Australian Securities Commission v Macleod, R.J

[1992] FCA 757

IN THE FEDERAL COURT OF AUSTRALIA )	No. QG 3011 of 1992
QUEENSLAND DISTRICT REGISTRY	)
GENERAL DIVISION	)

IN THE MATTER OF ROBERT JAMES MACLEOD AND OTHERS

AUSTRALIAN SECURITIES COMMISSION

Applicant

ROBERT JAMES MACLEOD

First Respondent

Second Respondent

Third Respondent

STARLIGHT PICTURES PTY. LTD.

A.C.N. 055168128

Fourth Respondent

STAR PARTNERS PTY. LTD.

A.C.N. 055168155

Fifth Respondent

concern was to obtain proper particulars of the grounds relied	course of argument, it emerged that the respondents' real
upon by the applicant in making the allegation that the disbursements in question, made to Mr. Macleod, which are described in the pleading as sums advanced to him by the second respondent, Trainex Pty. Ltd., were made in breach of a duty owed by Mr. Macleod to that company.
It was submitted by the applicant that enough has been pleaded to set up a sufficient case, and that it is the respondent, Mr. Macleod, who has the onus of proving that the payments made to him by Trainex of which he was a director, were made for the benefit of, or in the interests of, the company and so were not made in breach of his duty to that company.
However, questions of onus are not determinative of questions as to how extensively an applicant must particularise his case: see Bailey v Commissioner of Taxation (Cthl (1977) 51 A.L.J.R. 429 at 431. The real issue is thus whether the case as pleaded sufficiently informs the
respondents of the nature of the case they have to meet as distinguished from the way in which the case will be proved.
The pleading must be sufficiently particularised so as to prevent the respondents from being taken by surprise at the trial and must enable the respondents to know what evidence they should collect to run their defence.
Coram:	Drwnmond J
Date:	11 September, 1992

Place: Brisbane

EX TEMPORE REASONS FOR RULING

The respondents have taken objection to paragraph

40(c) and (d) of the applicant's statement of claim. In the

In my view, the applicant has adequately

particularised its case here. It is pleaded that Mr. Macleod

was the sole director of Trainex from 24 November, 1986 to 25 July, 1991. It is alleged he applied the funds of the company for his own purposes. As to paragraph 40(c), the advances are particularised by reference to a loan account in his name in the company's general ledger. This identifies every payment that makes up the $337,900.74 referred to in the pleading. There are many such payments, as is apparent from the document incorporated in the pleading. They range from amounts as small as $10.00 on 30 October, 1990 to $150,667.55 on 26 September, 1990.

The respondents did not really submit that paragraph 40 should be struck out as not disclosing a good claim in law, although, having regard to the number and character of the payments and the period over which they were made by Mr. Macleod from company moneys - as alleged in the pleading - I think such an attack would fail. I think sufficient is alleged which, if proved, would raise a prima facie case that the payments were made by Mr. Macleod to himself in breach of

O'Brien & Yorkville Nominees Ptv. Ltd. (in liauidation) v J.E.

his duty, and not for the benefit of the company: see J.W.

Walker (1982) 1 A.C.L.C. 59 at 63.

The respondents have also taken objection to paragraph 68(ii) and paragraph 76(ii) of the statement of claim. It is said that those two paragraphs cannot stand together because paragraph 68(ii) sets up a case in which the applicant asserts it cannot say what happened to a large part of the money in question, whereas paragraph 76(ii) asserts that Mr. Macleod got the money. It is clear enough that the same funds are the subject of both paragraphs.

However, paragraph 68(ii) sets up a case that, save for three sums totalling about $840,000.00, the whole of the $5,288,142.00 plus $277,400.00 that was paid by the investors to Trainex and Starlight Film Studios Ltd. (the third respondent) was applied in breach of the trusts upon which those two companies received those funds.

This paragraph of the pleading identifies how it says about $2,000,000.00 of the investors' funds received by the two companies was misapplied and alleges that, as to the balance of about $3,600,000.00, the applicant is unable to provide particulars as to the use to which the funds received were put, save that it was not for film production; that is, it was not for the purpose of the trusts upon which the funds were received, and in respect of which the allegation of

breach of trust is made in the paragraph.

Paragraph 76(ii), on the other hand, alleges that all the funds received from the investors, other than the $840,000.00 identified in paragraph 68 as having been expended on film production, were applied to Mr. Macleod's own use. It identifies how about $2,000,000.00 of this balance of the investors' moneys was misapplied but it goes on to say that, as to the balance, the applicant cannot say how that was misapplied by Mr. Macleod to his own use, at least until after interlocutory steps have been completed.

There is, in my view, no inconsistency between the two paragraphs of the pleading. The one sets up a case that no part of the $5,600,000.00 that came originally from the investors was applied for the purposes of the trusts on which it was received by the companies, save for an identified part of $840,000.00. The other sets up a qulte different case in which the applicant undertakes the burden of showing what, in fact, happened to the moneys originally provided by the investors (apart from the $840,000.00), once those moneys came into Mr. Macleod's hands.

It is said that this is not an acceptable way for the applicant, after the detailed investigation that it has conducted, to plead his case in paragraph 76(ii); but I am not prepared to deal with what seems to me to be really a complaint of abuse of process on the basis of argument about

the pleading put in the form of submissions from the bar

table. If the complaint is to be taken further, it is one

which can only be resolved on proper evidence.

I certify that this and the preceding
four pages is a true copy of the
reasons for ruling herein of the
Honourable Mr. Justice Drummond.

