Scott, Walter Robert v Beneficial Finance Corporation Ltd

[1995] FCA 1022

CATCHWORDS

ESTOPPEL - Anshun estoppel - whether Applicant acted unreasonably in seeking to proceed in this Court instead of making a further application in an earlier proceeding in the Supreme Court for leave to cross-claim - whether the claim now made can lead to "inconsistent judgments".

DAMAGES - rule in Foss v Harbottle (1843) 2 Hare 461 - whether damages for alleged contraventions of s. 52 of the Trade Practices Act can include diminution in the value of the Applicant's shareholdings in companies induced by misrepresentations to act to their detriment.

PRACTICE AND PROCEDURE - pleadings - application to strike out statement of claim because pleading is embarrassing - whether leave should be granted to replead.

Port of Melbourne Authority v Anshun Proprietary Limited
(1981) 147 CLR 589
Foss v Harbottle (1843) 2 Hare 461
Bank of New Zealand v Spedley Securities Ltd (in liq) (1992)
107 ALR 333
Rogers v The Queen (1994) 181 CLR 251
Currabubula Holdings Pty Limited v Mita Copiers Australia Pty
  Limited Burchett J., unreported, 5 May 1995
Bryant v Commonwealth Bank of Australia (1994) 123 ALR 642
Bryant v Commonwealth Bank of Australia (1995) ATPR 40,744
Bryant v Commonwealth Bank of Australia Sackville J.,
  unreported, 3 March 1995
Bryant v Australia & New Zealand Banking Group Limited
  Lindgren J., unreported, 20 September 1995
Hoysted v Federal Commissioner of Taxation (1925) 37 CLR 290
Brewer v Brewer (1953) 88 CLR 1
Murphy v Abi-Saab N.S.W. Court of Appeal, Gleeson C.J.,
  Kirby P. and Rolfe A.JA., unreported, 20 July 1995
Morwood v Chemdata Pty Limited (1995) ATPR 40,827
Prudential Assurance Co. Ltd. v Newman Industries Ltd. (No. 2)   [1982] Ch 204
Gould v Vaggelas (1985) 157 CLR 215
O'Neill v Ryan [1990] 2 IR 200
Wentworth v Rogers (No 5) (1986) 6 NSWLR 534
Republic of Peru v Peruvian Guano Company (1887) 36 Ch D 489

WALTER ROBERT SCOTT v BENEFICIAL FINANCE CORPORATION LIMITED
NG 699 of 1993

Burchett J.
Sydney
14 December 1995

IN THE FEDERAL COURT OF AUSTRALIA  )
  )
NEW SOUTH WALES DISTRICT REGISTRY  )    NG 699 of 1993
  )
GENERAL DIVISION                 )

BETWEEN:     WALTER ROBERT SCOTT

Applicant

AND:BENEFICIAL FINANCE CORPORATION LIMITED

Respondent

CORAM: Burchett J.
PLACE: Sydney
DATE : 14 December 1995

ORDERS OF THE COURT

THE COURT ORDERS THAT:

1. It be declared that the separate question whether the Applicant's claim is wholly or partly barred by the principle of Port of Melbourne Authority v Anshun Proprietary Limited be answered "No";

1. It be declared that the separate question whether it is open to the Applicant to claim damages by reason of the reduction in value of his shareholdings or otherwise on the basis that the companies referred to in the second further amended statement of claim as Golden Ponds and Shelldale suffered loss, as he has alleged, by contraventions of s. 52 of the Trade Practices Act 1974 be answered "No";

1. The Applicant's second further amended statement of claim be struck out;

1. The Applicant have leave to replead by lodging with his Honour's Associate and serving by 16 February 1996 a draft Third Further Amended Statement of Claim, with a view to appropriate orders being made at a directions hearing to be fixed by arrangement with the Associate;

1. One half of each party's costs of the motions and of the argument upon the separate questions be that party's costs in the cause.

