FEDERAL COURT OF AUSTRALIA McIntyre v Eastern Prosperity Investments Pte Ltd (No 4) [2002] FCA 1133 PRACTICE AND PROCEDURE – pleadings – claim for damages for misleading or deceptive conduct and unconscionable conduct – shopping centre – numerous representations alleged – substantial amount of irrelevant and embarrassing matter pleaded – pleading as a whole defective – two previous pleadings struck out – unfair prejudice to respondents – no prospect of improvement absent competent legal representation – statement of claim struck out – proceedings to be terminated as proceedings under Part IVA until solicitor on the record engaged – question of dismissal of application stood over. Trade Practices Act 1974 (Cth) s 52 DONALD COLIN MCINTYRE (FOR AND ON BEHALF OF HIMSELF AND PATRICIA ANN MCINTYRE AND AS A REPRESENTATIVE OF THE GROUP MEMBERS REFERRED TO IN THE APPLICATION) v EASTERN PROSPERITY INVESTMENTS PTE LTD and DBF PROPERTY HOLDINGS PTY LTD AS TRUSTEE FOR THE FREARSON FAMILY TRUST W243 of 2000 FRENCH J 12 SEPTEMBER 2002 PERTH IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY W243 OF 2000 BETWEEN: DONALD COLIN MCINTYRE (FOR AND ON BEHALF OF HIMSELF AND PATRICIA ANN MCINTYRE AND AS A REPRESENTATIVE OF THE GROUP MEMBERS REFERRED TO IN THE APPLICATION) APPLICANT DONALD COLIN MCINTYRE AND PATRICIA ANN MCINTYRE TRADING AS VICTORIA PARK TRAVELWORLD (SHOP 24) First Group Member PAUL STANLEY SCRUTTON AND BEVERLEY MAUREEN SCRUTTON TRADING AS PHOTOMAT VICTORIA PARK (SHOP 20) Second Group Member DENNIS BEAUMONT AS TRUSTEE FOR THE BEAUMONT FAMILY TRUST TRADING AS INNERSPIN COMPACT DISCS (SHOP 8) Third Group Member KERRY GEORGE AND FREDERICK WILLIAM GEORGE TRADING AS THE HEART COFFEE LOUNGE (SHOP 21) Fourth Group Member PHIMCHAI SMITH TRADING AS PHUKET THAI RESTAURANT (SHOP 44) Fifth Group Member KENNETH JECKS AND IRENE FUSSELL TRADING AS PLAYFUL PETS (SHOP 31) Sixth Group Member ARMIN PODGORNY AND SABINA PODGORNY TRADING AS GOURMET AVIGNON (SHOP 33) Seventh Group Member DAVID THAMBIPILLAI TRUSTEE FOR THE NEW DAY TRUST TRADING AS CURRY BOWL INDIAN TAKEAWAY (SHOP 45) Eighth Group Member BRENDAN REIDY-CROFT CEASED TRADING AS ZIPPY MULTI SERVICES (SHOP 47) Ninth Group Member MILAN SIMIC AND ANNA SIMIC TRADING AS MARTINS SKEWERS (SHOP 10) Tenth Group Member ALLAN AND HELEN LAWRENCE CEASED TRADING AS HAVA LOOK DISCOUNTS (SHOP 23) Eleventh Group Member KIM LIEN LAM TRADING AS FAIRY PATISSERIE (SHOP 26) Twelfth Group Member THIONG AIK GAN AND BEE TIN TAN TRADING AS TEONGBEE MALAYSIAN FOODS (SHOP 42) Thirteenth Group Member SHIRLEY JANE FRUDE CEASED TRADING AS AZALEA FLORIST AND GIFT BASKET (SHOP 9) Fourteenth Group Member AND: EASTERN PROSPERITY INVESTMENTS PTE LTD (ACN 065 747 006) FIRST RESPONDENT DBF PROPERTY HOLDINGS PTY LTD (ACN 082 702 103) AS TRUSTEE FOR THE FREARSON FAMILY TRUST SECOND RESPONDENT JUDGE: FRENCH J DATE OF ORDER: 12 SEPTEMBER 2002 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The statement of claim be struck out. 2. The applicant pay the first and second respondents' costs of the motions filed on 31 May and 4 June 2002 respectively forthwith. 3. Unless on or before 12 October 2002, a solicitor is on the record as representing the applicant and the group members, the proceeding shall thereafter not continue as representative proceedings under Part IVA of the Act. 4. The directions hearing be adjourned to 17 October 2002 at 9.30am at which time the question whether the application as a whole should be dismissed or other directions made will be considered. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY W243 OF 2000 BETWEEN: DONALD COLIN MCINTYRE (FOR AND ON BEHALF OF HIMSELF AND PATRICIA ANN MCINTYRE AND AS A REPRESENTATIVE OF THE GROUP MEMBERS REFERRED TO IN THE APPLICATION) APPLICANT DONALD COLIN MCINTYRE AND PATRICIA ANN MCINTYRE TRADING AS VICTORIA PARK TRAVELWORLD (SHOP 24) First Group Member PAUL STANLEY SCRUTTON AND BEVERLEY MAUREEN SCRUTTON TRADING AS PHOTOMAT VICTORIA PARK (SHOP 20) Second Group Member DENNIS BEAUMONT AS TRUSTEE FOR THE BEAUMONT FAMILY TRUST TRADING AS INNERSPIN COMPACT DISCS (SHOP 8) Third Group Member KERRY GEORGE AND FREDERICK WILLIAM GEORGE TRADING AS THE HEART COFFEE LOUNGE (SHOP 21) Fourth Group Member PHIMCHAI SMITH TRADING AS PHUKET THAI RESTAURANT (SHOP 44) Fifth Group Member KENNETH JECKS AND IRENE FUSSELL TRADING AS PLAYFUL PETS (SHOP 31) Sixth Group Member ARMIN PODGORNY AND SABINA PODGORNY TRADING AS GOURMET AVIGNON (SHOP 33) Seventh Group Member DAVID THAMBIPILLAI TRUSTEE FOR THE NEW DAY TRUST TRADING AS CURRY BOWL INDIAN TAKEAWAY (SHOP 45) Eighth Group Member BRENDAN REIDY-CROFT CEASED TRADING AS ZIPPY MULTI SERVICES (SHOP 47) Ninth Group Member MILAN SIMIC AND ANNA SIMIC TRADING AS MARTINS SKEWERS (SHOP 10) Tenth Group Member ALLAN AND HELEN LAWRENCE CEASED TRADING AS HAVA LOOK DISCOUNTS (SHOP 23) Eleventh Group Member KIM LIEN LAM TRADING AS FAIRY PATISSERIE (SHOP 26) Twelfth Group Member THIONG AIK GAN AND BEE TIN TAN TRADING AS TEONGBEE MALAYSIAN FOODS (SHOP 42) Thirteenth Group Member SHIRLEY JANE FRUDE CEASED TRADING AS AZALEA FLORIST AND GIFT BASKET (SHOP 9) Fourteenth Group Member AND: EASTERN PROSPERITY INVESTMENTS PTE LTD (ACN 065 747 006) FIRST RESPONDENT DBF PROPERTY HOLDINGS PTY LTD (ACN 082 702 103) AS TRUSTEE FOR THE FREARSON FAMILY TRUST SECOND RESPONDENT JUDGE: FRENCH J DATE: 12 SEPTEMBER 2002 PLACE: PERTH REASONS FOR DECISION Introduction 1 On 22 December 2000, Donald Colin McIntrye, on behalf of himself and Patricia Ann McIntyre, and as representative of a number of other persons, commenced proceedings against Eastern Prosperity Investments Pte Ltd (Eastern Prosperity) and DBF Property Holdings Pty Ltd (DBF) as trustee of the Frearson Family Trust. The proceedings were bought by way of representative action on behalf of persons all of whom are or have been tenants of the Heart of the Park Shopping Centre (the Group Members). Eastern Prosperity was the owner of the Centre and DBF, the Centre Manager. 2 Mr McIntyre has been representing himself and his wife and the other Group Members throughout. As a result he has had considerable difficulty in properly formulating his case. On 6 December 2001, the statement of claim was struck out as against both respondents and leave given to file and serve a substituted statement of claim on or before 31 January 2002. The substituted statement of claim was filed on 18 February 2002 pursuant to leave given at a directions hearing on that day. The respondents were directed to file and serve any motions to strike it out by 11 March 2002. They were to be returnable on 18 March. 3 A strike out motion was filed on 12 March 2002 by DBF. Argument was heard on 18 March 2002. On 8 April 2002, an order was made striking out the substituted statement of claim. The applicant was given leave within twenty eight (28) days to file a further substituted statement of claim, limited to a cause of action or causes of action based upon implied representations as to the financial capacity of Eastern Prosperity. A further substituted statement of claim was filed on 6 May 2002 and motions to strike it out were filed by Eastern Prosperity on 4 June 2002 and DBF on 31 May 2002. Argument on the motions was heard on 6 August 2002 and judgment reserved until today. The Further Substituted Statement of Claim 4 The new pleading identifies the first respondent, Eastern Prosperity, (pars 1 to 4). It continues the irrelevant assertion that Eastern Prosperity was in breach of provisions of the Corporations Law for failing to file annual accounts, was deregistered on 28 February 2001 and re-registered on 29 August 2001 (pars 5 and 6). Paragraphs 7 and 8 identify directors of Eastern Prosperity and other companies in Australia of which they were also directors. The Singaporean holding company of Eastern Prosperity is identified (par 9). 5 The company's ownership of the shopping centre is pleaded (par 10) as is the irrelevant fact of the price paid for it (par 11). The land on which the shopping centre stands is also identified (par 12) and adjacent land later acquired by the company (par 13). 6 The assertion is continued from the previous pleading that the shopping centre thrived for the first two years of its operation, that it had nearly full occupancy and had a good retail mix with Woolworths as a key tenant (par 14). This paragraph does not appear material to any cause of action. It is accompanied by inexplicable particulars, including the assertion that the trading figures of the various Group Members reveal that their businesses initially traded successfully and have been in decline ever since. The inclusion of these allegations as particulars of par 14 disclose a basic misunderstanding of what particulars are for. The shopping centre is said to be uniquely situated to take advantage of any substantial change in the character of Victoria Park, the suburb in which it is located (par 15). Planning restrictions in the area meant that it was unlikely that any other shopping centre could be constructed nearby (par 16). 7 It is alleged that Eastern Prosperity failed to apply sufficient moneys towards the maintenance and upkeep of the shopping centre and that numerous problems were encountered as a result (par 17). Because of the failure to maintain the shopping centre, its attractiveness declined, several tenants departed and were not replaced and the flow of customers decreased (par 18). Woolworths elected to renew its lease for five years only instead of the ten years to which it was entitled (par 21). It negotiated an agreement that Eastern Prosperity would undertake significant repairs and refurbishment of the centre (par 21). Woolworths was prepared to expend significant funds of its own upon the improvement of its store (par 22). Thus far the pleading appears unchanged from the previous pleading. Much of it is irrelevant. 