FEDERAL COURT OF AUSTRALIA

Lean v Tumut River Orchard Management Ltd [2003] FCA 1004

GRAEME TREVOR LEAN v TUMUT RIVER ORCHARD MANAGEMENT LTD (IN LIQUIDATION), HP MERCANTILE PTY LTD and RRKM PTY LTD

WAG 329 of 2002

CARR J

23 SEPTEMBER 2003

PERTH

THE COURT ORDERS THAT:

1.         The applicant have leave to amend the application and statement of claim in terms of the minute of proposed application and minute of proposed statement of claim (each lodged on 6 June 2003) respectively.

2.         The documents lodged on 6 June 2003 and described as “Substituted Application” and “Substituted Statement of Claim” respectively stand as the substituted application and substituted statement of claim and service of those documents is dispensed with. 

3.         The question of the costs of the motion be stood over for consideration, if necessary, on a date to be fixed.

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

REASONS FOR JUDGMENT

introduction

1                     This is a motion on notice whereby the applicant, perhaps somewhat unusually, seeks an order that he amend the application and statement of claim without leave or, alternatively, have leave to amend the application and statement of claim.  Minutes of the proposed substituted application and proposed substituted statement of claim were filed with the notice of motion.

factual and procedural background

2                     This matter has already been the subject of an interlocutory judgment, delivered on 28 March 2003, in respect of a motion to strike out the statement of claim: Lean v Tumut River Orchard Management Ltd [2003] FCA 269.  The following descriptive paragraphs are taken largely from that judgment.  

3                     At the material times the first respondent was the registered proprietor of land at Coonabarabran in New South Wales and Mundubbera in Queensland on which it carried on and managed orchards of peaches and nectarines for the purposes of investment schemes.  Those activities were conducted pursuant to the terms of two investment deeds (“the Investment Deeds”) and two prospectuses (“the Prospectuses”) which had been issued under the terms of the Investment Deeds.  

4                     On 28 April 1999, the first respondent went into voluntary liquidation.  Messrs Maxwell William Prentice and Vince Christopher Barilla became joint liquidators pursuant to s 446A(4)(a)(ii) of the Corporations Law. 

5                     On 20 November 2002 I gave leave, under s 500(2) of the Corporations Act 2001 (Cth), to the applicant to commence proceedings against the first respondent – see Lean v Tumut River Orchard Management Ltd [2002] FCA 1419.  The principal application in this matter is the proceeding brought pursuant to that leave. 

6                     The application is brought by the applicant as a representative action under Part IVA of the Federal Court of Australia Act 1976 (Cth) on his own behalf and as a representative party on behalf of the group members described in paragraph 2 of the application and paragraph 3 of the statement of claim in which latter paragraph seven persons are named as being group members. 

7                     In summary, the matters pleaded by the applicant in the statement of claim are as follows.  The applicant and the other group members entered into contractual arrangements with the first respondent with a view to investing in two schemes (one in respect of the first respondent’s New South Wales property and the other in respect of the first respondent’s Queensland property – each respectively described as “the Project”) to produce and market peaches and nectarines.  Those arrangements included:

·          a licence agreement (“the Licence Deed”) under which the first respondent granted a licence to an investor (“the Grower”) to occupy a farming allotment;

·          a farming agreement (“the Farming Agreement”) whereby the first respondent undertook to cultivate and harvest the fruit trees; and

·          Investment Deeds entered into between the first respondent and a trustee company (a different trustee company in relation to each Project) on behalf of the Growers.

8                     Some of the Growers (“the Borrowers”) took up the offer of a loan (“the Investor Loans”) to meet their financial commitments under the Licence Deed and the Farming Agreement.  The agreements in respect of those loans are known as “Investor Loan Agreements”. 

9                     The applicant alleges that in brochures (one in respect of each Project) published by the first respondent and in a document described as a “Project Summary”, copies of which were distributed on its behalf by the third respondent at “seminars”, the first respondent made certain representations to the applicant and the other group members.  In the brochures the representations were said to have been as follows:

·          that the information provided in the brochure gave a summary that exactly reflected the information contained in the Prospectus;

·          the Growers would be required to pay the operating costs attributable to their allotments out of the gross sale proceeds of the fruit produced by the Project which operating costs included the cost of harvesting and marketing; and

·          the borrowers would be required to “pay the first two interest payments and the minimum principal repayments” required by the terms of the Investment Loan Agreements but that all other payments would be made from income derived from the investor’s orchard.

