Millinium Capital Managers Ltd v Soma Group Ltd (No.2)

[2020] NSWSC 474

Supreme Court

New South Wales

Medium Neutral Citation:	Millinium Capital Managers Ltd v Soma Group Ltd (No.2) [2020] NSWSC 474
Hearing dates:	On the papers
Date of orders:	30 April 2020
Decision date:	30 April 2020
Jurisdiction:	Equity - Commercial List
Before:	Stevenson J
Decision:	Plaintiff granted leave to amend its Commercial List Statement
Catchwords:	PRACTICE AND PROCEDURE – leave to amend Commercial List Statement
Legislation Cited:	Competition and Consumer Act 2010 (Cth), Sch 2 (‘Australian Consumer Law’)
Cases Cited:	Millinium Capital Managers Limited v Soma Group Limited [2020] NSWSC 300
Category:	Procedural and other rulings
Parties:	Millinium Capital Managers Ltd (Plaintiff) Soma Group Ltd (First Defendant) Logic Fund Management Ltd (Second Defendant) Gregory Phillipe Marshall (Third Defendant) Paul John Chamberlain (Fourth Defendant)
Representation:	Solicitors: Piper Alderman (Plaintiff) Maddocks (Defendants)
File Number(s):	2019/291329

Judgment

1. On 26 March 2020 I refused to grant the plaintiff, Millinium Capital Managers Ltd, leave to amend its Commercial List Statement in the form then proposed, but gave leave to Millinium to circulate a further proposed Amended Commercial List Statement: Millinium Capital Managers Limited v Soma Group Limited [2020] NSWSC 300.

2. These reasons assume familiarity with that judgment.

3. Millinium has now circulated a proposed Amended Commercial List Statement.

4. That document more fully particularises the basis upon which Millinium will contend that Mr Marshall and Mr Chamberlain were “involved” in Soma’s alleged misleading or deceptive conduct.

5. As I set out at [9] of my 26 March 2020 judgment, such knowledge was, in the previous proposed Commercial List Statement, particularised as follows (taking as a typical example, proposed paragraph 138C):

“Marshall was a director of Soma and, in that capacity, can be expected to have had actual knowledge of the funds and the source of the funds available to Soma. Accordingly, it can be inferred that Marshall had actual knowledge that [the relevant representations] were false.”

6. The current proposed draft List Statement now particularises the allegation at paragraph 138C as follows:

“As at the dates each of the Available Funds Representation were made, Marshall knew that the Available Funds Representations were misleading and deceptive or likely to mislead or deceive.

Particulars

1. In the period from Soma’s incorporation up until the time the Available Funds Representations were made, Soma did not employ or otherwise engage any employees or contractors. As Soma had no staff at all relevant times, the actions of Soma must necessary [sic necessarily] have been affected by the actions of its only directors, being Messrs Marshall and Chamberlain (that is, Soma could only have acted through the conduct of Messrs Marshall and Chamberlain). Accordingly, Soma could only have obtained binding commitments from prospective investors if those binding commitments had been given directly to Messrs Marshall and Chamberlain. For that reason, Mr Marshall must have had actual knowledge of the existence of any binding commitments given by prospective investors and must have known that the Available Funds Representations were false (as no such commitments had been given by any or all of John Bostock, the Te Puia Tapapa Fund and/or Malcolm Fairbairn);

2. It is apparent from the correspondence particularised in paragraphs 14 to 16 of the ACLS that Mr Marshall was the person within Soma who undertook responsibility for identifying and negotiating with potential investors (including Millinium) and for providing updates to Millinium concerning the state of negotiations with potential investors. Based on these facts, it can be inferred that at the time Mr Marshall made each of the Available Funds Representations, he had actual knowledge that neither he nor Mr Chamberlain (on behalf of Soma) had reached an agreement or arrangement with any of John Bostock, the Te Puia Tapapa Fund or Malcolm Fairbairn for any one of them to commit funds to, or underwrite the deal, to acquire the IXL Business.

3. As Soma had no staff at all relevant times, Soma could only have had a bank account if Messrs Marshall or Chamberlain had caused a bank account to be opened. If such a bank account was opened, it must necessarily have been operated by one or both of Messrs Marshall and Chamberlain. Accordingly, Mr Marshall must have had actual knowledge that no funds had been deposited by the supposed investor consortium for use by Soma in acquiring the IXL Business and accordingly, that the representation referred to at paragraph 16.1 of the ACLS was false.”

7. The same particulars are relied upon in relation to paragraphs 145C, 147E. Similar particulars are proffered in relation to paragraph 150C which are repeated in relation to paragraphs 157C, 159E. Similar particulars are given in relation to paragraph 174C, which are repeated in relation to paragraph 176C.

8. In my opinion, this further particularisation cures the difficulty that I found in relation to the earlier iteration of the proposed Amended List Statement.

9. At [18] of my judgment on 26 March 2020 I said that the mere fact of Mr Marshall’s and Mr Chamberlain’s directorship could not, without more, be sufficient to establish their intentional participation in any breach by Soma of s 18 of the Competition and Consumer Act 2010 (Cth), Schedule 2 – The Australian Consumer Law.

10. As now proposed to be particularised, Millinium’s case is that the fact that Mr Marshall and Mr Chamberlain were directors of Soma, combined with the other matters particularised, especially the fact that Soma did not employ or otherwise engage any employees or contractors, gives rise to an inference of their intentional participation on Soma’s alleged misleading or deceptive conduct.

11. Whether the trial judge is prepared to draw such an inference, in all circumstances, is a matter which remains to be seen.

12. At [22] of my judgment of 26 March 2020, I referred to the defendants’ pending application to strike out certain paragraphs of the existing Commercial List Statement.

13. In his submissions in relation to proposed amendments, Mr Gee, who appears for Messrs Marshall and Chamberlain, submitted that paragraphs 148 to 150 of the list statement should be struck out upon the basis that they do not disclose any cause of action against Mr Marshall.

14. That submission appears to overlook the contents of paragraph 28 which alleges that Mr Marshall, along with Soma and Logic Fund Management Ltd, made the representations set out. Mr Gee also submitted that paragraph 35 of the proposed Amended Commercial List Statement should be struck out. That paragraph alleges a further representation by Mr Marshall and Soma. The allegation is particularised by reference to identified documents as well as “conversations between Tom Wallace on behalf of Millinium and Marshall on behalf of Soma”.

15. In my opinion, these matters sufficiently particularise the allegation. The documents will no doubt be disclosed in the course of the proceedings and evidence adduced as to the terms of the conversations.

16. I make the following orders:

1. I grant leave to the plaintiff to amend its Commercial List Statement in accordance with the document sent by email to my associate on 28 April 2020, a copy of which I have marked MFI-1 and placed with the papers;

2. I order that the costs of the defendants’ Notice of Motion of 28 February 2020 and the costs of the plaintiff’s Notice of Motion of 25 February 2020 be the defendants’ costs in the cause.

3. I order that those two notices of motion be otherwise dismissed.

4. I stand the matter over for directions before the Commercial List Judge on 8 May 2020.

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Decision last updated: 30 April 2020