FEDERAL COURT OF AUSTRALIA

McIntyre v Eastern Prosperity Investments Pte Ltd (No 5) [2003] FCA 254

PRACTICE AND PROCEDURE – pleading – representative action – claims of misleading or deceptive conduct in relation to shopping centre operations and refurbishment – unconscionable conduct – successive attempts at pleading over two and a half year period – three prior statements of claim struck out – proposed substituted statement of claim – confusing pleading incorporating unsustainable irrelevant and superfluous causes of action – possible cause of action disclosed – pleading requiring further major amendment – amended minute not permitted to stand as statement of claim – discretionary considerations – application dismissed.

Trade Practices Act 1974 (Cth) s 52

DONALD COLIN MCINTYRE (FOR AND ON BEHALF OF HIMSELF AND PATRICIA ANN MCINTYRE AND AS A REPRESENTATIVE OF THE GROUP MEMBERS REFERRED TO IN THE APPLICATION) v EASTERN PROSPERITY INVESTMENTS PTE LTD and DBF PROPERTY HOLDINGS PTY LTD AS TRUSTEE FOR THE FREARSON FAMILY TRUST

W243 of 2000

FRENCH J

25 MARCH 2003

PERTH

THE COURT ORDERS THAT:

1.         The application is dismissed.

2.         The applicant is to pay the respondents’ costs of the application.

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

REASONS FOR DECISION

Introduction

1                     On 22 December 2000, Donald Colin McIntyre, on behalf of himself and Patricia Ann McIntyre, and as representative of a number of other persons (the Group Members), all of whom are or have been tenants of the Heart of the Park Shopping Centre, commenced proceedings in this Court.  The proceedings were brought against Eastern Prosperity Investments Pte Ltd (Eastern Prosperity), the owner of the centre and the centre manager, DBF Property Holdings Pty Ltd (DBF) as trustee of the Frearson Family Trust.

2                     Initially, Mr and Mrs McIntyre were representing themselves and the Group Members and had great difficulty in adequately formulating their claims.  Their statement of claim was struck out on 6 December 2001 and they were given leave to file and serve a substituted statement of claim on or before 31 January 2002.  A substituted statement of claim was filed out of time on 18 February 2002 pursuant to leave given at a directions hearing on that day.  A receiver and manager was appointed to Eastern Prosperity on 22 January 2002 by Perpetual Trustees (Victoria) Ltd and Service Finance Corporation Ltd, both of which hold securities over assets of the company.  A strike out motion was filed by DBF only on 12 March 2002 and argument on that motion was heard on 18 March.  On 8 April 2002, I made orders that the substituted statement of claim be struck out.  The applicant was given leave within twenty-eight days to file a further substituted statement of claim limited to a cause of action or causes of action based upon implied representations as to the financial capacity of Eastern Prosperity. A further substituted statement of claim was filed on 6 May 2002 and motions to strike out were filed by DBF on 31 May 2002 and by Eastern Prosperity on 4 June 2002.  Argument on the motions was heard on 6 August 2002 and on 12 September 2002 an order was made that the statement of claim be struck out.  Orders were made that the applicant pay the first and second respondents’ costs of the motions filed on 31 May and 4 June 2002 respectively forthwith.  It was also ordered that unless on or before 12 October 2002 a solicitor was on the record as representing the applicant and the Group Members the proceeding would thereafter not continue as a representative proceedings under Pt IVA of the Trade Practices Act 1974 (Cth).  The directions hearing was adjourned to 17 October 2002 at which time the question whether the application as a whole should be dismissed or other directions made would be considered.

3                     Subsequently, Melvyn Levitan, a solicitor filed an appearance representing the applicant and the Group Members.  An application for leave to appeal against the orders made on 12 September 2002 was dismissed by Carr J on 29 October 2002.  At a directions hearing on 5 December 2002, I ordered that the application stand dismissed unless on or before 31 January 2003 the applicant filed and served a minute of a proposed substituted statement of claim.  A minute of a proposed substituted statement of claim was filed on 23 January 2003.  An amended minute of a proposed substituted statement of claim was filed on 7 March 2003.  At that time submissions were heard on the question whether the applicant should be allowed to proceed on the amended substituted statement of claim.  Further written submissions were to be filed by 12 and 17 March respectively.  Judgment on the question whether the amended minute of proposed substituted statement of claim should be allowed to stand as the applicant’s statement of claim was reserved until today.