8 The statement of claim goes on to recount the formation of a tenant action group called "The Heart of the Park Tenant Action Group". It is said to have been formed early in 1998 because of generally deteriorating conditions at the shopping centre (par 23). The Group approached the WA Retailers Association and its then Chief Executive Officer for assistance (par 24). Following that approach, Eastern Prosperity and its then managing agents, Druitt First National Real Estate, are said to have entered into discussions with the WA Retailers Association on a number of issues relating to the promotion of the shopping centre, rent relief, improving the retail tenant mix, confirming the long term commitment of the owners to it, negotiating with Eastern Prosperity's Perth-based representative and negotiating to finalise long term plans for the centre involving its redevelopment (par 25). Eastern Prosperity was represented by a David Tian (par 26). 9 It is alleged that on 15 June 1998, letters signed by David Tian were sent to the various Group Members (par 27). Representations are said to have been made in these letters. They were to the general effect that Tian, on behalf of Eastern Prosperity, was negotiating finance in relation to car park extensions and general refurbishment of the shopping centre. When confirmation of the finance was to hand the commencement date of the refurbishment and car park extensions would be confirmed which was anticipated at that time to be in or during January 1999 (par 28). These express representations are said to have conveyed certain implied representations being: (a) That Eastern Prosperity had undertaken extensive investigations into the refurbishment of the shopping centre and that it had the reasonable expectation that the refurbishment of the shopping centre would commence shortly. (b) That Eastern Prosperity was currently in a financial position to meet its existing liabilities together with additional future liabilities that would arise from the obligation to make repayment of the moneys that were to be borrowed by Eastern Prosperity to effect the refurbishment of the shopping centre. (c) That Eastern Prosperity was in good financial standing with potential lenders and was in a position to borrow and repay substantial sums of money. (d) That the express representations could be relied upon and were not mere statements of opinion or puffery (par 29). The Tian representations are said to have been misleading or deceptive or likely to mislead or deceive in contravention of s 52 of the Trade Practices Act 1974 (Cth) (par 30). Particulars of the falsity of the express representations referred to in par 28 are set out in par 30. Particulars of the falsity of the implied representations pleaded in par 29 are set out in par 31. The express representations and their asserted falsity are outside the terms of the leave granted on 8 April 2002. Many of the alleged particulars of falsity are not particulars of falsity at all. 10 The particulars of falsity of the implied representations relating to the financial position of Eastern Prosperity set out in par 29(b) and (c) are specified in par 31 at particulars C and D. There it is said: "C. The First Respondent was not in a financial position to meet its existing liabilities together with the additional future liabilities that would arise from the obligation to make repayment of the monies that were to be borrowed by the First Respondent to effect the refurbishment of the shopping centre. D. The First Respondent was not in good financial standing with potential lenders and the ANZ Bank in Singapore was seeking to terminate the existing financial accommodation provided to the First Respondent." The further substituted statement of claim pleads that at all material times Tian and/or Eastern Prosperity well knew or ought to have known that Eastern Prosperity was not in a financial position to effect the promised refurbishment (par 32). Particulars of that assertion are given. 11 The further substituted statement of claim refers to a mediation process undertaken before the Commercial Registrar pursuant to the provisions of s 19 of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA). This mediation process followed a referral by the first Tenant Action Group through the WA Retailers Association (par 33). During the course of the mediation it is said that Eastern Prosperity's solicitors, James Chong & Co, made express representations that Eastern Prosperity had in place plans that included an upgrade of the premises and the car parking and that the works to the car park would not be carried out until after Christmas 1998 so as not to disrupt the Christmas trade at the shopping centre (par 37). These representations are said to have been contained in correspondence sent by the solicitors