Famel Pty Ltd v Burswood Management Ltd

[1990] FCA 27

C A T C H W O R D S

PRACTICE AND PROCEDURE - preliminary issue - causes of action in misleading or deceptive conduct, fraud, breach of fiduciary duty - plea that trade practices cause of action time barred - motions for trial of preliminary issue on whether action time barred - principles regulating discretion to make order - short point - no substantial saving in time or expense - motlons dlsmlssed.

Trade Practices Act 1974 s.82

Federal Court Rules 0.29

Arcadi v Colonial Mutual Life Assurance Society Limited (1984)
ATPR 40-473
Everett v Ribbands [l9521 1 KB 112
Car1 Zeiss Stiftunq v Herbert Smith & Co. [l9691 1 Ch.93
TVW Enterprises Ltd v Duffy (unrep. Fed. Ct. Toohey J. 28/3/85)
Orison v Strategic Minerals Corporation NL (1987) 77 ALR 141
Jobbins v Cape1 Court Corporation Ltd (unrep. 21/12/89)

FAMEL PTY LTD and STEVEN P.H.LUNN V BURSWOOD MANAGEMENT LIMITED, DALLAS REGINALD DEMPSTER, LIM KOK THAY, WESTERN AUSTRALIAN TRUSTEES LIMITED and RIDER HUNT & PARTNERS

NO. WAG 121 OF 1987

7 FEBRUARY 1990

. FRENCH J .

PERTH

IN THE FEDERAL COURT	)
OF AUSTRALIA	)
WESTERN AUSTRALIA	)
DISTRICT REGISTRY	)
GENERAL DIVISION	1 No. WAG 121 of 1987
B E T W E E N :	FAMEL PTY LTD

First Applicant

and

STEVEN P.H. LUNN

Second Applicant

and

BURSWOOD MANAGEMENT LIMITED

First Respondent

DALLAS REGINALD DEMPSTER

Second Respondent

LIM KOK THAY

Third Respondent

WESTERN AUSTRALIAN TRUSTEES LIMITED

Fourth Respondent

and

RIDER HUNT & PARTNERS

Fifth Respondent

I'IINUTE OF ORDER

JUDGE MAKING ORDER:	FRENCH J.
WHERE MADE:	PERTH
DATE ORDER WDE:	7 FEBRUARY 1990
THE COURT ORDERS THAT:

1.         The motions of the first, second, third and fourth respondents be dismissed in so far as they seek a trial of the preliminary issue.

The motions be otherwise adjourned to 21 March 1990 at
9 a.m.
The parties be at liberty to relist the motions at an
earlier date by arrangement wlth the Registry.
The first, second, third and fourth respondents are to
pay the applicants' costs of the motions today.

NOTE: Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT	)
OF AUSTRALIA	1
WESTERN AUSTRALIA	)
DISTRICT REGISTRY	)
GENERAL DIVISION	) NO. WAG 121 of 1987
B E T W E E N :	FAMEL PTY LTD

First Applicant

and

STEVEN P.H. LUNN

Second Applicant

and

BURSWOOD MANAGEMENT LIMITED

Flrst Respondent

DALLAS REGINALD DEMPSTER

Second Respondent

LIM KOK THAY

Third Respondent

WESTERN AUSTRALIAN TRUSTEES LIMITED

Fourth Respondent

and

RIDER HUNT & PARTNERS

Fifth Respondent

CORAM :	FRENCH J.
7 FEBRUARY 1990

EX TEMPORE REASONS FOR JUDGMENT

ON MOTIONS FOR TRIAL OF A PRELIMINARY ISSUE

The applicants are investors in a public unit trust known as the Burswood Property Trust and established in 1985 to raise funds for the construction of the Burswood Resort complex in Perth. They complaln of statements contained in a prospectus issued in April 1985 Inviting members of the public to subscribe for unlts of the trust to the extent of $50 mllllon. They say that in subscribing, they relied upon representations as to the costs of the project which were misleading or deceptive, were made fraudulently and reflected breaches of fiduciary duty. They claim against the Fund Manager and its directors (the first, second and third respondents), the Trustee (the fourth respondent) and the quantity surveyors associated wlth the project (the fifth respondent). Various forms of relief cumulatively and in the alternative are sought. The causes of action include misleading or deceptive conduct on the part of all respondents. That I take to be an allegation of misleading or deceptive conduct in contravention of the Trade Practices Act 1974 on the part of the corporate respondents and involvement in such conduct by the

