Magenta Holdings Ltd v Bank of New Zealand

[1992] FCA 743

C A T C H W O R D S	!
L
, -,

PRACTICE - application to strike out - no reasonable cause of	. ,
action disclosed against first respondent - material pleaded	L.
insufficient to support conclusion that first respondent
, .
knowingly concerned in contravention - material pleaded	' .
insufficient to show that loss suffered by entering into agreements. TRADE PRACTICES - person knowingly concerned in the contravention - actual or constructive awareness of elements of contravention necessary.
Trade Practices Act 1974 S. 75B Federal Court Rules 0. 11 r. 16
General Steel Industries Inc. v. Commissioner for Railways

jN.S.W.1 (1964) 112 C.L.R. 125

v. Victorian Railways Commissioners (1949) 78 C.L.R. 62

Arab Monetarv Fund v. Hashim (No. 21 [l9901 1 All E.R. 673

REGISTRY

MAGENTA HOLDINGS LTD & ANOR v. BANK OF NEW ZEALAND LTD & ORS

No. QG138 of 1990

SPENDER.J.	A
BRISBANE
11 SEPTEMBER 1992	- 7 OCT 1992

AUSTRALIA

PRINCIPAL

IN THE FEDERAL COURT OF AUSTRALIA	1
QUEENSLAND DISTRICT REGISTRY	1 No. QG138 of 1990
GENERAL DIVISION	1

BETWEEN: MAGENTA HOLDINGS LTD

First Applicant

AND: AMPERSAND INTERNATIONAL LTD

Second Applicant

AND: BANK OF NEW ZEALAND LTD

First Respondent

AND: EIE-INTERNATIONAL CORPORATION

Second Respondent

AND: AXIS LIMITED

Third Respondent

AND: ESSINGTON DEVELOPMENTS LTD

Fourth Respondent

AND: GRYLIS PTY LTD

Fifth Respondent

AND: ESSINGTON LIMITED

Sixth Respondent

AND: MALCOLM LESLIE EDWARDS

Seventh Respondent

AND: ROBERT BUNG0 ISHIZAKI

Eighth Respondent

MINUTES OF ORDER

Spender J.

Brisbane

11 September 1992

THE COURT ORDERS THAT:

(1) The statement of claim insofar as it pleads causes of

action against the first respondent be struck out.

(2) The respondent to the notice of motion pay the costs of	the applicant in the notice of motion, to be taxed if not
agreed.

THE COURT GRANTS:

(3) Liberty to replead the statement of claim.

THE COURT DIRECTS THAT:

(4) Any amended statement of claim be filed and served

on the first respondent within 21 days.

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

IN THE FEDERAL COURT OF AUSTRALIA	1
PUEENSLAND DISTRICT REGISTRY	1 No. QG138 of 1990
GENEKAL DIVISION	1

BETWEEN: 3IAGENTA HOLDINGS LTD

First Applicant

AND: AMPERSAND INTERNATIONAL LTD

Second Applicant

AND: BANK OF NEW ZEALAND LTD

First Respondent

AND: EIE-INTERNATIONAL CORPORATION

Second Respondent

AND: AXIS LIMITED

Third Respondent

AND: ESSINGTON DEVELOPMENTS LTD

Fourth Respondent

AND: GRYLIS PTY LTD

Fifth Respondent

AND: ESSINGTON LIMITED

Sixth Respondent

AND: MALCOLM LESLIE EDWARDS

Seventh Respondent

AND: ROBERT BUNG0 ISHIZAKI

Eighth Respondent

MINUTES OF ORDER

JUDGE MAKING ORDER:  Spender J.

DATE OF ORDER:	11 September 1992
WHERE MADE:	Brisbane

THE COURT ORDERS THAT:

(1) The statement of claim insofar as it pleads causes of	action against the first respondent be struck out.
(2) The respondent to the notice of motion pay the costs of	the applicant in the notice of motion, to be taxed if not
agreed.
IN THE FEDERAL COURT OF AUSTRALIA	1
QUEENSLAND DISTRICT REGISTRY	1 No. QG138 of 1990
GENERAL DIVISION	1