to the Commercial Tribunal on 20 August 1998. Implied representations are pleaded which again are outside the terms of the leave granted on 8 April 2002 (par 38). None of them relate to the financial capacity of Eastern Prosperity. Particulars of the falsity of the implied representations assert that Eastern Prosperity could not have had the reasonable expectation that the refurbishment would take place as there were strong grounds to suspect that for financial and regulatory reasons, the proposed refurbishment would not take place (par 40). It is also said that there were circumstances (which are not specified) in existence that required the original express representations to be qualified in a significant manner. Moreover, the express representations could not be relied upon and were mere statements of puffery, wishful thinking or good intention. 12 The outcome of the mediation is pleaded as yielding an agreement between the first Tenant Action group and Eastern Prosperity under which Eastern Prosperity would attend to refurbishment of the shopping centre, the members of the first Tenant Action Group would desist from taking further legal action against Eastern Prosperity and new standardised leases would be given to the tenants at the cost of Eastern Prosperity to reflect the changed circumstances that would apply after the refurbishment (par 41). 13 On 31 August 1998, Druitt First National ceased acting as the shopping centre managing agents and were replaced with effect from 1 September 1998 by DBF (par 42). The statement of claim identifies DBF as a corporation carrying on the business of a duly licensed real estate agent, its trading name and style and pleads its engagement by Eastern Prosperity in the management of the shopping centre from 1 September 1998 until 31 August 2000 (pars 43 to 47). At all times material to the action one Jodi Costello was engaged in the Commercial and Retail Property Management Department of DBF and had specific responsibility for the day to day management of the shopping centre (par 49). At all material times DBF and Costello were duly authorised to act on behalf of and bind Eastern Prosperity in all material respects (par 50). It is said that from 1 September 1998 onwards Costello made representations to the various Group Members on numerous occasions, both orally and in writing, that the refurbishment of the shopping centre was imminent (par 53). The occasions of the Costello representations are set out in par 54 thus: (a) Oral representations to a meeting of tenants at the shopping centre on 14 September 1998; (b) Oral representations to various individual Group Members in October 1998, October 1999 and January 2000; (c) Correspondence to individual tenants towards the end of 1998, early 1999 and early 2000; (d) Memorandum circulated to all tenants of the shopping centre dated 8 June 1999, 27 August 1999 and 9 November 1999; (e) Individual conversations with the various Group Members; (f) The display of an artist's impression of the refurbished shopping centre. 14 Express representations said to have been made on each of the occasions and in each of the ways identified in par 54 of the further substituted statement of claim are set out in pars 55 to 84 inclusive. In each case the same set of implied representations is relied upon. These are set out in par 57 in the following terms: "a) that the Second Respondent had the reasonable expectation that the refurbishment would take place and there were no grounds to suspect that the refurbishment would not take place; b) that Jodi Costello as a professional real estate agent, charged with the responsibility for the management of the shopping centre on behalf of the First Respondent had undertaken reasonable inquiries as to the veracity of the representations that were being made on behalf of the First Respondent prior to adopting the representations as her own; c) that there were no circumstances then in existence that would require the oral representations to be qualified in any significant manner; d) that the oral representations could be relied upon and were not mere statements of opinion or puffery." 15 In addition, there is an oral representation said to have been made in August 2000 by Costello to Mr McIntyre which concerned the security of his lease. This representation is outside the terms of the leave given on 8 April 2002. Particulars of falsity of the express and implied representations pleaded are set out. The particulars of falsity of the implied representations in par 57, which are asserted as implied representations arising out of subsequent communications, are set out in par 89. They are as follows: "A. The Second Respondent did not have or ought not to have had the reasonable expectation that the refurbishment would take place as there were strong grounds to suspect that for financial and regulatory reasons, that the