Ip ag JUDGMENT NO. --sseserereeeret I enconccsene® IN THE FEDERAL COURT OF AUSTRALIA ) ) No. G164 of 1982 NEW SOUTH WALES DISTRICT REGISTRY ) No. G 85 of 1983 ) ) GENERAL DIVISION IN THE MATTER of the TRADE PRACTICES ACT, 1974 BETWEEN : BRYAN JOHN MILNER AND ORS. Applicants AND: DELITA PTY. LIMITED ROGER McMILLAN GLASSON and MORRIS WALTER LEWIN Respondents and First Cross-Claimants AND: ROBERT CHARLES GOOCH MORRISON and JOHN CHRISTOPHER BENNETT 25 JUN 1999 FEDERAL COURT OF First Cross-Respondents PRINCIPAL and Second Cross-Claimants AND: ROGER McMILLAN GLASSON and MORRIS WALTER LEWIN Second Cross-Respondents 10 SEPTEMBER 1984 . REASONS FOR JUDGMENT LOCKHART J. On the third day of the hearing of this matter, Wednesday of last week, the applicants sought leave to amend the application and the statement of claim in certain respects. First they applied to add as respondents Robert Charles Gooch Morrison and John Christopher \G 2. Bennett, who are presently only cross respondents and cross claimants in a cross claim brought by them against the respondents. I should say at this stage, in the interests of clarity. that there are two cross claims propounded in each of the matters before the court, Gl64 of 1982 and G85 of 1983, which are being heard together by consent. In -the first cross claim Delita Pty. Limited, Roger McMillan Glasson and Maurice Walton Lewin. being the respondents to the proceedings, cross claim against Mr. Morrison and Mr.Bennett. In the second cross claim in each matter Mr. Morrison and Mr. Bennett cross claim aqainst the respondents. Delita, Glasson and Lewin. For reasons of convenience I shall refer to the parties as follows: "the applicants", which shall encompass all the applicants in both sets of proceedings of whom there are about 50: "the respondents", which shall mean Delita Pty. Limited, Roger McMillan Glasson and Maurice Walton Lewin; and "the cross respondents", which shall mean Robert Charles Gooch Morrison and John Christopher Bennett. The other amendments which the applicants seek to make are to add to the existing causes of action in both matters, which are presently confined to claims based on alleqged contraventions of s.52 of the Trade Practices Act 1974. further causes of action which for convenience may be described as claims based on fraud, neaqliqgence and fraudulent or innocent misrepresentation. I adjourned the application to amend until Thursday morning at the request of counsel for the respondents and counsel for the cross respondents. I asked counsel for the applicants to ensure that there would be available on Thursday morning a draft of the proposed amendments which the applicants sought to make to the proceedings, and that a copy of the draft be handed to other counsel on Wednesday afternoon. That was done.:-' On Thursday morning the applicants renewed their application for leave to amend. The application was opposed by the respondents "and cross respondents. Thursday, Friday and a large part of today have been occupied with the evidence and submissions in relation to the application for leave to amend. Matter G164 of 1982 was commenced by the filing of an application on 16 September 1982. There is one applicant in that matter, Brian John Milner, and I have already said who the respondents are. The statement of claim was filed on 21 October 1982, and it alleaes, so far as relevant to the application to amend, as follows: "4, Prior to 1980 the first. second and third respondents had been engaged in investment in the growing and the processing of quava fruit on the north coast of New South Wales and have continued to be so enaaged at all relevant times. 5. In late 1979 or early 1980 the first. second and third respondents invited persons to participate in the investment in the qrowing and processing of quava fruit and the establishment of a Guava Property Trust for the purposes of such investment. 6. 4. At relevant dates related to the making and implementation of such invitations by the first, second and third respondents, the first respondent by the second and third respondents acting as its directors and agents, engaged in conduct that is misleading or likely to mislead or deceive in contravention of s.52 of the Trade Practices Act 1974, namely the making of representations that: (a) (b) (ec) (d) (e) (f) (q) th) (i) The respondents, through an entity Australian Plantations, had carefully monitored a development of a quava fruit growing and processing industry in Hawaii. "* That there existed a substantial demand on the mainland of the United States of America and in Japan for the products of the aquava fruit growing and processing industry and that the extent of such demand was known to the respondents. That there existed in Hawaii a lack of production to cater for local demand, that Hawaiian processors would take all of the quava puree which could be supplied by quava plantations as projected by or on behalf of the respondents and that the extent of such demand was known to the respondents. That a quava fruit growing and processing industry in Australia was commercially viable both domestically and in export terms in 1980 and thereafter. That the respondents had during 1980 a first-class Management team in relation to the gqrowing and processing of quava fruit. That returns on overseas and local experience available to the respondents in relation to the qrowing and processing of quava fruit showed a lucrative early return, rising to an anticipated $5000 per acre in year 5 from planting. That the costs of qrowing and processing quava fruit as projected by or on behalf of the respondents were a true and accurate representation of such costs. That the costs and expenses of growing and marketina quava fruit as projected by or on behalf of the respondents represented a reasonable and proper charge in respect of such costs. That the Department of Primary Industry through its research station at Nambour in Queensland had made certain data available to the respondents in relation to the aqrowing of quava fruit. (4) That the New South Wales Department of Aariculture had made certain statements to the respondents, repeated by the respondents as having alleaedly been made by the New South Wales Department of Aqriculture as to the acreage requirements to meet the Australian demand for quava fruit. 