Milner, Bryan John v Delita Pty Ltd

[1984] FCA 493

IN THE FEDERAL COURT OF AUSTRALIA )

1 No. G164 of 1982

NEW SOUTH WALES DISTRICT REGISTRY	)	No. G 85 of 1983
1

DIVISION	GENERAL	1
IN THE MATTER of the
TRADE PRACTICES ACT. 1974

BETWEEN: BRYAN JOHN MILNER AND ORS.

Applicants

AND :

DELITA PTY. LIMITED

ROGER McMILLAN GLASSON and

MORRIS IdALTER LENIN

Respondents and

First Cross-Claimants

AND: ROBERT CHARLES GOOCH MORRISON and

JOHN CHRISTOPHER BENNETT

First Cross-Respondents

and

Second Cross-Claimants

AND :

ROGER McMILLAN GLASSON and

MORRIS WTE3 LEWIN

Second Cross-Respondents

10 SEPTEMBER 1984

REASONS FOR JUDGMENT

LOCKHART J.

On the third day of the hearing of this matter, Wednesday of

last week, the applicants souqht leave to amend the application and

the statement of claim in certain respects. First they applied to add

as respondents Robert Charles Gooch Morrison and John Christopher

2 .

Bennett, who are presently only cross respondents and cross claimants in a cross claim brought by them auainst the respondents.

I should sap at this stage, in the interests of claritp, that

there are two cross claims propounded in each of the matters before

the court, G164 of 1982 and G85 of 1983, which are beinu heard

toqether by consent. In -the first cross claim Delita Pty. Limited,

Roger McMillan Glasson and Maurice Walton Lewin, being the respondents

to the proceedings, cross claim aqainst Mr. Morrison and Mr.Bennett.

In the second cross claim in each matter Mr. Morrison and Mr.

Bennett cross claim aualnst the respondents, Delita, Glasson and

Lewin. For reasons of convenience I shall refer to the parties as

follows: "the applicants", which shall encompass all the applicants in

both sets of proceedings of whom there are about 5 0 : "the

respondents", which shall mean Delita Ptv. Limited, Roger McMillan

Glasson and Maurice Walton Lewin: and "the cross respondents", which

shall mean Robert Charles Gooch Morrison and John Christopher Bennett.

The other amendments which the applicants seek to make are to

add to the existinq causes of action in both matters, which are

presently confined to claims based on alleged contraventions of s.52

of the Trade Practices Act 1974. further causes of action which for

convenience may be described as claims based on fraud, neuligence and

fraudulent or innocent misrepresentation.

3 .

I adjourned the application to amend until Thursday morninq

at the request of counsel for the respondents and counsel for the

cross respondents. I asked counsel for the applicants to ensure that

there would be available on Thursday morninq a draft of the proposed

amendments which the applicants souuht to make to the proceedings, and

that a copy of the draft be handed to other counsel on Wednesday

afternoon. That was done..'

On Thursday morninu the applicants renewed their application

for leave to amend. The application was opposed by the respondents

'and cross respondents. Thursday, Friday and a larqe part of today have been occupied with the evidence and submissions in relation to

the application for leave to amend. Matter G164 of 1982 was commenced

by the filinq of an application on 16 September 1982. There is one

applicant in that matter, Brian	John Milner, and I have already said
who the respondents are.

The statement of claim was filed on 21 October 1982, and it

alleues, so far as relevant to the application to amend, as follows:

"4 . Prior to 1980 the first, second and third

respondents had been enqaued in investment in the

growing and the processinq of uuava fruit on the north

coast of New South Wales and have continued	to be so
engaued at all relevant times.

5. In late 1979 or early 1980 the first, second and

third respondents invited persons to participate in

the investment in the arowinq and processing of quava

fruit and the establishment of a Guava Property Trust

for the purposes of such investment.

6. At relevant dates related to the makinq and

imDlementation of such invitations by the first,

second and third respondents, the first respondent by

the second and third respondents acting as its

directors and agents. engaqed in conduct that is

misleading or likely to mislead or deceive in

contravention of s.52 of the Trade Practices Act 1974,

namely the making of representations that:

The respondents. throuuh an entity Australian Plantations, had carefully monitored a development of

a guava fruit growing and processinu industry in

c a*.

Hawaii.

That there existed a substantial demand on the mainland of the United States of America and in Japan for the products of the guava fruit growing and processing industry and that the extent of such demand was known to the respondents.

That there existed in Hawaii a lack of production to cater for local demand, that Hawaiian processors would take all of the quava puree which could be supplied by guava plantations as projected bp or on behalf of the respondents and that the extent of such demand was known to the respondents.

That a guava fruit qrowinu and processing industry in and in export terms in 1980 and thereafter.