The Amended Minute of Proposed Substituted Statement of Claim – The Representations

4                     The amended minute first identifies the applicant and Group Members who are continuing in these proceedings (pars 1 to 10).  Each was a tenant of a shop at the Heart of the Park Shopping Centre on Albany Highway, Victoria Park (par 15).  The periods of their tenancies cover various parts of the period from 1991 to 2000. 

5                     Eastern Prosperity, which has apparently been wound up since the last directions hearing, is named as first respondent.  Further proceedings against that company would depend upon whether leave is sought and obtained to proceed against it under the Corporations Law. It was at all material times the owner of land on which the shopping centre stood (pars 15 and 16).  Its directors were Leow Moke Ang (Johnny Ang) and his father, Ang Kho Thang (Mr Ang Snr) (par 12).  The Angs are also said to be directors of three related companies with extensive trading activities in Australia (par 13).  David Tian was employed by Eastern Prosperity at all material times as its Perth-based agent (par 17). 

6                     The amended minute, in par 18, pleads representations made by David Tian in writing to all tenants on or about 15 June 1998 that he “was currently negotiating finance for the refurbishment of the shopping centre and would anticipate confirmation of finance within a short period of time”.  There are said, in par 19, to be representations implied in the express representations referred to in par 18 namely that:

(a)        Eastern Prosperity was currently in a financial position to meet its existing liabilities together with the additional future liabilities that would arise from the obligation to make repayment of the moneys that were to be borrowed by Eastern Prosperity to effect the refurbishment of the shopping centre;

(b)        Eastern Prosperity was in good financial standing with potential lenders and was in a position to borrow and repay substantial sums of money;

(c)        the express representations could be relied upon and were not mere statements of opinion or puffery.

In so far as the implied representations were related to future matters the applicant relied upon s 51A of the Trade Practices Act.  This is a plea rather oddly located in a paragraph which has to do with the content of the representations.  It does not identify the statement to which it relates.

7                     The purpose of these and other representations later pleaded is set out at par 37 although it is not clear why that purpose is pleaded at all.  The purpose of the representations does not relate to any of the causes of action relied upon which are based upon contraventions of the Trade Practices Act, common law negligence and breach of implied terms of the shopping leases. This plea appears to raise a false issue and is embarrassing.

8                     Further express and implied representations attributed to Eastern Prosperity are pleaded at pars 20 and 21.  The express representations relied upon are said to have been made pursuant to an agreement made after a mediation held before the Commercial Tribunal on 22 August 1998 between all Group Members, other than the first, and Johnny Ang on behalf of Eastern Prosperity.  Eastern Prosperity is said to have expressly represented in writing through its solicitors, James Chong & Co, that it would refurbish the premises and the carpark at the shopping centre.  Again, reliance is placed upon s 51A of the Trade Practices Act.

9                     The implied representations in par 21 are said to be that Eastern Prosperity had the financial capacity to carry out the refurbishment, that there were no circumstances then in existence that would require the express representations to be qualified in any significant manner, that the express representations could be relied upon and that Eastern Prosperity had the reasonable expectation that the refurbishment would take place and that there were no grounds to suspect that the refurbishment would not take place.  Section 51A is invoked in the same global way as in par 19.