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

IN THE FEDERAL COURT OF AUSTRALIA  )
  )
NEW SOUTH WALES DISTRICT REGISTRY  )    NG 699 of 1993
  )
GENERAL DIVISION                 )

BETWEEN:     WALTER ROBERT SCOTT

Applicant

AND:BENEFICIAL FINANCE CORPORATION LIMITED

Respondent

CORAM: Burchett J.
PLACE: Sydney
DATE : 14 December 1995

REASONS FOR JUDGMENT

BURCHETT J.:

When this matter came before me to hear opposing motions, there was some confusion as to whether in reality the respondent was seeking to strike out a second further amended statement of claim or whether, that document having been filed irregularly, I was required to deal with a motion by the applicant for leave to file his second further amended statement of claim.  It seemed to me that there was a question whether Hill J. had already granted leave to file the document; and, if not, that it would be appropriate in all the circumstances of the matter to grant leave so as to permit the respondent's application to strike it out to proceed on grounds which, I was originally told, were that it was so drafted as to be embarrassing and, in any event, raised claims that were barred upon the principle of Port of Melbourne Authority v Anshun Proprietary Limited (1981) 147 CLR 589 (Anshun).  Accordingly, I granted leave to file and serve the second further amended statement of claim de facto filed on 28 March 1995, and directed that it was to be taken to have been duly filed and served; but I reserved the question whether this leave ought to be subject to any special order in relation to the date as at which any cause of action raised by the statement of claim, as so amended, is to be deemed to have been first pleaded.  I then proceeded to hear the respondent's motion to strike out this statement of claim on the grounds I have mentioned.

I was taken by counsel for the respondent to an appeal book, prepared in relation to an application for leave to appeal from an earlier decision of Hill J., which was tendered in the proceeding before me.  As the argument proceeded, it became clear that counsel for the respondent, in addition to making substantial complaints about the drafting of the second further amended statement of claim, was wishing to raise for determination in the proceeding two distinct questions - whether the applicant was barred upon the principle of Anshun, and whether certain of the claims made by the applicant were unavailable to him upon the principle of Foss v Harbottle (1843) 2 Hare 461. Particularly as the Anshun point had already been debated before Hill J., and decided by him, as I then understood, upon the well known principle applicable to a motion for summary disposal of a proceeding, and as the other point raised a pure question of law, I thought it more appropriate to deal with these issues under Order 29 rule 2.  After some discussion with counsel, I made an order that it be decided separately from any other question whether the applicant's claim was wholly or partly barred by the principle of Port of Melbourne Authority v Anshun Proprietary Limited; and also whether it was open to the applicant to claim damages by reason of the reduction in value of his shareholdings, or otherwise on the basis that the companies referred to in the second further amended statement of claim as Golden Ponds and Shelldale suffered loss, as is alleged, by contraventions of s. 52 of the Trade Practices Act 1974. This order was made by consent. At the same time, and in view of the fundamental nature of the change in the proceeding before me which it involved, I gave directions permitting the filing of further material, if desired, by either party.

I now turn to the issue raised under Anshun.  It is necessary to give some brief account of the history of the matter.  For a substantial period, the applicant, as a director and shareholder of the companies Golden Ponds Corporation Pty Limited (Golden Ponds) and Shelldale Corporation Pty Limited (Shelldale), was involved in transactions with the respondent, a finance company and subsidiary of the former State Bank of South Australia.  Very large sums of money were lent to the companies.  Guarantees were given by the applicant.  At the time the transactions with which this case is concerned were initiated, the relationship between the parties was particularly close, and involved the applicant in doing work on behalf of the respondent in other matters.  At some point the relationship soured.  An affidavit sworn by the former managing director of the respondent provides confirmation that a change of attitude on the respondent's part may have clouded its dealings with the applicant and his companies.  At all events, a dispute developed, and the applicant was sued in the Commercial Causes Division of the Supreme Court of New South Wales for approximately $13 million upon his guarantee of the obligations of the two companies.  That was on 28 September 1992. 

