Truth about Motorways Pty Limited v Macquarie Infrastructure Investment Management Limited

REASONS FOR JUDGMENT 1 On 6 March 1998 the respondent filed a Notice of Motion seeking security for its costs of these proceedings. Consideration of that motion was intercepted by an application made on 30 July 1998 for the removal of the proceedings into the High Court where they remained until the High Court delivered judgment on 9 March 2000. 2 When the matter was returned to this Court, the respondent in the proceedings, ("Macquarie") revived its motion for security. On 29 March 2000 the applicant in the proceedings ("TAM") accepted that the security for costs application should be determined by me on the basis that TAM had an arguable case for obtaining the relief which it sought. On the hearing of the motion TAM did not adduce evidence which it had previously foreshadowed to the effect that its case was a strong case. 3 On 16 August 2000 I ordered that TAM should provide security for Macquarie's costs in the sum of $223,193 by 4 November 2000. The period which I allowed for provision of the security was that nominated by TAM as appropriate for that purpose. 4 Security was not provided in accordance with the order of 16 August 2000, and on 16 November 2000 Macquarie filed a Notice of Motion seeking an order for the dismissal of the proceedings. TAM issued a Notice to Produce in relation to legal advice which it asserted was germane to the motion for dismissal of the proceedings. On 5 March 2001 I ordered that the Notice to Produce be set aside. 5 On 12 March 2001 TAM filed an application for leave to appeal against the order for the provision of security for costs, and in relation to the order setting aside the Notice to Produce. Those applications were refused by a Full Court on 29 August 2001, with reasons for that refusal given on 18 September 2001. 6 The Full Court refused to grant an extension of time within which to seek leave to appeal from the judgments and orders concerning security for costs, but expressed the view that even if time should be extended, leave to appeal should not be granted in any event. That was because the judgment was interlocutory, involving matters of practice and procedure, and no error of principle had been exposed. 7 On 9 October 2001 TAM filed a Notice of Motion in which it sought leave to file an Amended Application, and sought that the orders for security for costs which I had made on 10 July 2000 and 16 August 2000 should be set aside or otherwise varied pursuant to s 56(3) of the Federal Court of Australia Act 1976 (Cth) ("the Act"), or by virtue of Federal Court Rules Order 28 rule 5(2). 8 Thus there is before the Court for determination: - Macquarie's motion for dismissal of the proceedings; - TAM's motion to set aside or vary the orders for security for costs made in July and August 2000. 9 Mr Francey, counsel for TAM, sought to have the order for security for costs discharged upon the basis of fresh material which was not adduced, and was not available to be adduced at the time of the hearing of the original security for costs application. That material was said by him to demonstrate that TAM's case is a strong one, or alternatively that Macquarie's defence to that case is a weak one. The material consists of figures showing the actual traffic flows on the Eastern Distributor according to Macquarie's releases to the Stock Exchange. The actual traffic flows are said to be "significantly less" than those projected. Reliance was also placed on a concession which Macquarie made on 19 February 2001 that it would not rely on delay between the filing of its application for removal of the proceedings into the High Court and the delivery of judgment by that Court. The third relevant factor was said to lie in the fact that TAM has sought to amend its application by transposing the relief sought such that its primary claim is now the claim for a declaration, and at the same time the scope of the injunctive relief sought has been expanded. 10 Section 56(3) of the Act provides: "(3) The Court or a Judge may reduce or increase the amount of security ordered to be given and may vary the time at which, or manner or form in which, the security is to be given." Order 28 of the Federal Court Rules deals with security for costs. Order 28 rule 5(2) provides that subject to sub-rule (3), the Court may set aside or vary any order made under this order. Sub-rule (3) provides that where a proceeding stands dismissed pursuant to an order made under Order 28, that order shall not be set aside or varied except in special circumstances. 