National Mutual Life Association of Australasia Ltd v Reynolds

Federal Court of Australia Amendment Act 1991 Federal Court Rules O 4 r 6, O 6 r 13, O 11 r 2, O 11 r 16, O 13 r 2, O 13 r 3, O 13 r 5, O 20 r 2, O 29 r 2, O 35 r 5 CTG Pty Ltd v Yamamori (Hong Kong) Pty Ltd (1992) 10 ASCR 534 Appl Sweeney & Vandeleur Pty Ltd v BNY Australia Ltd (1993) 11 ACSR 356 Foll Interchase Corporation Limited v ACN0100887573 P/L & Ors [2000] QSCDiscussed Dey v the Victorian Railways Commission (1949) 78 CLR 62 Appr General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Cited Webster v Lampard (1993) 177 CLR 598 Appr Dare v Pulham (1982) 148 CLR 658 Appr Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 Appr Bruce v Odhams Press Limited [1936] 1 KB 697 Appr Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR 41-522 Appr H 1976 Nominees Pty Ltd v Galli (1979) 40 FLR 242 Appr Trade Practices Commission v David Jones (Australia) Pty Ltd (1985) 7 FCR 109 Appr Mahon v Sutherland [1971] 1 NSWLR 502 Appr Saunders v Jones (1877) Ch D 435 Cited Yorkshire Provident Life Assurance Co v Gilbert (1895) 2 QB 148 Cited Trade Practices Commission v George Weston Foods Pty Ltd (1979) 39 FLR 182 Cited James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 347 Cited Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35 Appr Potts v Miller (1940) 64 CLR 282 Cited State of Western Australia v Wardley (1991) 30 FCR 245 Appl The Commonwealth v Mewett (1995) 140 ALR 99 Appr Christopoulos v Angelos (1996) 41 NSWLR 700 Cited Smith New Court Securities Ltd v Citibank NA [1997] AC 254 Cons Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 Cons Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398 Appl Lenijamar Pty Ltd & Ors v AGC (Advances) Ltd (1990) 90 ALR 200 Cited Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229 at 268 Appl Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 Appl THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LIMITED, THE PRUDENTIAL ASSURANCE COMPANY OF AUSTRALIA & NEW ZEALAND LIMITED (formerly AETNA LIFE OF AUSTRALIA & NEW ZEALAND LIMITED), THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LIMITED (as representative of all those parties identified in annexure 1 to the statement of claim filed 9 July 1993), THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LIMITED, THE PRUDENTIAL ASSURANCE COMPANY LIMITED, THE MERCANTILE & GENERAL REINSURANCE COMPANY OF AUSTRALIA LIMITED, CYRIL ALAN ROBINSON and THELMA JEAN ROBINSON, THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LIMITED (as representative of all those parties identified in Annexure 2 to the Statement of Claim filed 9 July 1993) v COLIN WILLIAM REYNOLDS, MAX RYAN, CHARLES PAUL CURRAN, ROBERT THOMAS SIMES, GEOFFREY FRANCIS SMITH, GROSVENOR HILL (QUEENSLAND) (formerly HILLIER, PARKER (QUEENSLAND) PTY LIMITED), JOHN RICHARDSON, REMM PROPERTY (AUST) PTY LTD (formerly REMM PROPERTY MANAGEMENT PTY LIMITED), JOHN HUNTER PEARSON QG110 OF 1993 SPENDER J 8 MARCH 2000 BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG110 of 1993

BETWEEN: THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LIMITED, THE PRUDENTIAL ASSURANCE COMPANY OF AUSTRALIA & NEW ZEALAND LIMITED (formerly AETNA LIFE OF AUSTRALIA & NEW ZEALAND LIMITED) First Applicants THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LIMITED (as representative of all those parties identified in annexure 1 to the statement of claim filed 9 July 1993) Second Applicant THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LIMITED, THE PRUDENTIAL ASSURANCE COMPANY LIMITED, THE MERCANTILE & GENERAL REINSURANCE COMPANY OF AUSTRALIA LIMITED, CYRIL ALAN ROBINSON and THELMA JEAN ROBINSON Third Applicant THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LIMITED (as representative of all those parties identified in Annexure 2 to the Statement of Claim filed 9 July 1993) Fourth Applicant COLIN WILLIAM REYNOLDS First Respondent MAX RYAN Second Respondent CHARLES PAUL CURRAN Third Respondent ROBERT THOMAS SIMES Fourth Respondent GEOFFREY FRANCIS SMITH Fifth Respondent GROSVENOR HILL (QUEENSLAND) (formerly HILLIER, PARKER (QUEENSLAND) PTY LIMITED) Sixth Respondent JOHN RICHARDSON Seventh Respondent REMM PROPERTY (AUST) PTY LTD (formerly REMM PROPERTY MANAGEMENT PTY LIMITED) Eight Respondent JOHN HUNTER PEARSON Ninth Respondent JUDGE: SPENDER J DATE OF ORDER: 8 MARCH 2000 WHERE MADE: BRISBANE

THE COURT ORDERS THAT: 1. Chase Corporation (Aust) Equities Pty Ltd be removed as a party to these proceedings from 4 March 1996. 2. Pursuant to O 30 r 5 of the Federal Court Rules, the proceedings by the applicant against each of the respondents be stayed. 3. Other than as indicated in Orders 1 and 2, the application to strike out the Statement of Claim be declined. 4. The other relief sought by the respondents' notices of motion be refused, except that the reference in para 14B.1 of the Amended Statement of Claim to "the valuation dated 27 February 1987", and the paragraph or paragraphs which later refer to that valuation, be deleted. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY QG110 of 1993

BETWEEN: THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LIMITED, THE PRUDENTIAL ASSURANCE COMPANY OF AUSTRALIA & NEW ZEALAND LIMITED (formerly AETNA LIFE OF AUSTRALIA & NEW ZEALAND LIMITED) First Applicants THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LIMITED (as representative of all those parties identified in annexure 1 to the statement of claim filed 9 July 1993) Second Applicant THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LIMITED, THE PRUDENTIAL ASSURANCE COMPANY LIMITED, THE MERCANTILE & GENERAL REINSURANCE COMPANY OF AUSTRALIA LIMITED, CYRIL ALAN ROBINSON and THELMA JEAN ROBINSON Third Applicant THE NATIONAL MUTUAL LIFE ASSOCIATION OF AUSTRALASIA LIMITED (as representative of all those parties identified in Annexure 2 to the Statement of Claim filed 9 July 1993) Fourth Applicant COLIN WILLIAM REYNOLDS First Respondent MAX RYAN Second Respondent CHARLES PAUL CURRAN Third Respondent ROBERT THOMAS SIMES Fourth Respondent GEOFFREY FRANCIS SMITH Fifth Respondent GROSVENOR HILL (QUEENSLAND) (formerly HILLIER, PARKER (QUEENSLAND) PTY LIMITED) Sixth Respondent JOHN RICHARDSON Seventh Respondent REMM PROPERTY (AUST) PTY LTD (formerly REMM PROPERTY MANAGEMENT PTY LIMITED) Eight Respondent JOHN HUNTER PEARSON Ninth Respondent JUDGE: SPENDER J DATE: 8 MARCH 2000 PLACE: BRISBANE

REASONS FOR JUDGMENT 1. A total of ten notices of motion have been filed in connection with proceedings which commenced in this court by the filing of an application and statement of claim on 9 July 1993, which proceedings are based on claims for relief by or on behalf of the shareholders and noteholders who subscribed to a prospectus issued by Interchase Corporation Limited ("Interchase") on or about 22 June 1987 in connection with a retail development by Interchase in the Queen Street Mall, called "The Myer Centre". 2. It is perhaps not surprising that there are numerous notices of motion seeking to challenge the statement of claim, when one has the regard to the fact that the amount claimed on behalf of the shareholders and noteholders who subscribed to the prospectus exceeds $300 million, and the further circumstance that, while the subscription to the shares and notes happened in June and July 1987, these proceedings were not commenced until 9 July 1993 and were not served on any of the respondents until late 1997 or early 1998. 3. The first applicants in the proceedings (some of the original applicants filed notices of discontinuance) and the National Mutual Life Association of Australasia Limited, as representative of the parties in Annexure 1 to the original statement of claim, are said to be the shareholders who subscribed to the shares and who paid to Interchase $199,980,000.00 as the price for subscription to the shares. The third applicants and the parties referred to in Annexure 2 to the original statement of claim are claimed to be the noteholders who advanced $120,130,000.00 as consideration for the notes. 4. The first five respondents were directors of Interchase and, in particular, are alleged to have been directors of Interchase at the time the prospectus was issued. The statement of claim alleges that each of them authorised and caused the prospectus to be issued, knew that the information contained in it would be relied upon by the members of the public to whom the prospectus was issued, and owed a duty of care to the members of the public to whom the prospectus was issued to exercise reasonable care and skill to ensure the accuracy of the matters in the prospectus. 5. The sixth respondent ("Hillier Parker") was the valuer who produced a "Property Valuation Report ("the valuation report") and authorised the publication of that report in the prospectus. It is said of the valuer that it owed to the members of the public to whom the prospectus was issued a duty of care to exercise the care and skill of a reasonably competent valuer. Mr Richardson, the seventh respondent, is said to be the director and employee of Hillier Parker who caused the valuation report to be published in the prospectus. 6. The eighth respondent ("RPM") was the leasing agent for the Myer Centre. It is said that RPM published a "Leasing Agent's Report" ("the leasing report") and gave its consent to the issue of the prospectus with that report in it. It is said that RPM also owed a duty of care to the members of the public to whom the prospectus was published to exercise reasonable care and skill in relation to the accuracy of the matters in the leasing report. The ninth respondent, Mr Pearson, is said to be the director and employee of RPM who caused the leasing report to be published in the prospectus. He also, it is said, owed a duty of care concerning the accuracy of the matters appearing in the leasing report. 7. I will hereinafter refer to the first five respondents as "the directors", to the sixth and seventh respondents as "the valuers", and to the eighth and ninth respondents as "the leasing agents". THE NOTICES OF MOTION 8. The motions with which I am presently concerned are as follows:

1. A notice of motion by the valuers filed 18 February 1998 for orders that:- (a) The statement of claim (or alternatively certain paragraphs of it) be struck out pursuant to O 11 r 16 of the Federal Court Rules ("the Rules") as against the valuers, as disclosing no reasonable cause of action or as an abuse of process. (b) Alternatively that the proceedings against them be dismissed or permanently stayed pursuant to O 20 r 2 of the Rules. (c) That the Trade Practices Act 1974 (Cth) ("the TP Act") claim be dismissed or permanently stayed pursuant to O 20 r 2 of the Rules. (d) That the representative proceedings, under Part IVA of the Federal Court of Australia Act 1976 ("the Act"), be dismissed or stayed as against the valuers pursuant to O 20 r 2 of the Rules. (e) That the proceedings by the Second and Fourth applicants under O 6 r 13 (joint relief) be dismissed or permanently stayed as against the valuers pursuant to O 20 r 2 of the Rules. (f) Further or alternatively, a declaration that the members of the groups whose names appear in Annexures 1 and 2 to the Statement of Claim do not have the same interest in the proceedings as each of the others. (g) Further or alternatively, an order that the proceedings not continue as representative proceedings pursuant to O 6 r 13 of the Rules. (h) A declaration that the causes of action against the valuers did not arise after the commencement of the Federal Court of Australia Amendment Act 1991, namely 5 March 1992. (i) Further or alternatively, that the preceding issue be determined as a preliminary issue pursuant to O 29 r 2 of the Rules. (j) Further or alternatively, that the question of when the causes of action arose be decided as a preliminary issue pursuant to O 29 r 2 of the Rules. 2. A notice of motion by the second and fourth applicants filed 24 February 1998 for orders in relation to the representative proceedings pursuant to Part IVA of the Act (ie 'opt in' 'opt out' orders). 3. A notice of motion by the fourth respondent filed 31 March 1998 for orders in similar terms to those outlined in relation to the valuers' notice of motion (listed as no. 1 above), as well as an order that the proceeding against the fourth respondent be dismissed or stayed pursuant to O 30 r 5 of the Rules (want of prosecution), or pursuant to the court's inherent jurisdiction. 4. A notice of motion by the first, second, third, fifth and eighth respondents filed 31 March 1998 and amended 1 April 1998 for orders in similar terms again to those outlined in relation to the valuers' notice of motion (listed as no. 1 above), as well as an order that Chase Corporation (Aust) Equities Pty Ltd ("CCAE") be removed as a party to the proceeding as and from 4 March 1996 and an order that the proceeding against the first, second, third, fifth and eighth respondents be dismissed or stayed pursuant to O 30 r 5 or to the court's inherent jurisdiction. 5. A notice of motion by the valuers filed on 16 April 1998 for an order that the proceeding against them be dismissed or stayed pursuant to O 30 r 5 or to the court's inherent jurisdiction. 6. A notice of motion by the applicants filed 17 September 1998 for an order that the applicants have the leave of the court that the time within which they were directed on 2 July 1998 to deliver an amended statement of claim pursuant to O 13 r 3 be extended to 17 August 1998 and further or other relief. 7. A notice of motion by the ninth respondent filed 23 April 1998 that the proceedings against him be dismissed or stayed pursuant to O 30 r 5 or the court's inherent jurisdiction. 8. A notice of motion by the valuers filed 28 August 1998 for disallowance of specified amendments contained in the Amended Statement of Claim dated 14 August 1998. 9. A notice of motion by the first, second, third, fifth and eighth respondents filed 13 October 1998, again for disallowance of specified amendments contained in the Amended Statement of Claim dated 14 August 1998. 10. A notice of motion by the fourth respondent filed 13 October 1998 for disallowance of the same amendments as in no. 9, above. 9. It will be seen that, apart from the position of CCAE as a party to these proceedings, all respondents (except the ninth) by their various motions challenge the original Statement of Claim, both as a matter of pleading and on the basis that it pleads a TP Act claim out of time, and all respondents claim that the proceedings against them should be dismissed for want of prosecution. There is also a challenge to the representative claim under the TP Act on the basis that it arose prior to the commencement of Part IVA of the Act, a claim based on O 6 r 13 of the Rules for want of "the same interest" in the proceeding, as well as an attack concerning entitlement to and validity of amendments sought to be made to the original Statement of Claim by the applicants. 10. All but the status of CCAE require a detailed consideration of the history of the matter, which I will defer until after disposition of the CCAE point.

