DELOITTEs Matter N1005 of 2001
19 Deloittes provided a report to the directors of Management and Plantation on the taxation implications of "The Oil Fields Project 3" for Australian resident growers. This report was included in the prospectus lodged with ASC by Management and Plantation on 23 February 1998. It is alleged by the applicant that Deloittes engaged in misleading or deceptive conduct in contravention of s 52 of the TPA and s 995 of the Corporations Law.
20 The central allegations against Deloittes are contained in the statement of claim in N1005 of 2001 in pars 6.47, 6.48 and 6.49, which read as follows:
"6.47 In the circumstances referred to in paragraphs 6.1, 6.2, 6.5 & 6.37, Deloittes engaged in conduct in trade or commerce which by The Deloittes Omissions was misleading or deceptive or likely to mislead or deceive in contravention of section 52 of the TPA and section 995 or [sic] the Corporations Law.
6.48 Further, and in the alternative, in the circumstances referred to in paragraphs 6.1, 6.2, & 6.37 to 6.47, Deloittes impliedly represented that prospective applicants for Growers' Interests could rely upon the contents of the Prospectus as being accurate and/or based on reasonable grounds and/or not misleading or deceptive and that The Representations were accurate and/or based on reasonable grounds and/or were mot misleading or deceptive ("The Implied Deloitte's Representation")
6.49 In the circumstances referred to in paragraphs 6.48, by the Implied Deloitte's Representations, Deloittes engaged in conduct in trade or commerce which was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the TPA and section 995 of the Corporations Law."
21 Paragraph 6.1 of the statement of claim refers to a number of statements in the prospectus said to have been made by Management and Plantation. Sub-par 6.1(ak) asserts that the prospectus included a report by Deloittes providing an expert opinion on the taxation implications of the project applying to Australian resident growers. It then purports to summarise the Deloitte report.
22 Sub-paragraph 6.1(ax) alleges that Management and Plantation stated that Deloittes consented to the issue of the prospectus with their taxation opinion included.
23 Paragraphs 6.37 - 6.52 make allegations against Deloittes. These are objected to by Deloittes on the following general grounds:
1. They do not plead material facts or sufficient material facts.
2. They are meaningless, uncertain and embarrassing.
3. They are frivolous or vexatious.
4. There is a failure to plead facts giving rise to representations.
24 I now turn to specific paragraphs concerning Deloittes. Paragraph 6.37 alleges that Deloittes knew, or ought to have known, certain matters with respect to the Taxation Commissioner's criteria for the allowance of income tax deduction; namely, that finance arrangements involving a "round-robin" exchange of cheques would be found to be a sham transaction. No material facts are specified or identified to support this allegation of knowledge. Deloitte's objection in relation to this paragraph is made out.
25 Paragraph 6.38 does not spell out the circumstances in which it is alleged that the group members might assume certain matters. It refers to group members being "entitled" to assume certain matters. This allegation is unclear to such an extent that it is embarrassing and impossible to plead to, as no material facts are set out specifying the basis on which members became entitled to make such assumptions. There is no description of any specific conduct on the part of Deloittes on the basis of which it is said that the assumption could be drawn by members that could amount to deceitful or misleading conduct.
26 In par 6.39, it is said that there was a failure to make inquiries as to whether the "representations" in Deloitte's report were accurate. However, neither the basis for the imposition of such a duty nor its extent are specified.
27 Paragraph 6.40 is dependent on the preceding paragraphs and does not specify what are said to be reasonable lines of inquiry.
28 In relation to par 6.41, there is a reference to "The Representations" in the Deloittes' advice. These are not specified or defined. There is no basis alleged for linking the conduct of Deloittes and the assumptions said to have been made or which group members were entitled to make.
29 Paragraph 6.44 is deficient because the assertions it contains depend upon the earlier paragraphs and the reference to "assumption" is unspecified.
30 In par 6.47 there is a "rolled up" reference to the circumstances referred to in pars 6.1, 6.2, 6.5 and 6.37 without any specific details of particular circumstances or the conduct or representations relied on, and there is a bald reference to "contravention". The same criticism can be levelled at par 6.48. There is reference to an implied representation but no identification as to the material facts said to give rise to the implication or how it is to be implied. Insofar as the implied representation could be alleged to arise from silence by Deloittes, there are no circumstances spelt out which give rise to any obligation to break any alleged silence.
31 In par 6.49 there is an allegation dependent on the defective previous paragraph. There is no specification as to the way in which the conduct was misleading, deceptive or likely to mislead or deceive. Such a specification is a central requirement to an allegation of misleading or deceptive conduct.
32 In par 6.50 there is reference to Deloittes' advice but this is not identified in earlier paragraphs, or specified.
33 Paragraph 6.51 is dependent on the defective pleadings in earlier paragraphs.
34 It can be concluded, in my view, that the primary defect in the statement of claim as against Deloittes is that it does not specify the representations said to have been made. Nor does it specify the material conduct said to give rise to such representations that are said to be misleading or deceptive. There is no attempt to link up the conduct of Deloittes with the allegation that it is deceptive or misleading. Insofar as silence is relied on, the circumstances giving rise to an obligation on Deloittes to say something are not spelt out.
35 In order to plead to this statement of claim as against Deloittes, it would be necessary for the pleader to speculate as to what facts and matters are being alleged to give rise to the representations and as to the basis on which it is said that the representations and conduct are false.
36 I have concluded that the defects outlined above are so substantial that the statement of claim should be struck out as against Deloittes. In view of the fact that, in substance, this is the fourth attempt by the applicant to frame its case and, like its predecessors, it is largely unintelligible and does not disclose a cause of action against Deloittes, the point has been reached at which the proceeding should be dismissed. I am not satisfied, after every opportunity has been given to the applicant, that there is any cause of action which can reasonably be pleaded against Deloittes. Ample warning has been given to the applicant as to the consequences of its continued failure to provide a pleading which is in any sense satisfactory, yet no such pleading has been forthcoming. It is not for the Court or the respondents to speculate as to which causes of action in a range of hypothetical possibilities might give rise to a legitimate claim on the basis of which the applicant might proceed against Deloittes. I therefore strike out the pleadings and dismiss the proceeding as against Deloittes.