Jucg.ncst NoSS 7 san we > »"IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) OLD G169 of 1986 GENERAL DIVISION ) BETWEEN: NANCY MARIS STEWART and ADAM HUNTER STEWART Applicants AND: GLENPITNEY PTY. LTD. First Respondent AND: HAROLD KUCKO Second Respondent AND: LLOYD JOHN WILLIAMSON Third Respondent MINUTES OF ORDER JUDGE MAKING ORDER: PINCUS J. DATE OF ORDER: 2 MARCH 1987 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The application of the third respondent made by notice of motion filed on 23 February 1987 be dismissed; 2. The third respondent pay the applicants' costs to be taxed. H Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. | CATCHWORODS TRADE PRACTICES - misleading brochures issued by respondent company - claim against one of only two directors and shareholders - no particulars of personal respondent's connection with brochure - whether claim abuse of process. Federal Court Rules, 0.11 r.16, 0.20 r.2 Nancy Maris Stewart & Anor. v. Glenpitney Pty. Ltd. Qld. G169 of 1986 PINCUS J. BRISBANE 2 MARCH 1987 IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD G169 of 1986 GENERAL DIVISION ) BETWEEN: NANCY MARIS STEWART and ADAM HUNTER STEWART Applicants AND: GLENPITNEY PTY. LTD. Pirst Respondent AND: HAROLD KUCKO Second Respondent AND: LLOYD JOHN WILLIAMSON Third Respondent PINCUS J. 2 MARCH 1987 REASONS FOR JUDGMENT. The applicants' case is brought principally under s.52 of the Trade Practices Act. The third respondent seeks an order striking out the application and statement of claim as against him on the grounds that the statement of claim discloses no reasonable cause of action against him, and that the application is frivolous or vexatious or an abuse of process. Alternatively, the third respondent asks for judgment in his favour on the same grounds. Power to give the relief sought is found in 0.11, r.16 and 0.20, r.2. I do not set these provisions out, but note that the former only allows pleadings to be struck out and does not refer to the giving of judgment. Insofar as the third respondent asks for . . judgment in his favour, that must be based on 0.20, r.2, under which rule evidence may be received (see Patton v. Beazley, unreported, 23 February 1987 Full Court). The question here is simply whether enough has been shown and pleaded to justify continuance of the application against the third respondent. I should mention that the solicitors on the record for the other respondents have withdrawn, which suggests that the claim against the third respondent may be of some practical importance. The statement of claim says that the first respondent is a company, and the second and third respondents were at all material times its directors and "persons responsible for the Management of the affairs of the First Respondent". Exhibit 1, referred to below, shows that the second and third respondents were on 31 December 1985 the only directors. The statement of claim says that the first respondent advertised the establishment of a residential development on certain land by means of brochures which made certain assertions said to be misleading and deceptive. Oral representations are also complained of. The pleading claims further that the third respondent knew the representations to be false or "made them not caring whether they were true or false". The allegation just quoted does not match the rest of the statement of claim, because it is nowhere said that the third respondent himself made any representations. The pleading goes on to say that the applicants executed agreements, being induced by the representations, and suffered loss. In addition to the allegations mentioned above against the third respondent, the pleading contains (in para.18) a general allegation substantially based on the language of s.75Bla) and (c) of the Trade Practices Act 1974. Particulars of para.18 have been sought and a rather general answer was given, the relevant part of which is: "The Third Respondent was at all material times appointed as, and acting in the capacity as a director of the First Respondent, and thereby knowingly engaged in the conduct of the affairs of the First Respondent. " Counsel for the third respondent argued, relying upon Yorke v. Lucas (1985) 61 A.L.R. 307, that it is not enough merely to say that the natural person sought to be made liable under s.75B is a director - or even a managing director. They pointed out that the statement of claim does not specifically allege that the third respondent played any part in the preparation or presentation of the brochures complained of. They also relied on the fact that discovery, which has already taken place, did not result in any proper particularisation of the claim against the third respondent. Counsel for the third respondent relied upon the decision of the Full Court of the Queensland Supreme Court in Brisbane Unit Development Corporation v. Robertson £19831 2 Qd.R. 105 (at p.109) in support of the proposition that a general allegation of fraud is not enough and that it is no part of the function of discovery or interrogatories "to enable a party to fish for a case which he cannot make out, and which he has no means of knowing whether or not he can make out..." Counsel suggested that these remarks are equally applicable to the case sought to be made here, one of statutory liability. Exhibit 1 is a.copy of the first respondent's annual return. As I read the statement of claim, the events mentioned therein began in the year 1983, but that date appears to be an error and the third respondent's list of documents suggests that the events principally in issue occurred 1n 1985 and 1986; I notice that the only annual return of the first respondent which has been discovered is that showing the position as at the end of 1985. It has the second and third respondents as the only members and the only directors of the first respondent, and the third respondent as secretary, and purports to be signed by both second and third respondents. The defence of the third respondent admits that the first respondent prepared or caused to be prepared brochures and other documents relating to the development mentioned in the statement of claim. Counsel for the applicants argued that exhibit 1 shows that the first respondent, which is admitted to have issued brochures relating to the development, was, at a date fairly close to the events in issue, controlled by the second and third ' respondents, being its sole directors and shareholders. They contended in effect that, on the facts presently known, 1t is likely that there is substance in the allegation in the statement of claim that the second and third respondents were, at material times, "persons responsible for the management of the affairs of the first respondent". They of course drew attention to the necessity for a very clear case to be shown, to deprive the applicants of their day in court. Counsel for the third respondent argued that the applicants' case is not based on any evidence and that interrogating about the third respondent's connection with the events complained of would be fishing; that does not appear to me to be so. It 1s no doubt possible that, although one of only two directors, the third respondent had nothing to do with the issue of the written material complained of. I cannot think, however, that it would necessarily be judged oppressive to deliver interrogatories with respect to the preparation and issue of the written material, designed to obtain information about the third respondent's connection with that material, 1f any. Whether or not such interrogatories are to be delivered, or elicit answers favourable to the applicants, it appears to me that the applicants should be given the opportunity of attempting to satisfy the Court at the trial of the correctness of the allegations in para.2 of the statement of claim that the second and third respondents were the persons responsible for the management of the affairs of the first respondent. In my view, it would be odd, since there were at relevant times only two directors and shareholders, the third respondent being one of them, to hold that an attempt to connect " the third respondent with the company's activities mentioned in the pleadings must be frivolous or an abuse of process. Counsel for the third respondent argued that since the annual return was tendered only at the hearing, some special order as to costs should be made, if the application failed on that account. I think the costs should follow the event; the return was discovered by the third respondent, was tendered by consent and its contents must surely have been known to the third respondent. The application of the third respondent made by notice of motion filed on 23 February 1987 must be dismissed with costs. Rent or - 5 - osc lag Pe, sia ' a ae Bie[ A372 72 Detec 3/87