SHOULD CCAE BE A PARTY TO THE PROCEEDINGS? 11. CCAE was dissolved on its own application on 4 March 1996, pursuant to the then s 574 of the Corporations Law. It is one of the parties named as an applicant in both the O 6 r 13 and Part IVA proceedings. Its significance in these proceedings is indicated by the material which suggests that it had the majority shareholding in Interchase and had a substantial number of the notes. The material suggests that CCAE paid $98,988,000 for ordinary shares, being 49,490,000 ordinary shares at $2 per share and $12,015,000 for convertible subordinated unsecured notes, being 5,340,000 notes at $2.25 per share. 12. It was submitted on behalf of the valuers that the dissolution of CCAE is fatal to its continuation in the proceedings. From the date of dissolution pursuant to s 574(1) of the Corporations Law, it was submitted that the company no longer existed, and there was no power to commence or maintain proceedings; any such proceedings, it was said, therefore amounted to an abuse of process. 13. For the applicants it was submitted that it was inappropriate to "strike out" CCAE at this point of the proceedings, on the basis that the company's property, including the right to participate in these proceedings, vested in the Australian Securities Commission ("the ASC") upon the dissolution of the company: see s 576 and s 9 of the Corporations Law, the latter for the definition of "property". It was said that O 6 r 10(2) of the Rules permits the court to allow an amendment to the schedules of represented persons, so that it refers to CCAE "or its successors or assigns" and that at an appropriate time the applicants will seek that amendment. The affidavit material suggests that those behind CCAE are yet to decide whether to apply to reregister that company, pursuant to s 574(3) of the Corporations Law. In any event it was submitted that if no re-registration occurs, the ASC becomes a member of the class. It was submitted that at the time CCAE was deregistered in 1996 the action was properly constituted. It was further submitted that the deletion of CCAE is premature until those behind CCAE have determined whether to apply for reregistration, and that an order should not be made until the ASC is given the opportunity to be heard on this question. 14. Section 574(1) of the Corporations Law provided at the relevant time: "At the end of the time mentioned in a notice sent by the Commission under subsection 572(2) or (3) or published under subsection 573(5), the Commission may, unless cause to the contrary is previously shown, by notice in writing published in the Gazette, cancel the registration of the company and, on the publication in the Gazette of the last-mentioned notice, the company is dissolved, but: (a) the liability (if any) of every officer and members of the company continues and may be enforced as if the company had not been dissolved; and (b) nothing in this subsection affects the power of the Court to wind up a company the registration of which has been cancelled." 15. Section 574 also provided for reinstatement of a company the registration of which had been cancelled, for application to be made in that regard, and for the consequences of any such reinstatement. Sections 574(2), (3), (4) and (5) provided as follows: "(2) If the Commission is satisfied that the registration of a company was cancelled as the result of an error on the part of the Commission, the Commission may reinstate the registration of the company, and thereupon the company shall be deemed to have continued in existence as if its registration had not been cancelled. (3) If a person is aggrieved by the cancellation of the registration of a company, the Court, on an application made by the person at any time within 15 years after the cancellation, may, if satisfied that the company was, at the time of the cancellation, carrying on business or in operation or otherwise satisfied that it is just that the registration of the company be reinstated, order the reinstatement of the registration of the company. (4) On the lodging of an office copy of an order under subsection (3), the company shall be deemed to have continued in existence as if its registration had not been cancelled. (5) The Court may, in an order under subsection (3), give such directions and make such provisions (including directions and provisions relating to the retransfer of property vested in the Commission under section 576) as seem just for placing the company and all persons in the same position, so far as possible, as if the company's registration had not been cancelled." 16. Section 576(1) provided for the outstanding property of a defunct company to vest in the Commission: "Where, after a company has been dissolved, there remains in this jurisdiction or elsewhere outstanding property of the company, the estate and interest in the property, at law or in equity, of the company or its liquidator at the time when the company was dissolved, together with all claims, rights and remedies that the company or its liquidator then had in respect of the property vests by force of this section in the Commission." 17. In CTG Pty Ltd v Yamamori (Hong Kong) Pty Ltd (1992) 10 ASCR 534, the first defendant company had instituted an application for summary judgment before it was deregistered, but when the application was heard and determined the company did not exist - having been deregistered pursuant to s 574 of the Corporations Law on 22 February 1992 (a chronology which is similar to that of CCAE in the present case). The deregistration was not revealed to the trial judge. The Court of Appeal of the Supreme Court of the Northern Territory (Asche CJ, Gallop and Martin JJ) said that, had the deregistration of the company been revealed to the primary judge: "…we are in no doubt that his Honour would not have permitted a litigant with no standing to pursue an application for summary judgment against the plaintiff and to resist the plaintiff's application for leave to amend…". 18. The Court ordered that CTG Pty Ltd be removed as a party to the proceedings from the date of its deregistration and said at 536: "The rights of CTG Pty Ltd to make application either to the Australian Securities Commission or to the court for the reinstatement of the registration of the company are not affected by the orders we have made. Nor are its rights to apply to the Commission for the Commission to act on its behalf pursuant to s 575 of the Corporations Law affected." 19. I note that the right to apply for reinstatement of a company, by s 574(3), was conferred not on the dissolved company, but on "a person aggrieved by the cancellation of the registration." 20. In Sweeney & Vandeleur Pty Ltd v BNY Australia Ltd (1993) 11 ACSR 356, Sweeney and Vandeleur Pty Ltd had been deregistered and dissolved by the ASC pursuant to s 574 of the Corporations Law, prior to the filing of a summons purporting to be by the company, seeking a certain declaration. The defendant filed a notice of motion seeking to strike out the summons as an abuse of process. 21. Cole J, in the Equity Division of the Supreme Court of New South Wales, held that from the date of dissolution pursuant to s 574(1) until such date upon which the registration of the company may be reinstated, a company does not exist and has no power to commence proceedings. His Honour further held that, as the company had ceased to exist on the date of dissolution, and any chose in action constituting the claim of the company against the defendant bank had thereupon vested in the ASC pursuant to s 576(1), the proceedings were an abuse of process of the Court - being proceedings instituted on behalf of a non-existent entity. In respect of an application to adjourn the proceedings, his Honour further said at 361: "…there is a real question whether the Court either has the power to, or if it has, should permit the substitution of a new plaintiff for an action brought on behalf of a non-existent entity, such action being an abuse of the process of the court." 22. Cole J noted the provisions of s 574 of the Corporations Law and concluded that the consequence of the cancellation of registration and dissolution pursuant to s 574(1) and the vesting of property in the Commission pursuant to s 576(1) was that any chose in action constituting the claim of the company against the defendant bank was vested in the Commission, and the company was thus not a proper plaintiff. 23. At 359, Cole J referred to the observations of Lord Blanesburgh in Morris v Harris [1927] AC 252 at 269, as follows: "[When the former dissolution of a company is declared void, the] company is restored to life as from the moment of dissolution but, continuing a convenient metaphor, it remains buried, unconscious, asleep and powerless until the order is made which declares the dissolution to have been void. Then, and only then, is the company restored to activity." 24. His Honour noted that the relevant UK provision did not have an equivalent to s 574(4), but continued: "Notwithstanding this distinction…I am of the view that while ever the company remains 'dissolved' it has no power to take proceedings…From the date of the dissolution pursuant to s 574(1) until such date upon which the registration may be reinstated, the company does not exist." 25. His Honour also noted (at 360) the forthright holding of Scrutton LJ in Banque Internationale de Commerce de Petrograd v Goukassow [1923] 2 KB 682 at 691, that: "A non-existent person cannot sue," and observed: "The fact that there exists a statutory provision which may result at some future time in a resurrection from dissolution effective, because of the statutory provision, from the date of dissolution does not mean that, pending that future occurrence flowing from a possible future exercise of the statutory power to resurrect, the company continues to exist." 26. The position of CCAE here is similar to that of the plaintiff in Sweeney and Vandeleur, and the judgment of Cole J there confirms the incompetence of CCAE as an applicant. In the circumstances, I propose to make an order similar to that made by the Court of Appeal of the Northern Territory in the CTG Pty Ltd v Yamamori, and order that Chase Corporation (Aust) Equities Pty Limited be removed as a party to the proceedings as from 4 March 1996. 27. I turn now to the other issues.