second and thlrd respondents. The other causes of action are in

decelt on the part of the flrst, second, third and fifth respondents, breach of trust or fiduciary duty by the first and breach of fiduciary duty by the fourth respondent. The relief claimed includes damages, rescission of the contracts allotting units in the Trust to each of the applicants, rectification of the register of the Burswood Property Trust and repayment with

interest of the subscription moneys. Exemplary damages are also
claimed against all but the fourth respondent.

The proceedings have reached the stage where pleadings are closed, various particulars have been supplied and the applicants and fourth respondent have glven discovery. Various reprogramming orders have been made in relation to discovery and the trlal has been set down for 1 August.

Motion for Trial of Preliminary Issue

In relation to the claims for relief based on alleged contraventlons of the Trade Practices Act 1974, all but the flfth respondent have pleaded that the causes of action under the Act are statute barred, the proceedings having been instituted more than 3 years after they allegedly accrued. Particulars of loss and damage filed by the applicants on 23 January 1990 indicate a clalm based upon what is said to have been the difference between the price pald by each of them for units in the Trust and the value of those unlts at the date of the allotments. The date of the.allotments are .said.in para. 14 of the further amended

second, third and fourth respondents now moves for an order that	statement of clalm to have been 20 May 1985. Each of the flrst,
the question whether the applicants' causes of action under the Trade Practices Act 1974 are statute barred by reason of sub-s.82(2) of the Act be tried separately before the trlal of the substantive proceedings.

Section 82 of the Trade Practices Act provides:

"82(1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV or V may recover the amount of the loss or damage by action against that other person or against any person lnvolved in the contravention.

(2) An action under sub-section (1) may be commenced at any time within 3 years after the date on which the cause of action accrued.

(3) Sub-sectlon (1) does not apply in relation

to conduct done in contravention of section 52A."

As I observed when the issue was raised on a motion to strike out the statement of claim prior to dellvery of the particulars, the incidence of loss or damage is an essential element of recovery under s.82 and a cause of action under that section accrues when loss or damage is suffered in consequence of a contravention of the Act. I declined to strike out the statement of claim last year having regard, inter alia, to the observation of Toohey J. In Arcadi v Colonial Mutual Life Assurance Soclety Limlted (1984) ATPR 40-473 that the question whether an actlon is time barred is not merely one of statutory construction. It involves the application of the sub-section as

. construed to the facts of the case. And as his Honour said in

that case:

"...particular care is called for in considering whether a reasonable cause of action has been disclosed or, perhaps more accurately, in determining that none has been disclosed."

The motions now before the Court do not envisage summary disposal on the basis that the pleadings do not disclose a cause of actlon wlthin time. what is now sought is a separate trial of the issue whether the trade practices claim is time barred.

The Court's power to separately decide certain questions or Issues is expressed in 0.29 of the Federal Court Rules, which provides in the relevant parts:

"29(1) In this Order, 'questionf includes any question or issue in any proceeding, whether of fact or law or partly of fact and partly of law, and whether raised by pleadings, agreement of parties or otherwise.

(2) The Court may make orders for -

(a)	the decision of any questlon separately from any other question, whether before, at or after any trlal or further trial in the proceedings; and
(b)	the statement of a case and the question for decision.

(3) Where any question is declded under this Order, the Court shall, subject to rule 4, make such order, grant such relief or give such directions as the nature of the case requires.

