FEDERAL COURT OF AUSTRALIA Fuller v Toms [2012] FCAFC 155 Citation: Fuller v Toms [2012] FCAFC 155 Appeal from: Fuller v Toms [2012] FCA 27; Fuller v Toms (No 2) [2012] FCA 103 Parties: DONALD FULLER v STEPHEN NORMAN TOMS, CHARLES ERNEST BRIGHT, BRETT HEADING, PHILLIP TOYNE, AUSTRALIAN AGRICULTURAL COMPANY LIMITED, DONALD J MACKAY, STEPHEN LONIE, PETER HUGHES, NICK BURTON-TAYLOR, CHRIS ROBERTS, ARUNAS PALIULIS, ABDUL SAMAD BIN HAJI ALIAS (DATUK ABDUL SAMAD), DATO' SABRI AHMAD, DONALD GORDON MCGAUCHIE, DAVID FARLEY, J WHITEMAN , KERRY PARKER, J SLOMAN, PHILIP BEALE, DAVID R CONNOLLY, TROY SETTER, ELDERS LIMITED, STEPHEN GERLACH, LES P WOZNICZKA and MALCOLM JACKMAN File number: WAD 322 of 2011 Judges: SIOPIS, GILMOUR & MCKERRACHER JJ Date of judgment: 5 November 2012 Catchwords: PRACTICE AND PROCEDURE – appeal - whether the decision below was interlocutory or final - whether the orders made below finally disposed of the rights of the applicant - whether the applicant required leave to appeal - limitations placed on an appellant court's capacity to review judgments on matters of practice and procedure PRACTICE AND PROCEDURE – pleadings - the function of the pleadings - particularity required when alleging fraud Legislation: Corporations Act 2001 (Cth) ss 674(2), 1317J(3A) Trade Practices Act 1974 (Cth) Federal Court of Australia Act 1976 (Cth) s 31A Competition and Consumer Act 2010 (Cth) Cases cited: Banque Commerciale SA En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 cited Bienstein v Bienstein (2003) 195 ALR 225 cited Dai v Telstra Corporation Ltd (2000) 171 ALR 348 cited Davy v Garrett [1877] 7 Ch D 473 cited Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 cited Fuller v Toms (No 2) [2012] FCA 103 affirmed Fuller v Toms [2012] FCA 27 affirmed General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 cited Hall v Nominal Defendant (1966) 117 CLR 423 cited House v The King (1936) 55 CLR 499 cited Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 599 cited Jewiss v Deputy Commissioner of Taxation (2006) 65 ATR 222 cited Licul v Corney (1976) 180 CLR 213 cited Marketing Advisory Services v Football Tasmania Ltd (2002) 42 ACSR 128 cited Oldfield Knott Architects Pty Ltd v Ortiz Investments Pty Ltd [2000] WASCA 255 cited Oswal v Burrup Fertilisers Pty Ltd (Rec & Man Appointed) (2011) 85 ACSR 531 cited Rajski v Bainton (1990) 22 NSWLR 125 at 135 cited Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 cited Weatherall v Satellite Receiving Systems (Australia) Pty Ltd (1999) 92 FCR 101 cited White Industries Aust Ltd v Federal Commissioner of Taxation (2007) 160 FCR 298 cited Date of hearing: 20 August 2012 Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 69 Counsel for the Appellant: Mr Fuller appeared in person Counsel for the 5th & 22nd Respondents: Mr K Barlow SC with Mr S Ogden Solicitor for the 5th & 22nd Respondents: King & Wood Mallesons IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 322 of 2011 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: DONALD FULLER Applicant AND: STEPHEN NORMAN TOMS First Respondent CHARLES ERNEST BRIGHT Second Respondent BRETT HEADING Third Respondent PHILLIP TOYNE Fourth Respondent AUSTRALIAN AGRICULTURAL COMPANY LIMITED Fifth Respondent DONALD J MACKAY Sixth Respondent STEPHEN LONIE Seventh Respondent PETER HUGHES Eighth Respondent NICK BURTON-TAYLOR Ninth Respondent CHRIS ROBERTS Tenth Respondent ARUNAS PALIULIS Eleventh Respondent ABDUL SAMAD BIN HAJI ALIAS (DATUK ABDUL SAMAD) Twelfth Respondent DATO' SABRI AHMAD Thirteenth Respondent DONALD GORDON MCGAUCHIE Fourteenth Respondent DAVID FARLEY Fifteenth Respondent J WHITEMAN Sixteenth Respondent KERRY PARKER Seventeenth Respondent J SLOMAN Eighteenth Respondent PHILIP BEALE Nineteenth Respondent DAVID R CONNOLLY Twentieth Respondent TROY SETTER Twenty-First Respondent ELDERS LIMITED Twenty-Second Respondent STEPHEN GERLACH Twenty-Third Respondent LES P WOZNICZKA Twenty-Fourth Respondent MALCOLM JACKMAN Twenty-Fifth Respondent JUDGES: SIOPIS, GILMOUR & MCKERRACHER JJ DATE OF ORDER: 5 November 2012 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. Leave to appeal be refused. 2. The applicant pay the costs of the corporate respondents, to be taxed if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 322 of 2011 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: DONALD FULLER Applicant AND: STEPHEN NORMAN TOMS First Respondent CHARLES ERNEST BRIGHT Second Respondent BRETT HEADING Third Respondent PHILLIP TOYNE Fourth Respondent AUSTRALIAN AGRICULTURAL COMPANY LIMITED Fifth Respondent DONALD J MACKAY Sixth Respondent STEPHEN LONIE Seventh Respondent PETER HUGHES Eighth Respondent NICK BURTON-TAYLOR Ninth Respondent CHRIS ROBERTS Tenth Respondent ARUNAS PALIULIS Eleventh Respondent ABDUL SAMAD BIN HAJI ALIAS (DATUK ABDUL SAMAD) Twelfth Respondent DATO' SABRI AHMAD Thirteenth Respondent DONALD GORDON MCGAUCHIE Fourteenth Respondent DAVID FARLEY Fifteenth Respondent J WHITEMAN Sixteenth Respondent KERRY PARKER Seventeenth Respondent J SLOMAN Eighteenth Respondent PHILIP BEALE Nineteenth Respondent DAVID R CONNOLLY Twentieth Respondent TROY SETTER Twenty-First Respondent ELDERS LIMITED Twenty-Second Respondent STEPHEN GERLACH Twenty-Third Respondent LES P WOZNICZKA Twenty-Fourth Respondent MALCOLM JACKMAN Twenty-Fifth Respondent JUDGES: SIOPIS, GILMOUR & MCKERRACHER JJ DATE: 5 November 2012 PLACE: PERTH REASONS FOR JUDGMENT 1 The "appellant" requires leave to appeal from two related judgments of a judge of the Court delivered on 1 February 2012 (the first judgment) and 16 February 2012 (the second judgment): Fuller v Toms [2012] FCA 27; Fuller v Toms (No 2) [2012] FCA 103. Accordingly, we have referred to him as the applicant in these reasons. When we refer to particular paragraphs in the reasons of the primary judge these are from the first judgment unless otherwise stated. Only the corporate respondents, Australian Agricultural Company Limited (AACo) and Elders Limited, entered an appearance in the appeal. Summary of issues 2 There are two preliminary issues in this appeal: (a) whether the decision below was an interlocutory or final order; and (b) if the decision below was interlocutory, whether leave to appeal ought be granted. The applicant's main claim 3 The applicant's proposed pleading, in whatever iteration, centred on a claim that he had suffered damages in the order of $144 million as the result of a lost opportunity to acquire, during 2008-2009, a shareholding of 10% or thereabouts in AACo. The applicant pleaded that on behalf of a group of prospective buyers, he led negotiations for the acquisition of a 43% controlling interest in AACo held by Futuris Corporation Ltd. 4 Futuris changed its name to Elders Limited which is one of the corporate respondents. 