HISTORY OF PROCEEDINGS 28. It is necessary to set out in some little detail the history of these proceedings. Interchase, on or about 22 June 1987, issued to the public a prospectus containing an application form for shares in Interchase and an application form for convertible, subordinated, unsecured notes in Interchase. Interchase, as it turns out, was wound up by order of the Federal Court on 20 October 1992. The prospectus included the valuation report prepared by the valuers, and the leasing report prepared by the leasing agents. The shareholders, comprised of the first and second applicants, subscribed nearly $200 million as subscription for shares; the third and fourth applicants, the note holders, advanced a little more than $120 million as consideration for the notes. The allotment date of all the shares and notes was 22 July 1987. 29. The Myer Centre opened on 28 March 1988. 30. The directors were directors of Interchase at the time the prospectus was issued, although all of them had ceased to be directors by 17 November 1989. As to the basis for liability of the directors, the statement of claim pleaded: "4.(g) each of the directors authorized and caused the Prospectus to be issued to the public. (h) each of the directors knew at the time of the said authorisation that the Prospectus and the information contained in it would be relied upon by members of the public to whom the Prospectus was issued which included the Shareholders and Noteholders ("the Recipients"), in considering whether to subscribe for Shares or Notes. (i) in the premises, each of the Directors owed a duty of care to the Recipients to exercise reasonable care and skill to ensure the accuracy of the matters stated in the Prospectus." 31. The statement of claim pleaded that the valuers published their valuation report stating that the open market value of the Myer Centre was $470 million being the sum reached by applying a capitalisation rate of 7% to an expected net income of $32.9 million, and that they gave their written consent to the prospectus containing the valuation report and knew that the prospectus and valuation report were intended to be issued to the recipients and would be relied upon by them in considering whether to subscribe for shares or notes. It was claimed: "…in the premises, [the valuers] owed a duty of care to the Recipients to exercise the care and skill of a reasonably competent valuer in: (i) gathering information material to the valuation of the Myer Centre (ii) assessing the value of the Myer Centre. (iii) ensuring the accuracy of the matters appearing in the Valuation Report." 32. The leasing agents are said to have published or caused to be published their leasing report in the prospectus, and to have known that the prospectus and leasing report were intended to be issued to the recipients, who would rely on the report in considering whether to subscribe for shares and notes. The leasing agents thus are claimed: "…In the premises, [to have] owed a duty of care to the Recipients to exercise reasonable care and skill in: (i) gathering and/or assessing information material to the leasing of the Myer Centre. (ii) ensuring the accuracy of the matters appearing in the Leasing Report." 33. The statement of claim pleads that each of the leasing report, the valuation report and the prospectus contain statements which were untrue and representations as to future matters which were made without the respective authors having any reasonable grounds for making them, and that each of those documents failed to disclose matters which were known to the respective respondents and known by them to be material. It was further claimed that each of the leasing agents, the valuers and the directors: engaged in conduct in trade or commerce which was misleading or deceptive or likely to mislead or deceive; is liable (pursuant to s 107 of the Companies (Queensland) Code) to pay compensation to persons who subscribed for shares and debentures on the faith of the prospectus for any loss or damage sustained by reason of the relevant untrue statements or non-disclosure; and failed to exercise reasonable care and skill in ensuring the accuracy of the matters appearing in, respectively, their leasing report, valuation report and prospectus. 34. Under the heading "Damage", the statement of claim pleaded: "24. In reliance upon the truth of the matters stated in the Prospectus: (a) the Shareholders subscribed for and became holders of the Shares; (b) the Noteholders subscribed for and became holders of the Notes. 25. After the commencement of retail operations at Myer Centre on 28 March 1988, the net income received by Interchase from these operations was: Year to Net Income 30 June 1988 $4.7 million 30 June 1989 $28.0 million 30 June 1990 $19.6 million 26. Between October 1991 and December 1991, an extensive international marketing campaign was conducted promoting a sale by tender of the Myer Centre. 27. After the conclusion of the marketing campaign, on 10 March 1992, Interchase entered a contract to sell the Myer Centre for a purchase price of $200 million. 28. On 17 July 1992, this sale was completed. 29. On 20 October 1992, Interchase was wound up by order of the Federal Court of Australia. 30. Since the commencement of the liquidation of Interchase: (a) no distribution has been made to the Shareholders in the course of the liquidation. (b) only two distributions totalling EIGHTEEN MILLION, SIX HUNDRED AND NINETY THOUSAND DOLLARS ($18,690,000), have been made to the Noteholders in the course of the liquidation. 31. In the premises, the Shareholders suffered loss and damage, being the amount paid to Interchase by the Shareholders as the price for the Shares. 32. In the premises, the Noteholders suffered loss and damage, being the difference between: (a) the amount advanced to Interchase by the Noteholders in exchange for the Notes. (b) the said distributions received by the Noteholders in the course of the liquidation of Interchase." 35. Mr Morrison QC, senior counsel for the applicants in the principal proceedings, made it clear in the course of submissions that the applicants' case is that the date of the winding up is the date on which the applicants say their cause of action accrued on which they suffered loss and damage. 36. The strikeout motions are directed at the proceedings and the statement of claim, but there is further material which is relevant to other aspects of the various motions, including the assertion of want of prosecution and prejudice arising therefrom. The Myer Centre opened on 28 March 1988. The Statement of Claim pleads that the income to the 30 June 1988 was $4.7 million, to 30 June 1989 was $28 million, and to 30 June 1990 was $19.6 million, against a projected income in the valuation report of $32.9 million. 37. The Australian Stock Exchange suspended share trading in Interchase from 1 November 1990 to 5 February 1991 for non-lodgment of an annual return. On 10 February 1991, Interchase informed its noteholders that it was in default of its loan obligations to the extent of $76 million and would not pay interest to noteholders. Interchase was again suspended by the Stock Exchange on 4 April 1991 after Notice of Intention to Appoint a Provisional Liquidator was given. The Federal Court on that day appointed a provisional liquidator. In the last quarter of 1991, there was a marketing campaign for the sale of the Myer Centre. A contract was signed on 10 March 1992 for the sale of the Centre for $200 million, to be completed on 17 July 1992. On 20 October 1992, Interchase was ordered to be wound up. 38. The solicitors acting for the applicants (who were also acting for the liquidator of Interchase) say they first obtained the names of the shareholders and noteholders in June of 1993. The liquidator obtained legal senior counsel's advice about advising shareholders of potential actions and in late June 1993 caused a letter to be sent to all shareholders enclosing a report canvassing various matters relating to the issue of proceedings and indicating that shareholders and noteholders should decide whether they wished to do so. 39. On 5 July 1995, the fifth respondent responded to that letter, and opposed the proposal to issue proceedings against the directors (of which he was one). On 9 July 1993, the application and the statement of claim were filed. The report, prepared by Feez Ruthning, Solicitors, at the request of the liquidator, stated: "This report canvasses possible causes of action against certain parties named in the prospectus, based primarily on the fact that the prospectus contained a valuation of the Myer Centre at $470 million, whereas it ultimately sold for approximately $200 million in 1992. Such causes of action could have accrued as early as 9 July 1987 when subscription lists were opened and would therefore expire six years later on 9 July 1993. The vital question to be addressed therefore is whether the shareholders and noteholders want to issue proceedings. If they do want to issue proceedings they should consult their legal advisers urgently." 40. The report indicated that the "two key components of the valuation" were the rental income stream of $32.9 million and the capitalisation rate of 7%. 41. Concerning the directors, the report said: The directors were primarily responsible for the prospectus. Their report at pages 14 to 22 [of the prospectus] relies on the estimates of rental income of the Myer Centre, which in hindsight proved to be overoptimistic." 42. As to the valuers, the report said: "The report by Remm was dated 18 June 1987 and is included at pages 30 to 31 of the prospectus. It is relevant because it supported the budgeted net income of $32.9 million. Therefore Remm's potential liability needs to be considered in tandem with Hillier Parker's." 43. Far from alerting the respective respondents to the case pleaded in the Amended Statement of Claim, the report would tend to suggest that matters now requiring investigation were not identified in 1993 at possible areas of litigious concern. The mere threat of proceedings is quite a different matter to being appraised of a case one might have to meet. 44. It is also necessary to set out in some detail the history of the directions hearings concerning this matter. On 6 August 1993, the applicants' solicitors wrote to the Registrar, advising that the application had not yet been served on any of the respondents and seeking that the first directions hearing (scheduled for 10 August 1993) be postponed for approximately six weeks, because: "… applicants are not yet in a position to give us instructions as to the directions to be sought at the first hearing…one of [the] applicants, National Mutual Life Association of Australasia Limited, also sues as representative of over 1600 shareholders and noteholders of Interchase…". 45. The letter also said: "…the applicants [shareholders or noteholders] are still in the process of reaching agreement as to the way in which decisions will be made on their behalf as to the conduct of the litigation, and as to what portion of the costs of the case will be met by each applicant." 46. It noted that those matters were currently being considered by the applicants, and that final agreement was expected within four to six weeks. Further, the letter stated: "These proceedings were instituted on 9 July 1993 in order to avoid a possible limitation argument." 47. The letter sought the Registrar's discretion under O 4 r 12 to alter the date of the first directions hearing to a later date. Service copies of the application were supplied with a request that they be re-engrossed with an altered date for the first directions hearing some six weeks as is. 48. On 5 October 1993, at the first directions hearing, the Court was told that the respondents had not been served pending the outcome of public examinations for which a date was not yet set, and that a cost sharing agreement between the applicants had not yet been reached. An adjournment of approximately eight weeks was sought. On that occasion, I commented: "The only difficulty is I do not want it just to go [into] limbo", and adjourned the matter until 15 December 1993. 49. On 8 December 1993, the applicant's solicitors wrote to the court concerning the public examination of persons connected with Interchase, including some of the respondents. The letter indicated that the public examinations had commenced only on 7 December 1993 and would continue into 1994, and that service had not yet been effected, that no cost sharing agreement had yet been reached and that it would be premature to serve until after the public examinations were concluded. An adjournment of the approaching directions hearing until March 1994 was then sought. The directions hearings for 15 December 1993 were then delisted. 50. On 30 March 1994, the applicants' solicitors sought an adjournment of the directions hearing for one month, the public examinations being said to be still incomplete. On 13 April 1994, proceedings were commenced in the Supreme Court by Interchase against two sets of valuers, one being Hillier Parker. 