10                  The pleading then goes to representations attributed to Eastern Prosperity’s managing agent, DBF, which is named as second respondent.  DBF is said to have been appointed managing agent on 1 September 1998 (pars 22 and 23).  It carried on business as a licensed real estate agent under the name and style of Ray White Mount Hawthorn and from 7 May 2000 under the name and style of Frearson and Partners Estate Agents (par 25).  Ms Jodi Costello was employed in the Commercial and Retail Property Management Department of DBF and had specific responsibility for day-to-day management of the shopping centre with effect from 1 September 1998 (par 26).  Costello also attended to the day to day management of the Wanneroo Markets and the Subiaco Markets which  “… were part of the Ang Corporate Entities” (par 29).  The term “were part of” does not describe any intelligible relationship.

11                  The statement of claim alleges oral representations by Costello to the Group Members, other than the First Group Member, on Monday 14 September 1998 (par 30).  The representations are said to have been:

(a)        Eastern Prosperity had released a sum of $2,700,000 for the refurbishment of the shopping centre.

(b)        The refurbishment was due to commence in January 1999.

(c)        The moneys were to be spent on a new carpark, a new roof tiling and air conditioning. 

Reliance was again placed on s 51A of the Trade Practices Act.  Implied representations associated with the oral representations are set out in par 31.  These relate to the financial capacity of Eastern Prosperity to carry out the refurbishment, the absence of any circumstances that would require the oral representations to be qualified and the statement that the oral representations could be relied upon and were not mere statements of opinion or puffery.  The particulars of these implied representations are expressed, in part, as though they were implied terms of a contract.  That is plainly an inappropriate particularisation in the context of this statement of claim. 

12                  Then it is said in par 32 that, further and in the alternative, it was Costello’s duty to inform tenants of the shopping centre if the funds obtained by Eastern Prosperity were being used for purposes other than the refurbishment of the shopping centre. 

13                  The next set of representations is said to comprise oral statements made to the first Group Member in October 1998.  Costello, on behalf of Eastern Prosperity and DBF, is said to have orally represented to the McIntyres that there was going to be a substantial refurbishment of the shopping centre and that as a result the McIntyres would have to relocate the business which they proposed to purchase to a new location within the shopping centre.  It was also represented that the refurbishment would take place in two separate stages and that work on the initial stage would commence during January 1999.  Implied representations associated with the express representations pleaded in par 33 are set out in par 34.  They include representations that Eastern Prosperity had the financial capacity “to the knowledge of [DBF] through Costello to carry out the refurbishment”.  It is also said to be implied that DBF had the reasonable expectation that the refurbishment would take place and that there were no grounds to suspect that the refurbishment would not take place.  A further implication was that Costello, as a professional real estate agent charged with responsibility for the management of the shopping centre on behalf of Eastern Prosperity, had undertaken reasonable inquiries as to the veracity of the representations that were being made on behalf of Eastern Prosperity prior to adopting them as her own and that of DBF.  The implications are supported by reference to the circumstances in which the oral representations were made and operation at law.  Otherwise reliance was placed upon criteria relevant to implied terms in contracts. 

14                  Then, in par 35, it is said that from about January 1999 Costello, on behalf of Eastern Prosperity and DBF “… continually represented from time to time to the tenants of the shopping centre … that the refurbishment of the shopping centre was proceeding and informed the tenants … of the progress with the refurbishment of the shopping centre on behalf of the First and Second Respondents…”.  This continual representation was said to have been effected by the relocation of the sixth Group Member to the old Centre Manager’s office, the changing of dimensions of the area of the eleventh Group Member’s shop, requests to tenants to vacate the shopping centre altogether in order to accommodate the proposed refurbishment and providing dates when the refurbishment was supposed to take place in the shopping centre.  Particulars of this allegation are provided by reference to a number of written communications from DBF to the tenants in the period from January 1999 to February 2000 and oral discussions with the applicant, Donald McIntyre, in October 1999.  Paragraph 36 asserts that it was implied in these representations that Eastern Prosperity, to the knowledge of DBF had at all material times the financial capacity to pay for the refurbishment of the shopping centre. 

15                  All of the representations thus pleaded are said, in par 37, to have been made in order to induce:

(a)        the Group Members to refrain from taking any further legal action against Eastern Prosperity.