5 The applicant alleged that the accounts of AACo were false and misleading in that the natural increase of cattle livestock had been variously overstated to the extent of 300,000 cattle which was half of the represented total. This, it is alleged, sounded in an over-valuation of the companies shares by many millions of dollars. The causes of action embraced, ultimately, the provisions of the Trade Practices Act 1974 (Cth) (the TPA), common law deceit and breach of the continuing disclosure obligations of the Corporation Act 2001 (Cth) (the Corporations Act). 6 However, the claim for loss of opportunity damages in the pleading suffered throughout from a fatal flaw. As developed in the proposed pleading the loss is calculated by reference to the price at which he would have acquired his shareholding in AACo assuming the representations as to cattle numbers were true. 7 Significantly, the applicant pleaded, relevantly, that he would "never have gone near either company if [he] had known the true status of AACo at that time". The "true status" was a reference to the cattle numbers and their impact on the accounts of AACo. In other words, he would not have sought to complete the takeover on his own behalf and that of his group of investors if the misrepresentation had not been made and he had known the true position. 8 The applicant restated his case for damages at ground 5(f) of the Notice of Appeal in these terms: My V.2 position: if the purported stock numbers actually existed, as my group had been falsely led to believe for 8-9 months, then in all probability we would have completed a buy-in-or-buy-out deal. Given the implied dreadful situation at AACo without half the cattle, we wouldn't have touched it "with a 40ft barge pole", so to speak. We were falsely induced to negotiate for 8-9 months before we discovered the alleged overstatements in the cattle inventories and related cattle values. (Original emphasis) 9 The pleading that the applicant would not have concluded the share acquisition if he had known the true position concerning the cattle numbers and their impact on the accounts of AACo was an insuperable obstacle to the lost opportunity case propounded by the applicant. This is so whether the claim for damages is based in the trade practices legislation or common law deceit. It was unsustainable on the pleaded facts. No other lost opportunity was pleaded nor has the applicant advanced any other claim of loss and damage. He expressly distanced his case from one for reliance loss for the wasted time and expense brought about as a result of the alleged 8-9 months of fruitless negotiations. Whilst that might have been a pleading capable of being maintained it was not one pursued by the applicant. The judgments below 10 The first judgment refused the applicant leave to amend the initiating application and to file a substituted statement of claim. Principally this was because, correctly, the primary judge identified what we have described as the fatal flaw. His Honour said at [27]-[29]: [27] In their initial submissions in support of their strike out application, the corporate respondents submitted that the losses then alleged and claimed in respect of the cause of action in [178]-[184] of $20 million appeared to be based on the position in which the applicant asserts he would have been in if the allegedly incorrect accounts of AACo had been correct, and the proposed takeover in which the applicant was allegedly involved had proceeded. These respondents submitted in respect of that formulated claim that it misunderstood the correct method of calculating loss. These respondents submitted that if the applicant would not have attempted to negotiate a takeover of AACo had he known its true financial position, then his only loss can be any expenses which he incurred (and perhaps arguably some compensation for his time) in undertaking the alleged negotiations. On no measure could that amount to $20 million and yet he does not allege other types of loss or damage. [28] In my view, the submission in these terms made by these respondents is accurate. The current proposed pleading as set out above is, in fundamental terms, the same in the substituted statement of claim as it was in the initial statement of claim, with some refinements. The refinement is that the applicant would now plead 90% probability of successful completion, but the question remains: 90% probability of successful completion of what? If, on all the matters pleaded, it was plain that the respondents did not accept the applicant's allegations of misstatement of cattle numbers, then the precondition for this pleading, that there would have been continued negotiations on the cattle position as claimed to be true by the applicant, can never be sustained. [29] It seems to me to be a complete misconception, on the facts alleged by the applicant, for the applicant to contend that, if he can prove the alleged fraudulent misrepresentation/lack of proper disclosure on behalf of the respondents, then in all probability (leaving aside whatever the percentage of that probability might have been), he and his group would have completed the purchase of the shareholding of AACo. On his own pleading, he was never involved in negotiations on such terms. That is to say, the negotiations never proceeded on the understanding that his assertions about the number of cattle involved were correct. 