51. On 22 April 1994, the second directions hearing in this Court was held. The Court was told that the application had been filed because of the statute of limitations, that "there is about approximately another month's work to do," and that: "the liquidator…was intending to run a public examination of the people involved with the Myer Centre to determine whether there might be a cause of action that the liquidator might have and also relevant to a cause of action that the shareholders might have arising out of the original prospectus in 1987." 52. I then said: "…what I am minded to do is, given the history of the matter and its apparent complexity, if I adjourn this until 15 July, that at least will give you, one would have thought, time to determine whether to proceed or not." 53. The third directions hearing was held on 15 July 1994, and the Court was told that service had still not occurred. I asked: "When is something going to happen about it, do you know?", and was told that investigations were still continuing which would not be finished before 31 August. The matter was adjourned until 31 October 1994. 54. On 31 October 1994, the fourth directions hearing occurred. On that occasion, the Court was told again that the proceedings had not been served, although "a number of the parties are aware of the Federal Court proceedings." A further adjournment was sought by the applicants to mid-December. The Court was told "There are parallel proceedings in the Supreme Court". As will be later indicated, this was a serious and worrying mis-statement. I indicated: "I am quite happy for the Supreme Court to look after anything - everything." 55. The matter was adjourned until 8 February 1995. I said that I hoped: "that in the meantime all those questions can be resolved." 56. On 6 February 1995, the fifth directions hearing was heard. The Court on that occasion was told: "There is a somewhat parallel action running in the Supreme Court." I asked: "Well, why can I not get rid of this then?" 57. I was told: "Your Honour, the other action could only be instituted in the Supreme Court. This one, being a class action, can only be instituted in the Federal Court."; and that the Federal Court action "was filed in order to preserve the statute of limitations period. Whether it proceeds will depend on the evidence adduced in the Supreme Court." On that occasion, I adjourned the matter to the Registry, to be brought on on 14 days notice, with the Registrar to review the matter annually. 58. In the middle of 1996, there were contested applications in the Federal Court by the liquidator, who wished to examine persons associated with the indemnity insurer of Hillier Parker. Kiefel J ordered that the examinations proceed. Her Honour's orders were the subject of an unsuccessful appeal. 59. The Registrar wrote to the solicitors for the applicants on 11 February 1997 seeking information as to the state of the proceedings. By letter of 20 March 1997, the solicitors for the applicant stated that service had still not occurred, and that: "The parallel Supreme Court proceedings to which reference was made at the last review of this matter before Mr Justice Spender on 6 February 1995 were virtually ready for trial and were about to be set down for mediation when one of the insurers advised that it declined indemnity…it is expected that it will be at least another three months before the matter is ready for trial." 60. On 1 September 1997, I had my Associate contact the solicitors for the applicants, and a directions hearing occurred on 12 September 1997. Ms T Harrip of Allen, Allen and Hemsley, solicitors for the applicants, announced her appearance and I said: "Yes, I am a bit concerned about this. Why should not this be struck out? … [the] application was filed in July 1993. There are nine named respondents and there has not been any service, and from what I understand of the matter, there has not been any attempt at service." 61. Ms Harrip agreed that was correct and said: "The proceedings were issued in July 1993 with a view to avoiding a possible limitation argument." 62. I interrupted: "That is a fortiori then why is it unfair to keep going. This is all stale. Do the respondents know this is on foot? What happens when they are served with these proceedings?" 63. I was then told: "The respondents are aware that the matter is on foot. The named applicants in this matter have taken the position all along that they are prepared to await the outcome of related proceedings by the liquidator against the same valuers in the Supreme Court. … The named applicants are still prepared to take the position that they would prefer to await the outcome of the Supreme Court matter before getting this matter up and running, although they have always been prepared to abide any order of the Court that this matter should now be served if that is what the Court wishes." (emphasis added) 64. I asked: "Why is the Federal Court concerned with this?" and "Why should these proceedings not be part and parcel of the liquidator's proceedings?" 65. The transcript then records as follows: "MS HARRIP: It is a different valuation, your Honour, and this is a representative action with over a thousand class members, each and every shareholder and noteholder is represented by the representative applicant in this matter. If this matter were to be brought on now and served and got going, the next directions which would need to be made would be the provision of a date for the opt in or opt out by those represented members, and the--- HIS HONOUR: Why should that not happen? You see, at the moment, you have got people who are going to be sued or may be sued in respect of matters that are now well and truly stale. Why should not they, just as a matter of justice be entitled to be in a position to know what the allegations are against them, so that they can find out what the evidence is? This trial is now seven years old. MS HARRIP: Yes. Well, if the Court is of the view that the proceedings should now be served of course the applicants--- HIS HONOUR: It is not a question for the Court. All I am concerned with at the moment, you see, you brought proceedings and sat on your hands. It just seems to have been a case where proceedings have been parked in the Federal Court, and I cannot really see at the moment what the connection is between doing nothing here and the Supreme Court proceedings. Is it the case that - well, I understood that the continuation of these proceedings was dependent upon whether the application by the plaintiff in the Supreme Court to join insurers was successful. MS HARRIP: That has happened and that has been successful in relation to the insurers of one of the valuers, not the valuers involved in this case. The Supreme Court proceedings have many overlapping issues, but they are not identical. One of the valuers who the liquidator has sued in the Supreme Court is the same as the valuers who are the respondents in this case. It is not the same valuation, but many of the matters which appear in the prospectus valuation, which are alleged to be negligent by the liquidators, are the same as in that case." 66. I later asked: "If there are a lot of overlapping issues why cannot there be two trials heard concurrently? MS HARRIP: Because of this, the valuation in the liquidator's action is a valuation 12 months later in time, and many of the same aspects of that valuation occurred in the prospectus valuation. They are not the same issues because what may have been negligent in 1988 may not have been negligent in 1987. Those kinds of issues. But many of the facts in the liquidator's action would be of use to the applicants in this action. HIS HONOUR: Well, I am just very concerned that people are going to be exposed to litigation in respect of events and opinions that were formed more than 10 years ago…in respect of litigation they have not even been served yet." 67. I was told the valuers were aware of the existence of these proceedings. I asked "Were all the respondents valuers?" and was told: "No, some of the respondents are former directors of the company who are aware of these proceedings also because they have been publicly examined by the liquidator. Some of the respondents are former property managers of the Myer Centre who have also been publicly examined by the liquidators, and others are officers of the companies. The named applicants' preferred position in relation to these proceedings is that they be - they continue to be left in abeyance pending the outcome of the Supreme Court proceedings, but of course, they are prepared to abide by any decision of the Court that they should now be served and a directions hearing set." (emphasis added) 68. I concluded the directions hearing by saying: "I will list this matter for directions on 6 February 1998. One way or the other the boil will have to be lanced on that day…Really, when proceedings are in their twelfth year, when the events are 12 yeas old and we are talking about very big money, it is a little bit unfair." 69. There was one further directions hearing on 4 February 1998, and then hearings of the various motions from April 1998 onwards. 70. The so-called "parallel proceedings" in the Supreme Court, which have a relevance to the application that these proceedings be stayed for want of prosecution (pursuant to O 30 r 5), were the subject of a judgment by White J on 8 February 2000: Interchase Corporation Limited v ACN010087573 P/L & Ors [2000] QSC. 71. In very abbreviated summary, the Supreme Court proceedings concerned a "Development Agreement" between Interchase and the builder of the Myer Centre that a "a completion valuation" would be arrived at by averaging two valuation reports. Those two valuation reports were received by Interchase some 12 months after the publication of the prospectus which is at issue in these proceedings. In effect, the Development Agreement provided that for every dollar the Myer Centre was valued over $425 million, Interchase would pay 25 cents to the builder, whilst for every dollar the Myer Centre was valued under $425 million, there was to be a dollar refunded to Interchase. The two valuations, the average of which formed the completion valuation, were performed by the sixth respondent in the Federal Court proceedings, Hillier Parker, and a firm of valuers, Colliers. Colliers valued the centre at $500 million and Hillier Parker at $490 million, which gave a completion valuation of $495 million. This was $70 million more than the $425 million, so Interchase was required to pay an extra $17.5 million to the builder. 72. The liquidators of Interchase in the Supreme Court proceedings alleged negligence on behalf of both Colliers and Hillier Parker. Interchase reached a settlement with Colliers on 17 March 1999 in which liability was admitted, with damages to be assessed up to a limit of $20 million. The proceedings continued to trial against Hillier Parker, who denied liability and further contended that there was never any capacity in respect of the recipients of the payment to repay to Interchase $17.5 million or any further sum or part of it, and so, if they were liable, there was no prospect that, at the relevant time, Interchase could recover the sum sought or any part thereof. 73. White J assessed $410 million as the "correct" value of the Myer Centre which a competent valuer would have ascertained at the relevant date. Her Honour delivered extensive reasons for judgment of some 154 pages, giving judgment for Interchase against Colliers in the sum of $12.994 million plus an interest component to be calculated from 30 June 1993 to judgment at 6% per annum. Her Honour gave judgment for Interchase against Hillier Parker for $12.031 million plus interest from 30 June 1993 to judgment at 6% per annum. The fact that interest ran only from 30 June 1993 reflected her Honour's view that the lengthy delay in the Supreme Court proceedings dictated that interest should not run prior to that date. The loss which Interchase suffered had been discounted by her Honour, and the amounts awarded were approximately 77% of the loss by Interchase. 74. While the material before me suggests that the valuation by Hillier Parker contained in the prospectus appears to have been the precursor of Hillier Parker's completion valuation (and so aspects of whether the latter valuation was negligent might also be highly material to the allegation that Hillier Parker's prospectus valuation was negligently performed), it is simply not true to say that the proceedings in the Federal Court and the Supreme Court were parallel, or even "somewhat parallel". The proceedings in the Supreme Court are of almost peripheral relevance to the allegations against the directors and the leasing agents, and the valuations were at different times and were performed for different valuation dates. The Supreme Court proceedings have none of the difficulties associated with the question of when the shareholders' or noteholders' loss or damage, in reliance on the prospectus or parts of it, occurred; nor with the question of whether the proceedings could or should be brought as representative proceedings under O 6 r 13 of the Rules or under Part IVA of the TP Act. These aspects will have to be considered later, in the context of the claim that the proceedings should be dismissed or stayed for want of prosecution.