10                  The brochure in relation to the Coonabarabran Project, so it is pleaded, contained a further statement that the Grower’s liabilities, apart from the subscription price, would be limited to the income derived from the investor’s orchard.  The brochure in relation to the Queensland Project, again so it is pleaded, contained a further statement that “if these payments are made as and when due” the Grower’s liabilities, apart from the subscription price, would be limited to the income from the investor’s orchard. 

11                  The applicant alleges that the Project Summary stated that the investment in the Project was a non-recourse loan and that the investors would have no personal liability for principal or interest payments. 

12                  The applicant alleges that publication of the statements in the brochures and in the Project Summary constituted conduct which was misleading or deceptive in contravention of s 52 of the Trade Practices Act 1974 (Cth) (“the Act”), because contrary to the express and implied representations summarised above, the various agreements exposed the group members to personal liability in respect of Harvesting and Marketing Costs (a defined term) and the loans are recourse loans. 

13                  In a related, but distinct, claim the applicant sues the first respondent for damages for breaches of the Farming Agreements.  Leave to commence proceedings (referred to above), in relation to the breach of contract claims, was confined to the commencement of proceedings with liberty to apply further. 

14                  In the statement of claim the applicant pleads that by a series of agreements, dated between 1 September 1997 and 31 August 2001, the rights of the first respondent under the Investor Loan Agreements, the Licence Deed and an amending deed in respect of each Project (“the Amending Deeds”) were assigned to the second respondent which is a finance company dealing in debt recovery.  The applicant pleads that the second respondent is in the course of suing approximately 30 of the group members in Local Court actions in New South Wales for Harvesting and Marketing Costs, interest and legal costs. 

15                  The applicant pleads that as a result of the first respondent’s misleading or deceptive conduct the group members have incurred or may be likely to incur loss or damage which is particularised as including demands made by the second respondent and the proceedings in the Local Court in New South Wales.  There are other particulars of loss, including the possibility of accelerated liability to repay the principal and interest under the Investor Loan Agreements.   

16                  The relief which the applicant seeks (at present) includes damages pursuant to s 82 of the Act against the first and third respondents for misleading or deceptive conduct and against the first respondent for unconscionable conduct.

17                  The applicant claims against the second respondent that if the second respondent acquired the first respondent’s rights under the Investor Loan Agreements and the Licence Deeds and the Amending Deed, those rights are subject to any rights of set-off that are available to the group members against the first respondent.  The applicant seeks declarations that the group members are entitled to an equitable set-off or a statutory set-off under s 533C of the Corporations Act against the first respondent and that the second respondent takes its rights under what are described as “the alleged assignments” from the first respondent or intervening parties subject to the group members’ equitable set-off against the first respondent.  [The description in this paragraph includes some non-controversial proposed amendments.] 

18                  In the application and in the statement of claim the applicant originally sought declarations that:

“(i)      the Group Members are not personally liable for the Harvesting and Marketing Costs;

 (ii)      the Investor Loans are non-recourse loans;

(iii)      the Group Members have not committed an event of default within clause 4.1 of the Investor Loan Agreement by:

            (1)        ceasing to carry on the Farm Business [another defined term]…;

            (2)        making default in the observance or performance of any obligation contained in the Investor Loan Agreements or in Any Security (sic) or on any other account or transaction between the Lender and the Borrower under the Investor Loan Agreements as a result of a failure by the Borrowers to pay the Harvesting and Marketing Costs or any instalment of principal and interest apart from the Borrowers’ original subscriptions to the Project; or  

            (3)        any Security becoming enforceable according to its terms as a result of a failure by the Growers to pay the Harvesting and Marketing Costs or any instalment of principal and interest apart from the Borrowers’ original subscriptions to the Project.