That the respondents had during 1980 a first-class management team in relation to the growinu and processing of guava fruit.

That returns on overseas and local experience available to the respondents in relation to the growing and processing of quava fruit showed a lucrative early return, rising to an anticipated $5000 per acre in year 5 from planting.

That the costs of urowing and processinq guava fruit as projected by or on behalf of the respondents were a true and accurate representation of such costs.

That the costs and expenses of growinq and marketinu uuava fruit as projected by or on behalf of the

respondents represented a reasonable	and	proper
charge in respect of such costs.

That the Department of Primary Industry throuqh its research station at Nambour in Oueensland had made certain data available to the respondents in relation to the growing of quava fruit.

5.

( g 1 That the New South Wales Department of Auriculture had made certain statements to the respondents, repeated by the respondents as havinu alleqedly been made by the New South Wales Department of Aqriculture as to the acreage requirements to meet the Australian demand for uuava fruit.

7. At relevant dates related to the making and implementation of the invitations referred to above, the first respondent by the second and third respondents acting as its directors and agents enuaqed in conduct that is misleading or deceptive or likely to mislead or" deceive in contravention of 9 . 5 2 of the Trade Practices Act 1974, namely the distribution and the dissemination by themselves their servants or agents or with their consent by a business investment advisory firm known as Robert Morrison and Associates of a document entitled "Reasons

for Recommendinu the Guava Property Trust", The applicant

craves leave to refer to this document when produced as if fully

set out in this statement of claim.

8. The relevant dates related to the making and implementation of the invitations referred to above, the first respondent by the second and third respondents actinu as its directors and agents enqaued in conduct that is misleadinq or deceptive or likely to mislead or deceive in contravention of S.

52 of the Trade Practices Act 1974, namely the distribution and

the dissemination by themsleves their servants or aqents or with their consent by a business investment advisory firm known as Robert Morrison and Associates of a brochure related to the establishment of a Guava Property Trust includinu "Reasons for Recommending the Guava Property Trust". The applicant craves leave to refer to this document when produced as if fully set out in this statement of claim.

9. At relevant dates related to the making and implementation of the invitations referred to above, the first respondent bp the second and third respondents acting as its directors and agents enqaged in conduct that is misleading or deceptive or likely to mislead or deceive in contravention of S. 52 of the Trade Practices Act 1974, namely the distribution and the dissemination by themselves their servants or agents or with their consent by a business investment advisory firm known as Robert Morrison and Associates of a Proqress Report. The applicant craves leave to refer to this document when produced as if fully set out in this statement of claim.

19. The conduct of the first respondent referred to above is in contravention of S . 52 of the Trade Practices Act 1974."

6.

The respondents, Glasson and Lewin, are said to have aided,

abetted, counselled, procured or induced the contraventions of the

first respondent, Delita Ptp. Limited, and to have been knowingly

concerned in or a party to them. The applicants claim declaratory

relief, certain injunctive relief, damaues, interest and costs. In

their defence the respondents deny or put in issue all the material

allegations in the statement of claim. The respondents have cross

claimed auainst the cross respondents for contribution or indemnity in

the event that the applicants succeed against the respondents.

The cross respondents have cross claimed aqainst the

respondents alleging essentially the same matters by way of misleading

or deceptive conduct as the applicants allege auainst the respondents,

and claim that, by reason of the investment of substantial sums of

money by the cross respondents in the proiect for the growing and

processing of guavas in the north coast of New South Wales, which is

the subject of these proceedings, those moneys have been lost to the cross respondents due to the impuuned conduct of the respondents.

Proceeding G85 of 1983 was commenced by the filing of an

application on 27 April 1983. There are more than 40 applicants. Each

of the applicants make substantially' the same allegations auainst the

respondents as Mr. Milner makes in the proceeding G164 of 1982. The

defences and cross-claims are substantially the same	as in G164 of
1982.

7.

The matters have been before the court on many occasions for

directions. The discovery of documents and the administration and

answering of interrogatories has been a very larue and obviously

expensive exercise. Cvidence was taken by me in June this year at the

request of the parties sittinq as a Commissioner, appointed by this

Court, in Hawaii, for about two weeks. The witnesses were residents

Hawaii of . * %,

Early this year the matters were set down for hearins to

commence on Monday 3 September 1984, and some five weeks have been set

‘aside for the hearinq. The application to amend was, as I have said,

made for the first time last Wednesday. As a qeneral rule, all

amendments should be permitted to pleadings which are necessary to

determine the real issues between the parties. Also, if

inconvenience, injustice or prejudice to respondents or

cross-respondents can be cured by the imposition of terms - wh ther as

to costs or otherwise - prima facie the amendment should be allowed.