7. At relevant dates related to the making and implementation of the invitations referred to above, the first respondent by the second and third respondents acting as its directors and agents engaged in conduct that is misleading or deceptive or likely to mislead or* deceive in contravention of s.52 of the Trade Practices Act 1974, namely the distribution and the dissemination by themselves their servants or agents or with their consent by a business investment advisory firm known as Robert Morrison and Associates of a document entitled "Reasons for Recommending the Guava Property Trust". The applicant craves leave to refer to this document when produced as if fully set out in this statement of claim. 8. The relevant dates related to the making and implementation of the invitations referred to above, the first respondent by the second and third respondents acting as its directors and aqents engaged in conduct that is misleading or deceptive or likely to mislead or deceive in contravention of s. 52 of the Trade Practices Act 1974, namely the distribution and the dissemination by themsleves their servants or agents or with their consent by a business investment advisory firm known as Robert Morrison and Associates of a brochure related to the establishment of a Guava Property Trust including "Reasons for Recommending the Guava Property Trust". The applicant craves leave to refer to this document when produced as if fully set out in this statement of claim. 9. At relevant dates related to the making and implementation of the invitations referred to above, the first respondent bv the second and third respondents acting as its directors and agents enaaged in conduct that is misleading or deceptive or likely to mislead or deceive in contravention of s. 52 of the Trade Practices Act 1974, namely the distribution and the dissemination by themselves their servants or agents or with their consent bv a business investment advisory firm known as Robert Morrison and Associates of a Progress Report. The applicant craves leave to refer to this document when produced as if fully set out in this statement of claim. 19. The conduct of the first respondent referred to above is in contravention of s. 52 of the Trade Practices Act 1974." The respondents, Glasson and Lewin, are said to have aided, abetted, counselled, procured or induced the contraventions of the first respondent, Delita Pty. Limited, and to have been knowingly concerned in or a party to then. The applicants claim declaratory relief, certain iniunctive relief, damages, interest and costs. In their defence the respondents deny or put in issue all the material alleaations in the statement of claim. The respondents have cross claimed against the cross respondents for contribution or indemnity in the event that the applicants succeed against the respondents. The cross respondents have cross claimed aaainst the respondents alleging essentially the same matters by way of misleading or deceptive conduct as the applicants allege against the respondents, and claim that, by reason of the investment of substantial sums of money by the cross respondents in the project for the aqrowing and processing of quavas in the north coast of New South Wales, which is the subject of these proceedings, those moneys have been lost to the cross respondents due to the impuaned conduct of the respondents. Proceeding G85 of 1983 was commenced by the filing of an application on 27 April 1983. There are more than 40 applicants. Each of the applicants make substantially the same allegations against the respondents as Mr. Milner makes in the proceeding Gl64 of 1982. The defences and cross-claims are substantially the same as in G164 of 1982. 7. The matters have been before the court on many occasions for directions. The discovery of documents and the administration and answering of interrogatories has been a very large and obviously expensive exercise. Evidence was taken by me in June this vear at the request of the parties sitting as a Commissioner, appointed by this Court, in Hawaii, for about two weeks. The witnesses were residents of Hawaii. -* Early this year the matters were set down for hearing to commence on Monday 3 September 1984, and some five weeks have been set 'aside for the hearing. The application to amend was, as I have said, made for the first time last Wednesdav. As a qeneral rule, all amendments should be permitted to pleadings which are necessary to determine the real issues between the parties. Also, if inconvenience, injustice or prejudice to respondents or cross-respondents can be cured by the imposition of terms - whether as to costs or otherwise - prima facie the amendment should be allowed. The present case is not, however, so simple. The applicants chose to frame their case initially and to persist with it until last week solely on the basis of alleged contraventions of