proposed refurbishment would not take place. B. Jodi Costello as a professional real estate agent, charged with the responsibility for the management of the shopping centre on behalf of the First Respondent had not undertaken sufficient inquiries or any inquiries at all as to the veracity of the representations that were being made on behalf of the First Respondent prior to adopting the representations as her own. C. There were circumstances then in existence that required the original representations to be qualified in a significant manner. D. In light of the parlous state of the finances of the Ang Corporate Entities, the express representations by Jodi Costello as to the refurbishment of the shopping centre could not reasonably be relied upon and the representations were made and form part of a pattern of misleading and deceptive conduct embarked upon by the First Respondent and/or the Second Respondent as agents of the First Respondent to induce the members of the first Tenant Action Group to desist from taking further legal action and/or to induce the members of the first Tenant Action Group to continue trading at the shopping centre and thereby prevent the vacancy rate from increasing and/or in order to maintain or enhance the valuation of the shopping centre for purposes of obtaining financial accommodation by the Ang Corporate Entities from potential lenders. E. Further and better particulars will be provided after discovery and/or the administration of interrogatories." Particulars of falsity of the various express representations said to have been made by Jodi Costello on the numerous occasions pleaded are set out together with a repetition of the particulars of falsity of the implied representations said to have arisen on those occasions (pars 90 to 112 inclusive). There follows an allegation that Jodi Costello at all material times well knew or ought to have known that the representations regarding the refurbishment of the shopping centre earlier pleaded "… were unlikely to materialise in light of her knowledge of the financial and regulatory position of the First Respondent and the related Ang Corporate Entities". Particulars of knowledge are then set out in twenty two separate paragraphs designated A to V inclusive. 16 The next set of representations are those attributed to Johnny Ang, a director of Eastern Prosperity and said to have been made in March 2001 to the twelfth group member (par 114). Representations said to have been made were that the shopping centre would be refurbished and that the refurbishment would be completed by September 2001. Implied in this representation are said to be the assertions: "a) that the First Respondent had the reasonable expectation that the refurbishment would take place and there were no grounds to suspect that the refurbishment would not take place; b) that there were no circumstances then in existence that would require the express representations to be qualified in any significant manner; c) that the express representations could be relied upon and were not mere statements of opinion or puffery." The particulars of falsity of the express representations relied upon the non-fulfilment of the prediction that the shopping centre refurbishment would be completed by September 2001. Particulars of falsity of the implied representations are again that Eastern Prosperity could not have had the reasonable expectation that the refurbishment could take place as there were strong grounds to suspect that for financial and regulatory reasons the proposed refurbishment would not take place. 17 The further substituted statement of claim then turns to the question of inducement. It is alleged that as a result of all of the pleaded representations the various Group Members were induced into continuing to trade at the shopping centre in the reasonable expectation that its refurbishment would take place and have thereby suffered loss and damage (par 118). There is a repeated assertion of ongoing trading losses (par 119) and that the Group Members were induced into changing their positions by not taking legal action to enforce their rights against Eastern Prosperity, or selling their businesses or otherwise minimising their losses through ceasing to trade or pursuing alternative commercial opportunities etc (par 120). Their businesses are said to have been rendered valueless as a result of the failure by Eastern Prosperity to complete the refurbishment of the shopping centre (par 122). There is a general allegation that the conduct of Eastern Prosperity permitting its agents to make the various representations asserted was misleading or deceptive in contravention of the Trade Practices Act in light of the state of knowledge of the directors of Eastern Prosperity as to its financial and regulatory affairs. Particulars of the asserted knowledge are then set out in pars A to Q inclusive. There are further pleas about the failure of the directors of Eastern Prosperity and DBF to qualify or retract representations made by Costello. It is not clear what function this pleading plays as there is no action against the directors themselves. 