Burns Philp Trustee Company Ltd v Moneylink Financial Planning (Systems) Ltd

[1989] FCA 243

JUDGMENT No. 024.1 ....'/.E?-.

NOT FOR GENERAL DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA	)
1
NEW SOUTH WALES DISTRICT REGISTRY )	No. N G 1446 of 1988

)

GENERAL DIVISION 1

BETWEEN: BURNS PHILP TRUSTEE COMPANY

LIMITED

First Applicant

ESTATE MORTGAGE MANAGERS

LIMITED

Second Applicant

AND: MONEYLINK FINANCIAL PLANNING

(SYSTEMS) LIMITED
First Respondent
JUTANT PTY LIMITED
Second Respondent
THOMAS COLLINS
Third Respondent
STEPHEN VAN EYK

CORAM :	WILCOX J
PLACE:	SYDNEY
DATE :	27 APRIL 1989

Fourth Respondent
JULIE WEBBER

Fifth Respondent

MINUTES OF ORDER

A.	Statement of Claim; any such amendments to be effected by filing an Amended Statement of Claim within 14 days of today.	Leave be granted to the applicants to amend the within 21 days from the date of filing and serving the Amended Statement of Claim.
Any Reply be filed and served within seven days of filing Defences.
Lists of Documents be filed and served not later than 21 June 1989.
The matter proceed to hearing on the basis of affidavit evidence, subject to cross-examination as required and subject to the proviso that evidence concerning conversations shall not be included in affidavits, but shall be set out in statements of evidence to be supplied to the opposing party at the time when the affidavits of the party relying on that evidence are required to be filed.
All affidavits upon which the applicants propose to
rely be filed and served not later than 12 July 1989.
All affidavits upon which any of the respondents propose to rely be filed and served not later than 28 July 1989.
H.	The exhibits tendered in connection with the Notice of Motion be returned.
J.	Documents produced on subpoena by third parties remain in the Registry until further order.
R.	subpoena or a notice to produce may be uplifted by
All documents produced by a party pursuant to a solicitor will retain custody of, and return, the documents to the Court if and when required to do so.
Note :	Settlement and entry of orders is dealt with in Order
36 of the Federal Court Rules.

THE COURT ORDERS THAT:

1.        The Notice of Notion filed on 2 2 March 1989, to strike out the Statement of Claim as against the first, third and fourth respondents, be dismissed.

The first, third and fourth respondents pay 80 percent of the respondents' costs of the said Notice of Motion.

The matter be stood over for further mention at 9.30 am on Tuesday, 1 August 1989.

Liberty be granted to any party to apply on two days' notice in respect of any interlocutory matter.

AND THE COURT DIRECTS THAT: 

NOT FOR GENERAL DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA	) )
NEW SOUTH WALES DISTRICT REGISTRY )	NO. N G 1446 of 1988

1

GENERAL DIVISION 1

BETWEEN: BURNS PHILP TRUSTEE COMPANY

LIMITED

First Applicant

ESTATE MORTGAGE MANAGERS

LIMITED

Second Applicant

AND: MONEYLINK FINANCIAL

PLANNING (SYSTEMS) LIMITED
First Respondent
JUTANT PTY LIMITED
Second Respondent
THOMAS COLLINS
Third Respondent

STEPHEN VAN EYK

Fourth Respondent

JULIE WEBBER
Fifth Respondent

CORAM :	W1 LCOX J
PLACE:	SYDNEY
DATE :	27 APRIL 1989

EXTEMPORE REASONS FOR JUDGMENT

This is an application made by three of the

respondents -- namely, the first, third and fourth respondents

-- by which they seek that the Statement of Claim be struck

out, as against them. The application is made pursuant to

0.20 r.2 of the Federal Court Rules. That rule provides:

"2 (1) where in any proceeding at appears to

the Court that in relation to the proceeding
generally or in relation to any claim for relief in

the proceeding--

(a)	no reasonable cause of action is disclosed;
(b)	the proceeding is frivolous or vexatious; or
(e)	the proceeding is an abuse of the process of the Court,

the Court may order that the proceeding be stayed
or dismissed generally or in relation to any

claim for relief in the proceeding.