A defence of economic duress was filed in the Supreme Court action on 22 February 1993, and shortly afterwards an application was made to file a cross-claim.  This application was refused by Giles J. on 26 March 1993, for the reason that its formulation was "irretrievably embarrassing".  At that stage, the plaintiff was itself proposing to amend, so the proceeding was stood over; but nothing was said, it appears, about whether or not the defendant could make a further application for leave to file a more appropriately drafted cross-claim.  In fact, the plaintiff did amend, and amended defences became necessary.  Without making a further application for leave to cross-claim, the defendant filed amended defences including a cross-claim.  That was on 1 September 1993, and on 3 September 1993 Giles J. delivered a judgment in which he ordered that the cross-claim "be taken to have been removed from the file or alternatively struck out".  He pointed out that the hearing of the action had been fixed for three days commencing on 22 September 1993, a direction having been given that a defence to the amended summons be served by 19 August 1993, later extended to 31 August 1993.  Under the purported cross-claim as filed on 1 September, additional cross-claimants were involved, the companies Shelldale and Golden Ponds.  Giles J. remarked that they could not be cross-claimants because they were not defendants.  In any case, the pleading of the cross-claim was again "embarrassing to such an extent that it could not be allowed to stand".  Giles J. added:

"Beyond that, and beyond the fact that Shelldale and Golden Ponds cannot be cross-claimants, in my opinion even the defendant should not be permitted to bring a cross-claim of the kind apparently intended to be set up at this stage of the proceedings.  He needs leave to do so, and I do not think leave should be given, but even if he had had a general leave to cross-claim I consider that a cross-claim framed as this one is would have to have been struck out.  It will be open to the defendant, and to Shelldale and Golden Ponds, to seek to enforce whatever rights they may have by way of a claim against Beneficial [i.e. the then plaintiff, respondent in the proceedings before me] in other proceedings, but they cannot be permitted, after the history of the proceedings which I have related, to raise some three weeks prior to the appointed hearing and in the wholly unsatisfactory way they have sought to do the present purported cross-claim."

Giles J. then proceeded to point out that contravention of the Trade Practices Act could not be relied upon as a defence to the proceedings in the Supreme Court (he plainly had in mind Bank of New Zealand v Spedley Securities Ltd (in liq) (1992) 107 ALR 333), and since he was not permitting it to be relied upon by way of cross-claim, it could not be
relied upon at all. In the upshot, the Commercial Causes case was brought to an end by a consent judgment for the sum due upon the guarantee. At about the same time, the applicant acted on the suggestion made by Giles J., launching this proceeding in this Court, in which he claimed damages pursuant to s. 82 of the Trade Practices Act, alleging contraventions of s. 52.

