Stewart, N. v Glenpitney Pty Ltd

[1987] FCA 85

THE FEDERAL COURT OF AUSTRALIA )

9UEENSLAND DISTRICT	REGISTRY	)	QLD G169 of 1986
GENERAL DIVISION	)

BETWEEN: NANCY MARIS STEWART and ADAM HUNTER STEWART

Appllcants

AND: GLENPITNEY PTY. LTD.

First Respondent

!

AND: HAROLD KUCKO

Second Respondent

AND: LLOYD JOHN WILLIAMSON

Third Respondent

MINUTES OF ORDER

JUDGE MAKING ORDER:	PINCUS J.
DATE OF ORDER:	2 MARCH 1987
WHERE MADE:	BRISBANE
THE COURT ORDERS THAT:

1. The applicatlon of the third respondent made by notice of motlon flled on 2 3 February 1987 be dlsmissed;

2 . The third respondent pay the appllcants' costs to be taxed.

m:	Order 36 of the Federal Court Rules.
Settlement and entry of orders 1 s dealt with m

C A T C H W O R D S

TRADE PRACTICES - misleading brochures issued by respondent company - claim against one of only two directors and shareholders - no

particulars of personal respondent’s connection with brochure	-
whether claim abuse of process.

Federal Court Rules, 0.11 r.16, 0.20 r.2

Nancv Maris Stewart & Anor.

v. Glenpitnev Ptv. Ltd.

Qld. G169 of 1986

-_

PINCUS J.

BRISBANE

2 MARCH 1987

>

, IM THE FEDERAL COURT OF AUSTFWLIA 1

QUEENSLAND DISTRICT REGISTRY ) QLD ~169 of 1986

DIVISION GENERAL )

BETWEEN: NANCY MARIS STEWART and ADAM HUNTER STEWART

Applicants

AND: GLENPITNEY PTY. LTD.

First Respondent

AND: HAROLD KUCKO

Second Respondent

A N D : LLOYD JOHN WILLIAMSON

Thlrd Respondent

PINCUS J. 2 MARCH 1987

REASONS FOR JUDGMENT

The applicants' case is brought prlncipally under 5 . 5 2

of the Trade Practices Act. The thlrd respondent seeks an order

striking out the application and statement of claim as against h m on the grounds that the statement of clam discloses no reasonable

cause of action agalnst hlm, and that the applicatlon is frivolous

or vexatlous or an abuse of process. Alternatively, the thlrd

respondent asks for judgment in his favour on the same grounds.

Power to glve the relief sought is found in 0.11, r.16 and 0.20,

r . 2 . I do not set these provisions out, but note that the former

only allows pleadings to be struck out and does not refer to the

giving of judgment. Insofar as the third respondent asks for

L.

L ~udgment in his favour, that must be based on 0.20, r.2, under

which rule evidence may be received (see Patton v. Beazley,

unreported, 23 February 1987 Full Court).

The question here is simply whether enough has been

shown and pleaded to justify contlnuance of the applicatlon

against the thlrd respondent. I should mention that the

solicitors on the record for the other respondents have wlthdrawn,

which suggests that the claim against the third respondent	may be
of some practical importance.

The statement of claim says that the first respondent is

a company, and the second and third respondents were at all

materlal times its dlrectors and "persons responslble for the

management of the affalrs of the First Respondent". Exhibit 1,

referred to below, shows that the second and thlrd respondents

were on 31 December 1985 the only dlrectors.

The statement of clalm says that the flrst respondent

advertised the establlshment of a resldential development on

certain land by means of brochures which made certam assertlons

said to be misleading and deceptlve. Oral representations are

also complained of. The pleading claims further that the third

respondent knew the representations to be false or "made them not

caring whether they were true or false". The allegatlon just

quoted does not match the rest of the statement of claim, because

it is nowhere said that the third respondent himself made any

representatlons. The pleading goes on to say that the applicants

~	executed agreements, being induced	by the representations, and
suffered loss.