U

( 2 ) ...

There are two aspects of the claim that is brought by the two applicants. In the first place they make that claim

under s.52 of the Trade Practices Act 1974, claiming that
certain statements which were made by the first and second
respondents, and in which the third, fourth and fifth
respondents were respectively knowingly concerned, were
misleading. Secondly, they claim that the published matter
contained imputations defamatory of them.

In relation to the defamation aspect of the case, I can deal with the matter quite shortly. It 1s not suggested that there is an inherent difficulty about defamatlon

proceedings arising out of the published matter. The
submissions which have been put to the Court raise pleading
points.

Paragraph 18 of the Statement of Claim alleges that

the particular publications, in their natural and ordinary
meaning, bore certain specified imputations which were
defamatory of the first applicant. Counsel for the
respondents emphasises that any imputation, in order to be
actionable in defamation, must be an imputation about a
particular person. And he argues that the particulars which
have been given, and which relate to the Estate Mortgage
Trusts, of which the first applicant is trustee, do not
contain allegations defamatory of the first applicant. I
think that there is substance in this complaint, in the way in
which the paragraph is drafted, and that it would be better
for there to be a revision of the paragraph so as to make

clear precisely what imputations, as against the first

applicant, are said to arise from the published material.

Secondly, in para.(b) of the particulars, the word

"improperlyn is used without any specification of the precise
meaning of this word in that context. A similar position

arises in relation to para.l9(a) of the Statement of Clalm. It seems to me that it would be desirable for there to be a specification of the content of thls word, and that the

particulars should be expanded accordingly.

Nr Kelly, on behalf of the applicants, has

acknowledged the desirability of the revision of paras.18 and 19 and has sought an opportunity to amend. I think that this is appropriate, and that it would not be appropriate to strike

out the Statement of Claim because of these pleading defects.

On behalf of the respondents, Nr Rares complains of

the imputations set out in para.(b) of the particulars of
c1.19 saying that the imputation does not arise out of the
published material. I think that this is an arguable
question, but I am of the view that it is not appropriate for
it to be dealt with on a strike out application. ~t may be
that the revision which Mr Kelly proposes to undertake will
effect some change in this particular clause so that anything

that I might now say would become irrelevant.	In any event, I
think that it is far better for this to be a matter to be

considered at the trial. Whatever imputations are finally

pleaded by the applicants will be the imputations upon which

they will go to trial. If they put their case too high, in

that they allege imputations which cannot reasonably be
extracted from the published material, they take the risk of

failing because the Court so holds. Consequently, if Mr Rares
is in fact correct in his submission, then he has nothing

ultimately to fear.

In relation to the trade practices aspect of the

matter, a major question which arises relates to the
circumstances under which the first respondent published the
material complained of. It appears that this material was
published in a publication put out by the first respondent,
called "Moneylink Digest". It is alleged that this
publication was sent to various franchisees of the first
respondent. The argument is put by Mr Rares that this is a
case in which s.65A of the Trade Practices Act applies. As

s.65A operates to take the publications to which it refers

outside of the operation, -- inter alia, of s.52 of the Act, the

argument is that the trade practices claim must fail so that
the Statement of Claim, at least as regards the trade
practices action, should be struck out.

I think that the question whether s.65A does apply to this particular publication is a matter of some complexity.

It will involve consideration of quite a number of facts and

the determination of questions of law arising out of s.65A,
which, so far as I know, have not yet been the subject of

judicial consideration. I refer to the meaning of the words

"supply", as used in s.65A(l)(a)(i) of the Act, and the word
"suppliedn, as used in the definition of "relevant goods or

services" in s.65A(3). Section 65A(l)(a)(i) excludes from the

application of s.52 "a prescribed publication of matter by a prescribed information provider, other than--" certain types of publications.

