FEDERAL COURT OF AUSTRALIA

Sereika v Cardinal Financial Securities Ltd [2001] FCA 1715

PRACTICE AND PROCEDURE –representative proceedings – pleadings – notices of motion to have the pleadings struck out and the proceedings dismissed – where the statement of claim is the fourth version of the applicant’s statement of claim filed in the proceeding – whether the pleadings disclose any cause of action in law or equity – whether the proceedings ought to be dismissed – principles of pleading – pleadings in representative proceedings – common question of fact and law – in the absence of any identification of a common issue of fact or law, the statement of claim is defective in a fundamental respect and does not meet the requirements of ss 33C and 33H of the Federal Court of Australia Act 1976 (Cth) – where statements of claim allege misleading or deceptive conduct but do not specify the representations said to have been made nor the material conduct said to give rise to such representations – the defects in the pleadings are so substantial that the statement of claim  ought to be struck out as against the applicants to the notices of motion – the point has been reached at which the proceeding should be dismissed

Federal Court of Australia Act 1976 (Cth) Part IVA

Trade Practices Act 1974 (Cth) s 87, s 52

Corporations Law s 995

Cameron v Qantas Airways Ltd (1993) ATPR 41-251

Bright v Femcare Ltd (1999) 166 ALR 743

Phillip Morris (Aust) Pty Ltd v Nixon (2000) 170 ALR 487

Murphy v Overton Investments Pty Ltd [1999] FCA 1123

Jacob and Goldrein Pleadings Principles and Practice (1990)

JOHN ANTHONY SEREIKA v CARDINAL FINANCIAL SECURITIES LIMITED (formerly INTEQ CUSTODIANS LIMITED), PHILLIP WASS, LYALL WILLIAMS, STEVEN SEREIKA, STAPLETON PARTNERS PTY LIMITED, PRICEWATERHOUSECOOPERS SECURITIES LIMITED (formerly COOPERS & LYBRAND (SECURITIES) LIMITED), AUSTRALIAN TEA TREE MANAGEMENT LIMITED, TEA TREE PLANTATION LIMITED AND LANDMARK FINANCE PTY LIMITED (formerly FARM FINANCE AUSTRALIA LIMITED)

N654 OF 2000

JOHN ANTHONY SEREIKA v CARDINAL FINANCIAL SECURITIES LIMITED (formerly INTEQ CUSTODIANS LIMITED), PHILLIP WASS, LYALL WILLIAMS, STEVEN SEREIKA, STAPLETON PARTNERS PTY LIMITED, DELOITTES TOUCHE THOMATSU INTERNATIONAL, AUSTRALIAN TEA TREE MANAGEMENT LIMITED, TEA TREE PLANTATION LIMITED AND LANDMARK FINANCE PTY LIMITED

N1005 OF 2001

TAMBERLIN J

SYDNEY

7 DECEMBER 2001

THE COURT ORDERS THAT:

1.         The application and statement of claim be struck out and the proceeding dismissed as against the fifth and sixth respondents.

2.         The applicant pay the costs of the respondents of the notices of motion to strike out and dismiss the application.

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

THE COURT ORDERS THAT:

1.         The application and statement of claim be struck out and the proceeding dismissed as against the fifth and sixth respondents.

2.         The applicant pay the costs of the respondents of the notices of motion to strike out and dismiss the application.

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

REASONS FOR JUDGMENT

1                     There are before the Court two matters in which John Anthony Sereika (“Sereika”) has commenced proceedings as a representative party under Part IVA of the Federal Court of Australia Act 1976 (Cth) (“the FCAA”) claiming relief against the respondents in relation to two tea tree oil projects.  The projects involved the cultivation of tea tree plantations for the purpose of producing and marketing tea tree oil.  Members of the public were invited to participate by prospectuses lodged with the then Australian Securities Commission (“ASC”) by the seventh and eighth respondents, Australian Tea Tree Management Limited (“Management”) and Tea Tree Plantation Limited (“Plantation”), both of which are now in liquidation. 