Despite the terms of the judgment delivered by Giles J., the respondent finance company did, immediately after it, make plain to the applicant, if not to the Judge, its contention that the applicant was barred from taking any further proceeding.  The difficulty about that seems to me to be quite obvious.  Beneficial Finance Corporation Ltd (Beneficial), as plaintiff in that proceeding, had persuaded Giles J. to deny the defendant an opportunity to cross-claim on three grounds, one of which was that the claim ought properly to be brought in separate proceedings, since it involved additional parties who could not cross-claim.  So far as that ground goes, it would suggest a very good reason why there should be separate proceedings; and the fact that the companies which were attempted to be joined have not in the event proceeded with the claim cannot alter this.  In fact, it may be, although Giles J. does not suggest anything of the kind, that they were never able to proceed because they were already in liquidation and their liquidators were unwilling to incur the costs that would have been involved.  That is a matter that was not explored before me.  The second ground on which Beneficial succeeded before Giles J. was the defectiveness of the pleading presented, and the third ground was the shortness of the time left before the hearing.  These two grounds are plainly related, since a longer period would have enabled a redrafted pleading to be presented without relevant prejudice to Beneficial.  But for his view that the applicant's claim could be brought later together with the claims of Shelldale and Golden Ponds (which could not claim in the proceedings before him), it is difficult to see any reason why Giles J. would not have permitted the defendant to file a redrafted cross-claim, and then ordered a separate hearing of it, to take place at an appropriate time.  The numerous cases which have declared a court's duty to permit all necessary amendments to enable justice to be done are too well known to need repetition.  Accordingly, Beneficial's stated attitude, made plain only after it had received the benefit of the decision given by Giles J., seems to me to have been properly disregarded by the applicant.  At any rate, in the circumstances of this case, I do not think the applicant can possibly be held to have acted unreasonably in seeking to proceed in this Court, by "other proceedings" as Giles J. had suggested, instead of making a further application in the Supreme Court for leave to cross-claim in a proper form, on his own account alone, on the basis that the hearing of the cross-claim would be deferred.  Unless his action was unreasonable, so as to bring the principle of Anshun into play, he was not barred by any res judicata or issue estoppel.  A court should be cautious, in such a situation, before denying the applicant, on imprecise notions of reasonableness, a remedy that the court previously seised of the matter contemplated he would have, and that the precise principles of res judicata and issue estoppel do not deny him: Brewer v Brewer (infra, at 20); Rogers v The Queen (1994) 181 CLR 251 at 275. Cf. Murphy v Abi-Saab (N.S.W. Court of Appeal, Gleeson C.J., Kirby P. and Rolfe A.JA., unreported, 20 July 1995) at 12.

In the event, the application in this Court was met with a motion for a stay grounded, alternatively, upon the doctrine of res judicata and upon the doctrine of Anshun.  The ground of res judicata failed, and has not been pursued before me.  As for the second ground, Hill J. drew attention to the remarks made in the joint judgment of Gibbs C.J., Mason and Aickin JJ. in Anshun at 600, which were plainly intended as a warning against too ready an application of the doctrine of the case to a cross-claim.  I drew attention to the same remarks, and to several authorities supporting them, in my judgment in Currabubula Holdings Pty Limited v Mita Copiers Australia Pty Limited (unreported, 5 May 1995).  They have also been considered by Einfeld J. in Bryant v Commonwealth Bank of Australia (1994) 123 ALR 642 at 649 (see the same case on appeal as Bryant v Commonwealth Bank of Australia (1995) ATPR 40,744 and see also Bryant v Commonwealth Bank of Australia (Sackville J., unreported, 3 March 1995) and Bryant v Australia & New Zealand Banking Group Limited (Lindgren J., unreported, 20 September 1995) at 33-35).  There is, of course, a great difference between this case and Bryant.  Mr Bryant, for a reason successive courts found quite unconvincing, chose to withdraw a cross-claim that was available to him in the earlier proceeding with a view to raising it in the later proceeding.  The applicant here tried to raise a cross-claim in the Supreme Court, being denied leave.  In a sense, it cannot be said he failed to raise the cross-claim in the earlier proceeding; but, at most, that he should have sought leave to appeal against the judge's order - perhaps on the ground that a cross-claim should have been permitted, although split hearings might then have been required.  If the matter is seen in that light, the reasonableness of acting on what Giles J. said, in the context of a cross-claim that was wider in scope than the issues necessarily involved in any litigation about the guarantee and that might have required the joinder of additional parties, may well wear a very different appearance.

Hill J. next referred to an argument that the application might result in inconsistent judgments, insofar as damages awarded against the respondent might include the sum awarded to it in the Supreme Court under the guarantee.  He pointed out that this was to treat judgments as inconsistent on a basis quite different from that adopted in Hoysted v Federal Commissioner of Taxation (1925) 37 CLR 290, "namely that two judgments will be inconsistent if the judgment in the second case could not have been decided in that way consistently with the decision in the first case". He continued:

"I cannot see why a claim on the guarantee and a claim for damages under the Act are in any way inconsistent with each other.  They are certainly not contradictory.  Nor do they appear to declare rights which are inconsistent in respect of the same transaction."