In addition to the allegations mentioned above against

the third respondent, the pleadlng contains (in para.18) a general

allegation substantlally based on the language of s.75B(a) and (c)

of the Trade Practices Act 1974. Particulars of para.18 have been

sought and a rather general answer	was given, the relevant part	of
which is:

"The Thlrd Respondent was at all material times

appointed as, and acting in the capacity as a

director of the First Respondent, and thereby

howlngly engaged In the conduct	of the affairs of
the First Respondent."

Counsel for the third respondent argued, relying upon

Yorke v. Lucas ( 1 9 8 5 ) 61 A.L.R. 307, that It is not enough merely

to say that the natural person sought to be made liable under

_. s.75B is a director - or even a managlng director. They pointed

out that the statement of clalm does not speciflcally allege that

the third respondent played any part m the preparation or

presentatlon of the brochures complained of.

They also relied on the fact that discovery, whlch has

already taken place, did not result in any proper

particularlsation of the claim against the third respondent.

Counsel for the third respondent relied upon the

decision of the Full Court of the Queensland Supreme Court in

Brisbane Unit Development Corporation v. Robertson C19833 2 Qd.R.

4.

L

105 (at p.109) in support of the proposltion that a general

allegation of fraud is not enough and that it is no part of the

function of discovery or interrogatories "to enable a party to

fish for a case which he cannot make out, and whlch he has no

means of knowing whether or not he can make out ... " Counsel

suggested that these remarks are equally applicable to the case

sought to be made here, one of statutory liability.

Exhibit 1 is a.copy of the first respondent's annual

return. As I read the statement of claim, the events mentioned

therein began in the year 1983, but that date appears to be an

error and the thlrd respondent's list of documents suggests that

the events prlnclpally in issue occurred In 1985 and 1986; I

notice that the only annual return of the first respondent which

has been discovered is that showlnq the position as at the end of

1985. It has the second and thlrd respondents as the only members

and the only dlrectors of the flrst respondent, and the third

-.

respondent as secretary, and purports to be signed by both second

and third respondents.

The defence of the thlrd respondent admits that the

first respondent prepared or caused to be prepared brochures and

other documents relating to the development mentloned in the

statement of claim.

Counsel for the applicants argued that exhibit 1 shows

that the first respondent, which is admitted to have issued

brochures relating to the development, was, at a date fairly close

to the events in issue, controlled by the second and third

respondents, being its sole directors and shareholders. They

contended In effect that, on the facts presently known, It is

likely that there is substance in the allegation in the statement

of claim that the second and third respondents were, at material

times, "persons responsible for the management of the affairs of

the first respondent". They of course drew attention to the

necessity for a very clear case to be shown, to deprive the

applicants of their day in court.

Counsel for the third respondent argued that the

applicants' case is not based on any evidence and that

interrogatlng about the third respondent's connectlon with the

events complained of would be flshing; that does not appear to me

to be so. It 1 s no doubt posslble that, although one of only two

directors, the third respondent had nothing to do wlth the lssue

of the written materlal complained of. I cannot thlnk, however,

that it would necessarlly be judged oppresslve to dellver

.- interrogatories wlth respect to the preparation and issue of the

written material, deslgned to obtaln informatlon about the third

respondent's connection with that material, If any. Whether or

not such interrogatories are to be dellvered, or elicit answers

favourable to the applicants, it appears to me that the appllcants

should be given the opportunity of attempting to satisfy the Court

at the trial of the correctness of the allegatlons In para.2 of

the statement of claim that the second and third respondents were the persons responsible for the management of the affairs of the first respondent. In my n e w , it would be odd, since there were at relevant times only two directors and shareholders, the third respondent being one of them, to hold that an attempt to connect

b.

the third respondent with the company's activities mentioned in

the pleadings must be frivolous or an abuse of process.

Counsel for the third respondent argued that since the

annual return was tendered only at the hearing, some special order

as to costs should be made, if the application falled on that

account. I thlnk the costs should follow the event; the return was discovered by the third respondent, was tendered by consent

and its contents must surely have been known to the third

respondent.

The applicatlon of the third respondent made by notice

of motion filed on 23 February 1987 must be dismissed with costs.

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