11 The primary judge at that time relisted the proceeding to 10 February 2012 to enable the Court to hear submissions from the parties as to orders that should be made in consequence of the order refusing leave to amend. In particular, the primary judge at [88] left open the possibility of a pleading in a proper form, for example, as a stand-alone action against the corporate respondents based on breach of the continuing disclosure obligation imposed on a publicly listed company under s 674(2) of the Corporations Act, if not other causes of action. 12 At the hearing on the 10 February 2012, the fifth and the twenty-second respondents, AACo and Elders Limited, successfully opposed the granting of leave to replead and by the second judgment orders were made that the proceeding should be dismissed with costs. 13 The primary judge resolved the issues at [3]-[10] of the second judgment: [3] The applicant opposed any dismissal of the proceedings and addressed written submissions he had filed for the purposes of the hearing on 10 February 2012. In substance, the written submissions of the applicant challenged or questioned the findings made that led to refusal of leave to amend the initiating application and to file a substituted statement of claim in the form proposed. The applicant proposed that the Court "modify" its position and address the "inadequate work" represented by the reasons. [4] In the course of the applicant orally addressing his written submissions, the Court emphasised to the applicant that the hearing was an opportunity, not to "appeal" the decision made, but to indicate to the Court whether he required the opportunity to re-plead any particular causes of action and, if so, which. [5] However, the ensuing submissions made orally by the applicant made it quite plain that the applicant simply considered the decision refusing leave to file the proposed substituted statement of claim to be wrong and that he wished to maintain the proposed claim for damages or compensation in the sum of $144 million against the respondents on the basis earlier proposed and rejected by the Court. [6] The applicant, in his oral submissions, confirmed in substance what he had asserted in his written submissions (for example at [22]) that the decision of the Court refusing leave was "misconceived", "outdated" and "procedurally unfair", and that the Court should "voluntarily recall it, with no hard feelings all round!". [7] Having regard to the terms of the written and oral submissions made on behalf of the applicant it became quite plain to the Court that the applicant did not accept the primary ruling that, in the view of the Court, the "lost opportunity" claim for $144 million was simply misconceived and not open. [8] The applicant at one point in his oral submissions suggested to the Court that if the Court was not prepared to act on his written and oral submissions then he would have no alternative but to appeal the decision and orders made on 1 February 2012. Despite the Court endeavouring to encourage the applicant to focus on the future – what causes of action, if any he might wish to re-plead – the applicant continued to focus on the past – his dissatisfaction with the decision of the Court of 1 February 2012. [9] In those circumstances, the applicant, not putting forward any other form of proposed pleading in respect of any other arguable cause of action, and insisting that he should be allowed to maintain the "lost opportunity" action against which the Court ruled, there is no alternative open to the Court but to refuse leave to re-plead and to dismiss the whole of the proceeding instituted by the applicant. [10] The Court considers there is no point in granting the applicant leave generally to re-plead a fresh proposed statement of claim. The applicant has shown an unwillingness or inability to do so. The deficiencies in the proposed statement of claim dealt with in the Court's reasons are so extensive that leave to re-plead generally should not be granted. The applicant has already had two opportunities on which to endeavour to bring his pleading into conformity with the Federal Court Rules 2011 (Cth) and to disclose a case that should be permitted to go to trial. This is not a case, in my view, of the Court preventing an applicant from running an arguable case, but a case where the primary claim (the so called "lost opportunity" case) is simply untenable. There must be some finality to proceedings in these circumstances. Respondents in the position of the respondents here cannot be obliged to continue to defend a case which is so inadequately articulated. Leave to appeal 14 The decisions below were made on an interlocutory application for leave to file an amended pleading. The application failed and the proceeding was dismissed. Those orders did not finally dispose of the rights of the parties: Licul v Corney (1976) 180 CLR 213 at 225 per Gibbs J (dissenting); Hall v Nominal Defendant (1966) 117 CLR 423 at 442-443; in Bienstein v Bienstein (2003) 195 ALR 225 at [25], as it would be open to the applicant to commence and prosecute another proceeding if he is able to craft a pleading which satisfies the rules and discloses a cause(s) of action. An order summarily dismissing proceedings on the ground that no reasonable cause of action has been disclosed is interlocutory: Marketing Advisory Services (MAS) v Football Tasmania Ltd (2002) 42 ACSR 128 at [29] citing Weatherall v Satellite Receiving Systems (Australia) Pty Ltd (1999) 92 FCR 101; Dai v Telstra Corporation Ltd (2000) 171 ALR 348 at 352. The orders were therefore interlocutory, not final. 