(iv)      the Farming Agreement may not be terminated on grounds that the Group Members have failed to pay the Harvesting and Marketing Costs or on other grounds attributable to the First Respondent’s breaches of contract …;

(v)       the Group Members are entitled to an equitable set-off against the First Respondent; and

(vi)      the Second Respondent takes its rights under the alleged assignments from the First Respondent or intervening parties  subject to the Group Members’ equitable set off or statutory set off against the First Respondent;”

19                  The applicant seeks orders for certain refunds to be made by the first respondent. He also seeks injunctions against the second respondent restraining it from making demands or instituting or continuing legal process or any enforcement process against the group members under the agreements, restraining it from disposing or dissipating any funds collected by it from group members and from enforcing any Security (another defined term). The applicant also seeks an order for the refund of moneys from the second respondent. 

the motion

20                  As Professor J O’Donovan, counsel for the applicant, explained in oral submissions the essence of the amendments sought is, first, to seek injunctive relief against the first respondent to restrain it from further assigning its rights under the various agreements to any other party.  Secondly, the applicant wishes to seek injunctive relief against the third respondent under s 80 of the Act.  The applicant freely acknowledges that his purpose in seeking injunctive relief against the third respondent is thereby to become entitled to seek relief by way of remedial orders under s 87 of the Act. 

21                  Section 87(1) of the Act relevantly provides that it is a condition for the grant of relief under that sub-section that there be a proceeding instituted under Part VI of the Act.  As Professor O’Donovan pointed out, an injunction may be granted under s 80 against a party who is engaged in misleading or deceptive conduct without it being established that such party is still engaging in such conduct.  Furthermore, on the present state of the authorities, it is clear that remedial orders can be granted under s 87 whether or not an injunction is actually granted under s 80.  Professor O’Donovan said that the applicant was seeking these amendments “… to remove any doubt about limitation issues in this matter.” 

22                  At the same time, Professor O’Donovan submitted that there were “grave doubts” about whether the applicant and the represented group have yet suffered loss or damage.  He referred to the fact that the investments were long-term investments which were still continuing and that a balancing exercise would be required to establish whether there was any loss. 

Whether the applicant needs leave

23                  The applicant contended that he did not need leave to amend the application and statement of claim.  Although during the hearing of the strike-out motion mentioned above I had granted the applicant leave to amend the application and statement of claim in certain respects and, in my later judgment in that matter, gave further leave, having struck out his unconscionable conduct claims, to re-plead those claims, the applicant contended that he still had a right to amend without leave under Order 13 rule 3 of the Federal Court Rules.  That rule provides that a party may, without leave, amend any pleading once at any time before the pleadings are closed.  The pleadings in this matter were not closed, so the applicant contended, and thus, despite the fact that he had obtained leave to amend on two prior occasions he could still amend without leave. 

my reasoning

24                  At the hearing of the motion, the question whether the proposed amendments should be allowed was fully argued, with the second and third respondents making oral submissions in opposition and the first respondent filing and exchanging written submissions (also in opposition) after the hearing.  

25                  Order 13 rule 5 provides that after a party amends his pleading under Order 13 rule 3 a Court may on application by an opposite party disallow the amendment. 

26                  Accordingly I do not intend to decide whether the applicant needs leave, but I shall treat the position as if the applicant had made the proposed amendments under Order 13 rule 3 without leave, and an opposite party had applied to disallow the amendments, thereby enlivening the Court’s power under Order 13 rule 5(4) to disallow the proposed amendments in whole or in part.  The test to be applied is whether the Court would have given leave so to amend.  My purpose in taking this course is to save time and costs.  Furthermore the applicant wants to amend the originating application.  An application is not a pleading – see Order 1 rule 4 – and he needs leave to amend that document.  The proposed amendments to the application overlap substantially with the proposed amendments to the statement of claim.  I now turn to the various objections of the respondents. 

the first respondent’s objections

27                  The first respondent only opposes the applicant’s proposed amendment to sub-paragraph 102(h)(i) to the statement of claim.  Paragraph 102 contains the applicant’s prayer for relief.  The relevant proposed sub-paragraph would read:

‘(h)      Injunctions under section 80 of the Trade Practices Act 1974 or the general law:

            (i)         against the First Respondent to restrain it from: 

                  A.       assigning or contracting to assign its rights at law or in equity under the Agreements or any security or any other account or transaction between the Lender and the Borrower under the Investor Loan Agreements to any person or corporation;