s.52 of the Trade Practices Act, and claimed consequential relief. They joined as respondents, the three parties to whom I have referred. There is evidence that the applicants' solicitor was conscious from the commencement of the proceedings, almost two years aqo, of the possibility of ioininag the cross-respondents as respondents, but for tactical reasons decided not to join them. I do not use the word 8. tactical with any sense of approbrium whatever. It is a necessary concomitant of most steps that are taken by parties in the conduct of litigation for good or bad. It appears that the applicants were hopeful until very recently that Mr. Morrison would be a friendly witness and qive evidence for them. That hope has now been shattered, or at least, faded somewhat. Additional'reasons for the change of attitude of the applicants are that certain material came to light only last week when the respondent Glasson answered the applicants interrogatories from 'which it appeared that the respondents' case would be that Mr. Morrison was the source of any relevant representations constituting misleading or deceptive conduct and the source of them in his own right and in no way on behalf of the respondents. Counsel and the solicitors for the applicants have also recently reassessed the applicants' case. For these and other reasons the application was made on Wednesday last. But the applicants nevertheless elected to shape their case in its present form many months ado. They made a conscious decision not to sue the cross-respondents directly as respondents and adhered to that decision until the 11th hour. This case has been on foot, as I have said, since 16 September 1982. The preparation for the trial by all the parties has been an immense and expensive task including, as I have already mentioned, the taking of evidence in June this vear on commission in Hawaii which I have no doubt was undertaken at aqreat expense to the parties. All this work was done on the basis of the existing issues. If the amendments were merely formal or were merely supplementary to the pleadings, as presently framed, obviously different considerations might arise, but they are not. The proposed amendments are far-reaching. They introduce for the first time alleaations of fraud against the respondents -and cross-respondents. A case based on sub-s.82(1) of the Trade Practices Act is sought to be brought for the first time aqainst Mr. Morrison, as a person involved in the alleaed contravention of s.52 by the respondents. It is sought to allede "negligence against all the respondents and cross-respondents. Assertions of misrepresentation, fraudulent or innocent, are propounded against some of the parties. The applicants seek, in my view, to make a fundamentally different case to the one that they have hitherto propounded. There is no evidence before me of any fraud or fraudulent misrepresentation by any of the respondents or cross-respondents. In my opinion, where a party seeks to amend his pleadings by alleaing fraud in a case such as the present, inall the circumstances which I have but brieflv touched on, there must be some cogent evidence before the Court to support the amendment and not a bare alleaation of fraud with some broad particulars. I am satisfied that the respondents approached this case for the purposes of pre-trial work and for the purposes of this final hearing on the footing of the existing issues and that, if the issues 10. had been what the applicants now seek to have as the issues, the preparation of the case would have been considerably different in character. In particular I am satisfied from what I have been told, both in evidence from the solicitor for the cross respondents and from the Bar table, that the cross respondents would have adopted a substantially different role from the one they in fact adopted during the two weeks taking of evidence on commission in Hawaii. These and other considerations which have been adverted to in the course of evidence and araqument lead me to conclude that the case is not one where prejudice to the respondent and cross respondents can be cured by the imposition of appropriate terms. Further, order 12, rules 2 and 3 of this Court's rules require that a party pleading shall give particulars of any fraud or misrepresentation on which he relies and that if he pleads any fraudulent intent he shall dive particulars of the facts on which he relies. The draft amendments to the statement of claim do not furnish the material which would be required by those rules if they were, in fact, formal pleadings in the case; and I take that into account also as a relevant consideration. It is common ground that the claims for fraud, neaqliqence and misrepresentation may be brought by the applicants aqainst the respondents or cross respondents at common law or in equity in courts of competent jurisdiction. ll. As the case is ready for hearing and many weeks have been set aside for the trial it seems inevitable that, if the applicants were to succeed in this application to amend the proceedings, the trial would be adjourned for a substantial lenath of time. I propose to dismiss the application for leave to amend. It is unnecessary for me to* deal with certain additional arquments advanced by the parties. The Court orders that the application for leave to amend be 'dismissed. The applicants must pay the costs of the respondents and of the cross respondents of that application. | certify that this and the preceding pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Lockhart. Ck A " AA _ ee Associate Dated: /O Seplanke, (784