11 It is clear from the terms of Order 28 rule 5(2) that the Court has power to set aside or vary the original security for costs order. The Court retains jurisdiction, because of the very nature of an interlocutory order, to set aside, vary or discharge it up to the time of the final disposition of the proceedings. However, as McLelland J recognised in Brimaud v Honeysett Instant Print Pty Ltd (1988) 6 ACLC 942, it would be conducive to great injustice and enormous waste of judicial time and resources if there were no limit on the power of a party to have any interlocutory application or order relitigated at will. Hence the ordinary practice is that an application to set aside, vary or discharge an order of a substantive nature made after a contested hearing in contemplation that it would operate until a final disposition of the proceedings, must be founded on a material change of circumstances since the original application was heard, or the discovery of new material which could not reasonably have been put before the Court on the hearing of the original application. That principle was applied by a Full Court of this Court in Darling Harbourside (Sydney) Pty Ltd v Sanirise Pty Ltd (unreported, Beaumont, Carr, Sackville JJ, 17 May 1996) to an order for the provision of security for costs. The Full Court set aside an order varying an order for the provision of security upon the basis that there had been no material change in circumstances established so as to warrant a variation of the original order. 12 That principle is applicable here. TAM elected to conduct the security for costs application upon the basis of a concession made by Macquarie that, for the purposes of that application TAM had an arguable case for obtaining the relief which it sought. Having failed in its resistance to the provision of security on that agreed assumption, TAM should not be permitted to relitigate the issue of security on a basis different from that on which the parties chose to conduct the original application. 13 However, as McLelland J pointed out in Brimaud v Honeysett, the overriding principle concerning the approach of the Court to interlocutory applications is that the Court should do whatever the interests of justice require in the particular circumstances of the case. Given that Macquarie seeks dismissal of the proceedings for non-provision of security, I have reconsidered whether the orders which I made in July and August 2000 are appropriate in the light of the additional materials relied upon by Mr Francey. 14 Neither the concession made on 19 February nor the proposed alteration to the application provide any reason for departing from the course which I then took which was based upon the agreed assumption that TAM had an arguable case for the relief which it sought. The concession and the proposed amendment do not materially advance that position. 15 As matters stand on the face of the pleadings, the case is confined to the first prospectus, although it is and it has been common ground between the parties that if the claim is to go forward, it is to be amended so as to embrace the traffic forecasts in the second prospectus as well as those in the first. It is common ground between the parties that the motions should be dealt with upon the basis of that assumption. It is TAM's contention that the statements in the two prospectuses as to traffic forecasts are misleading and deceptive. There may be room for dispute as to the precise representations which are said to be conveyed by those statements, but it seems reasonably clear that the representations are with respect to future matters, thus enlivening the operation of s 51A of the Trade Practices Act 1974 (Cth). 16 The mere fact that representations as to future events do not come to pass does not make the representations misleading or deceptive. In general terms, where predictions are said to be misleading and deceptive the issues will be: - whether the respondent held the expectation in question; - whether the prediction was soundly based; - whether a prediction even if soundly based would be misleading and deceptive unless suitably qualified, and if so, whether adequate warnings or qualifications were given. 17 By its defence, Macquarie asserts that it had the expectations referred to in the prospectuses, that the predictions were soundly based in reasonable reliance upon expert reports, and that adequate warnings and/or qualifications to potential investors of the risks associated with traffic modelling and traffic forecasts were contained in the prospectuses. 18 Thus, having regard to those issues, even if it be assumed that the gap between predicted performance and actual results is material, and even if it be the case that up to this point in time the trend has been for the gap to widen, that does not lead to the conclusion that the applicant's case is a "strong" case, in the sense of being something above and beyond a reasonably arguable claim to the relief sought. Certainly the actual figures do not sustain the view expressed by Mr Gatenby in evidence that the case is one which is "virtually unlosable". In coming to that conclusion I have left out of account Macquarie's contention that the actual figures cannot meaningfully be compared with the projected figures, because of toll increases imposed after the opening of the motorway by reason of the introduction of GST. I am not able to assess the strength or otherwise of that contention on the hearing of this application. 19 Had the material on which Mr Francey now relies been before me at the time of the original application, I would nonetheless have made orders in the terms which I did. I therefore dismiss the motion seeking a discharge or variation of those orders.