                  B.       assigning its claim to the Harvesting and Marketing Costs allegedly incurred during its term as Manager of the Projects to any person or corporation;

                  C.       terminating the Project pursuant to clause 23.3 of the Farming Agreement.’

28                  The first respondent’s reasons for such opposition are as follows.  When the Court granted the leave referred to in paragraph 5 above to the applicant to commence proceedings against the first respondent in respect of the claims described in what were then drafts of the application and statement of claim, the applicant’s primary purpose was to obtain declaratory and injunctive relief against the second respondent.  The further relief proposed is, so the first respondent submits, outside the scope of the leave to proceed.  The first respondent says that the purpose for which this additional relief is sought by the applicant against it is unclear.  It is possible, so the first respondent speculates, that the applicant may seek to allege that amounts claimed by the second respondent in respect of Harvesting and Marketing Costs have not been validly assigned to the second respondent and remain, if they are debts at all, as debts owed to the first respondent.  If so, the first respondent may be obliged to defend substantively the proceedings against the applicant in order to protect itself from a claim by the second respondent.  This would be inconsistent with the purpose for which leave to proceed against it was originally granted and would also be inconsistent with the interests of the first respondent’s other creditors.  In summary, in the first round of its written submissions, the first respondent maintains that the applicant must state the reasons why he seeks the relief set out above and the basis upon which he argues that leave ought to be granted pursuant to s 500(2) of the Corporations Act to proceed against the first respondent in respect of that relief. 

29                  The applicant took up that challenge in his written submissions in reply.  In summary, those submissions are as follows.  First, the applicant says that the relief sought in the above proposed paragraph is not outside the scope of the leave granted to proceed against the first respondent.  The applicant refers to clause 1(b) of the relevant orders which provided:

‘(b)   such leave is confined to commencement of the proposed proceedings by filing an application and statement of claim and prosecuting all claims other than the breach of contract claims in those proceedings to the point at which the issues of liability and relief other than damages have been decided...’

30                  The thrust of those orders, so the applicant contends was to leave the monetary claims against the first respondent to be determined by the proof of debt procedure.  But there was no indication in the reasons for judgment or the orders that the applicant was not to be permitted to seek injunctive relief against the first respondent.  The need for such relief was not, so the applicant submits, apparent when the original application and statement of claim were drafted, but it now appears that such relief is necessary to protect the applicant’s interests. 

31                  The applicant says that injunctive relief is now required because the purported assignment by the first respondent to a company called Treetop Projects Ltd (“Treetop”) of the first respondent’s rights under the Investor Loan Agreements (“the Assignment”) might not be valid.  The Assignment was the first of the series of agreements referred to in paragraph 14 above. 

32                  The applicant says, for reasons which he outlines in his submission, that the Assignment was not effective as a legal assignment or as an equitable assignment and thus did not effectively transfer the debts under the Investor Loan Agreements to Treetop.  If the Assignment is ineffective, so the applicant submits, it follows that all subsequent assignments, including the purported assignment to the second respondent are not effective.  In those circumstances the first respondent is entitled, subject to the applicant’s set-off claims, to collect moneys owing under the Investor Loan Agreements.  It could assign those rights to a third party who could then institute proceedings against the applicant and the other group members to recover amounts allegedly owing under the Investor Loan Agreements.  If that occurred, the expenses incurred by the applicant in the present proceedings would be wasted and it would be necessary to institute fresh proceedings against the third party. 

33                  An injunction to restrain the first respondent from assigning its claim to Harvesting and Marketing Costs allegedly incurred during its terms as manager of the Projects to any person or corporation is, so the applicant contends, required for similar reasons.  A failure to pay any amounts owing under the Farming Agreements, including but not limited to Harvesting and Marketing Costs, enables the Farming Agreements to be terminated.  If the growers cease to carry on the Farming Business, the Projects may be terminated.  Termination of the Farming Agreements also constitutes an event of default under the Investor Loan Agreements which consequently accelerates the amounts owing (if any) under the Investor Loan Agreements.  Therefore, the applicant says that it is necessary to seek an injunction against the first respondent to prevent it from terminating the Projects and recovering amounts allegedly owing under the Investor Loan Agreements. 

