Crowley v WorleyParsons Limited

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FEDERAL COURT OF AUSTRALIA

Crowley v WorleyParsons Limited [2017] FCA 3

File number: NSD 1292 of 2015
Judge: FOSTER J
Date of judgment: 6 January 2017
Catchwords: PRACTICE AND PROCEDURE – whether a Statement of Claim filed in an investor class action pursuant to Pt IVA of the Federal Court of Australia Act 1976 (Cth) should be struck out in whole or in part as being likely to cause embarrassment, as failing to disclose a reasonable cause of action or as being otherwise an abuse of the process of the Court
Legislation:

Australian Consumer Law, ss 4, 18 and 236

Australian Securities and Investments Commission Act 2001 (Cth), ss 12BAB, 12BB, 12DA(1) and 12GF

Corporations Act 2001 (Cth) ss 674, 769C, 1041H, 1041I, 1317HA and Pt 7.10, Div 4

Federal Court of Australia Act 1976 (Cth), Pt IVA

Federal Court Rules 2011, r 16.21 and r 16.43

Cases cited:

Australian Securities and Investments Commission v Storm Financial Ltd (Receivers and Managers Appointed) (In Liq) (No 6) [2012] FCA 996

Bill Acceptance Corporation Ltd v GWA Ltd (1983) 50 ALR 242

Bolitho v Banksia Securities Ltd [2014] VSC 8

Caason Investments Pty Ltd v Cao (2015) 236 FCR 322

Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304

City of Botany Bay Council v Jazabas Pty Ltd (2001) ATPR 46-210

Fair Work Ombudsman v Eastern Colour Pty Ltd (2011) 209 IR 263

Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82

Johnson Tiles Pty Ltd v Esso Australia Ltd (1999) ATPR 41-679

North East Equity Pty Ltd v Proud Nominees Pty Ltd (2010) 269 ALR 262

North East Equity Pty Ltd v Proud Nominees Pty Ltd (2012) 285 ALR 217

Polar Aviation Pty Ltd v Civil Aviation Safety Authority (2012) 203 FCR 325

Police & Nurses Credit Society Ltd v Burgess Rawson (WA) Pty Ltd [2006] FCA 1395

Re HIH Insurance Ltd (In Liq) (2016) 335 ALR 320

SPAR Licensing Pty Ltd v MIS Qld Pty Ltd (2014) 314 ALR 35

Spiteri v Nine Network Australia Pty Ltd [2008] FCA 905

Sykes v Reserve Bank of Australia (1998) 88 FCR 511

Date of hearing: 9 March 2016
Date of last submissions: 9 March 2016
Registry: New South Wales
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Category: Catchwords
Number of paragraphs: 101
Counsel for the Plaintiff: Mr PJ Brereton SC and Ms V Whittaker
Solicitor for the Plaintiff: ACA Lawyers
Counsel for the Defendant: Ms WA Harris QC and Mr RG Craig
Solicitor for the Defendant: Herbert Smith Freehills

ORDERS

NSD 1292 of 2015
BETWEEN:

LARRY CROWLEY

Plaintiff
AND:

WORLEYPARSONS LIMITED (ACN 096 090 158)

Defendant

JUDGE:

FOSTER J

DATE OF ORDER:

6 JANUARY 2017

THE COURT ORDERS THAT:

1.The Interlocutory Application filed by the defendant on 3 March 2016 be dismissed.

2.The defendant pay the plaintiff’s costs of and incidental to the said Interlocutory Application.

3.The plaintiff have leave to amend his Amended Statement of Claim…

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Details
Case
[2017] FCA 3
Decision Date

CaseChat Overview and Summary

Crowley, the plaintiff, commenced an investor class action against WorleyParsons Limited, the defendant, seeking damages for misleading or deceptive conduct. The action was brought under Part IVA of the Federal Court of Australia Act 1976. The primary legal issue before the Court was whether the Statement of Claim filed by the plaintiff should be struck out in whole or in part as being likely to cause embarrassment, as failing to disclose a reasonable cause of action, or as being otherwise an abuse of the process of the Court. WorleyParsons argued that the Statement of Claim should be struck out on these grounds.

The Court found that the plaintiff had a legitimate entitlement to supplement existing particulars in the Statement of Claim in the future as more information became available, especially given that the opposing litigant's state of mind was central to some of the causes of action. However, the plaintiff was subject to the supervision and control of the Court. The Court concluded that WorleyParsons had not made out its case that the Statement of Claim should be entirely struck out nor should specific paragraphs be struck out. Although the plaintiff was directed to amend his Statement of Claim in minor respects, the Court found that it should not be struck out in whole or in part. Consequently, the Interlocutory Application filed by WorleyParsons was dismissed with costs.

The Court also granted leave to the plaintiff to amend the current iteration of his Statement of Claim to clarify certain matters and ordered WorleyParsons to file its Defence. The matter was listed for further case management to consider the status of a competing class action in the Supreme Court of Victoria and to determine how best to deal with the existence of that other proceeding.