(4) Where the declsion of a question under thls

Order -

(a) substantially disposes of the proceeding or of

the whole or any part of any claim for relief

in the proceeding; or

(b) renders unnecessary any trial or further trial in the proceedlng or on the whole or any part of any claim for rellef in the proceeding,

the Court may, as the nature of the case requlres -

(c) dismiss the proceeding or the whole or any part of any claim for relief in the proceedlng; or

(d) pronounce any judgment; or
(e) make any other order."

Various criterla have been developed upon which the Court acts in decldlng whether or not to separately try a preliminary issue. The "rule" enunciated by Romer L.J. in Everett v ~ibbands [l9521 1 KB 112 and approved by the Court of Appeal in Carl v Herbert Smith & Co. [l9691 1 Ch. 93 was that where there is a point of law which if decided one way will determine the litlgatlon, then advantage ought to be taken of the facilities afforded by the rules of Court to have it disposed of at the close of pleadings or very shortly thereafter.

It is important however that the discretion not become weighed down with judicially generated rules. The question in the end is one of case management and the identlflcation of the most economical and expeditious way of disposing of the proceedings. As Toohey J. sald in TVW Enterprlses Ltd v Duffy (unrep. Fed. Ct. Toohey J. 28/3/85) the decision is ultimately one for the Court although the attitudes of the partles are relevant. But such factors as the llkely time taken on the preliminary hearing, the availability of hearing dates for that purpose, the time and

before the case comes to trial in the ordinary way are all	expense of the substantive hearing and the time likely to elapse	relevant.
In Orison v Strategic Mlnerals Corporation NL (1987) 77 ALR 141, I ordered the trial of a preliminary issue on whether the conduct complained of as contravening the Trade Practices Act was conduct in trade or commerce. That trial occupied one hearing day and proceeded on agreed facts. Had it been decided adversely to the applicant, it would have disposed of a substantial part of the litigation.
In the present case the substantive hearing has been set down for some 4 weeks commencing 1 August. The disposal of the trade practices claim on the limitation point will not dispose of the claims in fraud and for breach of fiduciary duty nor would it, in my opinlon, substantially shorten the substantive trial. I accept that there is a reasonable prospect that the point could be disposed of comparatively shortly on the trial of the preliminary issue. I am not satisfied however that that procedure would result in any significant saving in time or money. It would, in effect, add a further interlocutory step to proceedings already well endowed in that regard. In so saying, I have regard to the recent observations of the Full Court in Jobbins v Cape1 Court Corporation Ltd (unrep. 21/12/89) that where it is clear that an applicant cannot succeed upon the case pleaded because s.82(2) will be a complete answer to the claim, the Court should not merely defer the inevitable. In this case, counsel for the applicants has foreshadowed an argument that the calculation of
allotment does not determine the date upon which loss was damage by reference to the value of the units at the date of
sustained. That argument is plainly not wlthout difficulty, but I am not prepared at this stage to say that it is completely untenable. For the reasons I have indicated the motlons will be dismissed in so far as they seek the trial of a preliminary issue.

I certify that the preceding
seven (7) pages are a true
copy of the Ex tempore
Reasons for Judgment of his

Honour Justice French.

Assoclate: c fitchL,

Date:

Counsel for the Applicants: Ms. G. Pitt

Solicitors for the Applicants: Williams & Hughes

Counsel for the Flrst, Second and Third Respondents:
Mr. S.J. Archer
Solicitors for the First, Second and Third Respondents:

Robinson Cox

Counsel for the Fourth Respondent: Plr K. Martin

Solicitors for the Fourth Respondent: Parker & Parker

Counsel for the Fifth Respondent: Mr J. Ley

Sollcltors for the Fifth Respondent: Freehill Hollingdale & Page

Date of hearing:	7 February 1989
Date of Judgment:	7 February 1989