Supreme Court New South Wales Medium Neutral Citation: Millinium Capital Managers Ltd v Soma Group Ltd [2020] NSWSC 300 Hearing dates: On the papers Date of orders: 26 March 2020 Decision date: 26 March 2020 Jurisdiction: Equity - Commercial List Before: Stevenson J Decision: Leave to plaintiff to file a proposed Amended Commercial List Statement is refused. Leave granted to plaintiff to circulate any further proposed Amended Commercial List Statement. Upon plaintiff's undertaking to the Court and to the defendants concerning payment into Court if its assets are reduced below a specified level, the defendants' notice of motion seeking security for costs is dismissed. The defendants' notice of motion seeking to strike out certain paragraphs of the plaintiff's Commercial List Statement is stood over to the Commercial List on 24 April 2020. Catchwords: PRACTICE AND PROCEDURE – leave to amend Commercial List Statement CONSUMER LAW – misleading or deceptive conduct – whether directors were knowingly involved COSTS – security for costs – where plaintiff undertakes to notify defendants if assets fall below specified value Legislation Cited: Competition and Consumer Act 2010 (Cth), Sch 2 ('Australian Consumer Law') Trans-Tasman Proceedings Act 2010 (Cth) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Sutton v AJ Thompson Pty Ltd (in liq) (1987) 73 ALR 233 Texts Cited: R V Miller, Miller's Annotated Competition and Consumer Law (42nd ed, 2020, Lawbook Co) Category: Procedural and other rulings Parties: Millinium Capital Managers Ltd (Plaintiff) Soma Group Ltd (First Defendant) Logic Fund Management Ltd (Second Defendant) Gregory Phillipe Marshall (Third Defendant) Paul John Chamberlain (Fourth Defendant) Representation: Counsel: J Willis (Plaintiff) G P Gee (Defendants) Solicitors: Piper Alderman (Plaintiff) Maddocks Lawyers (Defendants) File Number(s): 2019/291329 Publication restriction: Nil Judgment 1. The plaintiff, Millinium Capital Managers Ltd, is the Responsible Entity for an ASX-listed managed investment scheme known as the Millinium's Alternatives Funds ('the Fund"). 2. Millinium claims that the first and second defendants, Soma Group Ltd and Logic Fund Management Ltd, both incorporated in New Zealand, induced it to subscribe for shares in Soma and to take various other steps based on representations, said to be misleading or deceptive, concerning: 1. Soma's proposed acquisition of the IXL branded jam, fruit spread and conserve products business and the Taylor's branded sauce products business; and 2. Soma's alleged partnership with a New Zealand Government-owned entity known as Plant & Food Research. 1. Millinium alleges that the third and fourth defendants, both directors of Soma, Mr Gregory Marshal and Mr Paul Chamberlain, were knowingly involved in Soma's and Logic's misleading or deceptive conduct. 2. These reasons deal with a number of interlocutory applications brought by the parties. First application – Millinium's application to file an Amended Commercial List Statement 1. By notice of motion filed on 25 February 2020, Millinium seeks to file an Amended Commercial List Statement. 2. The defendants oppose such leave being granted on the basis that certain of the amendments were futile. 3. The List Statement alleges that Soma made representations that were misleading or deceptive, contrary to the proscription in s 18 of the Australian Consumer Law ("ACL") and that Mr Marshall and Mr Chamberlain were involved in that contravention for the purposes of s 236 of the ACL. 4. A number of paragraphs in the proposed List Statement allege that Mr Marshall or Mr Chamberlain knew that the representations allegedly made by Soma were misleading or deceptive. 5. Such knowledge is particularised as follows (to take a typical example from proposed paragraph 138C): "Marshall was a director of Soma and, in that capacity, can be expected to have had actual knowledge of the funds and the source of the funds available to Soma. Accordingly, it can be inferred that Marshall had actual knowledge that [the relevant representations] were false." 1. Allegations of knowledge, particularised to the same effect, are made against Mr Marshall at proposed paragraphs 145C, 147E, 150C, 157C and 159E, and against Mr Chamberlain at proposed paragraphs 174C and 176C. 2. Uniform Civil Procedure Rules 2005 (NSW) ("UCPR) r 15.4(1) provides that a pleading that alleges any condition of mind must give particulars of the facts on which the party pleading relies. 3. UCPR r 15.4(2) provides that for the purposes of r 15.4(1), "condition of mind" does not include knowledge. 