15 Accordingly, the applicant requires leave to appeal the decisions. We informed him at the outset of the hearing that we would deal with the question of leave in the course of our judgment even although he had not applied for leave. We are well satisfied that there is insufficient doubt about the correctness of the primary judge's decisions to warrant them being reconsidered by the Full Court, and that the refusal of leave would not result in any substantial injustice: Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-399. 16 We have given the following consideration to the merits of the appeal going to the question of leave, mindful always of the difficult task ordinarily confronting any application for leave from a discretionary interlocutory decision: House v The King (1936) 55 CLR 499 at 504-505. There are well established limitations on an appellate court's capacity to review judgments on matters of practice and procedure: Oswal v Burrup Fertilisers Pty Ltd (recs & mgrs apptd) (2011) 85 ACSR 531 at 534-535 [8]-[14]. Pleadings 17 The general principles of pleadings in the modern context are well-established. The function of a pleading is to state, with sufficient clarity, the case that a party must meet thereby rendering procedural fairness, as well as defining the issues for decision. Both aspects are important: Banque Commerciale SA En Liquidation v Akhil Holdings Limited (1990) 169 CLR 279 at 286. 18 Each proposed pleading clearly failed to meet these requirements. Each of them failed to disclose any cause of action, pleaded a deal of irrelevant facts and commentary, and if permitted to stand was likely to severely delay any fair trial of, and to prejudice the respondents in attempting to defend, the proceeding. 19 We are satisfied that the primary judge exercised his discretion in this respect without appealable error in refusing the applicant leave to replead. 20 The applicant also challenged the dismissal of the proceeding. The fact is that, by 10 February 2012, the applicant had provided four versions of a statement of claim to the Court, none of which constituted a proper pleading. This was in addition to earlier related defamation proceedings brought in the Supreme Court of Queensland by the first four respondents in this proceeding against the applicant. There the applicant filed, or applied to file, pleadings making similar allegations as in this case. These were variously struck out, or leave to file was refused. The primary judge extended opportunities to the applicant to produce a pleading that identified, in a comprehensible fashion, material facts giving rise to an arguable cause or causes of action. The applicant failed at every turn. 21 Against that long background not only in this Court but also in the Supreme Court of Queensland, there was no reasonable prospect that the applicant could produce a satisfactory pleading. The primary judge's discretion to dismiss the proceeding in its entirety was enlivened and no error has been demonstrated as to its exercise. The appeal 22 The Notice of Appeal sets out extensive challenges to the judgments. The principal issue raised by the applicant is said to be that the primary judge denied him a proper basis for pleading his $144 million damages claim. This, it seems, depends largely on the applicant's contention that the primary judge failed to consider every iteration of the proposed statement of claim. The grounds of appeal 23 We have not set out at length the content of the applicant's grounds of appeal. Much of these are argumentative and more in the way of submissions. We have articulated these in a way which elucidates, as best we can, the often obscure and discursive language employed by the applicant. We do not intend, in saying this, to be unduly critical of the applicant. He is a lay-man attempting, as best he can, to articulate serious complaints concerning a set of commercial dealings which demand a thorough understanding of complex areas of the law as well as an ability to plead these in a way that conforms to the rules of pleading relevant causes of action. Such complexities, at times, are a challenge even for those trained in these matters of law and procedure. 24 Nonetheless, these requirements are there to ensure fairness to putative respondents, as well as ensuring that the resources of courts are not wasted. Whilst we have some sympathy for the applicant's predicament in his efforts to articulate a defensible pleading, this is not the touchstone upon which such matters are to be resolved. The applicant's complaints inevitably required professional consideration in order to ascertain whether any cause(s) of action exist and then to set these out properly in a pleading. However, it was not such a pleading which confronted the primary judge and now confronts this Court. Ground 1 25 This contends that the primary judge failed to accord the applicant procedural fairness, in that his Honour did not refer to or consider the applicant's latest proposed statement of claim. His Honour had regard to two versions of the proposed pleading. Version 1 is reproduced in exhibit DF17 of the affidavit of the applicant sworn on 7 May 2012. Version 2 is reproduced in exhibit DF20 of the same affidavit. 26 Version 1 was the subject of the hearing before the primary judge for leave to file an amended statement of claim. After the hearing of the application, the applicant, with leave of the Court, provided further submissions. These contained Version 2 of his proposed pleading. Version 2 was a revision of Version 1 and responded to some criticisms of Version 1 principally by substituting reliance on the TPA and related State legislation as distinct from the Competition and Consumer Act 2010 (Cth) which had been pleaded in Version 1. The fact that the primary judge referred principally to paragraphs in Version 1 does not demonstrate error. There was a significant degree of overlap between the two versions and his Honour took into account the relevant differences between them. 27 The primary judge took into account Version 2 and the submissions made about it by the applicant as is apparent from his reasons at [36]-[37], [39]. Contrary to the applicant's submissions, Version 2 did not overcome the substantive problems with the pleading in Version 1. This, in particular, was the case in respect to the material facts pleaded in support of the applicant's claim for damages for a lost opportunity. 