DOES THE ORIGINAL STATEMENT OF CLAIM FAIL TO DISCLOSE A REASONABLE CAUSE OF ACTION OR IS IT OTHERWISE AN ABUSE OF PROCESS? 75. The central contention by the respondents in respect of this issue is that the applicants have not pleaded material facts sufficient to support the claims for relief made by their application. It is said they plead conclusions and do so in such a way as to preclude any identification of the substance of their complaints. 76. Order 4 r 6(2) provides that a statement of claim shall show: "(a) The nature of the applicant's claim; and (b) The material facts upon which it is based." 77. Order 11 r 2 provides: "Subject to these Rules - (a) a pleading of a party shall contain, and contain only, a statement in a summary form of the material facts on which he relies, but not the evidence by which those facts are to be proved;…" 78. Order 11 r 13 imposes an obligation on an opposing party to traverse any allegation of fact made by the other party in his pleading; otherwise it is deemed to be admitted. A pleading may be struck out pursuant to O 11 r 16 or alternatively be stayed or dismissed pursuant to O 20 r 2, if it fails to disclose a reasonable cause of action. 79. The principles relating to a strikeout action on this ground are clear: the power is to be exercised sparingly. In Dey v the Victorian Railways Commission (1949) 78 CLR 62, Dixon J (as he then was) stated at 91: "A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. …. Once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process." 80. See also General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 128-130 per Barwick CJ; and Webster v Lampard (1993) 177 CLR 598, where Mason CJ, Deane and Dawson JJ said at 602: "The power to order summary judgment must be exercised with 'exceptional caution' and 'should never be exercised unless it is clear that there is no real question to be tried'." (footnotes omitted) 81. It is against those general principles that I turn to consider the pleading of the original statement of claim. 82. In Dare v Pulham (1982) 148 CLR 658, the High Court (Murphy, Wilson, Brennan, Deane and Dawson JJ) said at 664: "Pleadings and particulars have a number of functions: they furnish a statement of the case sufficiently clear to allow the other party a fair opportunity to meet it (Gould and Birbeck and Bacon v Mount Oxide Mines Ltd. (In liq) [(1916) 22 CLR 490, at 517]); they define the issues for decision in the litigation and thereby enable the relevance and admissibility of evidence to be determined at the trial (Miller v Cameron [(1936) 54 CLR 572 at 576-577]), and they give a defendant an understanding of a plaintiff's claim in aid of the defendant's right to make a payment into court. Apart from cases where the parties choose to disregard the pleadings and to fight the case on issues chosen at the trial, the relief which may be granted to a party must be founded on the pleadings (Gould and Birbeck and Bacon [(1916) 22 CLR at 517, 518]); Sri Mahant Govind Rao v Sita Ram Kesho [(1898) LR 25 Ind App 195 at 207]). But where there is no departure during the trial from the pleaded cause of action, a disconformity between the evidence and particulars earlier furnished will not disentitle a party to a verdict based upon the evidence. Particulars may be amended after the evidence in a trial has closed (Mummery v Irvings Pty Ltd [(1956) 96 CLR 99, at 111, 112, 127]) though a failure to amend particulars to accord precisely with the facts which have emerged in the course of evidence does not necessarily preclude a plaintiff from seeking a verdict on the cause of action alleged in reliance upon the facts actually established by the evidence (Leotta v Public Transport Commission (NSW) [(1976) 9 ALR 437, at 446]). 83. In Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279, Mason CJ and Gaudron J said at 286: "The function of pleadings is to state with sufficient clarity the case that must be met … In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision. The rule that, in general, relief is confined to that available on the pleadings secures a party's right to this basic requirement of procedural fairness." 84. There is a clear distinction between pleadings and particulars. In Bruce v Odhams Press Limited [1936] 1 KB 697, Scott LJ in the Court of Appeal said at 712-713: "The word 'material' means necessary for the purpose of formulating a complete cause of action; and if any one 'material' fact is omitted, the statement of claim is bad; it is 'demurrable' in the old phraseology, and in the new is liable to be 'struck out' … The function of 'particulars' under r 6 is quite different. They are not to be used in order to fill material gaps in a demurrable statement of claim - gaps which ought to have been filled by appropriate statements of the various material facts which together constitute the plaintiff's cause of action. The use of particulars is intended to meet a further and quite separate requirement of pleading, imposed in fairness and justice to the defendant. Their function is to fill in the picture of the plaintiff's cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial. Consequently in strictness particulars cannot cure a bad statement of claim. But in practice it is often difficult to distinguish between a 'material fact' and a 'particular' piece of information which it is reasonable to give the defendant in order to tell him the case he has to meet; hence in the nature of things there is often overlapping." 85. In Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR 41-522, Burchett J said at 42-679: "The primary function [of a statement of claim] is to tell the defending party what the claim is that he has to meet. That is a matter of elementary and natural justice; the claim cannot be answered until it is known. When a sufficient defence has been filed to a sufficient statement of claim, a further function will generally have been performed - that of defining the question or questions for decision. This definition is required, of course, from an early stage, or else discovery and other interlocutory procedures are likely to prove misdirected, wasteful and unproductive. In order to achieve these fundamentals, a statement of claim must set out clearly, not just the bare claim that is made, but also 'the material facts on which it is based', including facts that, if not specifically pleaded, might take the other party by surprise: Federal Court Rules, Order 4, rule 6; Order 11, rr 2, 10." 86. The observations that "the function of pleadings is to state with sufficient clarity the case that must be met", and "the primary function…is to tell the defending party what the claim is that he has to meet" are highly relevant to the O 30 r 5 challenge here. 87. In H 1976 Nominees Pty Ltd v Galli (1979) 40 FLR 242, Northrop J struck out a statement of claim, but granted leave to file another - holding that the original statement of claim did not allege facts which were material to a claim under s 52(1) of the TP Act. In that statement of claim, the critical paragraph pleaded: "The fiduciary[Mr Galli] and Apex, inter alios, did, in trade or commerce, engage in conduct that was misleading or deceptive or alternatively engage in conduct that was likely to and did mislead or deceive … PARTICULARS - Particulars exceed three folios and are delivered herewith by being annexed hereto." 88. Northrup J said at 246: "Neither [para 17] nor any other paragraph of the statement of claim contains any statement of material facts which constitute or would constitute a contravention of s 52(1) of the Act by the respondents or one or either of them. Paragraph 17 contains a conclusion drawn from facts which are not contained in the statement of claim. In order to disclose a reasonable cause of action, a statement of claim must contain statements of material facts which support the claims made. Particulars are not statements of material facts; particulars perform a different purpose…" 89. His Honour then approved part of the passage quoted above from Bruce v Odhams Press Limited, where Scott LJ said regarding particulars (at 247) that: "Their function is to fill in the picture of the plaintiff's cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial." 90. Similarly, in Trade Practices Commission v David Jones (Australia) Pty Ltd (1985) 7 FCR 109, Fisher J was concerned with an application to strike out a statement of claim in proceedings for contravention of s 45 of the TP Act in respect of price fixing. The relevant paragraph of the statement of claim alleged: "In or about mid March 1984 the corporate respondents and each of them or some two or more of them made an arrangement or arrived at an understanding the material provisions of which had the purpose, or had or were likely to have the effect, of fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of, the prices at which the First, Second and Third Respondents, and certain other retails of manchester crafts in the Adelaide metropolitan area would sell Sheridan manchester." 91. Fisher J said of this passage, at 114: "It is merely a statement of a conclusion drawn from facts which are not in the statement of claim. Standing alone, par 15 does not disclose a reasonable cause of action against the respondents." 92. In Mahon v Sutherland [1971] 1 NSWLR 502, the Court of Appeal was concerned with the sufficiency of an account of negligence which was pleaded: "…the Defendant conducted himself negligently in failing to take reasonable care for the safety of the Plaintiff whilst the Plaintiff was carrying the said header blade at the request and direction of the Defendant WHEREBY the Plaintiff was injured and suffered the damage more particularly set out in the first count hereof." 93. Taylor AJA quoted at 504 from the "celebrated judgment" of Willes J in Gautret v Egerton (1967) LR 2 CP 371 at 374: "The plaintiff must, in his declaration, give the defendant notice of what his complaint is. He must recover secundum allegata et probata. What is it that a declaration of this sort should state in order to fulfil those conditions? It ought to state the facts upon which the supposed duty is founded and the duty to the plaintiff with the breach of which the defendant is charged. It is not enough to show the defendant has been guilty of negligence, without showing in what respect he was negligent and how he became bound to use care to prevent injury to others." 94. Taylor AJA concluded that: "No facts are alleged here from which it could be taken that the defendant assumed or accepted responsibility of seeing that, burdened as he was, the plaintiff negotiated the narrow path … However, the count is further defective when it comes to allege a breach of duty. It does not allege any facts which constitute a breach. It contents itself with alleging that the defendant was negligent in failing to take reasonable care for the safety of the plaintiff. An allegation of negligence simpliciter as a breach is no more sufficient than is an allegation of duty in general terms. The remainder of the declaration alleges a conclusion of law which is not based on any facts. The count is demurrable." 95. The main focus of the criticism of the original statement of claim here is that it pleads conclusions drawn from facts which are not in the statement of claim. 96. However, in this particular case, in my opinion, the statement of claim does not fail to plead material facts, but is embarrassing for want of particularity of those material facts. Particulars limit the generality and ambit of the pleadings: Saunders v Jones (1877) Ch D 435; Yorkshire Provident Life Assurance Co v Gilbert (1895) 2 QB 148 at 152 and Trade Practices Commission v George Weston Foods Pty Ltd (1979) 39 FLR 182 at 186. It is important to note that it is not sought to strike out the pleading on the basis that it would have "a tendency to cause prejudice, embarrassment or delay in the proceeding": O 11 r 16(b) of the Rules. The statement of claim pleads material facts against each set of respondents, but only in the baldest of ways. No respondent would know what in truth was the case he or it had to meet. 97. I decline to strike out the statement of claim for want of compliance as disclosing no reasonable cause of action or as being an abuse of process. I will consider the O 30 r 5 aspects later.

THE LIMITATION OF ACTIONS POINT 98. This question relates both to pleading a cause of action under the TP Act, and as relevant to the commencement of Part IVA of the Act on 3 March 1992. These challenges seek to agitate the question of when the causes of action arose. 99. The contention on behalf of the respondents is that, where the plaintiff acquires property or a chose in action, the date of accrual of the loss is the date of acquisition. 100. It can be accepted for the purposes of the claim under the TP Act that the limitation period is three years from when the applicant suffered loss and damage: s 82(2). It is when loss and damage is suffered that the cause of action accrues and time relevantly begins to run: James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 347 per Toohey J at 392. It was pointed out in Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35 at 43 and 48 when loss and damage is suffered is a matter to be determined in all the circumstances of the case. Sackville J said at 48 that loss and damage will be found to have been suffered when the loss was reasonably "ascertainable". At 40, Burchett and Hill JJ said: "The High Court in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 considered the question of when loss or damage was sustained in the context of an indemnity induced by misleading or deceptive conduct. The judgment makes it clear that loss or damage will not necessarily be suffered at the time a contract is entered into on the faith of misrepresentations made by a respondent. The question will be one of fact. In a simple case where a plaintiff purchases an asset on the faith of a misrepresentation and that asset is shown by evidence to have been worth less than it was represented to be, the loss or damage has generally been held to have been suffered at the time the contract was entered into or perhaps at the time when the purchase money under the contract is paid. The measure of damages in an action brought under the Act in such a case will be the same as that applicable in an action in deceit, namely, the difference between the value as represented and the real value at the time the asset was acquired: Potts v Miller (1940) 64 CLR 282; Gould v Vaggelas (1985) 157 CLR 215 at 220 and Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 at 12. However, the High Court in Wardley made it clear that in other cases the disadvantageous character or effect of an agreement entered into on the faith of a misrepresentation might not be ascertained until a future date. Mason CJ, Dawson, Gaudron and McHugh JJ drew a distinction between a case where there was but a potential for loss and one where that potential had come to fruition as an actual loss." 101. Mr Morrisson QC, senior counsel for the applicant here, has made it plain that the case for the applicant is that the loss and damage for the purpose of the Trade Practices claim was suffered at the date of the winding up of Interchase. 102. In Karedis, the Full Court held that where a contract is entered into in reliance upon a misrepresentation, loss or damage is not necessarily suffered at the time the contract is entered into: where the lessees in that case had entered into the lease, there was then the potential that they would suffer loss and damage, but, it was held, they did not then in fact suffer loss or damage. They could only have suffered loss or damage when the disadvantageous character of the lease was ascertained or ascertainable by reference to the receipts and outgoings of the business over time. 103. In the present case, it is contended on behalf of the respondents that where the shares and notes have a readily ascertainable market value in terms of being listed on the stock exchange, there is no warrant for suggesting that the cause of action is not complete unless and until on a winding-up, the purchaser of the shares and notes receives less than the amount those instruments were purchased for. The respondents rely primarily on Potts v Miller (1940) 64 CLR 282, where the High Court was concerned with a claim by the plaintiff based on deceit, alleging that he was induced by fraud to take up shares in a company. The High Court held that the measure of damage applicable to such a case was the difference between the amount paid for the shares and their true value at the time of allotment. Evidence of what transpired after allotment may be admissible in determining what the true value was at the time of the allotment. 