BETWEEN: MAGENTA HOLDINGS LTD

First Applicant

AND: AMPERSAND INTERNATIONAL LTD

Second Applicant

AND: BANK OF NEW ZEALAND LTD

First Respondent

AND:  EIE-INTERNATIONAL CORPORATION

Second Respondent

AND: AXIS LIMITED

Third Respondent

AND: ESSINGTON DEVELOP14ENTS LTD

Fourth Respondent

AND: GRYLIS PTY LTD

Fifth Respondent

AND: ESSINGTON LIMITED

Sixth Respondent

AND:  W C O L M LESLIE EDWARDS

Seventh Respondent

AND: ROBERT BUNG0 ISHIZAKI

Eighth Respondent

CORAM:	SPENDER J.
PLACE :	BRISBANE
DATE :
-	10 September 1992  REASONS FOR JUDGMENT

The first respondent in the principal proceedings, Bank of New Zealand Ltd ('BNZ'), by notice of motion seeks that the statement of claim of the applicants be struck out pursuant to 0. 11 r. 6 of the Federal Court Rules, insofar as it pleads a cause of action against it.

The application is based on 0. 11 r. 16 which

provides :

"	Where a p l ead ing -
( a ) d i s c l o s e s n o r easonab l e cause o f a c t i o n o r

d e f e n c e o r o t h e r c a s e a p p r o p r i a t e t o the

n a t u r e o f the p lead ing;

(b) h a s a t e n d e n c y t o c a u s e p r e j u d i c e ,

embarrassment	or d e l a y i n the proceeding;
o r

( C ) i s o t h e r w i s e an abuse o f the proces s o f

the Cour t ,

the Court may a t a n y s t a g e o f the proceeding

o r d e r t h a t the whole o r a n y p a r t o f the p l ead ing

be s t r u c k o u t . "

The claim of BNZ is that the statement of claim discloses no reasonable cause o f action against it.

The power conferred by this rule is one to be exercised sparingly: of the many authorities it is sufficient to refer only to General Steel Industries Inc. v. Commissioner for Railwavs (N.S.W.1 (1964) 112 C.L.R. 125. In that case Barwick C.J. said at 128-129:

" The p l a i n t i f f r i g h t l y p o i n t s o u t t h a t the

j u r i s d i c t i o n summari ly t o t e r m i n a t e an a c t i o n

i s t o be	s p a r i n g l y employed	and	i s n o t	to be
used	e x c e p t	i n a	c l e a r c a s e where	the Court i s

s a t i s f i e d t h a t i t h a s the r e q u i s i t e m a t e r i a l

and the n e c e s s a r y a s s i s t a n c e from the p a r t i e s

t o r each a d e f i n i t e and c e r t a i n c o n c l u s i o n . "

After adverting to authority, his Honour continued:

"	I t i s s u f f i c i e n t f o r me	t o s a y t h a t these	c a s e s
u n i f o r m l y adhere	t o the	v i e w t h a t	the p l a i n t i f f

ough t n o t t o be den i ed a c c e s s t o the cus tomary

t r i b u n a l which d e a l s w i t h a c t i o n s o f the k i n d

he b r i n g s , u n l e s s h i s l a c k o f a c a u s e o f a c t i o n

- i f t h a t be the ground on which the c o u r t i s

i n v i t e d , a s i n this c a s e , t o exercise i t s

powers o f summary d i s m i s s a l - i s c l e a r l y

demonstrated .	The	test	t o be	a p p l i e d h a s been
v a r i o u s l y	e xpre s sed ;	' s o	o b v i o u s l y	un t enab l e

t h a t i t cannot p o s s i b l y succeed ' ; ' m a n i f e s t l y

groundless ' ; ' s o m a n i f e s t l y f a u l t y t h a t it does

n o t admit o f argument'; ' d i s c l o s e s a c a s e which

the Court i s s a t i s f i e d canno t succeed ' ; ' u n d e r

no p o s s i b i l i t y can there be a good cause o f

a c t i o n ' ; 'be m a n i f e s t t h a t t o a l l o w them' (the

p l e a d i n g s ) ' t o s t a n d would i n v o l v e u s e l e s s

expense ' . "

His Honour at 129 referred to the observation by Dixon

J., as he then was, in v. Victorian Railwavs Commissioners

(1949) 78 C.L.R. 62, where Dixon J. said at 91:

" A c a s e mus t be very c l e a r i n d e e d t o j u s t i f y the

summary i n t e r v e n t i o n o f the c o u r t t o p reven t a

p l a i n t i f f s u b m i t t i n g his c a s e f o r de t e rmina t i on

i n the appoin ted manner by the c o u r t w i t h o r

w i t h o u t a j u ry . The f a c t t h a t a t r a n s a c t i o n i s

i n t r i c a t e may n o t d i s e n t i t l e the c o u r t t o

examine a cause o f a c t i o n a l l e g e d t o grow o u t

o f i t f o r the purpose o f s e e i n g whether the

proceed ing amounts t o an abuse o f p roces s o r i s

v e x a t i o u s .	Bu t	once i t	appears	t h a t	there	i s a
r e a l	q u e s t i o n	t o be	de termined	whe ther	o f	f a c t

o r l a w and t h a t the r i g h t s o f the p a r t i e s

depend upon i t , then i t i s n o t competent for

the c o u r t t o d i s m i s s the a c t i o n a s f r i v o l o u s

and v e x a t i o u s and an abuse o f process. ' ''

And later at 130 Barwick C.J. noted:

" Argument, perhaps e v e n o f an extensive k i n d ,

may be n e c e s s a r y t o demons t ra t e t h a t the c a s e

o f the p l a i n t i f f i s s o c l e a r l y un t enab l e t h a t

i t cannot p o s s i b l y succeed . "

I turn now to the rather complicated facts in the

present proceedings, which concern corporate manoeverings
directed at Ariadne Australia Ltd ('Ariadne').

The statement of claim asserts two claims as against BNZ. The first is a claim by the first applicant, Magenta Holdings Ltd ('Magenta') and the second by Ampersand International Ltd ('Ampersand').

The proceedings are concerned with two parcels of shares in the issued capital of Ariadne, the first of them being a parcel held as at 29 August 1988 by F.A.I. Insurance Ltd ('FAI') being approximately 146,000,000 shares of which FA1 was the registered holder amounting to 19.969% of the issued capital of Ariadne ('the FA1 parcel'). The second parcel is a parcel amounting to 17.504% of the issued share capital of Ariadne, in respect of which the statement of claim alleges that Grylis Pty Ltd ('Grylis') was entitled from February 1988 to become the registered holder of that parcel ('the Grylis parcel'), pursuant to an agreement in writing between BNZ and Judge Corporation Ltd ('Judge Corporation').

As to the Grylis parcel, until 12 September 1988, registered holder of that parcel; after that date Grylis was	Judge Corporation or its wholly owned subsidiaries was the
the registered holder of the Grylis parcel. From 11 March 1988 BNZ held a fixed and floating charge over the assets of Grylis, including the Grylis parcel, to secure repayment of monies owing by Grylis to BNZ from time to tlme.
As to the shareholding of Grylis, until 12 September 1988, Southdrive Ltd ('Southdrive') and Essington Developments Ltd ('EssingLon Developl~lents') were the holders of the issued share capital of Grylis as to 97.25% and 2.78% respectively. The issued share capital of Southdrive was held by BNZ.
At all relevant times a company, Essington Securities Ltd ('Essington Securities'), was owned 50% by Essington Limited ( 'Essington' ) , the other 50% being owned by Essington Finance Pty Ltd which itself was owned 100% by Essington.
From 12 September 1988, BNZ has been the holder of 2,750.000 shares in the issued capital of Essington. On or about that date BNZ caused Southdrive to transfer the issued share capital in Grylis then held by Southdrive, to Essington Securities and on or about 22 February 1989 Essington Developments transferred to Essington Securities the issued capital in Grylis then held by Essington Developments. Therefore, from about 22 February 1989, Grylis was owned 100% by Essington Securities which, in turn, was ultimately 100%
owned by Essington. The seventh respondent, Mr. Malcolm
Leslie Edwards, was the Managing Director of Essington Developments and Essington at all material times.
As to the Magenta claim against BNZ, paragraph 6 of the statement of claim asserts that FA1 agreed, by an agreement in writing made on 29 August 1988, to sell the FA1 parcel to Magenta for a price of $94,680,000.00, payable by a deposit of $4,680,000.00 on execution of the agreement and by a first instalment of $50,000,000.00 fifteen business days
from the date of execution, and a second instalment of $30,000,000.00 on 29 August 1989, on which date FA1 would transfer the FA1 parcel to Magenta. Magenta paid FA1 the deposit of $4,680,000.00 on 29 August 1988.
Magenta claims that it was induced to enter into the agreement to purchase the FA1 parcel and to make the payments made thereunder by the terms of a written offer called in the statement of claim 'the irrevocable offer' dated 15 August 1988 addressed to Magenta by EIE-International Corporation ('EIE').
Magenta claims in paragraph 8 that by the irrevocable offer, EIE represented that it was willing and able to and would lend to Magenta $50,000,000.00 to enable Magenta to purchase the FA1 parcel on the occurrence of certain events.