28 The day before the primary judge delivered the first judgment, the applicant attempted to lodge and rely on a Version 3 of the pleading, with a proposed amended application by which he purported to add four new respondents to the proceeding. His Honour did not consider Version 3. He made no error in not doing so. No leave had been given to file it. The application for leave to file and serve the proposed statement of claim had been heard. Even if it were otherwise, Version 3 did not correct the existing problems, but simply added a number of allegations based on the most recent annual report published by AACo. The applicant's alleged causes of action concerned matters that occurred in 2008 and 2009. Accordingly, the new allegations were irrelevant and could not have altered his Honour's decision. Grounds 2-4 Failing to consider relevant authorities and to apply the correct legal principles 29 The judgments below were not contrary to the principles cited by the applicant, such as General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 128-129 concerning early dismissal of a proceeding. Those principles have been relaxed, to some extent, by s 31A of the Federal Court of Australia Act 1976 (Cth): Jewiss v Deputy Commissioner of Taxation (2006) 65 ATR 222 at [26], which is concerned with bringing proceedings with substance: White Industries Aust Ltd v Federal Commissioner of Taxation (2007) 160 FCR 298 at [50]. Whichever test is applied, both Versions 1 and 2 of the proposed statement of claim in this case failed to meet the requirements for an acceptable pleading. The applicant's various submissions concerning the trial judge's findings of fact and issues of credit are, of course, misplaced and demonstrate the applicant's lack of appreciation as to the task which confronted the primary judge. 30 We reject the submission that the primary judge failed to take into account the principles on which a claim for loss of a valuable commercial opportunity may be made and pleaded. His Honour correctly considered that the manner in which the applicant pleaded his claim in this respect was not capable of demonstrating any loss because his proposed case at [74] of his pleading alleged that he "would never have gone near either company if [he] had known the true status of AACo at that time". The primary judge dealt with this directly in his reasons at [25] and at [27]-[32]. It follows on that pleading, assuming those facts to be established, that he would never have secured the opportunity to have earned shares, the value of which he contends he has lost. The pleaded lost opportunity case, as we have already stated, cannot be sustained by this pleading. The primary judge was correct in reaching this conclusion. 31 As to the part of these grounds which assert that the primary judge applied incorrect principles of law in his consideration of the proposed pleading which alleges damage arising from defamation proceedings against the applicant in the Supreme Court of Queensland, it is necessary to understand how the pleading was constructed. 32 In his proposed amended application he sought damages of different kinds against the first four respondents under the Defamation Act 2005 (WA) and the Defamation Act 2005 (Qld) for the defamation action brought allegedly without proper or probable cause against the applicant and which was subsequently discontinued. The defamation alleged centred upon statements concerning the first four respondents in relation to the misleading AACo accounts contained in certain letters written by the applicant. 33 The primary judge at 5-6 described it in this way: In [75] and earlier in [35] the applicant refers to a defamation action brought by the first four respondents against him in the Supreme Court of Queensland and pleads in effect that the defamation proceeding was designed to prevent him from negotiating for the purchase of the Futuris shareholding and, in [76], caused the loss of the opportunity to successfully negotiate for the purchase of that shareholding. and later at [15]: Mr Fuller says that when he made statements about this discrepancy he found himself as the defendant in defamation proceedings in the Supreme Court of Queensland at the instance of the first, second, third and fourth respondents, which proceedings were ultimately withdrawn by them. He now further alleges, in effect, that the defamation proceedings taken against him were strategic in nature and designed to force him out of the negotiations for the acquisition of the controlling interest in AACo. 34 The applicant complains that this is to mischaracterise his pleading concerning the defamation proceeding. He submits that his repeated allegation was that the defamation action was "at least in part for the purpose of maintaining the fraud on the market" and that his reputation had been damaged as a result of the suit particularly by the manner in which it had been brought with its attendant publicity. The pleading further alleged that the defamation suit was an abuse of process and a malicious prosecution. It had the additional effect, he pleaded, that the takeover project was halted. This indeed is the gist of his proposed pleading in this respect. 35 The problem with this pleading, even accepting a misdescription by the primary judge, is that it goes nowhere when the pleaded damages are considered at least to the extent that the applicant sought to maintain these. 