One of the exceptional publications is "a publication of matter in connection with the supply or possible supply of goods or services", but only where one or other of

sub-paras.(v) or (vi) is applicable. In the present case sub-para.(v) would seem to apply, so that the question is whether the services were relevant goods or services. That

takes one to the definition of sub-s.(3). There being no

question of the supply of goods, in this case, the question is
whether any. services, in connection with whose supply or
possible supply the matter was published, were of a kind

supplied by a "prescribed information provider".

Assuming in favour of Mr Rares that his client --

that is to say the first respondent -- is a person who carries

on a business of providing information, and therefore is a

"prescribed information provider", the question is whether the

first respondent published matter in connection with the
possible supply of services of a kind supplied by itself. It
is not a matter of whether the particular services, the
subject of the publication, were to be supplied by the first
respondent in this particular case.

Mr Rares points out that the publication complained of specifically advised that the services, namely investment in the Estate Mortgage Trust, should not be supplied. But I think that a discussion about the possibility of investment in

a particular fund, which discussion contains a negative
recommendation, is a publication of matter in connection with
the possible supply of that service; that is to say an
investment in that fund. The question then is whether these
were services of a kind supplied by the first respondent.

Mr Rares says that the first respondent is a licensed

dealer; and that it is licensed only to advise. He states
that the first respondent does not itself trade in those
investments about which it gives advice. However, as I
understand the position, from the smattering of evidence which
is available, the first respondent does have the benefit of
commissions on investments made by clients pursuant to advice

given to it. I think that it is arguable that a course of

conduct which consists of advising a client about the

viability of an investment provided by somebody else, allied

to the receipt of a commission when the third party does

provide to the client the investment, amounts to the supply by

the adviser of the services -- that is to say investments --

of a particular kind.

I emphasise that I use the word "arguable"; I have no firm opinion upon this matter. Much may depend upon the detail of the evidence, in particular cases, as to the

connection between the advice which is given and the benefits received by the adviser as a result of favourable advice. As

I say, there is also a question of what is meant by the word

"supply".

It may well be that, in the end, the first respondent

will be held entitled to succeed under s.65A; I would not wish to make any forecast about the evsntual result of the

case. It is enough for me to say that I think that it is not

overwhelmingly clear that s.65A applies, so as to make it
proper to say that the trade practices aspect of the clarm is
frivolous, vexatious or without merit.

A complaint is also made of that part of the

Statement of Claim which alleges, as against the first and third respondents, that they were involved in the republication of the material set out in the "Moneylink Digest" by the inclusion of that material in circulars

distributed throughout Australia by franchisees of the first

respondent. Two complaints are made: firstly, it is said
that the Statement of Claim does not allege facts justifying
the allegation that the first and third respondents caused the
material to be included in the circulars; and secondly, it is
said that the persons to whom the circular letters were sent
are not identified.

As to the first matter, the allegation of the

applicants, as I understand it, is that the very form of the
original publication constituted an invitataon for the
material to be sent on. Once again, I thank that this is a
matter which is arguable each way. The form of the document
was such that it would clearly be convenient for a franchisee
to copy it and to send it on to a particular person, or indeed

all of the people on that franchisee's mailing list.

On the other hand, it is true, as Mr Races points

out, that the "Honeylink Digest" itself, by a notation on its front cover, suggests that the material should be regarded as for the use of the franchisees only. under those

circumstances, it may be the proper ultimate conclusion of
fact that neither the first nor the third respondent caused
the material to be republished to persons on the mailing list
of the franchisees. However, once again, the facts are
presently so sparse, and the matter is so fairly arguable,
that it would be wrong to strike out the application on this

ground.