So as to illuminate what is said to be the

involvement and liability of BNZ in the making of that offer,

it is necessary to set out paragraphs 10, 11 and 12 of the

statement of claim in full.

" 10. The m a k i n g o f the I r r e v o c a b l e O f f e r was c o n d u c t

i n w h i c h	I s h i z a k i ,	BNZ,	E s s i n g t o n	Deve lopmen t s ,
E s s i n y t o n	and	Edwards	were ,	i n a d d i t i o n t o EIE,

p e r s o n s i n v o l v e d , i n t h a t : -

( a ) I s h i z a k i s i g n e d the I r r e v o c a b l e O f f er;

( b ) T h e I r r e v o c a b l e O f f e r was sent by EIE t o

Edwards and was d e l i v e r e d t o Magenta on 16

AugusL 1988 by Edwcirds on b e l ~ a l f o f E I E ,

E s s i n g t o n	Developments,	E s s i n g t o n	and
I s h i z a k i ;

( c ) BNZ had agreed w i t h the o t h e r r e s p o n d e n t s

t o g i v e e f f e c t t o the intention r e f e r r e d

t o i n paragraph	11	( d )	h e r e o f	by	the
conduct	r e f e r r e d	t o	i n	paragraph	12
h e r e o f ;

knowing	and	i n t e n d i n g t h a t Magenta	would	be
i n d u c e d	thereby	to e n t e r i n t o the	agreement	t o

purchase the FA1 p a r c e l .

11. The mak ing o f t h e I r r e v o c a b l e O f f e r was conduc t

which was m i s l e a d i n g and d e c e p t i v e i n t h a t , t o

the knowledge o f a l l t h e p a r t i e s i n v o l v e d

t h e r e i n :  -

( a ) EIE d i d n o t have r e a s o n a b l e grounds for

making the r e p r e s e n t a t i o n ;

( b ) EIE d i d n o t i n t e n d t o l e n d $50,000,000.00

t o Magenta t o e n a b l e Magenta t o purchase

t h e FAI Parcel e i t h e r upon the occurrence

o f the events r e f e r r e d t o i n t h e

I r r e v o c a b l e O f f e r or a t a l l ;

( C ) EIE rvas not, and had n o r e a s o n a b l e grounds

f o r r e p r e s e n t i n g t h a t it was a b l e t o l e n d

$50,000,000.00 t o Magenta t o enab l e

Magenta t o purchase the FAI Parce l ;

( d )	i t was made	w i t h	the	i n t e n t i o n common	to
them: -

( i ) t h a t BNZ by i t s C h i e f E x e c u t i v e i n

A u s t r a l i a , Le igh Scott-Kemmis, would

r e q u e s t t h e Na t iona l Companies and

S e c u r i t i e s Commission ( ' t h e NCSC')

t o t a k e s t e p s t o vest	the FAI	Parcel
i n t h e NCSC	on the ground	o f an

a l l e g e d	c o n t r a v e n t i o n	o f	the
Companies	( A c q u i s i t i o n	o f	S h a r e s )
(Queens land) Code	by r e a s o n	o f	the

a s s o c i a t i o n o f Bruce Raymond Judge

w i t h Magenta ( a s purchaser o f the

FA1 P a r c e l ) and w i t h Judge

Corpora t ion	( a s h o l d e r o f	the	G r y l i s
Parcel ) ;

( i i )     t h a t the r i g h t s a t t a c h i n g t o the FAI Parcel i n c l u d i n g the r i g h t t o v o t e

a t general m e e t i n g s o f Ar iadne ,

shou ld be s t e r i l i s e d a s a r e s u l t o f

such a c t i o n by the NCSC;

(iii)	t h a t , i n consequence, the v a l u e o f
the G r y l i s Parcel would be enhanced
i n t h a t i t s owner cou ld then
exercise ef fect ive c o n t r o l o f
Ar iadne; and
( i v )	t h a t , upon BNZ o r Es s inq ton
o b t a i n i n g c o n t r o l o f Ar iadne it
would procure the comple t ion by
Ar iadne o f the s a l e o f a l l the
i s s u e d s h a r e c a p i t a l o f Kerema P t y
L t d , the h o l d i n g company o f

Discovery Bay Developments P t y L t d .