I discussed this matter, which is dealt with in Anshun (at 603-604), in Currabubula (at 13-14), citing Brewer v Brewer (1953) 88 CLR 1 at 15, where a judgment of Fullagar J., in which Dixon C.J. concurred, is to the same effect as Hoysted.  As I pointed out, the joint judgment in Anshun, in the passage referred to, describes this judgment as "illuminating".  See also, as to inconsistency, Murphy v Abi-Saab (supra, at 18).

Hill J. came to a conclusion in the following passage:

"Assuming that the present proceedings could amount to the taking of a step so relevant to the subject matter of the first action that an Anshun defence was open in respect of it, I do not think in the present circumstances it can be said to have been unreasonable on the part of Mr Scott not to plead the cross-claim in the Supreme Court proceedings.  Indeed, Mr Scott had sought to do so but his applications so to do had been rejected by the Supreme Court.  It is true that the rejection in part depended upon inadequacies of the pleading and in part depended upon the closeness in time of the last application and the scheduled hearing.  It is also true that Mr Scott was guilty of not complying with various procedural orders in the meantime.  Nevertheless, given that Mr Scott had sought to bring forward to the Supreme Court these matters and was refused leave, it cannot, in my view, be said that to bring the case forward now was bringing forward a case which he could, had he exercised reasonable diligence, have brought forward in the Supreme Court."

The respondent then sought leave to appeal to a Full Court from the decision of Hill J.  Its application was dealt with on 31 May 1994 by Wilcox, Einfeld and Beazley JJ., who refused leave (in an unreported decision) on a ground that appears plainly from the following passage:

"It is clear that the test to be applied in relation to the Anshun principle is whether it was unreasonable of that person [i.e. a person in the position of the present applicant] not to plead a particular defence or, if the principle applies to cross-claims, a particular cross-claim. 

That inevitably involves a court in the task of looking at the history of the earlier proceeding and the issues that were there tendered.  That has been done on this occasion, with the assistance of counsel, and all members of the Court have reached the view that it cannot be said that the learned primary Judge erred in principle in coming to the conclusion, as he did at p. 15 of his reasons for judgment [the page containing the lengthy passage I have last cited from his reasons], that it was not unreasonable for Mr Scott not to plead a cross-claim in the Supreme Court proceedings."

In Currabubula, I pointed out that an application for a stay, a striking out of an application or summary dismissal, of the kind which was brought before Hill J., is an application governed by a very strict principle; it may only succeed "in the clearest of cases": Wardley Australia Limited v The State of Western Australia (1992) 175 CLR 514 at 533. Counsel for the respondent seized on this proposition to contend that Hill J. had not decided the same issue which now falls for decision by me. Undoubtedly, it was not necessary for him to go so far. He could have dismissed the motion he was hearing on the ground that it was not a clear case. But I have read and re-read his reasons and those of the Full Court, and I have found nothing to show that Hill J. or their Honours attributed their decisions in any way to that point. Hill J. was firmly of the view that the extended principle of Anshun did not apply because "it was not unreasonable for Mr Scott not to plead a cross-claim in the Supreme Court proceedings", to use the language in which the Full Court summarized his reasons.  The Full Court itself saw no error in this view.  It is true that Hill J's finding was not necessary to his decision, in the sense that he had no need to come to so firm a conclusion.  Therefore, even if an interlocutory decision could give rise to an issue estoppel, I do not think the respondent would be estopped from maintaining the contrary: Murphy v Abi-Saab (supra, at 14).  But a conclusion so squarely expressed, and so squarely affirmed as correct in principle by a Full Court, cannot lightly be displaced.  As I have already made clear, it is also a conclusion to which I would have come myself.