As to the other matter, namely the fact that the

people on the mailing list are not known, I regard that
submission as having no merit. The particulars identify the
recipients of the circular letters by description, namely as
persons on the mailing lists of the franchisees. It is true

that no people are identified by name. The applicants say cannot specify the names of each of the individuals who fall within the described class. This is information which is within the purview of the respondents and, no doubt, after discovery and interrogation there will be further materials supplied.

that this will be done after discovery and interrogation. I
see nothing wrong with that. The particulars are intended to
inform the respondents of the case which they have to meet.

I do not think that it is fair to characterise the

present allegations as being in the nature of fishing, given
the specification which has occurred and the fact that, as one
of the exhibits tendered before me testifies, there came into
existence a pro forma letter prepared by one of the
franchisees apparently for distribution to people on its
mailing list.

One other matter which was argued arises out of

s.65A of the Securities Industries Code, which governs the

behaviour of advisers in securities. The submission was put
breach by the first respondent of the provisions of the	that the Court ought not to assume that there has been a neither do I think that I should assume the other way. There is simply no evidence before me as to what happened in the
present case. The respondents, the applicants on the strike out application, have not elected to put any direct evidence as to their conduct before the Court. I think that it would be wrong of me to assume, without evidence, that they have
governed themselves in accordance with the Securities which has been made against them.

It must be emphasised that s.65A of the Trade

Practices Act creates a defence to a claim under 5.52. The

onus of showing the application of that section rests upon a prove, if they can, the facts which make applicable s.65A of

respondent against whom a claim of breach of s.52 is made.

the Trade P.ractices Act. That position applies - a fortiori at

the present time, when the applicants have no onus whatever in
an evidentiary sense. At this stage they merely make
allegations. The respondents have to show that, on the basis

of the facts alleged in the Statement of Claim, the action is

doomed to failure. If there is an absence of evidence as to

the way in which the respondents conducted themselves, the

strike out application must fail.

For the above reasons, I am of the view that the

application to strike out the Statement of Claim, as against the first, third and fourth respondents, should be rejected. I grant leave to the applicants to amend the Statement of

Amended Statement of Claim within 14 days of today. I direct
that the Defences of all respondents be filed and served
within 21 days from the date of filing and serving the Amended Claim; any such amendments to be effected by filrng an within seven days of filing Defences. Lists of Documents are to be filed and served not later than 21 June 1989.

I direct that the matter proceed to hearing on the

basis of affidavit evidence, subject to cross-examination as required and subject to the proviso that evidence concerning conversations shall not be included in affidavits, but shall be set out in statements of evidence to be supplied to the

opposing party at the time when the affidavits of the party

relying on that evidence are required to be filed.

I direct that all affidavits upon which the

applicants propose to rely be filed and served not later than
12 July 1989. All affidavits upon which any of the

respondents propose to rely are to be filed and served not

later than 28 July 1989. Stand over for further mention at

9.30 am on Tuesday, 1 August. Liberty to any party to apply

on two days' notice in respect of any interlocutory matter.

Bearing in mind all that has happened today, I think

that the appropriate course is that I order that the first,
third and fourth respondents pay 80 percent of the

respondents' costs of the Notice of Motion filed on 22 March
1989.

All exhibits tendered on the hearing of the Notice of Motion may be returned. The documents produced on subpoena by third parties should remain in the Registry until further

order. All documents produced by a party, pursuant to a
subpoena or notice to produce, may be uplifted by the
solicitor for that party upon the basis that the solicitor
will retain custody and will return the documents to the Court

if and when required to do so.

I certify this and the twelve (12)

preceding pages to be a true copy of
the Reasons for Judgment of

his Honour Justice Wilcox.

Date:	16 May 1989
Counsel for the Applicants:	Mr J C Kelly
Solicitors for the Applicants:	Abadee, Dresdner & Freeman
Counsel for the First,
Third and Fourth Respondents:	Mr S D Rases and

Mr S R W Emmett

Solicitors for the First,

Third and Fourth Respondents:	Mallesons Stephen Jaques
Second and Fifth Respondents:	No appearance
Date(s) of hearing:	27 April 1989