36 That the defamation suit is pleaded as in part, a suit instituted for the purpose of maintaining a fraud on the market, does not, without more, disclose a cause of action. The only damages which the applicant seeks to maintain is his so-called loss of opportunity claim amounting to $144 million. 37 This ground fails. Ground 5 38 This ground asserts similar misconceptions by the primary judge. However, it exposes a basic misconception on the applicant's part as to the law of damages. He pleaded that the figures in the published accounts and related supporting material, including the annual reports, were false as a result of a gross overstatement of cattle numbers and that, if he had known the true figures, he would never have entered negotiations for a takeover. The primary judge made no error in concluding that, had the figures not been misrepresented as alleged, but the "true" figures disclosed, there would never have been a takeover with the prospect of the large profit alleged by the applicant. The Court raised with the applicant whether, apart from this alleged loss, he was claiming any other damages such as reliance costs. The applicant disavowed any such claims. 39 The applicant's proposed statement of claim does contain allegations of loss and damage as a result of being falsely diverted from commercial opportunity in other directions as well as being induced to negotiate for 8-9 months as a result of the misrepresentations in the accounts. However, those reliance damages have no part in the $144 million claimed as loss of opportunity damages. A claim for damages for being diverted from other commercial opportunities as a result of misrepresentation is a well-recognised cause of action: Sellars v Adelaide Petroleum NL (1994) 179 CLR 332. Such a claim, however, was never articulated by any material facts and the damages claimed were not calculated upon that basis. The reliance damages claims were implicitly abandoned before the primary judge and expressly disavowed before us. As the primary judge stated at [30]: This is not a case where an applicant proposes to plead that, as a result of conduct that was misleading or deceptive, the applicant abandoned a course of action in relation to which he had spent a certain amount of money which he now seeks to recover. Rather, the applicant simply asserts he should have been given the opportunity to negotiate for the controlling stake in AACo on the understanding that the number of cattle held by AACo was as he alleged it should have been stated, not as the respondents in fact stated it. 40 The applicant also complains in this respect, about the statement in [32] that nothing was pleaded that disclosed any reliance on the misrepresentations he alleged. The applicant says he pleaded reliance on the "false" figures in continuing to negotiate. That is a different reliance. It does not plead any reliance on those figures that would have led to a "successful" takeover and therefore the damages he alleges. Ground 6 41 The applicant contends that the primary judge referred only to one part of the alleged misrepresentations, namely, an alleged overstatement by 200,000 of the number of cattle, but does not refer to the other alleged misrepresentation, that 100,000 unbranded calves had been included due to a change in accounting practice, without noting the change in the accounts. That is so in express terms as is evident, for example, in the primary judge's reasons at [31]. However, the primary judge did refer indirectly to the complete number of 300,000, when at [53]-[54], his Honour referred to paras [114]-[116] and [117]-[129] of Version 2 of the proposed statement of claim, which in turn sets out the entire alleged 300,000 cattle overstatement. In any event, nothing material turns on this. The substance of the allegation was that the accounts significantly overstated the number of cattle and were therefore misleading. The primary judge dealt with the substance of the pleading. There was no pleading of any recoverable loss arising from the alleged reliance on the alleged misleading representations. Yet again, this pleading is not made good in the way that the damages claimed are formulated. That this is so, assumes as must be the case in a pleading contest that the allegations of misleading accounts are accurate. Ground 7 42 This ground contends that the primary judge erred in finding that the statement of claim did not plead any facts leading to an "opportunity loss". This again raises the fatal flaw as we have described it. His Honour was correct, as the damages claimed for the opportunity alleged to have been lost are calculated on the basis that the applicant would have secured an investment in a company that had the cattle numbers represented in the accounts, whereas the applicant alleged that those accounts overstated the cattle numbers and that, had the true numbers been known, the takeover would never have proceeded. Moreover, even allowing that the applicant claimed for reputational harm as a result of the alleged malicious prosecution of the defamation action, there is no causal connection between that allegation and the loss of opportunity damages relied on by the applicant. It is necessary to repeat again that the only damages claim advanced in argument, and intentionally so, was only the loss of opportunity case. Grounds 8 and 9: 43 The substance of these complaints is that the primary judge failed to take into account the allegations in the pleading, in which the role of each of the individual respondents was pleaded, when considering the later composite allegations of fraud by each respondent. We reject these arguments for a number of reasons. 44 First, the allegations of fraud did not refer back to the early part of the pleading. Accordingly, they did not set out or refer to the particulars required by rr 16.42 and 16.43 of the Federal Court Rules 2011 (Cth) (the Rules). 