2                     The respondents to both applications are identical with the exception that Coopers & Lybrand (Securities) Limited (“Coopers”) is the sixth respondent in proceeding N654 of 2000, whereas Deloittes Touche Tohmatsu International (“Deloittes”) is the sixth respondent in proceeding N1005 of 2001.  The principal difference is that matter N654 of 2000 relates to a project deed entitled “The Oil Fields Project 2 Project Deed”, while matter N1005 of 2001 is concerned with a deed entitled “The Oil Fields Project 3 Project Deed”.  For practical purposes, a decision in relation to one matter covers the issues in relation to the other.

3                     The application in each matter seeks declaratory relief under s 21 of the FCAA and under s 87 of the Trade Practices Act 1974 (Cth) (“the TPA”).  Declarations are sought that the respondents have been guilty of misleading or deceptive conduct in contravention of s 52 of the TPA and/or s 995 of the Corporations Law, and damages and compensation are sought together with a refund of monies paid.

4                     For the purposes of Part IVA of the TPA, the questions of law and/or fact in each case which are said to be common to the claims of the applicant and the group members against each of the respondents as set out in the pleadings are as follows:

(a)        were the representations pleaded made?

(b)        were those misrepresentations misleading or deceptive, or likely to mislead or deceive?

(c)        did each of the respondents engage in or, alternatively, were each of the respondents involved in contraventions of s 52 of the TPA and s 995 of the Corporations Law deriving from the making of the representations?

5                     In matter N654 of 2000, Pricewaterhousecoopers Securities Limited (“Coopers”) has filed a notice of motion seeking orders that the third amended application and statement of claim be struck out against it pursuant to O 11 r 16 of the Federal Court Rules (“the FCR”) and that the proceedings against it be dismissed pursuant to O 20 r 2 of the FCR.  This application was filed on 14 June 2001.  Notices of motion have also been filed by the fifth respondent Stapleton Partners Pty Limited (“Stapletons”) in both matters to have the pleadings against it struck out and the proceedings against it dismissed.  In matter N1005 of 2001, an application has been made by Deloittes to have the application and statement of claim against it struck out and the proceeding dismissed.

6                     The statement of claim in matter N654 of 2000 is the fourth version of the applicant’s statement of claim filed in this proceeding.  The Court has granted leave to the applicant to file an amended statement of claim on three previous occasions.  On each of these occasions leave was granted after the respective statements of claim were struck out for pleading which was grossly defective.  This proceeding has now reached a point where, in my view, determinations must be made on the questions whether the pleadings disclose any cause of action known to the law or equity and whether, in the event that the statement of claim and application are found yet again to be patently insufficient to delineate any arguable cause of action, the proceeding ought to be dismissed.

7                     In matter N1005 of 2001, the application and statement of claim filed on 29 June 2001 have not previously been before the Court. However, the pleadings are essentially in the same terms as those in the earlier matter, N654 of 2000, and the motions to strike out and dismiss should be considered having regard to the fact that the later proceeding, in substance, also represents the applicant’s fourth attempt to plead an intelligible case.

Principles OF pleading

8                     The importance and function of pleadings is referred to in Jacob and Goldrein “Pleadings Principles and Practice” (1990), which quotes a 1960 article by Jacob, at 11, as follows:

“Pleadings do not only define the issues between the parties for the final decision of the court at the trial; they manifest and exert their importance throughout the whole process of litigation.  They contain the particulars or the allegations of which further and better particulars may be requested or ordered, which help still further to narrow the issues or reveal more clearly what case each party is making.  They limit the ambit and range of the discovery of documents and the interrogatories that may be ordered. They show on their face whether a reasonable cause of action or defence is disclosed.  They provide a guide for the proper mode of trial and particularly for the trial of preliminary issues of law or of fact …”

At 11-12, the learned authors say:

“The very nature and character of pleadings demonstrates their significant and overwhelming importance, for the attention of the parties as well as the court is naturally focused on and riveted to the pleadings as being the nucleus around which the whole case revolves throughout all its stages.”

