FEDERAL COURT OF AUSTRALIA Hunter Valley Community Investments Pty Limited v Bell [2001] FCA 1148 HUNTER VALLEY COMMUNITY INVESTMENTS PTY LIMITED v JOHN WILLIAM BELL N 437 of 2000 SACKVILLE J SYDNEY 16 AUGUST 2001 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 437 OF 2000 BETWEEN: HUNTER VALLEY COMMUNITY INVESTMENTS PTY LIMITED FIRST APPLICANT KENNETH JAMES ALLEN SECOND APPLICANT DANNY MARTIN THIRD APPLICANT JAY PEGLER FOURTH APPLICANT AND: JOHN WILLIAM BELL FIRST RESPONDENT LAWLER DAVIDSON PTY LIMITED SECOND RESPONDENT STEPHEN WILLIAM DAVIDSON, TERENCE HENRY LAWLER, RAYMOND GEORGE TOLCHER, PETER JAMES McLEAN, PETER COUGHLAN, SIMON ANDREW RUTHERFORD, PHILLIP ANDREW BERICK, T/AS LAWLER DAVIDSON PARTNERS THIRD RESPONDENT RAYMOND WALKER and MARK SEXTON T/AS WALKER & CO. FOURTH RESPONDENT JUDGE: SACKVILLE J DATE OF ORDER: 16 AUGUST 2001 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The first applicant be removed from the proceedings. 2. The amended application and amended statement of claim, insofar as they seek relief or plead a claim against the second and third respondents, be struck out. 3. The second, third and fourth applicants have leave to discontinue the proceedings. 4. The second, third and fourth applicants be directed to file a notice of discontinuance by 4 pm on 17 August 2001. 5. The Court notes, pursuant to s 33ZB of the Federal Court of Australia Act 1976 (Cth), that the group members affected by orders 3, 4 and 5 are: (a) the Limited Partners of the Hunter Valley Community Investments Limited Partnership ("the Limited Partnership") who invested in the Limited Partnership and whose income tax returns were neither completed nor lodged by the second, third or fourth respondents for each or any of the years 1992 to 1995 inclusive and being approximately 34 in number and being represented in these proceedings by the second applicant. (b) the Limited Partners who invested in the Limited Partnership and whose income tax returns were completed and lodged by the second and/or third respondents for each or any of the years 1992 to 1995 inclusive and being approximately 38 in number and being represented in these proceedings by the third applicant. (c) The Limited Partners who invested in the Limited Partnership and whose income tax returns were completed and lodged by the fourth respondent for each or any of the years 1992 to 1995 inclusive and being approximately 22 in number and being represented in these proceedings by the fourth applicant. 6. The second, third and fourth applicants pay the respondents' costs of the proceedings. 7. Liberty to the respondents to apply if order 4 is not complied with. 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 437 OF 2000 BETWEEN: HUNTER VALLEY COMMUNITY INVESTMENTS PTY LIMITED FIRST APPLICANT KENNETH JAMES ALLEN SECOND APPLICANT DANNY MARTIN THIRD APPLICANT JAY PEGLER FOURTH APPLICANT AND: JOHN WILLIAM BELL FIRST RESPONDENT LAWLER DAVIDSON PTY LIMITED SECOND RESPONDENT STEPHEN WILLIAM DAVIDSON, TERENCE HENRY LAWLER, RAYMOND GEORGE TOLCHER, PETER JAMES McLEAN, PETER COUGHLAN, SIMON ANDREW RUTHERFORD, PHILLIP ANDREW BERICK, T/AS LAWLER DAVIDSON PARTNERS THIRD RESPONDENT RAYMOND WALKER and MARK SEXTON T/AS WALKER & CO. FOURTH RESPONDENT JUDGE: SACKVILLE J DATE: 16 AUGUST 2001 PLACE: SYDNEY REASONS FOR JUDGMENT 1 In these representative proceedings I granted leave on 9 August 2001 to the second, third and fourth applicants ("the remaining applicants") to file and serve a notice of discontinuance of the proceedings by 4.00pm on 10 August 2001. For quite proper reasons, the remaining applicants have not followed this course and accordingly the matter has come back to the Court. 2 The parties have pointed out that the Court's approval for discontinuation of the proceedings is required pursuant to s 33V(1) of the Federal Court of Australia Act 1978 (Cth) ("the Act"). They have also pointed out that a discontinuance with the leave of the court does not automatically result in a costs order in favour of the respondents (see Federal Court Rules O 22 rr 2(1)(d) and 3, and O 62 r 6). 