Johnstone v HIH Limited [2004] FCA 190

FEDERAL COURT OF AUSTRALIA

Johnstone v HIH Limited [2004] FCA 190 PRACTICE AND PROCEDURE - REPRESENTATIVE PROCEEDINGS - pleading - particulars - motion to strike out pleadings - purpose of pleadings and particulars generally - particulars of alleged state of mind - inadequacy of pleadings - deficient formulation of pleadings - requirement that material facts and allegations be properly pleaded - (CTH) Federal Court Rules O 11, O 12. PRACTICE AND PROCEDURE - REPRESENTATIVE PROCEEDINGS - threshold requirements for bringing representative proceedings in the Federal Court - every group member must have a claim against all respondents - pleadings must describe or otherwise identify the group members - claims must arise of out of similar or related circumstances - claims must give rise to substantial common issues of law or fact - requirements for applications commencing a representative proceeding - necessity of being able to define with precision who the members of the group are - group members' ability to opt out - possibility of meeting requirements by redrafting pleadings - (CTH) Federal Court of Australia Act 1976 ss 33C, 33H, 33N. CORPORATIONS - shareholders - noteholders - diminution in share value - company as proper claimant - derivative actions - where shareholder or noteholder has suffered personal loss - case law unsettled - shareholder or noteholder may be able to sue on the basis of a loss that is separate and distinct from any entitlement of the company. TRADE PRACTICES - misleading and deceptive conduct - misleading and deceptive conduct by silence - pleading of material facts must justify conclusion that silence would amount to misleading and deceptive conduct - accessorial liability - knowing involvement - requisite knowledge - reliance - requirement of a precise formulation of the causal nexus between the conduct alleged and the loss claimed - (CTH) Trade Practices Act 1974 ss 52 and 75B. PRACTICE AND PROCEDURE - SECURITY FOR COSTS - security for costs application - orders for costs against individuals only to be made in rare circumstances - financial hardship - frustration of proceedings - strength of applicant's case - orders sought at premature stage - issues impossible to determine on present pleadings. PRACTICE AND PROCEDURE - REPRESENTATIVE PROCEEDINGS - direct communication by solicitors to group members - solicitors made statements about potential group members' ability to join group proceedings and their financial liabilities - statements inaccurate - effect of statements - discretion of the Court to determine matters in relation to representative actions - ability of Court to order notices be given to group members - rectification of misleading communications to group members - correction letter necessary - (CTH) Federal Court of Australia Act 1976 Pt IVA Federal Court of Australia Act 1976 (Cth) Part IVA Trade Practices Act 1974 (Cth) ss 52 and 75B Corporations Act 2001 (Cth) ss 79 and 995 Fair Trading Act 1987 (NSW) s 68 Federal Court Rules Dare v Pulham (1982) 148 CLR 658 referred to Lyons v Kern Konstructions (Townsville) Pty Limited (1983) 47 ALR 114 cited Fox v H Wood (Harrow) Ltd [1963] 2 QB 601 cited Philip Morris (Australia) Ltd v Nixon (2000) 170 ALR 487 followed Bray v Hoffman-La Roche Limited (2003) 200 ALR 607 not followed Petrusevski v Bull Dogs Rugby League Club Limited [2003] FCA 61 referred to King v GIO Australia Holdings Ltd [2000] FCA 1543 cited Prudential Assurance Co Limited v Newman Industries Limited (No 2) [1982] Ch 204 distinguished Johnson v Gore Wood & Co [2002] 2 AC 1 discussed Harris v Milfull [2002] FCAFC 442 discussed Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 cited Yorke v Lucas (1985) 158 CLR 661 cited McMullin v ICI Australia Operations Pty Ltd (1998) 84 FCR 1 referred to King v AG Australia Holdings Ltd (formerly GIO Holdings Ltd) [2002] FCA 1560 cited Williams v FAI Home Security Pty Ltd (No 3) [2000] FCA 1438 cited BRIAN ALEXANDER JOHNSTONE v HIH INSURANCE LIMITED (ACN 008 636 575) (IN LIQUIDATION) AND ORS N317 of 2002 TAMBERLIN J SYDNEY 5 MARCH 2004