Associate: W,*. v

Date:  g1 September, 1992

IN THE FEDERAL COURT OF AUSTRALIA )  No. QG 3011 of 1992

QUEENSLAND DISTRICT REGISTRY	1
GENERAL DIVISION	)

IN THE MATTER OF ROBERT JAMES MACLEOD AND OTHERS

AUSTRALIAN SECURITIES COMMISSION

Applicant

ROBERT JAMES MACLEOD

.	First Respondent
.	~

'\TRAINEX PTY. LTD.

, T C . N . 001506332

l -, Second Respondent

+;	J	I L
. -

: - l \ -

\c - F2:z.L- xcc,; OF S~ARLIGHT FILM STUDIOS LTD.

.C.N. 051750442

y -' '\

\: , Third Respondent

STARLIGHT PICTURES PTY. LTD.

A.C.N. 055168128

Fourth Respondent

STAR PARTNERS PTY. LTD.

A.C.N. 055168155

Fifth Respondent

Coram:	Drummond J
Date:	11 September, 1992

Place: Brisbane

EX TEMPORE REASONS FOR RULING

The respondents have taken objection to paragraph 40(c) and (d) of the applicant's statement of claim. In the course of argument, it emerged that the respondents' real concern was to obtain proper particulars of the grounds relied upon by the applicant in making the allegation that the disbursements in question, made to Mr. Macleod, which are described in the pleading as sums advanced to him by the second respondent, Trainex Pty. Ltd., were made in breach of a duty owed by Mr. Macleod to that company.

It was submitted by the applicant that enough has been pleaded to set up a sufficient case, and that it is the respondent, Mr. Macleod, who has the onus of proving that the payments made to him by Trainex of which he was a director, were made for the benefit of, or in the interests of, the company and so were not made in breach of his duty to that company.

However, questions of onus are not determinative of questions as to how extensively an applicant must particularise his case: see Bailey v Commissioner of Taxation lCthl (1977) 51 A.L.J.R. 429 at 431. The real issue is thus whether the case as pleaded suffxiently informs the

respondents of the nature of the case they have to meet as	distinguished from the way in which the case will be proved.
The pleading must be sufficiently particularised so as to prevent the respondents from being taken by surprise at the trial and must enable the respondents to know what evidence they should collect to run their defence.

In my view, the applicant has adequately

particularised its case here. It is pleaded that Mr. Macleod

was the sole director of Trainex from 24 November, 1986 to 25 July, 1991. It is alleged he applied the funds of the company for his own purposes. As to paragraph 40(c), the advances are particularised by reference to a loan account in his name in the company's general ledger. This identifies every payment that makes up the $337,900.74 referred to in the pleading. There are many such payments, as is apparent from the document incorporated in the pleading. They range from amounts as small as $10.00 on 30 October, 1990 to $150,667.55 on 26 September, 1990.

The respondents did not really submit that paragraph 40 should be struck out as not disclosing a good claim in law, although, having regard to the number and character of the payments and the period over which they were made by Mr. Macleod from company moneys - as alleged in the pleading - I think such an attack would fail. I think sufficient is alleged which, if proved, would raise a prima facie case that the payments were made by Mr. Macleod to himself in breach of

his duty, and not for the benefit of the company: see J.w.

O'Brien & Yorkville Nominees Ptv. Ltd. (in liauidationl v J.E.
Walker (1982) 1 A.C.L.C. 59 at 63.

The respondents have also taken objection to paragraph 68(ii) and paragraph 76(ii) of the statement of claim. It is said that those two paragraphs cannot stand together because paragraph 68(ii) sets up a case in which the applicant asserts it cannot say what happened to a large part

of the money in question, whereas paragraph 76(ii) asserts that Mr. Macleod got the money. It is clear enough that the same funds are the subject of both paragraphs.

However, paragraph 68(ii) sets up a case that, save for three sums totalling about $840,000.00, the whole of the $5,288,142.00 plus $277,400.00 that was paid by the investors to Trainex and Starlight Film Studios Ltd. (the third respondent) was applied in breach of the trusts upon which those two companies received those funds.

This paragraph of the pleading identifies how it says about $2,000,000.00 of the investors' funds received by the two companies was misapplied and alleges that, as to the balance of about $3,600,000.00, the applicant is unable to provide particulars as to the use to which the funds received were put, save that it was not for film production; that is, it was not for the purpose of the trusts upon which the funds were received, and in respect of which the allegation of

breach of trust is made in the paragraph.

Paragraph 76(ii), on the other hand, alleges that all the funds received from the investors, other than the $840,000.00 identified in paragraph 68 as having been expended on film production, were applied to Mr. Macleod's own use. It identifies how about $2,000,000.00 of this balance of the investors' moneys was misapplied but it goes on to say that, as to the balance, the applicant cannot say how that was

misapplied by Mr. Macleod to his own use, at least until after
interlocutory steps have been completed.

There is, in my view, no inconsistency between the two paragraphs of the pleading. The one sets up a case that no part of the $5,600,000.00 that came originally from the investors was applied for the purposes of the trusts on which it was received by the companies, save for an ldentified part of $840,000.00. The other sets up a quite different case in which the applicant undertakes the burden of showing what, in fact, happened to the moneys originally provided by the investors (apart from the $840,000.00) , once those moneys came into Mr. Macleod's hands.

It is said that this is not an acceptable way for the applicant, after the detailed investigation that it has conducted, to plead his case in paragraph 76(ii); but I am not prepared to deal with what seems to me to be really a complaint of abuse of process on the basis of argument about

table. If the complaint is to be taken further, it is one	the pleading put in the form of submissions from the bar
which can only be resolved on proper evidence.
I certify that this and the preceding four pages is a true copy of the reasons for ruling herein of the Honourable Mr. Justice Drummond.
Associate:
Date:  U1 ~e~tembe;, 1992