12.    I n accordance w i t h and t o g i v e e f f e c t t o t h a t intention, on or abou t 30 August 1988, BNZ, by i t s Chief E x e c u t i v e i n A u s t r a l i a , Le igh S c o t t -

Kemmis, r e q u e s t e d the NCSC t o j o i n w i t h BNZ i n

t a k i n g s t e p s t o vest the FAI Parcel i n the NCSC on the ground t h a t the agreement between FAI and Magenta i n v o l v e d the c o n t r a v e n t i o n o f the

Companies ( A c q u i s i t i o n o f Share s ) (Queensland)

Code by reason o f the a s s o c i a t i o n o f Bruce

Raymond Judge w i t h Magenta ( a s purchaser o f the

FAI P a r c e l ) and w i t h Judge Corporat ion and i t s

w h o l l y owned s u b s i d i a r i e s ( a s h o l d e r o f the

G r y l i s P a r c e l ) . ''

By further and better particulars of the statement of claim, the applicants do not allege that BNZ was involved in the irrevocable offer by reason of the matters pleaded in sub-paragraph 10(a) or 10(b) and say that they are unable to	give the usual particulars in respect of the agreement alleged	in paragraph 10(c) " u n t i l d i s c o v e r y and i n t e r r o g a t i o n h e r e i n "
but say that its contention that BNZ was involved in the conduct specified in paragraph 10 is supported by the conduct particularised in paragraph 12 of the statement of claim.

Importantly, the applicants say that BNZ "was

i n v o l v e d i n the conduc t r e f e r r e d t o i n paragraph 10, i n t h a t

it counse l l ed the conduc t , was knowing ly concerned i n the

conduct and consp i r ed w i t h others t o e f f ec t the conduct . The

f a c t s m a t t e r s and c i r c u m s t a n c e s upon which the A p p l i c a n t s rely

a r e t h o s e pleaded i n paragraphs 5 ( a ) , (b), ( d ) , 8 and 12 o f

the S ta tement of Claim. "

Paragraph 5(a) asserts that from February 1988 ;

GryLis was entitled to become the registered holder of the	i
Grylis Parcel.	Paragraph 5(b ) asserts:

" From 11 March 1988 BNZ h e l d a f i x e d and

f l o a t i n g charge over the a s s e t s o f G r y l i s ,

i n c l u d i n g the G r y l i s P a r c e l . . . "

and by 5(d):

" A f t e r 12 September 1988 G r y l i s was the

r e g i s t e r e d h01 d e r o f the G r y l i s Parce l ; "

Insofar as paragraph 12 is concerned, the applicants

in their particulars assert that Bruce Judge was a shareholder

I.

and director of Magenta and was a director of Judge

Corporation. The case which the applicants wish to assert	I
against BNZ in respect of this aspect of the claim is that BNZ
- ,
had a motive in seeking to " s t e r i l i s e " the FA1 parcel by
persuading the NCSC to act in respect of it, because that	. , .
l
would enhance the value of the Grylis parcel in respect of

which BNZ had a floating charge.	Further, BNZ intended to	, .
8 ,

seek the NCSC to act to sterilise that parcel knowing that at

i

all relevant times the Grylis parcel was not beneficially

owned by Judge Corporation.

!

i r

Paragraph 13 of the statement of claim asserts that	:I '
. -

on or about 11 September 1988, the NCSC refused the request by
Leigh Scott-Kemmis.

Before a cause of action agalnst BNZ can be made out, it is necessary to establish facts from which it might be concluded pursuant to S. 75B of the Trade Practices Act 1974 that BNZ was knowingly involved in a contravention of Part V of the Act. The assertion that BNZ counselled the conduct, was knowingly concerned in the conduct and conspired with others to effect the conduct requires that it be established that BNZ participated in or assented to the contravention, and to be regarded as participating, BNZ must actually or constructively be aware of the elements constituting the contravention. It is therefore necessary that there be pleaded facts which, if proved, establish that BNZ knew of the making of the offer and knew, importantly, that it was misleading or deceptive.