The present case is not, however, so simple. The applicants

chose to frame their case initially and to persist with it until last

week solely on the basis of alleued contraventions of 9.52 of the

Trade Practices Act, and claimed consequential relief. They joined as

respondents, the three parties to whom I have referred. There is

evidence that the applicants’ solicitor was conscious from the

commencement of the proceedings, almost two years auo, of the

possibility of ioininu the cross-respondents as respondents, but for

tactical reasons decided not to ioin them. I do not use the word

8.

tactical with any sense of approbrium whatever. It is a necessary concomitant of most steps that are taken by parties in the conduct of litiqation for uood or bad.

It appears that the applicants were hopeful until very recently that Mr. Morrison would be a friendly witness and uive evidence for them. That hope has now been shattered, or at least, faded somewhat. Additional'reasons for the change of attitude of the applicants are that certain material came to liTht only last week when the respondent Glasson answered the applicants interrogatories from 'which it appeared that the respondents' case would be that Mr. Morrison was the source of any relevant representations constituting misleadinu or deceptive conduct and the source of them in his own

riaht and in no way on behalf of the respondents.

Counsel and the solicitors for the applicants have also recently reassessed the applicants' case. For these and other reasons the application was made on Wednesday last. But the applicants nevertheless elected to shape their case in its present form many months ago. They made a conscious decision not to sue the cross-respondents directly as respondents and adhered to that decision until the 11th hour. This case has been on foot, as I have said, since 16 September 1982. The preparation for the trial by all the parties has been an immense and expensive task includinu, as I have already mentioned, the takinq of evidence in June this year on commission in Hawaii which I have no doubt was undertaken at ureat expense to the parties.

9 .

All this work was done on the basis of the existing issues.

If the amendments were merely formal or were merely supplementary to

the pleadinus, as presently framed, obviously different considerations

miqht arise, but hey are not. The proposed amendments are

far-reachinq. They introduce for the first time alleuations of fraud

against the respondents -and cross-respondents. A case based on

sub-s.82(1) of the Zrade Practices Act is sought to be brouuht f r the

first time against Mr. Morrison, as a person involved in the alleaed

contravention of s.52 by the respondents. It is souqht to allege

‘negligence against all the respondents and cross-respondents.

Assertions of misrepresentation, fraudulent or innocent, are

propounded against some of the parties.

The applicants seek, in my view, to make a fundamentally

different case to the one that they have hitherto propounded. There is no evidence before me of any fraud or fraudulent misrepresentation

by any of the respondents or cross-respondents. In my opinion, where

a party seeks to amend his pleadinus by alleging fraud in a case such

as the present, in all the circumstances which I have but briefly

touched on, there must be some cogent evidence before the Court to

support the amendment and not a bare alleqation of fraud with some

broad particulars.

I am satisfied that the respondents approached this case for

the purposes of pre-trial work and for the purposes of this final

hearinq on the footing of the existing issues and that, if the issues

10.

had been what the applicants now seek to have as the issues, the

preparation	of	the case would have been considerably different in
character.

In particular I am satisfied from what I have been told, both

in evidence from the solicitor for the cross respondents and from the

Bar table, that he cross respondents would have adopted a

substantially different role from the one they in fact adopted during

the two weeks takinu of evidence on commission in Hawaii.

These and other considerations which have been adverted to in

the course of evidence and aruument lead me to conclude that the case

is not one where prejudice to the respondent and cross respondents can

be cured by the imposition of appropriate terms. Further, order 12,.

rules 2 and 3 of this Court’s rules require that a party pleadin9

shall give particulars of any fraud or misrepresentation on which he

relies and that if he pleads any fraudulent intent he shall give

particulars of the facts	on which he relies. The draft amendments to
the statement of claim	do not furnish the material which would be

required by those rules if they were, in fact, formal pleadinus in the

case; and I take that into account also as a relevant consideration.

It is common qround that the claims for fraud, neuliqence and

misrepresentation may be brought by the applicants aqainst the

respondents or cross respondents at common law	or in equity in courts
of competent jurisdiction.

11.

As the case is ready for hearinq and many weeks have been set aside for the trial it seems inevitable that, if the applicants were to succeed in this application to amend the proceedings, the trial would be adjourned for a substantial lenqth of time.

I propose to dismiss the application for leave to amend. It

is unnecessary for me to“ deal with certain additional arquments

advanced by the parties.

The Court orders that the application for leave to amend be

‘dismissed. The applicants must pay the costs of the respondents and of the cross respondents of that application.

I certi!y that t;liS and the

preced:ng pages are a true copy of the

Reasons far Judgment herein of his Honour

K:. Justice Lockhart.

Associate