Re Jet Corporation of Australia Pty Ltd (In Its Capacity As Trustee of the Jet Corporation of Australia Trust) v Petres Pty Limited (In Its Own Right and In Its Capacity As Trustee of the Schutt Unit Trust) and Others v [1985] FCA 16 (8 February 1985)

FEDERAL COURT OF AUSTRALIA

Re: JET CORPORATION OF AUSTRALIA PTY. LTD. (in its capacity as Trustee of the
JET CORPORATION OF AUSTRALIA TRUST)
And: PETRES PTY. LIMITED (in its own right and in its capacity as Trustee of
The Schutt Unit Trust) and OTHERS
V. No. G.109 of 1983
Practice and procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Northrop J.

CATCHWORDS

Practice and procedure - application for proceedings to be dismissed - joinder of parties - application for amended statement of claim and amended application to be struck out.

O.6 r.9, O.11 r.16, O.20 r.2 Rules of Court

HEARING

MELBOURNE
8:2:1985

DECISION

The history of interloctuory matters arising with respect to this application is contained in Jet Corporation of Australia Pty. Limited and Others v. Petres Pty. Ltd. and Others (1983) 50 ALR 722 and on appeal in Sent and Another v. Jet Corporation of Australia Pty. Limited [1984] FCA 178; (1984) 54 ALR 237. On 19 October 1984 the Court, as presently constituted, ordered that Andrew Grimwade and Kelvin John Dyer be added as respondents to the application and that Jet Corporation have leave to amend its application and statement of claim and that the directions hearing be adjourned to 9 November 1984. The application and statement of claim as so amended are hereinafter called "the amended application" and "the amended statement of claim" respectively.

2. By notice dated 5 November 1984, Grimwade gave notice that at the directions hearing he would move the Court for orders including the following three, namely:

1. That the proceedings against him be dismissed, or

alternatively that he cease to be a party to the
proceedings; see O.6 r.9 of the Rules of Court.

2. That the amended application, or alternatively
paragraphs 1, 3 and 6 thereof, insofar as it or
they sought relief against him, be dismissed or
struck out; see O.11 r.16 and O.20 r.2 of the
Rules of Court.

3. That the amended statement of claim, or
alternatively paragraphs 17, 18, 19, 20, 40, 41,
42, 43, 44, 45 and 46 thereof, insofar as it or
they related to him, be struck out; see O.11 r.16
and O.20 r.2 of the Rules of Court.

3. Further directions were given on 9 November 1984 and the directions hearing was then adjourned to 18 December 1984. On that day the Court made orders that Jet Corporation have leave to amend its amended application and amended statement of claim, such amendments to be made without prejudice to the rights of the respondents to object to any part of the amended application or amended statement of claim as so amended. The amended application and amended statement of claim as so amended are hereinafter called "the further amended application" and "the further amended statement of claim" respectively. The Court ordered further that it was a condition of the allowance of the further amendments that so much of the action as was concerned with the cause of action introduced by the further amendments should be deemed to have begun, for the purposes of the Trade Practices Act 1974 ("the Act"), on 18 December 1984.

4. The motion by Grimwade, insofar as it sought the Orders numbered 1, 2 and 3 above, was heard on 5 February 1985. The Court heard submissions by counsel for Grimwade and by counsel for Jet Corporation. At the conclusion of submissions the Court announced that it refused to make the Orders 1, 2 and 3 and that it would publish its reasons for so doing at a later date. The hearing of the motion, insofar as it sought other orders, was adjourned to a date to be fixed.

5. By its amended application Jet Corporation is seeking, inter alia, a declaration that specified conduct by five natural persons, including Grimwade, constituted conduct by each of them, in trade or commerce, which was misleading or deceptive, or likely to mislead or deceive contrary to s.52 of the Act, a declaration that each of those natural persons, including Grimwade, is bound to account to Jet Corporation for specified sums of money, and an order that the respondents, including Grimwade, pay to Jet Corporation the amount of loss and damage suffered by Jet Corporation by and in consequence of specified conduct by the respondents, including Grimwade.

6. Under O.6 r.9 of the Rules of Court, the Court has power to order that a party who has been improperly joined to a proceeding cease to be a party to that proceeding. That rule has application irrespective of whether the party was joined when the application was first issued or whether the party was joined pursuant to leave granted after the application had been issued.

