Lean v Tumut River Orchard Management Ltd - [2003] FCA 269

FEDERAL COURT OF AUSTRALIA
Lean v Tumut River Orchard Management Ltd [2003] FCA 269

PRACTICE AND PROCEDURE – whether application should be dismissed or statement of claim should be struck out as failing to disclose any cause of action – whether pleading defective – whether reasonably arguable that a claim for damages based on misleading or deceptive conduct gives rise to an equitable set-off in respect of moneys owing under contract – whether reasonably arguable that an assignee of such contractual entitlements takes its rights subject to such equitable set-off – applicant’s claims reasonably arguable, but part of statement of claim struck out with leave to re-plead – alternative application to transfer proceedings to the New South Wales Registry of the Federal Court – relevant factors – proceedings retained in Western Australia for time being.
Trade Practices Act 1974 (Cth), s 52, 82, 87
National Mutual Holdings Pty Ltd v The Sentry Corporation (1988) 19 FCR 155 applied
Phillip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457 applied
Fencott v Muller (1983) 152 CLR 570 applied
Re Wakim; Ex parte McNally (1999) 198 CLR 511 applied
Tomlinson v Cut Price Deli Pty Ltd (1992) 38 FCR 490 referred to
Ferro Corporation (Aust) Pty Ltd v International Pools Pty Ltd (1993) 30 NSWLR 539 referred to
Re Kleiss; Ex parte Kleiss v Capt’n Snooze Pty Ltd (1996) 61 FCR 436 referred to
AWA Ltd v Exicom Australia Pty Ltd (1990) 19 NSWLR 705 referred to
AMP Society v Specialist Funding Consultants Pty Ltd (1991) 24 NSWLR 326 referred to
Murphy v Zamonex Pty Ltd (1993) 31 NSWLR 439 referred to
Doherty v Murphy [1996] 2 VR 553 referred to
Ghirardi v Allregal Corp Pty Ltd [2001] WASCA 366 referred to
Oraka Pty Ltd v Leda Holdings Ltd (1997) ATPR 41-558 referred to
Krambousanos v Jedda Investments Pty Ltd [1996] FCA 144 referred to
Young v Kitchin (1878) 3 Ex D 127 referred to
Sun Candies Pty Ltd v Polites [1939] VLR 132 referred to
Government of Newfoundland v Newfoundland Railway Co [1888] 13 App Cas 199 referred to
Lawrence v Hayes [1927] 2 KB 111 referred to
Jedda Investments Pty Ltd v Krambousanos (1997) 72 FCR 138 referred to
Southern Textile Converters Pty Ltd v Stehar Knitting Mills Pty Ltd [1979] 1 NSWLR 692 referred to
Mitchell v Purnell Motors Pty Ltd [1961] NSWR 165 referred to
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 applied
GRAEME TREVOR LEAN v TUMUT RIVER ORCHARD MANAGEMENT LTD,
H P MERCANTILE PTY LIMITED and RRKM PTY LTD
W329 of 2002
CARR J
28 MARCH 2003
PERTH

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

W329 OF 2002

BETWEEN:

GRAEME TREVOR LEAN
Applicant

AND:

TUMUT RIVER ORCHARD MANAGEMENT LTD
(ACN 003 501 611) (Liquidator Appointed)
First Respondent

H P MERCANTILE PTY LIMITED (ACN 067 362 877)
Second Respondent

RRKM PTY LTD (ACN 008 930 532)
Third Respondent

JUDGE:

CARR J

DATE…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2003] FCA 269
Decision Date: 28 MARCH 2003

CaseChat Overview and Summary

The case of Lean v Tumut River Orchard Management Ltd involves the second respondent seeking various orders, including the striking out of the Statement of Claim filed by the applicant and the injunction sought on behalf of the applicant, or in the alternative, the dismissal of the proceedings and injunction. The second respondent also sought to transfer the proceedings to the Sydney Registry. The applicant, Lean, along with other group members, had entered into contractual arrangements with the first respondent for the purpose of investing in two schemes to produce and market peaches and nectarines in New South Wales and Queensland. The proceedings are brought as a representative action under Part IVA of the Federal Court of Australia Act 1976 (Cth).

The court was required to determine whether paragraph 88 of the Statement of Claim should be struck out, whether the applicant should have the right to re-plead, and whether the proceedings should be transferred to the New South Wales District Registry. The court also needed to decide on the issue of costs related to the motion.

The court held that paragraph 88 of the statement of claim should be struck out, but the applicant should have the right to re-plead his unconscionable conduct claims against the second respondent within 28 days. The court stood over the second respondent's motion for transfer of the proceedings to the New South Wales District Registry, with liberty to apply further at a later date. The court dismissed the motion otherwise and adjourned the matter of costs of the motion for oral argument at the next directions hearing. The court noted that written submissions on costs were not required.