4. However, UCPR r 15.10(2) provides that if a pleading alleges that a person had knowledge or notice of some fact, matter or thing, the court may order particulars of the facts on which the party relies. 5. Here, despite UCPR r 15.4, and without the need for an order under UCPR r 15.10, Millinium has offered particulars of the facts relied upon to contend that Mr Marshall and Mr Chamberlain knew that the relevant representations were misleading or deceptive or likely to be misleading or deceptive. 6. It alleged that each director had "actual knowledge" of the falsity of the representations. But the only basis on which such actual knowledge is alleged is the fact of their directorship. From that fact it is said that it "can be expected" and "can be inferred" that Mr Marshall and Mr Chamberlain had actual knowledge that the relevant representations were false. 7. In my opinion, this is not a sufficient basis on which to make the grave allegation of involvement in a breach of s 18 of the ACL. 8. It has been long established that "involvement" for the purposes of s 236 and its analogues must be intentional participation in the breach: for example, Sutton v AJ Thompson Pty Ltd (in liq) (1987) 73 ALR 233 at 242–3 (Foster, Woodward and Wilcox JJ) and see generally R W Miller, Miller's Annotated Competition and Consumer Law (42nd ed, 2020, Lawbook Co) at [CCA.76.80]. 9. The mere fact of Mr Marshall's and Mr Chamberlain's directorship could not be sufficient to establish their intentional participation in any breach by Soma of s 18 of the ACL. That fact, in combination with other facts, may be sufficient. But not that fact alone. 10. For that reason, I refuse to grant Millinium leave to file the proposed Amended Commercial List Statement. 11. I will, however, grant leave to Millinium to circulate, within 21 days, any further proposed Amended Commercial List Statement. 12. For that purpose, I will stand over Millinium's Notice of Motion of 25 February 2020 to the motions list on 24 April 2020. 13. In these circumstances I will not, at least for the moment, consider the defendants' pending application to strike out certain paragraphs of the existing Commercial List Statement. Security for costs 1. The second interlocutory application is the defendants' application, made by Notice of Motion filed on 28 February 2020, for an order that Millinium provide security for costs of the proceedings in the sum of $242,000. 2. In written submissions, Millinium did not suggest that the amount of security sought was unreasonable. 3. The assets of the Fund were some $7.2 million as at 31 December 2019. 4. Millinium has offered an undertaking to the defendants that if the Fund's assets fall below $1 million, it will immediately notify the defendants in writing and pay $242,000 into Court within seven days. 5. The defendants propose an alternative undertaking which, rather to referring to the Fund's "net assets", refer to the Fund's "unencumbered cash, cash equivalent listed equity (less all liabilities)". 6. As Millinium provides weekly net tangible asset value reports to the ASX, which reports are publically available, my opinion is that the undertaking proposed by Millinium is sufficient to protect the defendants' interests. 7. Mr Gee, in his submissions for the defendants, drew attention to s 15 of the Trans-Tasman Proceedings Act 2010 (Cth) which contains a provision for security for costs in circumstances where, as here, a document such as a Commercial List Summons was served in New Zealand. I do not see that this provision takes matters further in this case. Orders 1. I make the following orders: 1. I grant leave to the plaintiff to serve any further proposed Amended Commercial List Statement (any such document should be served on the defendants and sent by email to my Associate) by 5:00pm on 17 April 2020). 2. I stand the plaintiff's Notice of Motion of 25 February 2020 over to the motion's list on 24 April 2020. 3. I note the undertaking given by the plaintiff to the Court and to the defendants that in the event that Millinium's Alternatives Fund's net assets fall below $1 million, the plaintiff will immediately notify the defendants in writing and pay $242,023.30 into Court within seven days. 4. I otherwise dismiss the defendants' Notice of Motion of 28 February 2020. 5. The costs of the defendants' Notice of Motion of 28 February 2020 and the costs to date of the plaintiff's Notice of Motion of 25 February 2020 will be the defendants' costs in the cause. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 March 2020