7. Counsel for Grimwade contended, quite correctly, that s.52 of the Act proscribes conduct by a corporation in trade or commerce and that Grimwade is not a corporation. He contended, therefore, that it was apparent that the amended application disclosed no cause of action against Grimwade which came within the jurisdiction of the Court. He supported that contention by a reference to the amended statement of claim and in particular to the paragraphs referred to in the third order sought as set out earlier in these reasons. In substance, paragraphs 17 to 20 inclusive allege that Grimwade, with the other four natural persons, agreed that they would promote the formation of Jet Corporation, promote the formation of the Jet Corporation Australia Trust and promote other specified activities, including the acquisition by Jet Corporation of assets from some of the respondents. It is alleged that the five natural persons owed specified fiduciary duties to Jet Corporation, that pursuant to the agreement alleged, by a further agreement made between the respondent Dipson Pty. Ltd. and one Peter King, certain matters would be undertaken, including the matter that Dipson would cause the amount of $800,000 to be paid to King for and on behalf of Grimwade or otherwise at the discretion of Grimwade. It is further alleged that in making the second agreement Dipson acted at the direction of Jon Dean Wilson, one of the five natural persons already referred to, or alternatively at the direction of those five natural persons, including Grimwade, and that King made the second agreement for and on behalf of, or alternatively at the direction of, Grimwade. In substance, paragraphs 40 and 41 allege that pursuant to a number of agreements made between the five natural persons, including the agreement made by King for and on behalf of Grimwade, or at his direction, Dipson paid or agreed to pay to each of them specified sums of money including the $800,000 to or at the direction of Grimwade, and that each of those natural persons, including Grimwade, in breach of his fiduciary duty, did not disclose those matters to Jet Corporation and in so doing engaged in conduct in contravention of s.52 of the Act. That alleged contravention is expressed in various ways. Jet Corporation claims damages against Grimwade and the other natural persons as well as all the respondents, being damages suffered by Jet Corporation as the result of conduct in contravention of s.52 of the Act.

8. Counsel for Jet Corporation submitted that under the Rules of Court an application must be accompanied by either an affidavit or a statement of claim; see O.4 r.6, and that under O.11 the statement of claim should contain only a statement in a summary form of the material facts on which the applicant relies. Often, as a matter of convenience, a pleading contains matters of law and of contention, but those matters are not necessary to be set out in the pleading. He contended that a reference to the whole of the amended statement of claim showed that Jet Corporation alleges that the three company respondents are corporations under the Act and in trade or commerce engaged in conduct in contravention of s.52 of the Act and that Jet Corporation suffered loss or damage by reason thereof. In very brief outline, Jet Corporation alleges that in reliance upon that conduct it was induced to enter into agreements for the purchase of assets and carried those agreements into effect at greatly inflated prices, and that by their conduct, the five natural persons, including Grimwade, aided, abetted, counselled or procured the contravention of s.52 by the three companies and that each of those five natural persons, including Grimwade, was directly or indirectly knowingly concerned in and was party to the contraventions. He contended that by reason of the provisions of s.82 of the Act and of s.75B of the Act, Grimwade was a person against whom Jet Corporation was entitled to recover loss or damage. He contented that it was not necessary for the statement of claim to allege those matters since they were matters of law and contention and not of material fact.

9. There is much force in the submissions made by counsel for Jet Corporation and if necessary they should be accepted. In the circumstances, it is not necessary to make any final ruling on them, since the further amended application and further statement of claim put the matter beyond doubt.

10. For present purposes it is sufficient to say that the further amended statement of claim contained a substituted paragraph 50, and additional paragraphs including paragraphs 50A, 50B, 50C, 50D and 50E. The further amended application included an additional claim 4A seeking a declaration that the conduct referred to in paragraphs 50, 50C and 50E by each of the five natural persons, including Grimwade, aided and abetted, counselled and procured the contraventions by the three companies of s.52 of the Act and that each of them was directly or indirectly knowingly concerned in and party to the said contraventions.

11. Paragraph 50 of the further amended statement of claim alleges that each of the five natural persons, including Grimwade, knowing that specified conduct by the three companies was false, caused agreements to be entered into and carried into effect by Jet Corporation and thereby rendered themselves liable under s.75B of the Act. By paragraph 50A, Jet Corporation alleges specified conduct by the companies constituted a scheme whereby assets were to be sold and in fact were sold to Jet Corporation at a price higher than their true value and at a price which would allow the making of the payments by Dipson to the five natural persons, including Grimwade. Paragraphs 50C and 50E are expressly related to s.75B of the Act.

12. Counsel for Grimwade did not dispute the legal principles to be applied in deciding interlocutory matters of this kind; see the cases cited at the beginning of these reasons. He contended, however, that paragraph 50 of the further amended statement of claim did not have particulars appended to it and that the principles expressed by Adam J. in Rubenstein v. Truth and Sportsman Ltd. (1960) VR 473 at 475-6 should be applied with the result that paragraph 50 of the further amended statement of claim should be struck out. He referred to O.12 r.2 of the Rules of Court and contended that the conduct alleged against Grimwade was in substance fraud and that particulars should be given.

13. In my opinion, for the purposes of deciding this motion, sufficient particulars have been given by paragraph 50. In that paragraph specific mention is made to conduct alleged in earlier paragraphs of the statement of claim and that reference constitutes sufficient particulars for the purposes of deciding this motion.

14. Counsel referred also to what was said in Sent and Another v. Jet Corporation of Australia Pty. Limited and Others, above, that in order to be involved under s.75B of the Act a person had to have more than mere knowledge, namely the person had to take positive action. The further amended statement of claim does allege sufficient matters in the nature of positive action being taken by Grimwade to bring him within s.75B.

15. In all the circumstances I am not satisfied that the claims against Grimwade are so hopeless as to justify the making of the orders sought by him. This decision does not prevent Grimwade from seeking further particulars if so advised.

16. For these reasons the three orders sought were refused.

17. Jet Corporation's costs of the motion, insofar as they relate to the three orders dealt with, should be paid by Grimwade.

18. For the purposes of any appeal or application for leave to appeal, time should run from the date of the publication of these reasons.