3 Section 33ZB of the Act requires the Court to describe or otherwise identify group members who are affected by any "judgment" (which is defined in s 4 of the Act to include an order) given in the representative proceedings. 4 The remaining applicants again seek the leave of the Court to file a notice of discontinuance. They do not oppose the making of costs orders in favour of the respondents. They submit that the identification of the group members affected by the order granting leave and by any costs order should be made by reference to subparagraphs 2(b), (c) and (d) of the amended application filed in the proceedings. 5 It is necessary also to dispose of the proceedings insofar as they involve the first applicant, a company which is deregistered and has not been re-registered. As the remaining applicants point out, the proceedings do not abate merely by virtue of the de-registration of the first applicant and any cause of action theoretically vests in the Australian Securities and Investment Commission: see now Corporations Act 2001 (Cth), s 601AD(2). The remaining applicants submit that there is power under s 23 of the Act to make an order dismissing the proceedings brought by the first applicant, or alternatively removing the first applicant from the proceedings. 6 The respondents accept or do not dispute the general approach suggested by the remaining applicants. However, they actively seek a costs order in their favour. The second and third respondents also seek orders, pursuant to their outstanding motion, striking out the amended application and amended statement of claim insofar as relief is sought as against them. Having regard to the judgment delivered on 9 March 2001 and the failure of the remaining applicants to file and serve any further pleadings, I think it appropriate to make the orders sought by the second and third respondents. It is also appropriate to make a costs order against the remaining applicants 7 The orders I therefore make are the following: 1. The first applicant be removed from the proceedings. 2. The amended application and amended statement of claim, insofar as they seek relief or plead a claim against the second and third respondents, be struck out. 3. The second, third and fourth applicants have leave to discontinue the proceedings. 4. The second, third and fourth applicants be directed to file a notice of discontinuance by 4 pm on 17 August 2001. 5. The Court notes, pursuant to s 33ZB of the Federal Court of Australia Act 1976 (Cth), that the group members affected by orders 3, 4 and 5 are: (a) the Limited Partners of the Hunter Valley Community Investments Limited Partnership ("the Limited Partnership") who invested in the Limited Partnership and whose income tax returns were neither completed nor lodged by the second, third or fourth respondents for each or any of the years 1992 to 1995 inclusive and being approximately 34 in number and being represented in these proceedings by the second applicant. (b) the Limited Partners who invested in the Limited Partnership and whose income tax returns were completed and lodged by the second and/or third respondents for each or any of the years 1992 to 1995 inclusive and being approximately 38 in number and being represented in these proceedings by the third applicant. (c) The Limited Partners who invested in the Limited Partnership and whose income tax returns were completed and lodged by the fourth respondent for each or any of the years 1992 to 1995 inclusive and being approximately 22 in number and being represented in these proceedings by the fourth applicant. 6. The second, third and fourth applicants pay the respondents' costs of the proceedings. 7. Liberty to the respondents to apply if order 4 is not complied with. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville. Associate: Dated: 23 August 2001 Counsel for the Applicant: Mr Andrew Furnon Solicitor for the Applicant: Hansen's Commercial Lawyers Counsel for the First Respondent: Mr Ted Popper Solicitor for the First Respondent: Nash O'Neil Tomko Counsel for the Second and Third Respondents: Mr David Creais Solicitor for the Respondent: Bartier Perry Date of Hearing: 16 August 2001 Date of Judgment: 16 August 2001