104. The respondents rely on the observation of Starke J in Potts v Miller at 289: "The measure of damage in cases in which a person is induced by fraud to take up shares is the difference between the amount he subscribed or paid for the shares and the real value - not the market value - of the shares on allotment. 'Although the value of the shares is not to be ascertained at the subsequent period so as to take into account for the benefit of the plaintiff events subsequent which depreciated their value, yet those events, if they show that the company was originally, with the capital which it had got, a company which was worthless, may…be taken into account as evidence of what was the value of the shares immediately after they were allotted to the plaintiff': See Peek v Derry [(1887) 37 Ch D, at p 592]." 105. Dixon J, as he then was, said at 300: "A special difficulty must often arise where there is a market value for contributing shares, which is real and not fictitious. In such a case, as capital is called up, the market price of the shares may consequentially increase but, at the same time, the disproportion of the market price and the paid-up value may grow even wider. How then is the damage to be estimated of an allottee who has retained his shares under the continuing influence of the original inducement and has paid calls? Indeed even in a case like the present, where the value of the shares at the time of allotment is to be sought, not in a market price, but in some estimate of their intrinsic worth, based on the nature of the concern, it does not appear to be altogether easy to give effect to the conception of a value as at the date of the allotment, when the greater part of the share capital was obtained by calls made at a later date and the plaintiff's actual loss results from the calling up of his liability on his shares. But as the authorities stand, the plaintiff in a case of the present description must establish that the 'fair', 'real' or 'intrinsic' 'value' of the shares he subscribed for was at the date of allotment less than the face value for which he made himself responsible, and the amount recoverable is the excess." 106. Williams J summarised the position at 307: "The authorities, which are collected in the judgments of my brother Dixon and of the learned Chief Justice of the Supreme Court, show that the measure of damages in an action of deceit is the difference between the amount which the plaintiff paid or became liable to pay for his shares and their real value on the date of allotment." 107. The prospectus in the present case contained a statement: "An application form shall constitute an irrevocable offer to purchase the number of Shares and/or Notes applied for pursuant to the application form or such lesser number of Shares and/or Notes as may be allocated to the applicant by the Underwriter. A binding contract to issue Shares and/or Notes will only be formed at the time and on the date that the Underwriter allocates Shares and/or Notes to the applicant and such allocation is recorded in the subscription list." 108. The prospectus also stated that: "Upon subscription, shareholders will be under a present obligation to pay the outstanding instalments totalling $1.00 per share in accordance with the terms of the issue." 109. Full payment of the Note price of $2.25 per share was to be made on application. The Notes had the following features: at the option of the noteholder, they were convertible to one ordinary 50c share, issued at a premium of $1.75; they were convertible in multiples of 100, each six months commencing on 30 December 1988 and until 31 December 1992; those which were not converted at 31 December 1992 were to be redeemed by Interchase at $2.25 each; interest on them at 12% per annum was payable by Interchase at six monthly intervals, commencing on 31 December 1987; they were to rank for payment after all other liabilities of the company; and payment of the par value and interest was not guaranteed other than by a company with a paid up capital of $2. The notes were to be listed on the Australian Stock Exchange. 110. The respondents contend that, in respect of both the Notes and Shares, there was no element of contingency, as was the case in State of Western Australia v Wardley (1991) 30 FCR 245. It was said that once the allotment was made, each noteholder had entered into a binding contract to buy the number of Notes allotted to it, the price for which had already been paid, and each shareholder had entered into a binding contract to purchase the number of shares allotted to it, one of the terms of which was that it was obliged to make payments of the calls at the nominated dates. That obligation was not contingent upon the happening of any future event. 111. Before turning to more of the authorities touching the question of the accrual of the cause of action under the TP Act, for completeness reference should be made to the accrual of a cause of action under s 107 of the Companies (Queensland) Code. Section 107 of the Companies (Queensland) Code relevantly provided: "107(1) [Persons Liable] Subject to this section, where a prospectus is issued in relation to a corporation, a person who - … (d) authorised or caused the issue of the prospectus, is liable to pay compensation to all persons who subscribe for or purchase any shares or debentures or units of shares or debentures on the faith of the prospectus for any loss or damage sustained by reason of any untrue statement in the prospectus, or by reason of the non-disclosure in the prospectus of any matter of which he had knowledge and which he knew to be material."(emphasis added) 112. A person who may be liable under s 107(1) in respect of an untrue statement made by him as an expert is not liable if he proves, inter alia: (c) that he was competent to make the statement and that he had reasonable grounds to believe, and did until the time of the allotment, issue or sale of the shares or debentures believe, that the statement was true." (emphasis added) 113. Section 107 of the Companies (Queensland) Code is directed to the question of liability "for" any loss or damage sustained by reason of any untrue statement in a prospectus. It shares the same difficulties in relation to when that loss or damage is sustained, as does the entitlement to damages pursuant to s 82(2) of the TP Act for persons who suffer loss or damage "by reason of" a contravention of Part V of the TP Act. 114. The first answer to the complaint concerning when the cause of action arose is that, in my opinion, it is for the defendants to plead and establish that the cause of action is outside the relevant limitation period, and showing otherwise is not an ingredient of the applicant's cause of action. In State of Western Australia v Wardley (supra) at 259, having referred to the "double operation" of s 82 of the TP Act as dealing both with right and remedy, the Full Court (Spender, Gummow and Lee JJ) said: "In our view, in stating that an action under subs (1) may be commenced at any time within the three year time limit specified in s 82(2), that latter provisions is to be regarded as having a procedural character. That is to say, s 82(2) is a condition of the remedy rather than an element in the right and prerequisite to jurisdiction which cannot be waived. It follows that it is for a defendant to assert non-compliance, rather than for a plaintiff to assert compliance with s 82(2) as an element of the cause of action. The need for compliance with s 82(2) may be waived by the defendant and an estoppel may prevent the defendant denying such a waiver. If the defendant fails to plead the limitation, this may be taken as a waiver of the need for compliance with s 82(2). The authorities bearing upon the general principles involved are discussed by Windeyer J in Australian Iron & Steel Ltd v Hoogland (1962) 108 CLR 471 at 488-489 and in Pedersen v Young (1964) 110 CLR 162 at 169. The first of these passages was adopted by Brennan J and McHugh J in Commonwealth v Verwayen (supra) (at 425-426, 497-499); see also the remarks of Gaudron J (at 486-487)." 115. In The Commonwealth v Mewett (1995) 140 ALR 99, Cooper J (with whom I agreed) said at 104: "Compliance with a limitation period under a true statute of limitations does not form part of the essential elements of a cause of action at common law for damages for personal injuries arising from breach of duty; nor is compliance with the time limit a condition precedent to the exercise of the right: Commonwealth v Verwayen (1990) 170 CLR 394 at 497-8; 95 ALR 321. Once a relevant limitation period has expired it is irrelevant until such time as a defendant raises the plea in bar to the remedy. Otherwise the question of limitation does not arise for consideration by the court: Commonwealth v Verwayen at CLR 473 where Toohey J cites with approval the decision of the English Court of Appeal in Ronex Properties Ltd v John Laing Construction Ltd [1983] 1 QB 398. In Ronex Properties, Donaldson LJ said (at 404-5): Authority apart, I would have thought that it was absurd to contend that a writ or third party notice could be struck out as disclosing no cause of action, merely because the defendant may have a defence under the Limitation Acts. … Where it is thought to be clear that there is a defence under the Limitation Acts, the defendant can either plead that defence and seek the trial of a preliminary issue or, in a very clear case, he can seek to strike out the claim upon the ground that it is frivolous, vexatious and an abuse of the process of the court and support his application with evidence. But in no circumstances can he seek to strike out on the ground that no cause of action is disclosed." 116. In Christopoulos v Angelos (1996) 41 NSWLR 700, a transfer of land showing a right of way in favour of an adjoining property was registered in 1976, but the Registrar General omitted to note the right of way on the relevant folio. In 1979, the proprietor sold the land, their solicitors having stated in reply to a requisition from the purchasers that it was not encumbered by any right of way. In 1983, the Registrar General noted the right of way on the folio and notified the purchasers. In 1987, they commenced proceedings against the vendors and their solicitor for negligent misrepresentation. On appeal it was held by Handley and Cole JA, with Powell JA dissenting, that the action was not statute barred as the purchasers first suffered actual damage in 1983 when belated registration of the right of way occurred and they became aware of the defect in their title. 117. Smith New Court Securities Ltd v Citibank NA [1997] AC 254 is another case where the date of the suffering of loss or damage was not the date of acquisition. The plaintiff had bought shares "with a view to holding them as a market making risk and selling them when an appropriate opportunity arose". The House of Lords held: that where a contract was induced by fraudulent misrepresentation, the measure of damages was reparation for all the loss directly caused by entering the transaction, whether or not it was foreseeable, and included consequential loss; that the plaintiff was under a duty to mitigate his loss once he became aware of the fraud and that he had to give credit for any benefit received including, as a general rule, the market value of property acquired at the date of acquisition; but that the general rule as to market value at the date of acquisition would not normally apply where the misrepresentation continued to operate so as to induce the plaintiff to retain the asset, or whether circumstances were such that by reason of the fraud the plaintiff was locked into the property. The House of Lords thus held accordingly that, where the plaintiff's loss flowed directly from the acquisition of shares rather than from their retention and in the circumstances of the transactions, the correct measure was the difference between the price paid and the amount subsequently realised on sale. 118. I recognise that Smith New Court Securities was a case of fraud, but it was concerned with a situation where, in the words of Lord Browne-Wilkinson, at the date of acquisition: "…the shares were already pregnant with disaster". 119. His Lordship asked at 268: "Can it then be said that the loss flowed not from Smith's acquisition but from Smith's decision to retain the shares? In my judgment it cannot. The judge found that the shares were acquired as a market-making risk and at a price which Smith would only have paid for an acquisition as a market-making risk. As such, Smith could not dispose of them on 21 July 1989 otherwise than at a loss. Smith were in a special sense locked into the shares having bought them for a purpose and at a price which precluded them from sensibly disposing of them. It was not alleged or found that Smith acted unreasonably in retaining the shares for as long as they did or in realising them in the manner in which they did." 120. In Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533, Mason CJ, Dawson, Gaudron and McHugh JJ said: "We should…state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question." 121. While it is presently unclear to me why it is that loss or damage was not sustained until the date of the winding up of Interchase, the resolution of that question is truly a matter for another day. 122. In my opinion, for the above reasons, it is quite premature to decide to reach any conclusion on the limitation point at this stage; probably it would be premature in advance of the hearing of the action. This conclusion applies both to the limitation point in the context of a defence to a trade practices claim and as a condition precedent of the operation of Part IVA of the TP Act. ORDER 6 RULE 13 123. This aspect of the various motions seeks alternative forms of relief based on O 6 r 13, namely that the proceedings by the second and fourth applicants be dismissed or stayed; and declarations that the members of the groups in Annexures 1 and 2 do not have "the same interest" and the proceedings should not continue as representative proceedings. Under O 6 r 13(1), proceedings can be commenced or maintained when a persons "have the same interest" in the proceeding. 124. In Carnie v Esanda Finance Corporation Ltd (1995) 182 CLR 398, two borrowers claimed to sue, on their own behalf and on behalf of all other persons who had entered into contracts with a lender which had the same characteristics as their contracts. The High Court held that persons having separate causes of action in contract or tort may have "the same interest" in proceedings to enforce those causes of action. Both Brennan and McHugh JJ held that the test for determining whether an action is within the New South Wales Rule dealing with representative action is whether the plaintiff and members of the represented class have a community of interest in the determination of some substantial issue of law or fact. 125. Here it is probable that different individuals will have different circumstances, particularly concerning reliance and damage, but there are, in my opinion, a significant number of questions of fact and law common to all applicants. I would decline all relief sought on this ground. 126. In that context, the applicants contend that the respondents had notice of these proceedings and the directors and others relevant to issues in the prospectus were required to produce documents during the public examination by the liquidator. The fact, however, is that knowledge by any respondent of the fact of these proceedings prior to the provision of the particularised Statement of Claim on 11 August 1998 would not have been of genuine help in diluting the prejudice that inevitably flows from the passage of time. In fact only one of the five director-respondents was publicly examined. 127. It is also true that there is a large amount of information that is in the liquidator's possession, including Board Minutes and much leasing detail. However the particularised case of the applicants goes not only to contemporaneous documents of the kind to which deponents on the applicant's side refer, although they are no doubt helpful in some respects. The existence of that identified material does not alter my conclusion that the passage of time, the inevitable loss or destruction of relevant documents, the inevitably accelerating dimming of relevant recollections over such a long time (to the extent of not even knowing now what was relevant then) are such as to make the litigation of the particularised claims against the respondents inherently unfair. I believe that this is a case where evidence of relevant material, which would have been available to the respondents if the applicants had not so egregiously delayed in alleging their case against the respondents, was not able to be obtained when that case was presented on or about 14 August 1998.