(b)        the Group Members to continue trading so as to give the impression to valuers, potential financiers, potential tenants and potential buyers of the shopping centre that the trading conditions at the shopping centre were better than what they were in reality; and/or

(v)        the various Group Members herein to refrain from relocating their businesses to alternative premises.

As already observed, given the causes of action relied upon, the purpose of the representations raises a false issue and should not have been pleaded.

The Amended Minute of Proposed Statement of Claim – Reliance

16                  The various representations pleaded in pars 18 to 21 inclusive, 30, 31, 35 and 36 are said, in par 38, to have been relied upon by the second, third, fourth, sixth, seventh, eleventh, twelfth, thirteenth and fourteenth Group Members who continued to trade in the shopping centre and to await the carrying out of the refurbishment of the shopping centre by Eastern Prosperity.  A specific plea of reliance in relation to the first Group Member is set out in par 39.  There it is said the first Group Member, Mr and Mrs McIntyre trading as Travelworld, purchased their travel business, took an assignment of the lease of their shop in the shopping centre and moved into Shop 24 on 1 November 1998, continued trading and awaited the carrying out of the refurbishment of the shopping centre.  This is the entirety of the pleading on the issue of reliance.

Amended Minute of Proposed Substituted Statement of Claim – Falsity Pleas

17                  Paragraphs 40 to 51 inclusive of the amended minute set out what are said to be particulars of the falsity of the various representations alleged and of the state of knowledge of Tian, Johnny Ang and Costello concerning the financial position of Eastern Prosperity.  The pleas as to falsity are set out in the following paragraphs:

Paragraph 40                Falsifying the Tian representations pleaded in par 18.

Paragraph 41                Falsifying the Tian implied representations in par 19.

Paragraph 42                Falsifying the Eastern Prosperity representations of August 1998 pleaded in par 20.

Paragraph 44                Falsifying the implied representation of August 1998 pleaded in par 21.

Paragraph 45                Falsifying the Costello representations of September 1998 pleaded in par 30.

Paragraph 47                Falsifying the Costello implied representations of September 1998 pleaded in par 31.

Paragraph 49                Falsifying the Costello representations of October 1998 pleaded in par 33.

Paragraph 50                Falsifying the implied representations by Costello to the first Group Member in October 1998 pleaded in par 34.

Paragraph 51                Falsifying the representations by Costello to the tenants from January 1999 to February 2000 pleaded in par 35.

Amended Minute of Proposed Substituted Statement of Claim – State of Knowledge

18                  The falsifying facts relied upon in the amended minute are directed to the pleaded representations as to the financial capacity of Eastern Prosperity.  They are intertwined with a number of paragraphs relating to the state of knowledge of Tian, Johnny Ang and Costello concerning Eastern Prosperity’s financial position.  Paragraphs relating to this are as follows:

Paragraph 41                State of knowledge of Tian and Johnny Ang at all material times that Eastern Prosperity was not in the financial position to effect the promised refurbishment.

Paragraph 46                State of knowledge of Costello, on behalf of DBF, at all material times that Eastern Prosperity was not in a financial position to effect the promised refurbishment of the shopping centre.  It is also here asserted in the alternative that Costello “ought to have known” that Eastern Prosperity was not in the relevant financial position.

There are some twenty-four paragraphs of particulars in support of this plea.

Paragraph 49                This paragraph purports to falsify the representations in par 33 said to have been made by Costello in October 1998.  In addition to the particulars of falsity it sets out extensive particulars of knowledge albeit no state of mind is pleaded in par 33.  There are some sixteen paragraphs of particulars said to be particulars of knowledge in this respect. 

Paragraph 50                This paragraph, which purports to falsify the implied representations by Costello pleaded in par 34, also relies upon the particulars of knowledge contained in pars 41 and 46.  This goes to the implied representation in 34 that Eastern Prosperity had financial capacity “to the knowledge of the second respondent through Costello to carry out the refurbishment”. 