34                  The applicant says that the injunctive relief sought against the first respondent will not hamper the liquidators in the conduct of their administration.  The first respondent did not assign its rights under the Investor Loan Agreements or the Farming Agreements to the second respondent, so it will not be exposed to any claims by the second respondent if the assignment from the first respondent to Treetop is ineffective.  Accordingly, it will not be necessary for the first respondent to defend the proceedings in order to protect itself from a claim by the second respondent. 

35                  In turn the first respondent has filed a further outline of submissions without leave.  Normally the Court does not allow that course to be taken.  However, in this case I consider that it is in the interests of justice for the contents of that document to be taken into consideration. 

36                  In that further outline, the first respondent says that the applicant does not distinguish between Harvesting and Marketing Costs incurred during its time as manager and those incurred during Treetop’s time as manager or other liabilities of the growers such as loans made under the Investor Loan Agreements.  It says that it is unclear whether the applicant alleges in respect of each of these categories of costs or liabilities that a debt has been purportedly assigned and if so how. 

37                  The first respondent says that the applicant does not allege in the proceedings that the relevant assignments were ineffective or invalid, or seek a declaration to that effect and no other party makes such an allegation. 

38                  In those circumstances, so the first respondent argues, no issue properly arises in these proceedings as to whether “liabilities claimed by the second respondent as owed by the Growers were validly assigned to it”.  The first respondent says that there is neither a proper legal basis nor any practical utility for the applicant to seek the relief contained in the proposed paragraph set out above. 

39                  The first respondent argues that if the applicant properly raises the issue of validity of the relevant assignments in the proceedings (for example by way of amendment to the application and statement of claim) or is otherwise permitted to raise that issue, the spectre remains that those parties who have purported to take the benefit of an assignment of a debt or liability will look to the first respondent if the assignment is determined to be invalid.  Accordingly, the first respondent says that it may be obliged to participate in the proceedings to the extent of seeking to uphold the validity of the assignment in order to protect itself from claims by successive assignees.  Finally, it says that if the first respondent had never purported to assign any debts or liabilities to any third party it would be doubtful that the Court would have granted leave to it to seek the relief proposed. 

my reasoning

40                  I shall deal first with the very last of the above submissions from the first respondent.  On the facts pleaded to date there is an allegation of a series of alleged assignments from the first respondent – see paragraphs 56 and 86 of the statement of claim.  The eventual assignee, i.e. the second respondent, is seeking to enforce rights against the applicant the source of which is the first respondent.  There is no need to speculate what might have been the position in the hypothetical situation described immediately above. 

41                  I think that the relief sought in the amendment falls within the leave granted to bring proceedings against the first respondent. 

42                  I think that the first respondent’s submission that the applicant has not pleaded the bases for the invalidity of the assignments which he has set out in his written submissions, is correct.  References such as “alleged assignments” and “purported to acquire” are not, in my view, sufficient to bring into issue those alleged defects in the assignments.  But that is not, in my opinion, a basis upon which to refuse leave to amend or disallow the amendments in relation to the relief sought against the first respondent.

43                  If the applicant is successful in these proceedings in his claim to equitable set-off I think it would be at least arguable that a Court would entertain an application for an injunction to restrain the first respondent from assigning or contracting to assign its rights under the agreement or any related security or the like.  This would be on the basis that he should not be exposed to any further claims of the sort made by the second respondent as assignee.  I do not think there can be any suggestion of abuse of process. 

44                  In those circumstances, I do not consider that there is, at this stage, any real prospect of the first respondent being obliged to take part in the proceedings by defending the applicant’s claims in order to protect itself from a claim by the second respondent.  If that assessment proves to be incorrect and the liquidators find themselves obliged to incur substantial costs, the orders made on 20 November 2002 provide for leave to apply generally.  The applicant should have leave to amend its claims against the first respondent in terms of the respective minutes and in particular in terms of proposed sub-paragraph 102(h)(i). 

the second respondent’s objections

45                  The second respondent submits that the proposed amendments would cause the case against it to be substantially different.  It refers to the fact that the applicant has abandoned its former claim under s 51AC of the Act and its claim for damages pursuant to s 82 of that Act and now seeks relief against the second respondent by way of a declaration of equitable set-off or a statutory set-off under s 553C of the Corporations Act. 