9                     Where pleadings disclose no reasonable cause of action it is not appropriate in all cases to seek to remedy the situation by an order for particulars. The respondent is entitled to have, at the outset, an adequate indication from the applicant’s pleading of the case to be met so that a proper defence may be filed: Cameron v Qantas Airways Ltd (1993) ATPR 41-251.  The purpose of particulars is to give details of the material facts pleaded, with as much certainty and particularity as is reasonable, having regard to the circumstances and the nature of the facts alleged.  They inform the opponent of the case to be met at the hearing and limit the generality of the proceedings so as to define the issues.  They should indicate to the opposite party the nature of the evidence required.  Particulars, of course, presuppose that there is proper pleadings in place which set out the material facts and circumstances in respect of which the particulars are sought.  The obtaining of particulars is not a substitute for the absence of a properly pleaded case.

10                  In this case, for the reasons given below, I am not satisfied that the later furnishing of particulars can cure the intrinsic flaws in the pleadings or perform the function, together with the statement of claim, of properly informing the respondents of the nature of the case which they have to meet. 

11                  It is common ground that, in order to warrant the striking out of proceedings, the Court must bear in mind:

“… that the plaintiff ought not to be denied access to the customary tribunal which deals with actions … unless his [or her] lack of a cause of action – if that be the ground on which the court is invited … to exercise its powers of summary dismissal – is cleanly demonstrated.  The test to be applied has been variously expressed; ‘so obviously untenable that it cannot possibly succeed’; ‘manifestly groundless’; ‘so manifestly faulty that it does not admit of argument’; ‘discloses a case which the Court is satisfied cannot succeed’; ‘under no possibility can there be a good cause of action’; ‘be manifest that to allow them’ (the pleadings) ‘to stand would involve useless expense’.” 

Further:

“… great care must be exercised to ensure that when the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed Tribunal. … the exercise of this jurisdiction should [not] be reserved for those cases where argument is unnecessary to revoke the futility of the plaintiff’s claim”: General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129, per Barwick CJ.

12                  I have previously indicated to the applicant that this process of filing manifestly defective pleadings and then re-pleading with further deficient pleadings cannot continue indefinitely and that a stage will be reached when it will be necessary to dismiss the proceeding as against the parties who now object to the pleadings.  For reasons given below, I have concluded that in each of these proceedings the applicant has not raised any intelligible cause of action and I therefore propose to strike out the application and statement of claim, dismiss both matters and refuse leave to re-plead in relation to each of the notices of motion presently before me.

RepreSENtative actions – objections

13                  Counsel for the respondents submit that the pleadings do not comply with ss 33C and 33H of Part IV of the FCAA.  Those sections relevantly provide as follows:

“33C Commencement of proceeding

(1)       Subject to this Part, where:

(a)       7 or more persons have claims against the same person; and

(b)       the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and

(c)        the claims of all those persons give rise to a substantial common issue of law or fact;

            a proceeding may be commenced by one or more of those persons as representing some or all of them.

            …

33H Originating process

(1)       An application commencing a representative proceeding, or a document filed in support of such an application, must, in addition to any other matters required to be included:

(a)       describe or otherwise identify the group members to whom the proceeding relates; and

(b)       specify the nature of the claims made on behalf of the group members and the relief claimed; and

(c)        specify the question of law or fact common to the claims of the group members.

…”

14                  Apart from s 33H, Pt IVA does not specify what an applicant must include in any initiating process or pleading. However, s 33ZG(b) preserves the Court’s existing powers, including to strike out pleadings and stay or dismiss proceedings.  Order 11 r 16 of the FCR confers power on the Court to strike out the whole or any part of a pleading on the ground that it discloses no reasonable cause of action, has a tendency to cause prejudice or embarrassment or delay in the proceeding, or is otherwise an abuse of process. The Court also has power to stay or dismiss a proceeding where it appears that no reasonable cause of action is disclosed, the proceeding is frivolous or vexatious or is an abuse of process: O 20 r 2.