In an attempt to displace the reasoning of Hill J., counsel for the respondent suggested his Honour had at one point mistaken the nature of an equitable defence of innocent misrepresentation.  I have no doubt that his Honour did nothing of the kind.  He expressly refers (at p. 9) to a defence of misrepresentation, a defence which, in the context, can only refer to an innocent misrepresentation.  His later reference to "fraudulent misrepresentation" was in the context of representations causing recoverable damage.
     Accordingly, the separate issue in respect of the allegation that the applicant is barred by the extended principle of Anshun will be answered in favour of the applicant.

I turn to the second separate issue, which relates to the nature of the damages sought by the applicant. It arises in this way. The applicant claims damages under s. 82 of the Act on the basis that the respondent's contraventions of s. 52 brought about his liability under the guarantees, together with certain further losses and investments, and also caused the companies Golden Pond and Shelldale, of which he is a major shareholder, to incur heavy losses, thereby reducing the value of his shareholding. The question is whether the applicant is entitled to claim damages for a loss of this last kind.

I can deal with the matter quite shortly, because, subsequently to the argument in this matter concluding, Lockhart J. decided the point adversely to the interest of the applicant in Morwood v Chemdata Pty Limited (1995) ATPR 40,827. In that case, his Honour said (at 40,837):

"The claim by Mr Morwood for damages ... is for the reduction in value of his shares in [a company] or the loss of the opportunity of obtaining value in his shares in [the company], that loss of opportunity being both as to the capital value of the shares and the recurrent value of dividend from the shares.  ... 

In my opinion Mr Morwood is not entitled to recover damages in the circumstances as pleaded in the statement of claim."

His Honour cited a passage from Prudential Assurance Co. Ltd. v Newman Industries Ltd. (No. 2) [1982] Ch. 204 at 222-223, where Cumming-Bruce, Templeman and Brightman L.JJ. said in a joint judgment:

"But what [a shareholder] cannot do is to recover damages merely because the company in which he is interested has suffered damage.  He cannot recover a sum equal to the diminution in the market value of his shares, or equal to the likely diminution in dividend, because such a `loss' is merely a reflection of the loss suffered by the company.  The shareholder does not suffer any personal loss.  ...  The deceit practised upon the plaintiff does not affect the shares; it merely enables the defendant to rob the company."

The law as declared in this decision was accepted by the High Court in Gould v Vaggelas (1985) 157 CLR 215. It has also been accepted in other common law jurisdictions. See O'Neill v Ryan [1990] 2 IR 200 at 209, where Lynch J. said:

"The rule in Foss v Harbottle (1843) 2 Hare 461 ... merely prohibits persons who are not directly affected by the breaches from maintaining an action which is more properly to be maintained, if at all, by the company in which such persons are shareholders. The desirability of avoiding a multiplicity of actions perhaps in many cases contrary to the will of the directors and/or the majority of shareholders is obviously a major factor in the thinking underlying the rule in Foss v Harbottle and demonstrates the sound sense of that thinking."

See too American Jurisprudence 2nd ed., vol. 19, para. 2,246, where it is stated:

"The fact that a stockholder suffers indirect harm, such as a diminution in the value of his corporate shares resulting from the impairment of corporate assets, due to a wrong done the corporation by a third party, does not give the stockholder an individual right of action since such an action would authorize multitudinous litigation and ignore the corporate entity."

Accordingly, I shall answer the second issue raised for separate determination in favour of the respondent.  This will limit the scope of the damages that may be claimed in the action to those damages sustained by the applicant himself. 

It is now necessary to turn back to the issues remaining for determination under the motion to strike out the statement of claim.  In the course of the argument it became clear that the statement of claim, which was not drafted by counsel now appearing for the applicant, was remarkably defective.  As counsel for the applicant did not seek to defend it, there is no necessity to go into detail.  I will simply say that a statement of claim is concerned with the ultimate facts alleged as constituting the liability, which should be stated so as to show how the claim is said to arise and on what it depends.  The pleading is not concerned with merely peripheral facts, and certainly not with the evidence.  It should not plead such an impenetrable forest of detail that the respondent and the court are unable to identify what is said to be the timber.  In the present case, the pleader himself
seems to have lost sight of the timber, with the result that allegations apparently intended to lay a basis for claims of misleading conduct have not been translated into precise formulations of the conduct or, where they have, they are left hanging in the air without allegations to show how the conduct was misleading and without allegations of reliance on the part of the applicant on such representations as a generous reader might extract from the pleading.  In these, and in a number of other respects, the pleading is embarrassing.  I have no doubt it should be struck out, subject only to the question what further order should be made. 