46                  Counsel for the second respondent referred me to the declarations sought by the applicant in paragraph 102(d) of the prayer for relief.  The declarations referred to in that sub-paragraph are that the Group Members are not personally liable for the Harvesting and Marketing Costs, that the Investor Loans are non-recourse loans, that the Group Members have not committed an event of default within clause 4.1 of the Investor Loan Agreement by ceasing to carry on the Farm Business or making default in the observance or performance of any relevant obligation in the Investor Loan Agreements or any other related agreement or by any Security becoming enforceable as a result of a failure by the Growers to pay the Harvesting and Marketing Costs or any instalment of principal and interest apart from the Borrowers’ original subscriptions to the Project.  A further declaration is sought that the Farming Agreements may not be terminated on grounds that the Group Members have failed to pay the Harvesting and Marketing Costs or on other grounds attributable to the first respondent’s breaches of contract as earlier pleaded in the statement of claim. 

47                  The second respondent objected to the following proposed amendment to the statement of claim: 

‘90.      If the Court grants the relief sought by the Applicant under paragraph 102(d) hereof, neither Treetop nor the Second Respondent will be entitled to enforce any claim to Harvesting and Marketing Costs against the Group Members.’

48                  The second respondent says that for these amendments “to proceed” the applicant would have to join further parties, that is Treetop and other intermediary assignees who are not parties to the proceedings.  Those other parties included Australian Rural Group Ltd and Horticultural Operations Ltd.  According to paragraphs 56 and 57 of the statement of claim Treetop was an assignee from Core Finance Pty Ltd which had taken an assignment of the first respondent’s rights under the Investor Loan Agreements and related deeds.  Treetop entered into administration in December 2000 at which time Horticultural Operations Ltd assumed the role of Manager of the Project in succession to Treetop. 

49                  The main thrust of the second respondent’s submissions was that the amendment should not be allowed whilst these other corporate entities were not joined to the proceedings.  The second respondent also sought to make the point that there was no assignment to Treetop, but rather an appointment as manager. 

my reasoning

50                  The test which I have been applying in relation to this motion is whether the matters forming the subject of the proposed amended pleading are reasonably arguable and do not amount to an abuse of process. 

51                  I accept the applicant’s submission that the declaratory relief referred to in paragraph 102(d) of the statement of claim is expressed as being sought under s 87(1) of the Act.  Under that sub-section relief may only be ordered against a person who engaged in conduct in contravention of the various parts mentioned in the sub-section or a person who was involved in that contravention.  The applicant makes no such claim against the second respondent. 

52                  I think that, for the purposes of disposing of this motion, there is also considerable merit in the applicant’s point that he has not joined the intervening parties because he does not seek relief against them and joinder would simply incur unnecessary costs.  Part of the applicant’s point is that he seeks rights of set-off against the first respondent in respect of the various agreements, including the Farming Agreement.  If he is successful in establishing that set-off, so the applicant argues, the second respondent, as successor to what otherwise would have been the first respondent’s rights, will take those rights subject to the set-off. 

53                  It may well be that at trial, if the applicant is successful, the Judge may decline to grant a declaration in the absence of notice of the proceedings having been given to the intermediary parties or those parties having been joined to the application.  But I do not consider that at this stage such matters should preclude the applicant from claiming and pleading as he seeks to do. 

the third respondent’s objections

54                  The proposed amendments which concern the third respondent are as follows.  First, there is an alternative claim for damages pursuant to s 87(1) of the Act i.e. alternatively to the applicant’s existing claim for damages under s 82 against the third respondent for misleading or deceptive conduct.  Secondly, a claim for an injunction against the third respondent:

‘… to restrain it from engaging in misleading or deceptive conduct against the Group Members by making any false or misleading or deceptive representations to the Group Members in relation to their alleged liabilities under the Agreements or any security.’