15                  The pleadings in a representative proceeding are therefore required to adequately indicate the basis upon which it is claimed that the procedures mentioned in Pt IVA are said to be available: Cameron; Bright v Femcare Ltd (1999) 166 ALR 743 at 750; Phillip Morris (Aust) Pty Ltd v Nixon (2000) 170 ALR 487 at 515-516. In particular, the “substantial common question of law or fact” must appear from the application and statement of claim: Murphy v Overton Investments Pty Ltd [1999] FCA 1123.  It is therefore essential to particularise the way in which it is said that the claims arise out of the same or similar circumstances, to identify these circumstances, and to identify with precision the substantial common issue of fact or law relied on.

16                  The applications purport to satisfy the requirement of a common question of fact or law in describing those questions as set out above, at [4].  The respondents, however, submit that there is no identification of a substantial common issue of law or fact against any of them.  They submit that the representations relied on are those pleaded in par 6.2 of the statement of claim and those representations are only alleged to have been made against Management and Plantation and not against the three applicants in the notices of motion.

17                  There is considerable force in this submission because the representations are not alleged to have been made by the applicants on the three motions; nor are those parties alleged to have “engaged in” or been “involved in” contraventions deriving from “the making of the representations”.  The pleadings are so inadequately framed that it is not possible to determine with any precision what common issues of fact or law are raised against the three respondents who are pursuing the motions to strike out and dismiss.

18                  In my opinion, in the absence of any identification of a common issue of fact or law, the statement of claim is defective in a fundamental respect and does not meet the requirements of ss 33C and 33H of the FCAA.

DELOITTEs Matter N1005 of 2001

19                  Deloittes provided a report to the directors of Management and Plantation on the taxation implications of “The Oil Fields Project 3” for Australian resident growers.  This report was included in the prospectus lodged with ASC by Management and Plantation on 23 February 1998.  It is alleged by the applicant that Deloittes engaged in misleading or deceptive conduct in contravention of s 52 of the TPA and s 995 of the Corporations Law.

20                  The central allegations against Deloittes are contained in the statement of claim in N1005 of 2001 in pars 6.47, 6.48 and 6.49, which read as follows:

“6.47   In the circumstances referred to in paragraphs 6.1, 6.2, 6.5 & 6.37, Deloittes engaged in conduct in trade or commerce which by The Deloittes Omissions was misleading or deceptive or likely to mislead or deceive in contravention of section 52 of the TPA and section 995 or [sic] the Corporations Law.

  6.48   Further, and in the alternative, in the circumstances referred to in paragraphs 6.1, 6.2, & 6.37 to 6.47, Deloittes impliedly represented that prospective applicants for Growers’ Interests could rely upon the contents of the Prospectus as being accurate and/or based on reasonable grounds and/or not misleading or deceptive and that The Representations were accurate and/or based on reasonable grounds and/or were mot misleading or deceptive (“The Implied Deloitte’s Representation”)

  6.49   In the circumstances referred to in paragraphs 6.48, by the Implied Deloitte’s Representations, Deloittes engaged in conduct in trade or commerce which was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the TPA and section 995 of the Corporations Law.”

21                  Paragraph 6.1 of the statement of claim refers to a number of statements in the prospectus said to have been made by Management and Plantation.  Sub-par 6.1(ak) asserts that the prospectus included a report by Deloittes providing an expert opinion on the taxation implications of the project applying to Australian resident growers.  It then purports to summarise the Deloitte report.

22                  Sub-paragraph 6.1(ax) alleges that Management and Plantation stated that Deloittes consented to the issue of the prospectus with their taxation opinion included.

23                  Paragraphs 6.37 – 6.52 make allegations against Deloittes.  These are objected to by Deloittes on the following general grounds:

1.         They do not plead material facts or sufficient material facts.

2.         They are meaningless, uncertain and embarrassing.

3.         They are frivolous or vexatious.

4.         There is a failure to plead facts giving rise to representations.

24                  I now turn to specific paragraphs concerning Deloittes.  Paragraph 6.37 alleges that Deloittes knew, or ought to have known, certain matters with respect to the Taxation Commissioner’s criteria for the allowance of income tax deduction; namely, that finance arrangements involving a “round-robin” exchange of cheques would be found to be a sham transaction.  No material facts are specified or identified to support this allegation of knowledge.  Deloitte’s objection in relation to this paragraph is made out.