ORDERS:
1. Paragraph 88 of the statement of claim be struck out, but the applicant have leave to re-plead his unconscionable conduct claims against the second respondent within 28 days.
2. The second respondent’s motion for transfer of the proceedings to the New South Wales District Registry be stood over, with liberty to apply further at a later date.
3. The motion otherwise be dismissed.
4. The matter of costs of the motion be adjourned for oral argument at the next directions hearing.

Orders

Orders of the court

1. Paragraph 88 of the statement of claim be struck out, but the applicant have leave to re-plead his unconscionable conduct claims against the second respondent within 28 days.

2. The second respondent’s motion for transfer of the proceedings to the New South Wales District Registry be stood over, with liberty to apply further at a later date.

3. The motion otherwise be dismissed.

4. The matter of costs of the motion be adjourned for oral argument at the next directions hearing.

Background

Background to the litigation

The Court has before it a notice of motion in which the second respondent seeks various orders. Those presently relevant are expressed in the following terms: “1.The Statement of Claim filed and the Injunction sought on behalf of the Applicant be struck out.2.In the alternative, the Proceedings and the injunction sought against the Second Respondent be dismissed. 3.The Proceedings be transferred to the Sydney Registry.”THE FACTUAL BACKGROUND At the material times the first respondent was the registered proprietor of land at Coonabarabran in New South Wales and Mundubbera in Queensland on which it carried on and managed orchards of peaches and nectarines for the purposes of investment schemes. Those activities were conducted pursuant to the terms of two investment deeds (“the Investment Deeds”) and two prospectuses (“the Prospectuses”) which had been issued under the terms of the Investment Deeds. On 28 April 1999, the first respondent went into voluntary liquidation. Messrs Maxwell William Prentice and Vince Christopher Barilla became joint liquidators pursuant to s 446A(4)(a)(ii) of the Corporations Law. On 20 November 2002 I gave leave, under s 500(2) of the Corporations Act 2001 (Cth), to the applicant to commence proceedings against the first respondent – see Lean v Tumut River Orchard Management Ltd [2002] FCA 1419. The principal application in this matter is the proceeding brought pursuant to that leave. The application is brought as a representative action under Part IVA of the Federal Court of Australia Act 1976 (Cth) on behalf of the applicant and as a representative party on behalf of the group members described in paragraph 2 of the application and paragraph 3 of the statement of claim in which latter paragraph seven persons are named as being group members. In summary, the matters pleaded by the applicant in the statement of claim are as follows. The applicant and the other group members entered into contractual arrangements with the first respondent with a view to investing in two schemes (one in respect of the first respondent’s New South Wales property and the other in respect of the first respondent’s Queensland property – each respectively described as “the Project”) to produce and market peaches and nectarines. Those arrangements included: · a licence agreement (“the Licence Deed”) under which the first respondent granted a licence to an investor (“the Grower”) to occupy a farming allotment; · a farming agreement (“the Farming Agreement”) whereby the first respondent undertook to cultivate and harvest the fruit trees; and · Investment Deeds entered into between the first respondent and a trustee company (a different trustee company in relation to each Project) on behalf of the Growers. Some of the Growers (“the Borrowers”) took up the offer of a loan (“the Investor Loans”) to meet their financial commitments under the Licence Deed and the Farming Agreement. The agreements in respect of those loans are known as “Investor Loan Agreements”.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

CARR J

In my opinion, paragraph 88 of the statement of claim should be struck out, but the applicant should have the right to re-plead. CONCLUSION For the foregoing reasons there will be orders as follows:1.Paragraph 88 of the statement of claim be struck out, but the applicant have leave to re-plead his unconscionable conduct claims against the second respondent within 28 days.2.The second respondent’s motion for transfer of the proceedings to the New South Wales District Registry be stood over, with liberty to apply further at a later date. 3.The motion otherwise be dismissed. I will hear the parties on the question of costs of the motion at the next directions hearing. Any submissions as to costs may be made orally but I do not wish the parties to file written submissions in that regard. Some 57 pages of written submissions were filed in respect of the motion. I expect the issue of costs to be dealt with far more briefly.

Ratio Decidendi

Legal Principle Established

Established by: CARR J

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W329 OF 2002

BETWEEN:	GRAEME TREVOR LEAN Applicant
AND:	TUMUT RIVER ORCHARD MANAGEMENT LTD (ACN 003 501 611) (Liquidator Appointed) First Respondent H P MERCANTILE PTY LIMITED (ACN 067 362 877) Second Respondent RRKM PTY LTD (ACN 008 930 532) Third Respondent
JUDGE:	CARR J
DATE…