55                  The third respondent objects to the proposed addition of a claim for an injunction against it. 

56                  The third respondent says that the case against it is basically that in 1993 and 1994 it published some brochures and held some seminars at which representations were allegedly made which were false.  The application was not filed until 2002 and, so the third respondent contends, the applicant’s claim would be statute-barred because the loss would have occurred more than three years before that.  The proposed amendments are, so it is submitted, solely designed to “get around” that difficulty.  The applicant does not plead that the third respondent is presently engaging in contravening conduct or that it will, unless restrained, engage in that sort of conduct.  No interlocutory relief is sought.  The applicant is seeking an order, to be made at the conclusion of the trial, that the respondent refrain from making false statements about liabilities under the various documentation.  The third respondent submits that this is something which the Court ought not to entertain.  The agreements have all been entered into.  Nothing, so it was put, that can be said now by the third respondent will have any effect.  There is, so the third respondent submits, simply no occasion for an injunction of this nature.  The rights of the parties will have been determined at trial and the claim for relief is unsupported by any material facts that would justify it.  The plea should be seen basically as one which is made to overcome the limitation point. 

57                  The third respondent conceded that the Court has power to allow an amendment notwithstanding that a period of limitation may have passed, but only where the Court thinks it is just to do so – Order 13 rule 2(3).  The third respondent submitted that there was little or no prospect of the applicant being successful in obtaining the injunction sought against it.  Accordingly, the proposed amendment should not be allowed. 

the applicant’s contentions

58                  The applicant submitted that the amendment should be allowed because it was not shown to be futile or manifestly hopeless with no chance of success, nor would it cause substantial injustice.  The applicant relied upon the observations made in the majority judgment in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533. 

59                  The applicant also relied upon a decision of a Full Court of this Court, Mayne Nickless Ltd v Multigroup Distribution Services Pty Ltd (2001) 114 FCR 108 at 123-124.  In that case the Court held that the time limited for bringing claims under s 82 does not exclude the possibility of a claim for damages under s 87 outside that time, if the damages are claimed in proceedings other than under s 82.  The grant of relief by way of damages in such a case was discretionary. 

60                  It was not necessary for the applicant, in order to obtain an injunction under s 80 of the Act, to establish that the third respondent intends to engage again, or to continue to engage in misleading conduct – see s 80(4)(a).  Nor was it necessary, in order for the applicant to obtain relief under s 87 for it to be granted an injunction under s 80.  The justification for at least applying for an injunction against the third respondent was that it was directly involved, so the applicant alleges, in the promotions of these mass-marketed schemes.  It was guilty of misleading or deceptive conduct and was not just an agent. 

61                  The grant of an injunction against the third respondent would, so the applicant submits, signify the Court’s disapproval of the misleading or deceptive conduct engaged in by the third respondent.  As I have mentioned earlier, the applicant did not concede that the limitation period had expired.

my reasoning

62                  I have some doubts (and this applies to the objections of the other respondents) whether the prayer for relief is so much part of the statement of claim as to be susceptible to striking out on the usual pleading grounds.  The matter was not addressed in argument, so I proceed on the basis that it may be so susceptible.  In any event, there is the matter of proposed amendments to the application. 

63                  In my opinion, I should not form any view about whether any relevant limitation period has expired.  I note the arguments put by counsel for the applicant to the effect that time is still running.  I do not think that such evidence as is before the Court at this stage is sufficiently clear to determine that question: see Wardley Australia Ltd at 533 and Mayne Nickless Ltd at 118. 

64                  I do not think that the applicant’s proposed amendments, so far as the third respondent is concerned, are so devoid of merit as not to be allowed.  Nor do I consider that (even if the limitation period has expired) they would amount to an abuse of the Court’s process. 

65                  The Full Court’s explanation in Mayne Nickless Ltd about the time for bringing an application under s 87(1) of the Act enlarges the choices of relief potentially open to an applicant.  I do not think that there would have been any substance in the third respondent’s objections if the applicant had initially in his statement of claim pleaded this injunctive relief as a basis for a claim under s 87 from the outset.  The fact that he seeks to do so by way of an amendment does not, in my view, in the present circumstances make any difference. 

Conclusion

66                  For the foregoing reasons there will be orders that the applicant have leave to amend the application and the statement of claim in terms of the respective minutes lodged on 6 June 2003.  In the notice of motion the applicant sought an order that costs be in the cause.  I will hear the parties on the question of costs of the motion.  

Associate:

Dated:              23 September 2003