18 The pleading then focuses on the position of the particular Group Members, the nature of the businesses that they were operating, repeats by reference to earlier pleading the representations said to have been made to them and their responses to those representations and their suffering of loss and damage as a result. The Viability of the Further Substituted Statement of Claim 19 The further substituted statement of claim incorporates, in a less than precise way, allegations of implied representations as to the financial capacity of Eastern Prosperity to carry out the promised refurbishments. The falsification of those implied representations is expressed by reference to the existence of "strong grounds to suspect that for financial and regulatory reasons…the proposed refurbishment would not take place" (par 89, particular A). This is not in terms a falsification of a representation of financial capacity. In any event, these hints of a case are immersed in a mass of irrelevant material and unsustainable causes of action to which no respondent should be required to plead. 20 The submissions made for DBF summarises the difficulties succinctly. They can be paraphrased as follows: 1. The further substituted statement of claim goes well outside the scope of what was permitted by the orders of 8 April 2002. 2. The further substituted statement of claim relies upon a number of different representations which are broadly speaking representations in relation to renovations that were to be completed with specific details and timing of those representations. 3. There is an attempt to draw these express representations together by the assertion that Jodi Costello knew that they were unlikely to materialise in light of her alleged knowledge of the "financial and regulatory" position of Eastern Prosperity and the Ang Corporate Entities. 4. The further substituted statement of claim relies on various other representations and only brings in financial capacity as one of the reasons why these representations should not have been made in an unqualified fashion by DBF. This is not the same thing as making a case that an implied representation as to financial capacity was made. 5. There is no clear case in respect of pleas of misrepresentation, falsity and lack of reasonable grounds. In relation to an implied representation that Eastern Prosperity had the financial capacity to carry out the promised works, the falsity of the representation is asserted without the representation itself being pleaded. The applicant has not deleted the various representations not falsified but rather has chosen to rely upon the non-fulfilment of the predictions embodied in them. 6. Various representations are only alleged to have been made to certain of the group members. It is not asserted that other group members knew of them. The plea of reliance in pars 118, 119 and 120 asserts that various group members relied on "one or more or all" of the representations. 7. The further substituted statement of claim lacks particulars and details. 8. The further substituted statement of claim is clearly outside the terms of the leave given. 21 The most substantial difficulty with the further substituted statement of claim is that it imports a large number of representations outside the terms of the leave given on 8 April 2002. Although there are assertions which raise the issue of financial capacity the further substituted statement of claim taken as a whole involves so much in the way of untenable contentions and irrelevant and embarrassing material that it is beyond rescue by way of blue pencil exercise deleting particular paragraphs. The confinement of the leave given on 8 April 2002 to replead causes of action based upon implied representations as to the financial capacity of Eastern Prosperity was designed to achieve a clear focus upon that aspect of the case which might have given rise to an arguable cause of action. That clear focus has not been achieved and the statement of claim must be struck out. Disposition of the Action 22 This action has now been proceeding for some twenty months without yielding a viable statement of claim. Two prior statements of claim have been struck out. There does not seem to have been any real attempt in the latest pleading to comply with the terms of the leave granted on 8 April 2002. 