FEDERAL COURT OF AUSTRALIA Reiffel v ACN 075 839 226 Ltd [2001] FCA 509 Trade Practices Act 1974 (Cth) s 75B Yorke v Lucas (1985) 158 CLR 661 Rinbridge Marketing Pty Ltd v Walsh [2000] FCA 1738 Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 599 MARLENE JOYCE REIFFEL (for herself and representing the persons referred to in the Statement of Claim) v ACN 075 839 226 LIMITED, PANNELL KERR FORSTER CONSULTING AUSTRALIA PTY LIMITED ACN 059 506 115, ANDREW CHARLES VERON and KENNETH JAMES GRESHAM N 966 OF 2000 GYLES J SYDNEY 3 MAY 2001 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 966 OF 2000 BETWEEN: MARLENE JOYCE REIFFEL (for herself and representing the persons referred to in the Statement of Claim) APPLICANT AND: ACN 075 839 226 LIMITED FIRST RESPONDENT PANNELL KERR FORSTER CONSULTING AUSTRALIA PTY LIMITED ACN 059 506 115 SECOND RESPONDENT ANDREW CHARLES VERON THIRD RESPONDENT KENNETH JAMES GRESHAM FOURTH RESPONDENT JUDGE: GYLES J DATE OF ORDER: 3 MAY 2001 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The words in par 28 of the Second further Amended Statement of Claim "each of" before "Veron" and "and Gresham" after "Veron" be struck out. 2. Leave is granted to the applicant to amend par 28 of the Second Further Amended Statement of Claim within fourteen days of the date of this judgment on terms that such amendment is limited to supplementing the existing allegation in par 28. 3. The applicant pay the costs of the fourth respondent of and incidental to the hearing on 18 April 2001 of the Notice of Motion filed on 8 December 2000. 4. All other costs of the Notice of Motion to be costs in the proceeding. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 966 OF 2000 BETWEEN: MARLENE JOYCE REIFFEL (for herself and representing the persons referred to in the Statement of Claim) APPLICANT AND: ACN 075 839 226 LIMITED FIRST RESPONDENT PANNELL KERR FORSTER CONSULTING AUSTRALIA PTY LIMITED ACN 059 506 115 SECOND RESPONDENT ANDREW CHARLES VERON THIRD RESPONDENT KENNETH JAMES GRESHAM FOURTH RESPONDENT JUDGE: GYLES J DATE: 3 MAY 2001 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This is a motion by Kenneth James Gresham ("the fourth respondent") to a claim brought by Marlene Joyce Reiffel ("the applicant"), on behalf of herself and others, for, amongst other things, an order pursuant to O 11 r 16 or, alternatively, O 20 r 2 that par 34 of the Amended Statement of Claim be struck out or, alternatively, an order pursuant to O 12 r 5 that the applicant give further and better particulars of the conduct alleged in par 34. As a result of amendments which have been made, par 34 is now par 28 of the Second Further Amended Statement of Claim. 2 The applicant pleads a case against ACN 075 839 226 Limited, the first respondent (described in the Statement of Claim as "AGFM"), based upon misleading statements in a prospectus, which led to the acquisition of interests in rental apartments. The applicant pleads a case against the second respondent, Pannell Kerr Forster Consulting Australia Pty Limited ("the second respondent") (described in the pleading as "PKF"), based upon misleading statements by it in a report included in the prospectus. 3 It is alleged that the fourth respondent was, at all material times, a director of the first respondent, and authorised the issue of the prospectus. 4 Paragraph 28 of the Second Further Amended Statement of Claim is as follows: "28. By authorizing the issue of the Prospectus containing the Prospectus Representations and the PKF Representations, each of Veron and Gresham: (a) aided and abetted, and was directly knowingly concerned in, or party to, the contravention by AGFM of the Act as set out in paragraph 23 hereof. (b) aided and abetted, and was directly knowingly concerned in, or party to, the contravention by PKF of the Act as set out in paragraph 26 hereof." 5 It is submitted for the fourth respondent that the pleading is deficient because it fails to plead that he knew the essential facts constituting the contravention of s 52 of the Trade Practices Act 1974 (Cth) ("the Act") by the first and second respondents (Yorke v Lucas (1985) 158 CLR 661 (at 670, 677); Rinbridge Marketing Pty Ltd v Walsh [2000] FCA 1738 (at par 26); Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 599 (at pars 38 to 54)). It is submitted in particular that the applicant has not pleaded that the fourth respondent knew that the first respondent did not have reasonable grounds for making representations with respect to a future matter, or that the fourth respondent knew of the falsity of the alleged representations made by the second respondent. 6 It is submitted for the applicant that the pleading alleges the material facts and that the complaint by the fourth respondent is really about particulars. It is submitted that particulars have now been given which are all that is required. The fourth respondent disagrees and also disputes the adequacy of these particulars. 7 In my opinion, the pleading is deficient as submitted on behalf of the fourth respondent. The only material fact alleged is authorisation of the issue of the prospectus. The authorities referred to on behalf of the fourth respondent make clear that that fact alone would not establish accessorial liability pursuant to s 75B of the Act. The words in par 28 "each of" before "Veron" and the words "and Gresham" after "Veron" will be struck out. Leave is granted to the applicant to amend par 28 of the Second Further Amended Statement of Claim within fourteen days. 8 It is submitted on behalf of the fourth respondent that any leave to amend should be on terms as to the time at which the amendment is operative for the purpose of the limitation period in the Act. It should be understood that the leave granted is limited to an amendment to supplement the existing allegation. So limited, I do not think that any further terms are required. 9 This makes the question of particulars academic, at least for the time being. I assume that those advising the applicant will give further consideration to the criticisms made on behalf of the fourth respondent in order to limit (if not eliminate) the need for further argument. 10 Having considered the arguments advanced on costs, the order which I make is that the applicant pay the costs of the fourth respondent of and incidental to the argument on 18 April 2001, and that otherwise the costs of the motion be costs in the proceeding. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. Associate: Dated: 3 May 2001 Counsel for the Applicant: SJ Archer Solicitor for the Applicant: Slater & Gordon Counsel for the Fourth Respondent: BA Connell Solicitor for the Fourth Respondent: J Barboutis Date of Hearing: 18 April 2001 Date of Judgment: 3 May 2001