Orders

Orders of the court

1. The Interlocutory Application filed by the defendant on 3 March 2016 be dismissed.

2. The defendant pay the plaintiff’s costs of and incidental to the said Interlocutory Application.

3. The plaintiff have leave to amend his Amended Statement of Claim filed on 15 February 2016 so as to address the matters raised at pars 33 and 37 of Reasons for Judgment of Foster J published this day (Crowley v WorleyParsons Limited [2017] FCA 3) and also so as to correct any other typographical, spelling or referencing errors in the said Amended Statement of Claim, such Further Amended Statement of Claim to be filed and served by 2 February 2017.

4. By 16 February 2017, the defendant file its Defence.

5. By 23 February 2017, the plaintiff file his Reply (if any).

6. The proceeding be listed for further case management at 9.30 am on 24 February 2017 before Foster J.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In the ASOC itself and from time to time during argument, the plaintiff asserted a right to supplement existing particulars in the ASOC in the future when more is known about the relevant events as a result of the evidence gathering process. As a general proposition, this claimed entitlement is supportable and was not resisted by Senior Counsel for WorleyParsons. In cases where the opposing litigant’s state of mind is central to at least some of the causes of action relied upon, it is legitimate for a litigant in the position of the plaintiff in the present case to exercise his or her entitlement as often as he or she may consider necessary subject always to the supervision and control of the Court. CONCLUSIONS For all of the above reasons, I do not think that WorleyParsons has made out its case that the ASOC should be entirely struck out nor do I consider that the specific paragraphs referred to in par 2 of its Interlocutory Application should be struck out. Although I have suggested that the plaintiff should amend his Statement of Claim in some very minor respects, I have found that the ASOC should not be struck out in whole or in part. WorleyParsons has failed to secure any part of the relief which it claimed in its Interlocutory Application. I see no reason why costs should not follow the event. Accordingly, I propose to dismiss that Interlocutory Application with costs. I also propose to grant leave to the plaintiff to amend the current iteration of his Statement of Claim in order to clarify one or two matters so that his Statement of Claim is in a form with which the plaintiff is entirely content as at the present time. I also propose to order WorleyParsons to file its Defence with a view to having the pleadings in this matter settled as soon as possible. The matter will then be listed for case management before me. At that further case management hearing, I wish to be informed as to the current status of the competing class action in the Supreme Court of Victoria (Walsh v WorleyParsons Ltd) as there will inevitably be a need on the next occasion that the matter is before the Court for the parties and the Court to consider how best to deal with the existence of that other proceeding. There will be orders accordingly.

Ratio Decidendi

Legal Principle Established

In par 33, the plaintiff advances alternative bases for the assessment of his loss and the losses of group members. CONSIDERATIONThe Relevant Statutory Provisions Section 1041H(1) of the Corporations Act provides:A person must not, in this jurisdiction, engage in conduct, in relation to a financial product or a financial service, that is misleading or deceptive or is likely to mislead or deceive.Note 1:Failure to comply with this subsection is not an offence.Note 2:Failure to comply with this subsection may lead to civil liability under section 1041I. For limits on, and relief from, liability under that section, see Division 4. In the present case, the plaintiff says that the contravening conduct took place in relation to a financial product, not a financial service. Section 1041H(2) fleshes out the concept of “… engaging in conduct in relation to a financial product …”. Section 1041H(3) provides that certain specific conduct, which might otherwise constitute contravening conduct, is not contravening conduct under s 1041H(1). At the moment, s 1041H(3) appears not to be relevant to the present case. “Financial product” is defined in Pt 7.1, Div 3 of the Corporations Act. Failure to comply with the statutory norm of conduct specified in s 1041H(1) is not an offence. However, a person who suffers loss or damage by the conduct of another person that was engaged in in contravention of s 1041H(1) may recover the amount of that loss or damage by action against that other person (s 1041I(1)). That entitlement to statutory compensation is subject to the terms of subsections (1A) to (4) of s 1041I and is also subject to Pt 7.10, Div 4. Section 674(1) and s 674(2) are in the following terms: 674Continuous disclosure—listed disclosing entity bound by a disclosure requirement in market listing rulesObligation to disclose in accordance with listing rules(1)Subsection (2) applies to a listed disclosing entity if provisions of the listing rules of a listing market in relation to that entity require the entity to notify the market operator of information about specified events or matters as they arise for the purpose of the operator making that information available to participants in the market.(2) If:(a)this subsection applies to a listed disclosing entity; and(b)the entity has information that those provisions require the entity to notify to the market operator; and(c)that information:(i)is not generally available; and(ii)is information that a reasonable person would expect, if it were generally available, to have a material effect on the price or value of ED securities of the entity;the entity must notify the market operator of that information in accordance with those provisions.Note 1:Failure to comply with this subsection is an offence (see subsection 1311(1)).Note 2:This subsection is also a civil penalty provision (see section 1317E). For relief from liability to a civil penalty relating to this subsection, see section 1317S.Note 3: An infringement notice may be issued for an alleged contravention of this subsection, see section 1317DAC.