25                  Paragraph 6.38 does not spell out the circumstances in which it is alleged that the group members might assume certain matters.  It refers to group members being “entitled” to assume certain matters.  This allegation is unclear to such an extent that it is embarrassing and impossible to plead to, as no material facts are set out specifying the basis on which members became entitled to make such assumptions.  There is no description of any specific conduct on the part of Deloittes on the basis of which it is said that the assumption could be drawn by members that could amount to deceitful or misleading conduct.

26                  In par 6.39, it is said that there was a failure to make inquiries as to whether the “representations” in Deloitte’s report were accurate.  However, neither the basis for the imposition of such a duty nor its extent are specified.

27                  Paragraph 6.40 is dependent on the preceding paragraphs and does not specify what are said to be reasonable lines of inquiry. 

28                  In relation to par 6.41, there is a reference to “The Representations” in the Deloittes’ advice.  These are not specified or defined.  There is no basis alleged for linking the conduct of Deloittes and the assumptions said to have been made or which group members were entitled to make. 

29                  Paragraph 6.44 is deficient because the assertions it contains depend upon the earlier paragraphs and the reference to “assumption” is unspecified.

30                  In par 6.47 there is a “rolled up” reference to the circumstances referred to in pars 6.1, 6.2, 6.5 and 6.37 without any specific details of particular circumstances or the conduct or representations relied on, and there is a bald reference to “contravention”.  The same criticism can be levelled at par 6.48.  There is reference to an implied representation but no identification as to the material facts said to give rise to the implication or how it is to be implied.  Insofar as the implied representation could be alleged to arise from silence by Deloittes, there are no circumstances spelt out which give rise to any obligation to break any alleged silence.

31                  In par 6.49 there is an allegation dependent on the defective previous paragraph.  There is no specification as to the way in which the conduct was misleading, deceptive or likely to mislead or deceive.  Such a specification is a central requirement to an allegation of misleading or deceptive conduct.

32                  In par 6.50 there is reference to Deloittes’ advice but this is not identified in earlier paragraphs, or specified.

33                  Paragraph 6.51 is dependent on the defective pleadings in earlier paragraphs.

34                  It can be concluded, in my view, that the primary defect in the statement of claim as against Deloittes is that it does not specify the representations said to have been made.  Nor does it specify the material conduct said to give rise to such representations that are said to be misleading or deceptive.  There is no attempt to link up the conduct of Deloittes with the allegation that it is deceptive or misleading.  Insofar as silence is relied on, the circumstances giving rise to an obligation on Deloittes to say something are not spelt out.

35                  In order to plead to this statement of claim as against Deloittes, it would be necessary for the pleader to speculate as to what facts and matters are being alleged to give rise to the representations and as to the basis on which it is said that the representations and conduct are false.

36                  I have concluded that the defects outlined above are so substantial that the statement of claim should be struck out as against Deloittes.  In view of the fact that, in substance, this is the fourth attempt by the applicant to frame its case and, like its predecessors, it is largely unintelligible and does not disclose a cause of action against Deloittes, the point has been reached at which the proceeding should be dismissed. I am not satisfied, after every opportunity has been given to the applicant, that there is any cause of action which can reasonably be pleaded against Deloittes.  Ample warning has been given to the applicant as to the consequences of its continued failure to provide a pleading which is in any sense satisfactory, yet no such pleading has been forthcoming.  It is not for the Court or the respondents to speculate as to which causes of action in a range of hypothetical possibilities might give rise to a legitimate claim on the basis of which the applicant might proceed against Deloittes. I therefore strike out the pleadings and dismiss the proceeding as against Deloittes.

Stapletons

37                  In both proceedings, Stapletons is said to have accepted a retainer from Management to investigate and prepare a report for inclusion in the prospectus issued by Management and Plantation in relation to the two projects and to audit the books of account and financial returns concerning the projects. 

38                  The central allegations against Stapletons are outlined in the statements of claim as follows:

“6.31   In the circumstances referred to in paragraphs 6.1, 6.2. 6.5 & 6.22 to 6.29 inclusive, by The Auditor’s Omissions, Stapletons engaged in conduct in trade or commerce which was misleading or deceptive or likely to mislead or deceive in contravention of section 52 of the TPA and section 995 or [sic] the Corporations Law.