In my opinion, the matters pleaded in paragraph 10(c), taken with paragraphs ll(d) and 12 are not matters

which if proved would result in BNZ being a " p e r s o n i n v o l v e d

i n a c o n t r a v e n t i o n " within S. 75B of the Trade Practices Act. The particulars of paragraph 10 provided by the applicants indicate that the facts, matters and circumstances upon which

the applicants rely to establish that BNZ was involved in the

contravention as " t h o s e p l e a d e d i n paragraphs 5 ( a ) , (b) , ( d ) ,

8 and 12 of the S t a t e m e n t o f C la im" . In my view, these

matters if proved could not justify a finding that BNZ was

involved in the alleged misconduct.

Senior counsel for Magenta referred to the judgment of Hoffmann J. in Arab Monetanr Fund v. Hashim (No. 2 1 [l9901

1 All E.R. 673. However, when that judgment is analysed, one

sees that at 679, Hoffmann J. said:

" The m a i n s t r e a m o f a u t h o r i t y s u g g e s t s t h a t

c o n s t r u c t i v e notice o f the b r e a c h o f t r u s t i s

i n s u f f i c i e n t and t h a t there i s no s u c h t h i n g a s

c o n s t r u c t i v e	k n o w l e d g e .	What	m u s t	be	shown	i s
c o n d u c t	s h o w i n g	want	t o	p r o b i t y	by	r e a s o n

ei ther o f knowledge o f the b r e a c h ,of t r u s t or a

d e l i b e r a t e	a v o i d a n c e	o f	s u c h	knowledge .
On	the other h a n d ,	there	a r e c a s e s which	t r e a t
a	weaker	form	o f knowledge	a s s u f f i c i e n t and
would	impose	a c c o u n t a b i l i t y on	a	n o n - f i d u c i a r y

who gave r e a s o n a b l e man on a s s i s t a n c e or r e c e i v e d t r u s t money

w i t h knowledge o f f a c t s wh ich would p u t a

notice t h a t there had been a

b r e a c h o f t r u s t . T h i s , I assume, i s what was

i n t e n d e d by the e x p r e s s i o n ' c o n s t r u c t i v e

knowledge' i n the p l e a d i n g . T h e s t a t e o f the

a u t h o r i t i e s i s s u c h t h a t I do n o t think a n

a l l e g a t i o n o f l i a b i l i t y b a s e d on this weaker

form o f knowledge c a n for the moment be t r e a t e d

a s unarguab le . "

And later on the same page his Honour said:

" T h i s i s , i n m y v i e w , a c a s e i n which the fund

i s e n t i t l e d to p l e a d i n genera l t e r m s and t o

d e f e r p a r t i c u l a r i s a t i o n o f i t s c a s e u n t i l a f t e r

d i s c o v e r y : see e g Leitch v. Abbott (1886) 31 C h

D	374.	O f c o u r s e ,	by the time	the c a s e comes
t o t r i a l hl-S Hashim	w i l l	be	e n t i t l e d	t o f u l l

p a r t i c u l a r s o f the d e t a i l e d a l l e g a t i o n s on

w h i c h the fund w i l l rely. B u t the a b s e n c e o f

s u c h p a r t i c u l a r s i s not , i n m y judgment , a

"

ground f o r s t r i k i n g the c l a i m o u t now.

There was, however, material indicating want of
probity. His Lordship referred to a number of matters
including the Hashim's standard of living, of which Mrs Hashim

must have been aware, and the inadequacy of MY Hashim's salary to support that extensive and expensive standard of living. He referred to the payment of monies into her personal account, which she claimed came from a deposit in Beirut but which was not supported by bank documents at that time, and thirdly, her conduct at the time of the issue of a Mareva injunction and immediately thereafter, at which time she left Britain for Canada and emptied her bank account. These factors, Hoffmann J. concluded, constituted sufficient material on which the plaintiff was entitled to plead want of probity, so as to support a claim that ICrs Hashim was a non- fiduciary accountable as a constructive trustee.

In the view I take of the matter the material pleaded against BNZ is insufficient to support a conclusion that BNZ was a person involved in the contravention by EIE.

