Federal Court Rules on Joinder and Amended Pleadings

OUTCOME: Allowed in Part

16 /

CATCHWORDS Practice and procedure - application for proceedings to be dismissed - joinder of parties - application for

amended statement of claim and amended application to be struck out.

0.6 r.9, 0.11 r.16, 0.20 r.2 Rules of [COMPANY_1]. (in its capacity as Trustee of the [NAME_1] OF AUSTRALIA TRUST) v. [COMPANY_2] (in its own right and in its

capacity as Trustee of The Schutt Unit Trust) and OTHERS

V. No. G.109 of 1983

Northrop J. 8 February 1985

Melbourne

October 1984 the Court, as presently constituted,

ordered that [NAME_3] and [NAME_5] be

added as respondents to the application and that [NAME_1] have leave to amend its application and

statement of claim and that the directions hearing be

adjourned to 9 November 1984. The application and

Statement of claim as so amended are hereinafter called

"the amended application" and "the amended statement of

claim"

respectively.

By notice dated 5 November 1984, [NAME_3] gave

notice that at the directions hearing he would move the

Court for orders including the following three, namely:

That the proceedings against him be dismissed, or alternatively that he cease to be a party to the

proceedings; see 0.6 r.9 of the Rules of Court.

That the amended application, or alternatively Paragraphs 1, 3 and 6 thereof, insofar as it or they sought relief against him, be dismissed or struck out; see 0.11 r.16 and 0.20 r.2 of the

Rules of Court.

That the amended statement of claim, or alternatively paragraphs 17, 18, 19, 20, 40, 41, 42, 43, 44, 45 and 46 thereof, insofar as 1t or they related to him, be struck out; see 0.11 r.16

and 0.20 r.2 of the Rules of Court.

By its amended application [NAME_1] is seeking, inter alia, a deciaration that specified conduct by five natural persons, imcluding [NAME_3], constituted conduct by each of them, in trade or commerce, which was misleading or deceptive, or likely to mislead or deceive contrary to 5.52 of the Act, a declaration that each of those Matural persons,

including [NAME_3], 1s bound to account to [NAME_1] for specified sums of money, and an order that the respondents, including [NAME_3], pay to [NAME_1] the amount of loss and damage suffered by [NAME_1] by and in consequence of specified

conduct by the respondents, including [NAME_3].

Under 0.6 r.9 of the Rules of Court, the Court has power to order that a party who has been improperly joined toa proceeding cease to be a party to that proceeding. That rule has application irrespective of whether the party was joined when the application was first issued or whether the party was joined pursuant to

leave granted after the application had been issued.

Counsel for [NAME_3] contended, quite correctly, that 5.52 of the Act proscribes conduct by a corporation in trade or commerce and that [NAME_3] is not a corporation. He contended, therefore, that it was

apparent that the amended application disclosed no cause

of action against [NAME_3] which came within the

[NAME_6] paid or agreed to pay to each of them specified sums of money including the $800,000 to or at the direction of [NAME_3], and that each of those natural persons, including [NAME_3], in breach of his fiduciary duty, did not disclose those matters to [NAME_1] and in so doing engaged in conduct in contravention of s.52 of the Act. That alleged contravention is expressed in various ways. [NAME_1] claims

damages against [NAME_3] and the other natural persons

as well as all the respondents, being damages suffered ~

by [NAME_1] as the result of conduct in

contravention of 5.52 of the Act.

Counsel for [NAME_1] submitted that under the Rules of Court an application must be accompanied by either an affidavit or a statement of claim; see 0.4 r.6, and that under 0.11 the statement of claim should contain only a statement in a summary form of the material facts on which the applicant relies. Often, as a matter of convenience, a pleading contains matters of law and of contention, but those matters are not necessary to be set out in the pleading. He contende* that a reference to the whole of the amended statement of claim showed that [NAME_1] alleges that the three company respondents are corporations under the Act and in trade or commerce engaged in conduct 1n contravention of 5.52 of the Act and that [NAME_1] suffered loss or damage by

reason thereof. In very brief outline, [NAME_1]

4A seeking a declaration that the conduct referred to in paragraphs 50, 50C and S50E by each of the five natural persons, including [NAME_3], aided and abetted, -counselled and procured the contraventions by the three companies of s.52 of the Act and that each of them was directly or indirectly knowingly concerned in and party

to the said contraventions.

Paragraph 50 of the further amended statement of claim alleges that each of the five natural persons, including [NAME_3], knowing that specified conduct by the three companies was false, caused agreements to be entered into and carried into effect by [NAME_1] and thereby rendered themselves liable under s.75B of the Act. By paragraph 50A, [NAME_1] alleges specified conduct by the companies constituted a scheme whereby assets were to be sold and in fact were sold to [NAME_1] at a price higher than their true value and ata price which would allow the making of the payments by [NAME_6] to the five natural persons, including [NAME_3]. Paragraphs 50C and 50E are

expressly related to 5.75B of the Act.

Counsel for [NAME_3] did not dispute the legal principles to be applied in deciding anterlocutory matters of this kind; see the cases cited at the beginning of these reasons. He contended, however, that paragraph 50 of the further amended statement of claim

did not have particulars appended to it and that the

principles expressed by [NAME_7]. in [NAME_9] v. [COMPANY_11]. €19603 V.R. 473 at 475-6 should be applied with the result that paragraph 50 of the further

amended statement of claim should be struck out. He

referred to 0.12 r.2 of the Rules of Court and contended that the conduct alleged against [NAME_3] was in

substance fraud and that particulars should be given.

In my opinion, for the purposes of deciding this motion, sufficient particulars have been given by paragraph 50. In that paragraph specific mention is made to conduct alleged in earlier paragraphs of the statement of claim and that reference constitutes sufficient particulars for the purposes of deciding this

motion.

Counsel referred also to what was said in Sent

and Another v. [COMPANY_1]

and Others, above, that in order to be involved under 8.75B of the Act a person had to have more than mere knowledge, namely the person had to take positive action. The further amended statement of claim does allege sufficient matters in the nature of positive

action being taken by [NAME_3] to bring him within

5.75B.

In all the circumstances I am not satisfied that the claims against [NAME_3] are 50 hopeless as to

justify the making of the orders sought by him. This