 6.32    Further, and in the alternative, in the circumstances referred to in paragraphs 6.1 6.2, & 6.22 to 6.29 inclusive, Stapletons impliedly represented that prospective applicants for Growers’ Interests could rely upon the contents of the Prospectus as being accurate and/or based on reasonable grounds and/or not misleading or deceptive and that the representations  reported on by it concerning ownership of the tea tree stock and the Price Creek land were accurate and/or based on reasonable grounds and/or were not misleading or deceptive. (“The Implied Auditor’s Representations”).

 6.33    In the circumstances referred to in paragraphs 6.22 & 6.29, by the Implied Auditor’s Representations, Stapletons engaged in conduct in trade or commerce which was misleading or deceptive, or likely to mislead or deceive, in contravention of section 52 of the TPA and section 995 of the Corporations Law.”

The paragraphs appearing in relation to Stapletons are 6.22 – 6.36 inclusive.

39                  The above paragraphs are based on earlier paragraphs in respect of which specific defects have been alleged.  In par 6.22, for example, there are allegations that Stapletons knew or ought to have known certain things and ought to have undertaken reasonable inquiries for that purpose.  There are no material facts pleaded which provide any basis for this allegation.  There is no claim in negligence nor is there any allegation of a duty of care caused and breached by Stapletons.  No material facts have been pleaded which give rise to or enliven a duty to the applicant.  The first three sub-paragraphs do not make sense because they allege that Stapletons knew or ought to have ascertained upon reasonable inquiries for “the purpose”.  “[T]he purpose” is not specified.  There is an allegation in sub-par 6.22(d) that Stapletons, to its knowledge, was held out in the prospectus as an investigative accountant that would perform duties and obligations imposed upon auditors, yet there is no allegation of material facts or circumstances to support this allegation.  Nor are the duties specified.  The above allegations are wide-ranging, general and embarrassing in the sense that they cannot be the subject of a proper pleading by Stapletons.

40                  In sub-par 6.22(f), it is alleged that each of the representations was made in the prospectus and was material to the decision of prospective applicants as to whether they should subscribe and thereby became “privy to and bound by the Project Deed, the Management Agreement and if applicable, the Loan Agreement”.  It is impossible to plead to such a generalised and vague allegation.  This pleading does not disclose any basis for a cause of action.  It is not clear what is meant by becoming “privy to and bound by the Project Deed” because of representations made by the prospectus, or how such a consequence came about. This language is appropriate to a claim in contract, yet no such claim is made.

41                  In sub-par 6.22(g), there is reference to the knowledge of Stapletons “as an investigative account [sic]”.  The circumstances in which this knowledge is said to arise are not spelt out, nor is any reference made to any specific duty owed by an investigative accountant.  It is not specified in what context it is alleged that Stapletons were in a position to determine whether representations were accurate.

42                  In respect of par 6.23, reference is made to circumstances in sub-par 6.1(aj), yet this sub-paragraph refers to conduct of Management and Plantation.  There is reference to group members assuming or being “entitled to” assume certain matters.  This is not tied in with the conduct of Stapletons.  There must be some nexus between specified conduct and the understanding of the applicant or group members.

43                  In par 6.24, there is an allegation of breach in the most general terms of all the representations in Stapleton’s report.  It is not specified which particular representations are relied on, nor is it alleged what it is that Stapletons ought to have done.

44                  Paragraph 6.25 states that “Stapletons omitted to take any steps to bring to the attention of prospective applicants” certain things, but there is no specification as to the material facts giving rise to a duty to notify prospective applicants.  In par 6.29, there is a reference to Stapletons being, by alleged omissions, “recklessly indifferent”.  This is not a necessary allegation but rather seems related to a negligence count, which is not pleaded against Stapletons.  The general conclusions subsequently set out depend in turn upon earlier allegations which do not inform Stapletons as to the basis on which the proceedings are brought.