But the matter debated at the hearing was whether, and on what terms, I should grant leave to file a third further amended statement of claim.  The respondent argues that there should be no leave to replead, and that if any repleading is permitted, the Court should require the applicant first to pay indemnity costs in respect of the application to strike out the existing pleading. 

In my view, it would be a grave risk to justice if courts were generally to adopt, in cases such as this, the approach urged by the respondent.  I agree with the statement of Kirby P. (in a judgment with which Hope and Samuels JJ.A. concurred) in Wentworth v Rogers (No 5) (1986) 6 NSWLR 534 at 536-537:

"Courts should approach the peremptory termination of the litigation with special care to ensure that, within the possibly ill expressed and unstructured statement of the legal claim sought to be ventilated, there is no viable cause of action which, with appropriate amendment of the pleading and a little assistance from the court, could be put into proper form.  If this can be done, the court should avoid the summary termination of the proceedings for this will prevent the Court from examining any merits of the case, once the statement of claim is struck out."

These remarks were made with reference to a case brought by an unrepresented litigant, but the inexpert drafting of the present claim leaves the Court facing the same dilemma.  The language used by Kirby P. echoes the language used more than a century ago by Chitty J. in Republic of Peru v Peruvian Guano Company (1887) 36 Ch D 489 at 496, when he said:

"Under the new rule the pleading will not be struck out unless it is demurrable and something worse than demurrable.  If, notwithstanding defects in the pleading, which would have been fatal on a demurrer, the Court sees that a substantial case is presented the Court should, I think, decline to strike out that pleading; but when the pleading discloses a case which the Court is satisfied will not succeed, then it should strike it out and put a summary end to the litigation.

What I have just stated is intended to be not an exhaustive explanation of the rule, but merely an indication in a general way of the limits of its meaning."

Taking the same broad approach, I am of opinion that, although this statement of claim should be struck out, there should be leave to replead.  It seems to me the statement of claim does raise a substantial case, and certainly not one of which it could be said that the Court is satisfied it will not succeed.
     As for the question of costs, it must not be overlooked that the respondent has attempted to argue a complete bar to the applicant's cause of action.  That was what occupied most of the time at the hearing of the matter, and it was an issue on which the respondent failed.  Very little time was required to demonstrate the inadequacy of the pleading, since counsel now appearing for the applicant accepted the inevitable gracefully.  Some time was taken up by the point concerning the applicant's attempt to claim damages in respect of the diminution in value of his shares.  In essence, the position is that each side had a share of success, the bulk of the hearing being taken up by an issue on which the applicant succeeded.  In all the circumstances, I think the appropriate costs order is that one half of each party's costs of the motions and the argument upon the separate questions should be that party's costs in the cause.

Turning to the matter of the repleading of the claim, I shall order that the applicant may replead in the following manner: by lodging with my associate and serving by 16 February 1996 a draft Third Further Amended Statement of Claim, with a view to appropriate orders being made at a directions hearing to be fixed by arrangement with my associate.

I certify that this and the preceding seventeen (17) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Burchett.

Associate:

Date: 14 December 1995

Counsel for the Applicant:        Mr P.P. Strasser

Solicitors for the Applicant:     M.L. Marmentini & Co.

Counsel for the Respondent:       Mr M.H. Tobias Q.C. with Mr S.M.P. Reeves

Solicitors for the Respondent:     Mallesons Stephen Jaques

Date of hearing:                 14 July 1995