Paragraph 51                This purports to falsify the representations in par 35 none of which alleges a state of mind on the part of Costello although it is said, in par 36, to be implied in those representations that Eastern Prosperity to the knowledge of DBF had at all material times the financial capacity to pay for the refurbishment of the shopping centre.  The implied representation referred to in par 36 is not the subject of any separate falsifying plea.

Amended Minute of Proposed Statement of Claim –Plea of Loss and Damage

19                  Each of the representations as to financial capacity and related matters is said to have constituted misleading or deceptive conduct and unconscionable conduct on the part of the respondents.  As a result it is said, in par 57, that the McIntyres suffered loss and damage through:

(a)        agreeing to purchase the business from the previous owners;

(b)        continuing to trade in the expectation of the representations made by Costello as referred to in pars 33, 34, 35 and 36 would come about when in truth and in fact it was extremely unlikely that Eastern Prosperity would ever be in a financial position to carry out the refurbishment of the shopping centre.

20                  The loss and damage claimed by the first Group Member includes the purchase price of the business, ongoing trading losses, loss of interest on capital, loss of opportunity to purchase another travel agency, loss of opportunity to establish a travel agency offered to the McIntyres in the refurbished Carousel Shopping Centre, loss of wages and salary which could have been earned in alternative employment and loss and damage occasioned through the tenancy being flooded on four occasions with raw sewerage. 

21                  In relation to the other continuing Group Members, the second, third, fourth, sixth, seventh, eleventh, twelfth, thirteenth and fourteenth Group Members, they are also said in par 58 to have suffered loss and damage.  Their loss and damage is said to have been suffered by continuing to trade in the mistaken expectation that the representations made would be realised when in truth it was extremely unlikely that Eastern Prosperity would ever be in a position to carry out the construction of the carpark and the refurbishment of the shopping centre.  It is also said in each case the Group Member has foregone the opportunity of pursuing Eastern Prosperity through the legal system for compensation and/or variation of their deeds of lease and has foregone the opportunity of selling or attempting to sell their businesses and, alternatively, relocating them.  The particulars of loss and damage set out in par 58 include continuing trading losses, loss of opportunity to sell their businesses, diminution in the value of their businesses, loss of goodwill of the businesses and loss of the opportunity to trade in a refurbished shopping centre and to increase the profitability and value of the businesses.  Loss of wages and salary in alternative employment and, alternatively, loss of profits and goodwill is also claimed.

Other Causes of Action

22                  In par 32 it is asserted that it was the duty of Costello to inform the tenants of the shopping centre if the funds obtained by Eastern Prosperity were being used for purposes other than the refurbishment of the shopping centre.  No factual base for the duty is pleaded.  In par 48 it is said in breach of that duty she failed to inform all the Group Members that the funds obtained by Eastern Prosperity were not being used for the refurbishment but to DBF’s knowledge for other purposes.

23                  It is to be noted that par 48 asserts a breach of a duty of care owed by DBF to the Group Members.  Paragraph 32 pleads a duty owed by Costello.  Costello is not named as a respondent to the proceedings.  In any event, and more fundamentally, there are simply insufficient facts to sustain a contention that the shopping centre owner’s agent owed a common law duty of care to the tenants of the shopping centre as alleged in par 32 or at all.  In my opinion this cause of action cannot be sustained on the present pleading.

24                  In par 55 it is contended that the conduct of DBF in continuing to make the pleaded representations after it became aware of Eastern Prosperity’s precarious financial position was misleading and deceptive in breach of s 52 of the Trade Practices Act and alternatively, unconscionable pursuant to ss 51AA and 51AC of the Trade Practices Act.  The plea of unconscionable conduct is supported by the contention, at par 56, that the Group Members were in a situation of special disadvantage compared with that of Eastern Prosperity and DBF.  The foundation of this position of special disadvantage is said to be that the Group Members did not enjoy access to the financial records of Eastern Prosperity and were unaware of the precarious state of its finances.  DBF was aware of its precarious financial position.  Further particulars are promised after discovery and/or the administration of interrogatories.  In my opinion the claim of unconscionable conduct should not be allowed on two bases.  The first is that it does not appear to plead sufficient facts to establish a basis for making out unconscionable conduct.  The second is that it appears to be entirely superfluous and dependant upon establishing misleading or deceptive conduct in contravention of s 52.  In addition, at this stage of the proceedings when the Court has made orders directed to a more clearly focussed pleading, a vague plea of unconscionable conduct would undermine that objective.