45 Second, even referring to those allegations, we agree that it is difficult to discern the facts on which the applicant relied for alleging that each respondent knew of the allegedly fraudulent figures in the accounts. As the corporate respondents correctly submit, many of the facts alleged have nothing to do with knowledge. Indeed, some of the matters stated in the early paragraphs of the pleading related to periods after the applicant "discovered" the alleged fraud in February 2009. Most of them relied on the respective respondents' positions as board members and their approval of the relevant accounts but do not plead relevant particulars of knowledge which the primary judge identified. 46 Third, we accept the submission of the corporate respondents that a rolled up pleading of fraud against each of the 25 respondents is not a proper way of pleading fraud. The applicant should have provided particulars, in the case of each respondent, of the facts relied on for the allegation of fraud. He did not do so. 47 Version 2 of the pleading alleges, variously, that individual personal respondents had knowledge, actual or constructive, that the AACo accounts were false and misleading and fraudulent in terms of stated cattle inventories and related dollar values. The allegations of such knowledge are unparticularised in any meaningful way. 48 The applicant, in his ground of appeal, argues that such knowledge is a matter of commonsense. Obviously that approach is deficient and rather exposes the fundamental problem with this aspect of the proposed pleading. 49 This deficiency is not cured by particularising, at great length, as the applicant did in his pleading, the calculations which allegedly demonstrate the errors in the cattle numbers. The logical and necessary connection between the allegations of misrepresentations in the accounts and knowledge of these at material times on the part of each of the respondents is missing. It is well established that allegations of fraud "are to be precisely pleaded and particularised with some specificity": Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 599 at [43]; Rajski v Bainton (1990) 22 NSWLR 125 at 135; Davy v Garrett [1877] 7 Ch D 473 at 489. It is not enough for fraud to be inferred from the facts pleaded: Davy v Garrett at 489; Oldfield Knott Architects Pty Ltd v Ortiz Investments Pty Ltd [2000] WASCA 255 at [35]. 50 The allegations made against Mr Connolly, the 20th respondent, by way of illustration, are unparticularised in any meaningful way. Mr Connolly is alleged to have been at the material times the General Manager of Livestock Operations and Chief Operating Officer of AACo and to have attended the 2009 AGM of the company when the 2008 annual report and accounts were laid before the meeting. It is alleged, without specificity, that "[h]e had a large role to play in maintaining the charade" concerning the cattle numbers. Were this the only deficiency in the pleading concerning Mr Connolly then that deficiency could be cured by amendment potentially. However, no purpose would be served in taking that approach given the fatal flaw in the applicant's damages claim upon whichever asserted cause of action it is based. Such is also the case in respect of the allegations of knowledge made against the other respondents. Ground 10 51 The applicant complains that the primary judge gave no reasons for his conclusion that he would not allow certain of the proposed amendments to the statement of claim. This is without foundation. His Honour's considerations leading to that conclusion are expressly set out in his reasons at [17]-[32]. Ground 11 52 This ground, which challenges the approach of the primary judge in his reasons at [47], reveals a misunderstanding by the applicant as to what this paragraph concerns. Paragraph [47] states: As to the last point made by the applicant in respect of the tort of deceit, the particular proposed pleading here depends entirely on contraventions of relevant statutory provisions and there is no reliance on the tort of deceit. While the applicant may consider that the same conduct amounts to the tort of deceit, that is irrelevant for the purposes of the pleading proposed by him in these paragraphs. 53 The primary judge was limiting his statement that there was no reliance on deceit to "the particular proposed pleading", that is, the allegations of breaches of the Corporations Act as is evident from the heading contained at [44]. His Honour was considering the contention by the corporate respondents, summarised at [44], that the allegations of statutory breaches gave rise to no causes of action, including for deceit which was the only cause of action for which relief was claimed. His Honour had just dealt with the allegations of deceit at [38]-[43]. 54 This ground fails. Ground 12 55 This ground of appeal is that, in dealing with the alleged breach of the Corporations Act, the primary judge was wrong in finding, at [52], that the pleading did not properly plead sufficient facts to give rise to a claim for damages for failure to comply with the continuous disclosure rule. 56 The pleading of the breach of the continuous disclosure rule is found in [82]-[98] and [101]-[104] of Version 2 of the proposed statement of claim. As the corporate respondents correctly submit, even if it is accepted that the applicant has pleaded facts which (if proved) may amount to a failure to give continuous disclosure, he has not alleged any loss flowing from that breach. Damage is an essential criterion of a cause of action for inadequate disclosure: s 1317J(3A) of the Corporations Act. The loss alleged, namely a lost opportunity to participate in a takeover, did not result from any non-disclosure. As with the claim for misleading or deceptive conduct, on the facts pleaded, any non-disclosure simply led the applicant and his consortium to waste their efforts, for some 8-9 months, on negotiations for a takeover that would not have occurred had the disclosure of the allegedly true facts been made. The applicant expressly does not press any claim for loss consequent on that wasted effort nor, as we have said, does he wish to do so in the future. 