23 In the reasons for decision on the first strike out motion on 6 December 2001 I said: "Mr McIntyre and his wife are bringing these proceedings on their own behalf and as representatives of a number of other tenants. The difficulties with the statement of claim which I have identified may be indicative not only of a difficulty in framing their case. It may also reflect upon whether they have a case at all. In my opinion it is highly questionable whether this proceeding can be viably conducted without the assistance of competent legal advice. It could be unfair both to the applicants, those they purport to represent and to the respondents to allow the action to go on indefinitely with a succession of defective pleadings and increasing costs orders against them. I will therefore allow a further amendment to the statement of claim but if the fundamental difficulties cannot be overcome, I will not be disposed to allow further amendments and the incurring of further unnecessary costs on all sides." 24 Notwithstanding that I did, in striking out the second substituted statement of claim on 8 April 2002, allow limited leave to replead. At that time I said: "Notwithstanding its considerable revision, the substituted statement of claim seems to have retained many of the vices of its predecessor. As I observed in giving judgment on the previous statement of claim on 6 December 2001, if the fundamental difficulties could not be overcome I would not be disposed to allow further amendments and the incurring of further unnecessary costs on all sides. It may be, however, that out of the mass of irrelevant material a case may be formulated based upon an implied representation as to financial capacity which seems to have been the intended target of the substituted statement of claim. I will therefore afford the applicants one further opportunity to prepare a further amended pleading based on that case." 25 Despite the introduction of some allegations relating to the financial capacity of Eastern Prosperity, the further substituted statement of claim as a whole is so defective it cannot be allowed to stand. In the present circumstances, there is no reason to believe that the position will be improved by the grant of further leave to replead. Mr McIntyre, acting on his own behalf and on that of the various Group Members, has shown sincerity, commitment and energy in pursuing his and their interests. The demands that the representative process makes of him are too great to enable him to respond adequately in the absence of competent legal representation. This means not only that he incurs successive costs orders which he may or may not be able to meet but also that there is unfair prejudice to the respondents. 26 I have given consideration to the possibility of making an order under s 33N of the Federal Court of Australia Act 1976 (Cth), that the proceeding no longer continue as a representative proceeding under Part IVA. This would have the consequence that Group Members could then apply to be joined as applicants which would, of course, expose them to the possibility of liability for costs in the event that the application was unsuccessful. If Group Members were joined as applicants pursuant to s 33P of the Act it seems likely that this would leave them, for all practical purposes, in much the same position as they are now save for their potential liability under any further costs orders that might be made. The difficulty is that if the action is dismissed and individual Group Members wish to pursue their own proceedings as applicants they may be out of time in respect of certain of the causes of action. 27 In my opinion, the appropriate course at this stage is to strike out the further substituted statement of claim and to require that Mr McIntyre pay the costs of the respondents' motions forthwith. I will not however dismiss the application immediately. Rather, I will make an order that will have the effect that the proceeding will no longer continue as a representative proceeding unless the applicant and the Group Members are able to engage a solicitor on the record to represent them. I will give them until 12 October 2002 to do that. In the event that that has not happened by 12 October, then by force of this order, the proceeding will terminate as a proceeding under Part IVA. This will leave Mr McIntrye in the position of being the sole applicant unless one or more of the other Group Members applies to be joined as an applicant. I will assess the future of the proceeding at a directions hearing to be held on 17 October 2002. The respondents have asked that the application as a whole be dismissed. That question will be stood over to the directions hearing on 17 October 2002. I certify that the preceding twenty seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French . Acting Associate: Dated: 12 September 2002 Mr DC McIntyre appeared on his own behalf. Counsel for the First Respondent: Mr AH Karp Solicitor for the First Respondent: Karp Steedman Ross-Adjie Counsel for the Second Respondent: Solicitors for the Second Respondent: Ms DM Templeman Minter Ellison Date of Hearing: 6 August 2002 Date of Judgment: 12 September 2002