25                  There is a further claim raised in par 49 based upon the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA).  This plea has to do with breach of an implied term of the leases of all Group Members arising from failure to adequately maintain the building in which the shopping centre was comprised and common areas connected with the centre.  It incorporates, by way of particulars,  a list of complaints about maintenance failures in respect of various aspects of the shopping centre’s operation.  This plea falls well outside the scope of the direction given on 8 April 2002 that the statement of claim be limited to a cause of action or causes of action based upon implied representations as to the financial capacity of Eastern Prosperity.  I would not permit this cause of action to be advanced in these proceedings.

Difficulties in the Falsification of the Pleaded Representations  

26                  Paragraph 40 purports to falsify the Tian representations in par 18.  Particulars B, C and D do not address the pleaded representation.  Paragraph 41 goes to the state of knowledge of Tian and/or Ang but does not falsify par 18 which makes no plea relating to their state of mind.  Nor does par 41 falsify the implied representations in par 19.  Paragraph 42 in particulars A and B falsifies the implied representations in pars 19(a) and (b).  The additional particulars of falsity from par 40 and par 41 are relied upon.  The latter has no bearing on par 19 as it goes to Tian’s state of mind. 

27                  Paragraph 43 relies upon the particulars of falsity in pars 40 and 42 and the particulars of knowledge in par 41 to falsify the representations pleaded in par 20.  In so far as the particulars raise matters of the knowledge of Tian and Johnny Ang they do not falsify the representation in par 20 which is, in any event, a promissory statement about the refurbishment of the premises and says nothing in terms about the state of the finances of  Eastern Prosperity.

28                  The representations as to the state of Eastern Prosperity’s finances are said to be implied and these are set out in par 21.  Paragraph 21 is allegedly falsified in par 44 by a global reliance upon the particulars of falsity in pars 40, 42, and 43.  It may be noted that the particulars of falsity set out in par 42 incorporate those set out in par 41.  There is no doubt that the combined effect of all these particulars is to raise facts which, if established, would falsify the implied representations pleaded in par 21(a) and (b).  But they do more than that.  Paragraph 41 goes to particulars of knowledge of Tian and Ang.  It does so on a factual basis which is confusing especially in relation to particular C, D, E and F.

29                  The representations pleaded in par 30 and attributed to Costello are said to be falsified in par 45.  There is a direct falsification, albeit by way of particulars, of the representation that Eastern Prosperity had released a sum of $2,700,000 for the refurbishment of the shopping centre.  The particulars relied upon however do not falsify the representations at all but go to the commencement and cessation of the refurbishment works. 

30                  Costello’s state of knowledge, pleaded in par 46, does not falsify the representations attributed to her in par 30.  However it does go to the implied representations in par 31.  These are falsified by par 47 which, confusingly, introduces a plea that Costello “ought to have known” that Eastern Prosperity did not have the requisite financial capacity.  As to Costello’s actual state of knowledge to falsify the representations in par 30, par 47 invokes the particulars set out in par 46.

31                  Paragraph 49 purports to falsify implied representations attributed to Costello in par 33.  As particularised it does not falsify the representations pleaded.

32                  The implied representations in par 34 are falsified in par 50 which picks up all the particulars of falsity in pars 40, 42 and 49 and particulars of knowledge in pars 41 and 46.  The representations attributed to Costello in par 35 are globally falsified by reference to pars 44 to 46 inclusive.