45                  In relation to the paragraphs concerning reliance and damage (6.34-6.36), there are allegations of reliance in 6.34 and 6.35.  Loss and damage suffered by the applicant by such reliance is said to flow from contraventions referred to in pars 6.4, 6.5, 6.6, 6.31 and 6.33.  The first three paragraphs contain no allegations against Stapletons but refer only to Management and Plantation.

46                  I am satisfied that Stapletons has also made good its submission that the pleadings against it in these matters are totally inadequate and do not disclose any properly pleaded causes of action.  I propose to strike out the pleadings objected to and dismiss the proceedings as against Stapletons in both matter N654 of 2000 and matter N1005 of 2001.

Coopers

47                  Coopers are the sixth respondents in N654 of 2000.  In the prospectus, Coopers provided a report entitled “Taxation Implications for Growers”, dated 18 November 1996, in relation to “The Oil Fields Project 2”.  That report contains the following passages:

“65.     ‘Additional benefits’ could also arise in circumstances where expenditure is incurred pursuant to a loan which is non recourse and is never intended to be repaid.  On the basis that the loan made is non recourse and may, in events such as the commercial failure of the project, not be repaid Section 82KL could have potential application.  However, as I understand that the nature of the project is such that at the time the loan is made there is full contemplation and expectation that the loan will be repaid, given the commerciality of the project, it is my view that Section 82KL cannot apply to restrict the deductions otherwise available.

…

Disclaimer

84.       The matters set out in this letter are based on my understanding of information provided by Australian Tea Tree Management Limited, current income tax legislation and draft and final rulings of the Commissioner.

85.       Coopers & Lybrand (Securities) Limited has been responsible only for the preparation of this report and has authorised and consented to the issue of only that part  of this prospectus. Neither I, nor Coopers & Lybrand (Securities) Limited take any responsibility for the success of the project, nor do we underwrite, recommend or guarantee the success of the project to any person.

86.       With the exception that Coopers & Lybrand (Securities) Limited is entitled to receive fees, calculated on an hourly basis and paid regardless of the amount raised pursuant to this prospectus, for professional services rendered in connection with the preparation of this report, I declare that Coopers & Lybrand (Securities) Limited does not have any interest in the promotion of the project.

87.       Other than this report, Coopers & Lybrand (Securities) Limited has not had any responsibility for, or been involved in, the preparation of any part of or information or material contained in this prospectus.”

48                  The third amended statement of claim refers to Coopers having been retained by Management to prepare a taxation implication report for inclusion in the prospectus.  The causes of action against Coopers are pleaded at pars 6.37 to 6.52 of the statement of claim, which is the fourth version filed in the proceeding.  The Court granted leave to the applicant to file an amended statement of claim on three previous occasions, namely on 23 November 2000, 9 March 2001 and 4 June 2001.  On each of those occasions, leave was granted after the Court had struck out the previous statements of claim.

49                  As against Coopers, the allegations are in substantially the same form as those made against Deloittes in proceeding N105 of 2001.  I have reached the same conclusions with respect to this claim, for the same reasons, as I have reached with respect to the Deloittes claim.

50                  Accordingly, the paragraphs objected to in the statement of claim insofar as they concern Coopers should be struck out.  I am also of the view, in relation to this claim, that the proceeding should be dismissed as to Coopers.  The applicant has had every opportunity to plead its case against the respondents and has failed to plead an intelligible case on four occasions.  These circumstances lead me to conclude that there is no substance in the claims sought to be lodged against Coopers.

Conclusion

51                  The pleadings that have been filed against the three applicants to the notices of motion in each of these two matters are so deficient that they cannot be remedied by ordering that particulars be furnished.  In N654 of 2000, the applicant has attempted in four versions over about twelve months to articulate causes of action against the fifth and sixth respondents and has failed on each occasion.  The statement of claim in N1005 of 2001 is substantially the same as that in N654 of 2000, except that Deloittes is named as the sixth respondent in N1005 of 2001 whereas Coopers is the sixth respondent in N654 of 2000.  In these circumstances, I do not think that any useful purpose would be served by granting leave to the applicant to prepare a further statement of claim in either matter.  The applicant should pay the costs of the respondent of each notice of motion.

Associate:

Dated:              7 December 2001