WHETHER PARTS OF THE AMENDED STATEMENT OF CLAIM OUGHT TO BE DISALLOWED 128. On 14 August 1998, the applicants filed an amended Statement of Claim. The amended Statement of Claim gave very extensive detailed particulars of statements which were untrue and of representations as to future matters in respect of the leasing report, the valuation report, and the prospectus. 129. The amended Statement of Claim also alleged: "The Valuation Report dated 10 June 1987 and the valuation dated 27 February 1987…predicted that the initial and subsequent financial years' net income would be the amounts set out in paragraph 9B.1(a)…" 130. Particular complaint is made as to the introduction of the "valuation dated 27 February 1987." 131. Without setting out the extensive particulars supplied, it is sufficient to note that they were of the most detailed kind. Reference should be made to paras: 9A, 9A.1, 9A.2 (which runs to more than 3 pages); 9B, 9B.1 to 10A, 10A.1, 10A.2; 12A, 12A.1 to 14A, 14A.1, 14A.2, 14B, 14B.1 to 14B.3; 15A, 15A.1 (wrongly numbered 10A.1), 15A.2, 15A.3; 17A.1 to 17A.5; 19A, 19A.1 to 19A.5; 20A, 20A.1 to 20A.3; and 22A, 22A.1 to 22A.8. By way of example only, para 19A.5, relating to the directors, included the following: "Particulars of those respects in which the predictions in the prospectus independently of those in the Leasing Report or Valuation Report were made without reasonable grounds are as follows: (a) the forecasts were founded upon matters which excluded consideration of significant matters, namely the matters referred to in paragraphs 9A.2(a), (iii), (iv) and (v), 9A.2(b), (c), (d) and (e), the matters in 9B2(a), (iii), (b) and (c), 9B.3, 9B.4, 9B.5(b) and (c), 17A.4(ii), (a), (b), (c), (d), (e), (f), (g), (h) and (i); … (e) the directors omitted to obtain any or any proper independent advice or study identifying the: feasibility of the Centre; trade zones; percentage of likely shoppers from within the zones except the Food Court; disposal incomes of typical customers; average spending on a transaction; likely turnover of the Centre; availability of existing comparable space in the CBD or elsewhere; management skills of respective tenants or of their capacity to meet the proposed terms or the rental agreements in the short or long term". 132. This is just one collocation of enquiries it is now said the directors should have made, but did not. 133. The amendments to the paragraphs under the heading "Damage" added new paras 24(c), 24(d), 25A and 26A as follows: "24. In reliance upon the truth of the matters stated in the Prospectus: (a) the Shareholders subscribed for and became holders of the Shares; (b) the Noteholders subscribed for and became holders of the Notes (c) the Shareholders retained and determined not to sell their allocated shares in the stock market and which they otherwise might have determined to do and might have done; (d) the Noteholders retained and decided not to sell the notes in the stock market and which they might otherwise have determined to do and might have done. 25A. By reason of the conduct of the Respondents particularised in this Statement of Claim; (a) the Shareholders paid the price for their subscription of shares under the prospectus in respect of which shares they were and are unable to recover the price paid for the shares or any part thereof and the shares were, by 20th October 1992, valueless; (b) the Noteholders paid the price for their subscription of notes under the prospectus in respect of which notes they were and are unable to 27 the price paid for the notes or any price and the notes were, by 20th October 1992, valueless (save and except for the proportionate value they had by reason of the distributions particularised in paragraph 30(b). Particulars of the allegations in paragraph 25A are in paragraphs 25-30 as follows. 25. After the commencement of retail operations at Myer Centre on 28 March 1988, the nett income received by Interchase from these operations was: Year to Net Income 30 June 1998 $4.7 million 30 June 1989 $28.0 million 30 June 1990 $19.6 million 30 June 1991 $19 million 26A. On 4th April 1991 the shares and notes were suspended from trading and the market therefore ceased to exist at that time and at all material times thereafter. 26. Between October 1991 and December 1991, an extensive international marketing campaign was conducted promoting a sale by tender of the Myer Centre. 27. After the conclusion of the marketing campaign, on 10 March 1992, Interchase entered a contract to sell the Myer Centre for a purchase price of $200 million. 28. On 17 July 1992, this sale was completed. 29. On 20 October 1992, Interchase was wound up by order of the Federal Court of Australia. 30. Since the commencement of the liquidation of Interchase: (a) no distribution has been made to the Shareholders in the course of the liquidation; (b) only two distributions totalling EIGHTEEN MILLION, SIX HUNDRED AND NINETY THOUSAND DOLLARS ($18,690,000), have been made to the Noteholders in the course of the liquidation. 31. In the premises, the Shareholders suffered loss and damage, being the amount paid to Interchase by the Shareholders as the price for the Shares." 32. In the premises, the Noteholders suffered loss and damage, being the difference between: (a) the amount advanced to Interchase by the Noteholders in exchange for the Notes; (b) the said distributions received by the Noteholders in the course of the liquidation of Interchase." 134. Order 13 of the Rules provides for Amendment. Rule 2 gives the Court a general power to order that any document in the proceeding be amended or that any party have leave to amend any document or proceeding in such manner as the Court thinks fit. Order 13 rule 2(2) provides: "All necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceeding, or of correcting any defect or error in any proceeding, or avoiding multiplicity of proceedings." 135. Subrule 2(3) provides: "Where an application to the Court for leave to make the amendment mentioned in subrules (4), (5), (6) or (7) is made after any relevant period of limitation current at the date of commencement of the proceeding has expired, the Court may, nevertheless, grant such leave in the circumstances mentioned in that subrule if it thinks it is just to do so." 136. Subrule 2(7) provides: "An amendment may be made notwithstanding that the effect of the amendment will be to add or substitute a new claim for relief or another foundation in law for a claim for relief if the new claim for relief or foundation in law for that claim arises out of the same facts or substantially the same facts as those already pleaded to support existing claims for relief by the party applying for leave to make the amendment." 137. Subrule 2(7) was inserted with effect from 1 August 1994, the Federal Court of Australia Act 1976 having been amended on 23 June 1994 by the inclusion of a new section 59(2B). Order 13 subrule 2(3), however, focuses on a requirement that it be "just" to make an amendment, whereas subrule 2(7) focuses on whether the claim sought to be added arises out of "the same facts or substantially the same facts as those already pleaded to support existing claims". 138. Order 13 r 3(1) provides: "A party may, without leave, amend any pleading of his once at any time before the pleadings are closed." 139. Subrule 3(2) provides: "A party may further amend any pleading of his before the pleadings are closed and without the leave of the Court if he obtains the consent of all other parties." 140. In this case, the pleadings have not closed and the applicants had not, prior to the amendment filed on 14 August 1998, amended the original Statement of Claim. 141. Order 13 r 5(1) provides: "Where a party amends his pleading under sub-rule 3(1), the Court, on application by an opposite party, may, subject to sub-rule (3), by order disallow the amendment." 142. Order 13 r 5(3) provides: "Notice of a motion under sub-rule (1)…shall be filed and served within 14 days after the date of service on the applicant under rule 10 of this Order." 143. Order 13 r 5(4) provides: "Where, on the hearing of an application under sub-rule (1), the Court is satisfied that, if an application for leave to make the amendment has been made under sub-rule 2(1) on the date on which the amendment was made under sub-rule 3(1)…the Court would not have given leave to make the whole or some part of the amendment, the Court shall disallow the amendment or that part, as the case may be." 144. It seems to me plain that the word "has" in O 13 r 5(4) is a typographical error, and the word should be read as "had". 145. I have a real difficulty in this case with regard to the interaction of the provisions of O 13 in relation to amendment and the provision of O 30 r 5, in relation to prejudice caused by want of prosecution. In the view I take of the matter generally, I think it right to consider whether one ought to permit the amendments to the Statement of Claim (particularly those amendments which give particulars of otherwise bald allegations of fact) but then consider whether the late pleading of the applicant's particularised case is such as to call for application of the Court's powers under O 30 r 5, rather than to consider the question of prejudice flowing from the late provision of particularised allegations of the making of untrue statements, of future representations for which there was no reasonable basis, or of instances of breaches of the duty to take reasonable care, as a basis for refusing amendment. 146. I do not accept that the particularisation of the facts which constitute the untrue statements, representations and non-disclosure by paras 14A.1, 14A.2, 14B.1 and 15A has the effect of introducing new foundations in law and new claims for relief. I am satisfied, however, that what the introduction of those particulars does do is expose all of the respondents to very significant prejudice. Despite this, the detail and scope of the particularised case the applicants wish to make, and the fact that each of the particulars of omission and commission occurred more than 10 years before the particularised pleading, do not provide a basis for the amendments to be refused. 147. The amendments constituted by the supply of particulars of bald facts should thus be permitted, but provide a compelling reason why the proceedings should be stayed pursuant to the Court's power to see that any trial is fair. 148. I would not, however, permit the introduction of references to "the valuation dated 27 February 1987". That valuation seems to me not to be material to any cause of action pleaded, yet it is said to contain predictions which were made without reasonable grounds. As I understand the pleading, there is no allegation that the valuation dated 27 February 1987 formed part of the prospectus. As a result, the reference in para 14B.1 of the Amended Statement of Claim to the valuation dated 27 February 1987 and all consequential references to it should, in my opinion, be deleted. 149. The question of whether the amendments under the heading "Damage" should be permitted raises different considerations from the decision whether to permit amendments which consist of the particularisation of pleaded bald facts. Notwithstanding the submissions that paras 24(c), 24(d) and 25A do not add new claims for relief, I think the essential allegation has been enlarged to include a retention and determination not to sell the shares or notes. The conduct now alleged is conduct inducing someone to acquire and hold on to an asset. The case for the applicants was summarised by Mr Morrison as "in reliance on what you said, we bought and that was the basis of a decision to retain them. We were not able to get the price for them because while we were still holding them (acting in continual reliance on what you said), they ceased to have any value." 150. Notwithstanding my view that the amendments do raise a new claim for relief, particularly as to the element of reliance, it seems to me that the amendments should be permitted as arising out of the "same facts or substantially the same facts." The discussion earlier of Smith New Court Securities illustrates the interconnection between the question of when loss and damage is suffered and the quantum of such loss and damage, in the context of a volatile share price and where the purchase of the shares has been induced by misrepresentations. 151. For these reasons, I would not disallow the amendments sought to be made in the amended Statement of Claim filed 12 August 1998.