57 Accordingly, this ground fails. Grounds 13, 14 and 15 58 The applicant complains that the primary judge "exhibits no proper sense of proportion about" the matters pleaded in the proposed statement of claim at [114]-[129] and considered in the primary judge's reasons at [53]-[60]. The relevant allegations with which his Honour was concerned dealt with allegedly ongoing incorrect statements in accounts for years after the applicant had discovered the alleged errors in the earlier years' accounts. His Honour found that those allegations were irrelevant, as the applicant did not rely on the later years' accounts and therefore had suffered no loss, and did not seek any relief as a consequence of their publication. The applicant contends that they are relevant as showing an ongoing fraud on the market. We accept the corporate respondents' submission that even if there was such an ongoing fraud, that is irrelevant to any cause of action pleaded, or any cause of action that could be pleaded, by the applicant. The primary judge made no error in this respect. 59 This ground fails. Grounds 16 and 17 60 The primary judge declined to permit the paragraphs of the proposed pleading alleging dysfunctionality of the AACo board. They were irrelevant to the causes of action pleaded. The applicant contends that, as he pleaded that each respondent made a representation which was untrue, or not believed to be true, or as to which the respondent was reckless as to its truth or not, the pleadings of dysfunctionality were relevant, including to "the question of credit." This again evinces a misunderstanding by the applicant as to the law, and the rules of pleading. The primary judge was correct in concluding that these matters were not relevant to the misrepresentations and fraud alleged. Ground 18 61 This ground, which is particularly argumentative in its expression, appears to contend that, in concluding that [198]-[226] of the proposed statement of claim did not appear to demonstrate any fraud or misleading conduct, the primary judge did not understand the pleading, or misconstrued it. This part of the pleading was accurately described by the corporate respondents, as summarised by his Honour at [66]. This pleading is very difficult to comprehend and includes significant passages of commentary and argument. The primary judge was correct in refusing to allow this part of the proposed pleading. Ground 19 62 This ground raises a number of complaints about the primary judge's consideration of proposed paras [227]-[243] and in particular complains of procedural unfairness. However, it is in substance merely an expression of the applicant's general disagreement with the primary judge's reasons. There is no question of procedural unfairness arising. We are satisfied that his Honour correctly identified the deficiencies of those paragraphs and was justified in refusing leave to plead in those terms. Ground 20 63 This ground of appeal simply constitutes a general disagreement with his Honour's conclusions that the proposed pleading is inadequate in many respects and that leave should not be granted to file it. No error has been demonstrated in the reasoning of the primary judge nor in the exercise of his discretion in that respect. Grounds 21, 22 and 23 64 The applicant contends that the primary judge erred in not permitting substituted service of the natural person respondents at the corporate respondents' registered offices. 65 The applicant's reliance on s 109X of the Corporations Act is misconceived. This provision does not overcome the need for personal service of the natural person respondents. Rather it is simply facultative where the Australian Securities and Investments Commission (ASIC) has recorded an "alternative address" for a director, in accordance with s 205D, as to which there was no evidence concerning these respondents. The "alternative address" at which directors and officers may be served under that section is not the company's registered office. There was no other basis contended for justifying substituted service. 66 The primary judge did not err in refusing to allow substituted service where the applicant had made no attempt to serve the individual respondents personally nor demonstrated any reason why it was not practicable for him to do so. In any event, there was no need for substituted service when the entire proceeding was ultimately dismissed. Order dismissing action 67 The applicant does not state any separate grounds for appealing the primary judge's decision to dismiss the proceeding with costs. He relies solely on the grounds of appeal concerning the adequacy of the pleading. Those grounds have failed entirely. There being no other basis for the appeal against the consequent orders the appeal from them should be dismissed. Even so, we are satisfied for reasons already given that in making those orders the primary judge correctly exercised his discretion without error. Conclusion 68 The proposed grounds of appeal are without merit. The discretion of the primary judge has not even arguably miscarried when he refused leave to the applicant to file an amended statement of claim, and dismissed the action in the absence of any statement of claim and any apparent prospect of a proper statement of claim being produced. 69 We refuse the applicant leave to appeal, and order that he pay the costs of the corporate respondents associated with this application. I certify that the preceding sixty-nine (69) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Siopis, Gilmour & McKerracher. Associate: Dated: 5 November 2012