33                  There can be extracted from the tangled web of this pleading allegations of representations as to the financial capacity of Eastern Prosperity at various times and allegations of fact falsifying those representations.  In my opinion, however, the pleading is so convoluted and confused by the inclusion of irrelevant and embarrassing pleas and particulars that no respondent could be expected to plead to it without further major surgery.  In addition, the pleading has invoked claims in negligence, unconscionable conduct and breach of implied statutory terms of the shopping centre leases which are either unsustainable, superfluous or outside the scope of my directions of April 2002.  The damages claims, it should be added, are wide ranging and in some aspects of their particulars mutually inconsistent. 

34                  In my opinion the amended minute should not be allowed to stand as a substituted statement of claim.

The Discretion to Dismiss the Proceedings

35                  The history of these proceedings, as outlined in the introduction to these reasons is long and convoluted.  The amended minute of the proposed statement of claim represents the fifth attempt to formulate a claim, a process which has taken some two and a half years since the proceedings were instituted.  The first attempt is represented by the statement of claim which was struck out on 6 December 2001, the second by the statement of claim struck out on 8 April 2002 and the third by the statement of claim struck out on 12 September 2002.  The fourth attempt was the minute of a proposed substituted statement of claim which was lodged with the Court on 23 January 2003 and replaced on 7 March 2003 by the fifth, which is the amended minute of proposed substituted statement of claim.

36                  The question whether the proceedings now should be allowed to continue at all or should be dismissed does not turn solely upon whether the proposed pleading discloses in amongst the unacceptable material, a viable cause of action.  I observed in my reasons for judgment in the first strike out decision in December 2001, concerning the applicants’ case generally, that:

“The difficulties with the statement of claim which I have identified may be indicative not only of a difficulty in framing their case.  It may also reflect upon whether they have a case at all.  In my opinion it is highly questionable whether this proceeding can be viably conducted without the assistance of competent legal advice.  It could be unfair both to the applicants, those they purport to represent and to the respondents to allow the action to go on indefinitely with a succession of defective pleadings and increasing costs orders against them.  I will therefore allow a further amendment to the statement of claim but if the fundamental difficulties cannot be overcome, I will not be disposed to allow further amendments and the incurring of further unnecessary costs on all sides.”

37                  When the third statement of claim was struck out on 12 September 2002, the question whether the application as a whole should be dismissed was left open for further consideration.  The motions which were filed by the first and second respondents on 4 June 2002 and 31 May 2002 respectively had relied upon O 11 r 16 of the Federal Court Rules which provides:

“Where a pleading –

(a)       discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading;

(b)       has a tendency to cause prejudice, embarrassment or delay in the proceedings; or

(c)        is otherwise an abuse of the process of the Court.

the Court may at any state of the proceeding order that the whole or any part of the pleading be struck out.”

38                  The question whether leave to replead will be given is a matter of discretion.  Where leave to replead is not given, then the Court in the exercise of its incidental power may dismiss the action, there being no basis upon which it could thereafter continue.  In so doing the Court may invoke O 20 r 2 which provides:

“2(1)  Where in any proceeding it appears to the Court that in relation to the proceeding generally or in relation to any claim for relief in the proceeding –

(a)       no reasonable cause of action is disclosed;

(b)       the proceeding is frivolous or vexatious; or

(c)        the proceeding is an abuse of the process of the Court,

the Court may order that the proceeding be stayed or dismissed generally or in relation to any claim for relief in the proceeding.”

In my opinion this is a case in which there is now no statement of claim before the Court.  Leave to replead is to be refused.  Further delay in reworking the statement of claim will involve further costs and, at least to that extent, further prejudice to the respondents.  In my opinion the action should not be allowed to proceed any further.

Conclusion

39                  Having decided that the amended minute cannot stand, I propose to dismiss the application.  The process of searching for an intelligible, properly pleaded statement of claim has taken far longer than any respondent should have to endure.  I cannot confidently anticipate that yet another pleading will produce a document upon which this application can properly proceed.  In my opinion it is in the interests of all parties that this application now be dismissed.  I will so order.

I certify that the preceding thirty

nine (39) numbered paragraphs are

a true copy of the Reasons for

Judgment herein of the Honourable

Justice French:

Associate:

Dated:              25 March 2003