WANT OF PROSECUTION 152. Order 30 r 5(1) relevantly provides: "If, before or after the date for trial of a proceeding is fixed, a party has not done any act required to be done by or under these Rules or has not prosecuted the proceeding with due diligence, the Court may: (a) if the party in default is the applicant - order that the proceedings be stayed, or dismissed, as to the whole or any part of the relief claimed by the applicant in the proceeding; or … (b) make any other order or give any directions that the Court thinks just, and specify such consequences for non-compliance with the order or the directions as the Court thinks just." 153. The respondents have moved on motion for an Order that the proceedings be stayed or dismissed, essentially for the reason that the applicants have not prosecuted the proceeding with due diligence. This is not, therefore, a case based on default in complying with the direction or order of the Court: cf Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 96 ALR 197. 154. Salmon LJ in Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229 at 268 indicated that in order for an application to have proceedings dismissed or stayed for want of prosecution to succeed the defendant must show: "(1) that there has been inordinate delay. It would be highly undesirable and indeed impossible to attempt to lay down a tariff - so many years or more on one side of the line and a lesser period on the other. What is or is not inordinate delay must depend upon the facts of each particular case. These vary infinitely from case to case, but inordinate delay should not be too difficult to recognise when it occurs. (2) that this inordinate delay is inexcusable. As a rule, until a credible excuse is made out, the natural inference would be that it is inexcusable. (3) That the defendants are likely to be seriously prejudiced by the delay. This may be prejudice at the trial of the issue between themselves and the plaintiff, or between each other, or between themselves and the third parties. In addition to any inference that may properly be drawn from the delay itself, prejudice can sometimes be directly proved. As a rule, the longer the delay, the greater the likelihood of serious prejudice at the trial." 155. On the material in this case I am satisfied that each of those criteria is met. 156. I am satisfied that the delay has engendered specific prejudice to all respondents. By way only of example, the evidence concerning Mr Leonard Beaumont is important. He was the crucial witness concerning the Beaumont Tenancies. The evidence suggests that in 1992 he was suffering Alzheimer's Disease and by 1994 the liquidator, it is said for health reasons, did not seek to publicly examine him. Had the case now sought to be run been articulated when the application was filed, I think it probable that he would have been able to give evidence, and it is likely that his evidence would have been relevant and important to each of the respondents in respect of part of the allegations made against them. It is no answer to the fact he will not now be able to give meaningful assistance to say that probably that would have been the position in 1993, but this difficulty is merely a concrete illustration of what is likely to be the position in relation to other areas of enquiry. 157. So too is the evidence concerning accounting material and leasing matters with the Beaumont Group. In my opinion the fact that original accounting records were lost or destroyed prior to the commencement of these proceedings in 1993 does not avoid a conclusion of actual prejudice. If the present accusations involving the Beaumont Tenancies had been made at the time of the filing of this application, persons including accountants and bankers are likely to have been able to provide material and relevant evidence concerning the validity of those accusations. 158. I have earlier set out in great detail the history of the various directions hearings and the explanations offered concerning the delay in the prosecution of these proceedings, and in particular the failure to serve the respondents. The decision not to serve the respondents is of particular relevance to this application. The explanations offered to the Court included that there were "parallel proceedings" in the Supreme Court, the less misleading statement that there were "somewhat parallel proceedings" in the Supreme Court, and the statement that "the respondents are aware of the proceedings." 159. The applicants submit that, notwithstanding what has been sworn to by some of the respondents, it is likely that any relevant Board Minutes will be available from the liquidator that some of the respondents were aware of the proceedings from as early as 1994. The valuers must have known of these proceedings and that many of the respondents were the subject of applications for public examination, although not all of those summoned to be publicly examined were so examined. The directors produced what documents they then had relevant to proceedings in 1987 and 1988. 160. It is further submitted on the applicant's behalf that, in an environment of case management, the implication as to want of due diligence in their prosecuting the matter cannot be made out. I reject the suggestion that there was in some way a mandate by the Court for the inactivity in the Federal Court proceedings. This is so, particularly in the light of the Court being informed by solicitors for the applicant as to the reasons for non-service and for the delay in prosecution of the Federal Court proceedings generally. 161. It is in my opinion crucial that the case which the respondents are called on to meet would not have been able to be discovered by them, except in the most general sense, until the filing and serving of the amended Statement of Claim. It is only then that they would have been fairly appraised in a sensible and meaningful way of what was alleged against them. 162. This is so of all respondents, although in my opinion the case of the directors in this regard is particularly strong, that of the leasing agents less strong, and that of the valuers least strong. Nonetheless, the fact is that it was not until about 14 August 1998 that the case that in fact is being levelled against them, in respect of conduct in 1987 and 1988, was given to them. 163. There are claims of quite specific prejudice by various of the respondents, but to me this is a strong case where the general prejudice that flows from a lack of prosecution of the case for approximately 10 years (in the sense of an absence of communication of what is the case the applicants wish to make) is such that the proceedings against all respondents should be stayed. 164. Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 was concerned with the principles on which an application to extend time might be made. In such a case, as the judgment of Toohey and Gummow JJ at 547 points out, a discretion to order an extension of a limitation period "is a discretion to grant, not a discretion to refuse, and on well established principles an applicant must satisfy the Court that grounds exist for exercising the discretion in his or her favour." 165. The position in my view is different where a Court is asked to exercise its discretion to stay or dismiss a proceedings on the basis that an applicant has not prosecuted it with due diligence. In my opinion, the onus is on the party moving on notice for such an order to persuade the Court that the discretion should be exercised in its favour. Applying that onus, I am satisfied on the evidence before me that I ought to exercise the discretion to stay the present proceedings. 166. My view is heavily influenced by the weighty and compelling observations of McHugh J in South Brisbane Regional Authority v Taylor at 551-554. I make no apology for setting out his Honour's observations at some length: "The enactment of time limitations has been driven by the general perception that '[w]here there is delay the whole quality of justice deteriorates' [R v Lawrence [1982] AC 510 at 517, per Lord Hailsham of St Marylebone LC]. Sometimes the deterioration in quality is palpable, as in the case where a crucial witness is dead or an important document has been destroyed. But sometimes, perhaps more often that we realise, the deterioration in quality is not recognisable even by the parties. Prejudice may exist without the parties or anybody else realising that it exists. As the United States Supreme Court pointed out in Barker v Wingo [(1972) 407 US 514 at 532], 'what has been forgotten can rarely be shown'. So, it must often happen that important, perhaps decisive, evidence has disappeared without anybody now "knowing" that it ever existed. Similarly, it must often happen that time will diminish the significance of a known fact or circumstance because its relationship to the cause of action is no longer as apparent as it was when the cause of action arose. A verdict may appear well based on the evidence given in the proceedings, but, if the tribunal of fact had all the evidence concerning the matter, an opposite result may have ensued. The longer the delay in commencing proceedings, the more likely it is that the case will be decided on less evidence than was available to the parties at the time that the cause of action arose. … The effect of delay on the quality of justice is no doubt one of the most important influences motivating a legislature to enact limitation periods for commencing actions. But it is not the only one. Courts and commentators have perceived four broad rationales for the enactment of limitation periods. First, as time goes by, relevant evidence is likely to be lost [Jones v Bellgrove Properties Ltd [1949] 2 KB 700 at 704]. Second, it is oppressive, even cruel, to a defendant to allow an action to be brought long after the circumstances which gave rise to it have passed [RB Policies at Lloyds v Butler [1950] 1 KB 76 at 81-82]. Third, people should be able to arrange their affairs and utilise their resources on the basis that claims can no longer be made against them [New South Wales Law Reform Commission, Limitation of Actions for Personal Injury Claims (1986) LRC 50, p 3; Law Reform Commission of Western Australia, Limitation and Notice of Actions, Discussion Paper (1992) Project No 36, Pt II, p 11]. Insurers, public institutions and businesses, particularly limited liability companies, have a significant interest in knowing that they have no liabilities beyond a definite period [In Limitation of Actions for Latent Personal Injuries (1992) Report No 69, p 10, the Law Reform Commissioner of Tasmania said: The need for certainty can be justified in many cases. For example, manufacturers need to be able to 'close their books' and calculate the potential liability of their business enterprise with some degree of certainty before embarking on future development. Under modern circumstances, an award of damages compensation may be so large as to jeopardise the financial viability of a business. The threat of open-ended liability from unforeseen claims may be an unreasonable burden on business. Limitation periods may allow for more accurate and certain assessment of potential liability."] … In enacting limitation periods, legislatures have regard to all these rationales. A limitation period should not be seen therefore as an arbitrary cut off point unrelated to the demands of justice or the general welfare of society. It represents the legislature's judgment that the welfare of society is best served by causes of action being litigated within the limitation period, notwithstanding that the enactment of that period may often result in a good cause of action being defeated." 167. I have earlier indicated that it is premature, prior to the embarking on a hearing of the matters, to make a judgment as to when a cause of action under the TP Act arose, but the plain fact is that a basis for liability in respect of all the causes of action can only exist in this case in respect of conduct done or omitted to be done prior to the issue of the prospectus in June 1987. Again, as McHugh J noted in the quote above: "The longer the delay in commencing proceedings, the more likely it is that the case will be decided on less evidence than was available to the parties at the time that the cause of action arose." 168. There is here the delay from the filing of the application in June 1994 to the service of the application and original Statement of Claim on the parties in late 1997 or the first months of 1998, which Statement of Claim alleges in the baldest fashion almost a generic case of the various causes of action against the respondents. There is the further delay until the service of the amended Statement of Claim sometime after 14 August 1998. 169. One of the reasons for the delay between the filing of the original Statement of Claim and the service of the Amended Statement of Claim, in my opinion, is the fact that for a large part of that time the applicants had not in truth made up their mind whether or not they wished to prosecute the Federal Court proceedings. The applicants accept that the original Statement of Claim pleaded matters in paras 9, 10, 14, 15, 19 and 20, admittedly without particularity. The applicants accept that those paragraphs contain "bare facts". The ignorance which the applicants permitted the respondents to be in concerning the claim of which the applicants wish now to make against them is reflected, in my opinion, by what I regard as a concession concerning the nature of the original pleading. The applicants, in their written submissions, acknowledge: "The recipient of the original pleading might not have known which particular statements were alleged to be untrue (pars 9(a), 14(a) and 19(a)) or which representations as to future matters were said to be baseless (pars 9(b), 14(b) and 19(b), or which material matters had been omitted from the various documents (pars 10, 15 and 20), but they would have known that the case was one centrally concerned with the following:- (a) The issue of a particular Prospectus; (b) By them in their various capacities (Directors, Valuers and Leasing Agents); (c) That there were untrue statements in the various documents; (d) That there were predictions without foundation; (e) That there were omissions of a material nature; (f) That the Applicants relied upon the Prospectus in order to outlay money in obtaining share and notes; (g) That the value had been lost." 170. For the above reasons, I make the following Orders: 1. Chase Corporation (Aust) Equities Pty Ltd be removed as a party to these proceedings from 4 March 1996. 2. Pursuant to O 30 r 5 of the Federal Court Rules, the proceedings by the applicant against each of the respondents be stayed. 3. Other than as indicated in Orders 1 and 2, the application to strike out the Statement of Claim be declined. 4. The other relief sought by the respondents' notices of motion be refused, except that the reference in para 14B.1 of the Amended Statement of Claim to "the valuation dated 27 February 1987", and the paragraph or paragraphs which later refer to that valuation, be deleted. 171. It is not appropriate at this stage to consider the trial of any matter as a preliminary issue or as a separate question. I will hear the parties on costs. I certify that the preceding one hundred and seventy one (171) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court. Associate: Dated: 8 March 2000

Counsel for the Applicants: Mr P H Morrisson QC (1/4/98 and 13/10/98) and with him Mr J D McKenna (1/4/98); Mr R Hanson QC and with him Mr P Roney (5/6/98) Solicitors for the Applicants: Allen, Allen & Hemsley Counsel for the First, Second, Third, Fourth, Fifth and Eight Respondents: Mr S L Doyle SC Solicitors for the First, Second, Third, Fifth and Eight Respondents : Corrs Chambers Westgarth Solicitors for the Fourth Respondent: Clayton Utz Counsel for the Sixth and Mr D B Fraser QC, and with him Mr A Duffy Seventh Respondents (1/4/98) Solicitors for the Sixth and Ebsworth & Ebsworth Seventh Respondents: Counsel for Ninth Respondent: Mr P E Hack (5/6/98); Mr M J Craswell of Cleary Hoare (13/10/98) Solicitors for Ninth Respondent Cleary Hoare Date of Hearing: 1 April, 5 June & 13 October 1998 Date of Judgment: 8 March 2000