Further on this aspect, the facts pleaded in the

statement of claim do not, in my view, allege that Magenta

suffered loss by entering into the agreement said to be	induced by the misrepresentations by EIE. The statement of
claim does not allege that the conduct alleged in paragraph 12 was wrongful, nor, having regard to what is said in paragraph
13, is there any claim that loss or damage resulted from it.
This part of the claim in my view should be struck out.
As to the claim by Ampersand against BNZ, the statement of claim alleges (by paragraph 18) that on
22 November 1988 by an agreeioent in writing beLween FAI,
Magenta and Ampersand, Magenta assigned the benefit of the agreement for the purchase of the FA1 parcel to Ampersand. Ampersand alleges that on 15 November 1988 Edwards represented to Magenta and Ampersand that Grylis was willing and able to and would acquire the FA1 parcel from Magenta and Ampersand (paragraph 22). It is further alleged that on 23 November
1988 Edwards represented that if Magenta and Ampersand agreed
to sell the FA1 parcel to Grylis then, inter alia, Grylis was willing and able to and would take over all liability of Magenta and Ampersand to FA1 under the agreement for the purchase of the FA1 parcel (paragraph 23).

Paragraph 30 of the statement of claim is in these

terms :

" Magenta and Ampersand have s u f f e r e d loss and

damage a s fo l lows i n t h a t i n r e s p e c t o f t h e

c o n t r a c t f o r t h e purchase o f t h e FAI Parcel:-

( a ) by reason o f t h e conduct r e f e r r e d t o i n

paragraph 8 , Magenta made payment o f

$4,680,000.00	t o FAI on 29 August 1988;
and

( b ) by reason o f t h e Conduct r e f e r r e d t o i n

paragraphs 8 , 22 and 23, Anlpersand made: -

( i ) payment o f $3,641,096.00 t o FAI on

31 August 1989;

( i i )	payment o f $5,000,000.00	t o FAI on
31 October 1989;

(iii) payment o f $1,010,550.00 t o FA1 on

9 November 1989. "

It is not alleged that the agreement made on 22 November 1988 by which Magenta assigned the benefit (and it seems the burden) of the agreement for the purchase of the FA1 parcel to Ampersand was induced by any misconduct.

Paragraph 27 alleges that the making of the representations by Edwards earlier referred to was -

" . . .conduct i n which, i n a d d i t i o n t o Ess ington

Developments, G r y l i s , Essington and Edwards,

BNZ, I s h i z a k i , EIE and Axis were persons

i n v o l v e d ,	i n t h a t : -
( a ) BNZ	had agreed w i t h them t h a t Edwards

should make t h e r e p r e s e n t a t i o n s r e f e r r e d

t o i n paragraphs 22 and 23 h e r e o f ; . . . "

Paragraph 28 alleges that the making of those representations constituted misleading and deceptive conduct. The statement of claim alleges, baldly, that, inter alia, BNZ had agreed with various parties that Edwards should make the representations and that, inter alia, BNZ knew that Grylis was not willing and able to complete the agreement the subject of those representations. No particulars of the agreement or the asserted knowledge in BNZ are given, but insofar as this aspect of the Ampersand claim is concerned, the pleading is not insufficient. However, the complaint by BNZ that no loss

with Grylis, in my opinion, is sound. Any loss alleged is the	is alleged to have resulted from the making of the agreement
making of payments by Ampersand to FA1 in 1989, which are not alleged to have been paid by reason of the agreement by Ampersand with Grylis.
Finally, in the claim by Ampersand as well as in the claim by Magenta, in my view no facts are pleaded which show that either Magenta or Ampersand suffered a loss by entering

into the agreements or paying the sums referred to in paragraph 30. One cannot infer from the mere fact of payment that no consideration or inadequate consideration was received for that payment.

I therefore strike out the statement of claim

insofar as it pleads causes of action against BNZ.

In all the circumstances I grant liberty to replead the statement of claim and direct that any amended statement of claim be flled and served on BNZ within 21 days.

The applicants are to pay BNZ's costs of the notice

of motion, to be taxed if not agreed.

I

I certify that this and the	l ,_
preceding fourteen (14) pages	:
are a true copy of the reasons	i
for judgment herein of the	I.
Honourable Mr

i

1-

Date:	11	1 -,
l
I

Counsel for the applicants	Mr P. A. Keane Q.C. with	I i
Mr P.D. T.Applegarth
instructed by	Chambers McNab Tully &	I
f
P7ilson (now Corrs	I
Chambers Westgarth)	1 I
Counsel for the first respondent:	M r P. Hely Q.C. with Mt.	;
P. D. McJIurdo	,i
instructed by	Freehill Hollingdale &	I
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