FEDERAL COURT OF AUSTRALIA

Thompson v Department of Environment and Conservation [2011] FCA 617

THE COURT ORDERS THAT:

1.    On the notice of motion of the first, second and third respondents dated 25 March 2011, it is ordered that the following paragraphs of the applicants’ statement of claim be struck out: [44(b)(iii)], [44(c)(iii)], and in so far as they refer to the Trade Practices Act 1974 (Cth), [45(a), (b) and (c)].

2.    On the objections of the first, second and third respondents, it is ordered that those portions of the affidavits of Mr and Mrs Thompson filed in support of the applicants’ notice of motion filed 16 February 2011, and referred to in the attached Schedule be struck out on the basis indicated.

3.    (a)    On the objections of the fourth, fifth and sixth respondents as to the affidavit of Mrs Thompson sworn 19 October 2010 and filed 20 October 2010, the following portions be struck out on the basis indicated:

    [103], second and third sentences from “this development … shore up their position” (inadmissible speculation and opinion).

    [104], last sentence “we believe … purchaser(s)” (speculation and opinion).

    [118], the whole (irrelevant opinion).

    [130], the whole (hearsay).

    [137][141], (hearsay).

    [149], the whole (conclusory, vague and no basis).

(b)    As to the affidavit of Mr Thompson sworn 16 February 2010, the following portions be struck out on the basis indicated:

    [20], the whole (irrelevant).

    [21], the whole (irrelevant).

    [25], last sentence (opinion, irrelevant).

(c)    As to the affidavit of Mr Will Thompson sworn 4 March 2011 and filed 8 March 2011, the following portions be struck out on the basis indicated:

    [8(f)], “and Janet… did not see” (hearsay).

    [10], last sentence from “Janet informs me … to NBP” (hearsay).

    [13(c)(ii)], “neither Janet nor”.

    [14(b)], the whole (opinion, speculation).

    [19], the whole (speculative opinion and hearsay).

(d)    As to the affidavit of Mrs Thompson sworn 10 March 2011 and filed 11 March 2011, the following portions be struck out on the basis indicated:

    [8], the whole (conclusory, hearsay, opinion).

    [9], the whole (irrelevant and hearsay).

    [10], the whole (hearsay).

    [11], the whole (a combination of speculations, opinion, hearsay and relevancy).

4.    On the fifth respondents’ notice of motion dated 24 November 2010, [86(b)] of the applicants’ statement of claim be struck out.

5.    The applicants’ notice of motion filed 16 February 2011 be dismissed

6.    The applicants pay the costs of the fifth respondent in respect of the fifth respondents’ notice of motion filed 24 November 2010 to be fixed at a gross sum, in any event.

7.    The applicants pay the costs of the respondents in respect of the applicants’ notice of motion filed 16 February 2011 to be fixed at a gross sum, in any event.

8.    The applicants pay the costs of the first, second and third respondents’ notice of motion dated 25 March 2011 to be fixed at a gross sum, in any event.

9.    The respondents file and serve and affidavits and submissions in support of the assessment of the gross sum within 21 days.

10.    The applicants file and serve any affidavits and submissions in response to the respondents’ affidavits within 21 days thereafter.

11.    The matter be listed for further hearing on costs on Tuesday 26 July 2011 at 10.15am.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

INTRODUCTION

1    In 2001 Matt Willis Thompson and Janet Hufnagel Thompson (Mr and Mrs Thompson or the applicants) caused Narrogin Beef Producers Pty Ltd (ACN 100 851 376) (the company), which they controlled, to purchase land at Narrogin, Western Australia with the intention of developing and operating on it a cattle feedlot business.

2    Mr and Mrs Thompson, for the company, over a period of time, had a number of dealings with officers of the Department of Environment and Conservation and other officers of the State of Western Australia in relation to the establishment and operation of the business.

3    Mr and Mrs Thompson and the company also applied for and received financing in relation to the establishment and operation of the business from National Australia Bank Ltd (NAB).

4    The cattle feedlot business was eventually established and operated by the company.

5    Ultimately, however, the business failed and the NAB appointed receivers and managers to the company also took possession of the assets of the company.

6    Mr and Mrs Thompson consider that the receivers and managers should never have been appointed by NAB and believe they should be removed and that NAB should pay them damages or compensation for losses they say they have suffered at the hands of the bank.

7    Mr and Mrs Thompson also complain about the conduct of the State department and State officers and say that certain licences issued under the Environmental Protection Act 1986 (WA) (EP Act) should be declared void and that the State parties or some of them should also pay damages or compensation for the losses they say they have suffered at their hands.

current or recent proceedings

8    In order to vindicate their rights, Mr and Mrs Thompson have found themselves embroiled in various legal proceedings. First, they found themselves responding to proceedings commenced by the receivers personally in the Supreme Court of Western Australia on 14 October 2010, in which the receivers sought a declaration under s 418A of the Corporations Act 2001 (Cth) (Corporations Act) that their appointment as receivers and managers of the property of the company was valid.

9    Then they found themselves responding to related proceedings commenced in the Supreme Court of Western Australia on the same day by the receivers and NAB in which these parties as plaintiffs claimed delivery up of possession of the land and assets of the company by reason of the Thompsons’ alleged breach of the terms of a mortgage and deed of guarantee and indemnity which had been concluded as part of the earlier financing arrangements with NAB.

10    Soon after this, on 20 October 2010, Mr and Mrs Thompson filed, in the New South Wales District Registry of this Court, an application against the Department of Environment and Conservation, as first respondent, State of Western Australia, as second respondent, Paul Byrnes, as third respondent, NAB, as fourth respondent, Martin Jones, Andrew Saker and Daniel Weaver (the receivers), as fifth respondents and the company as sixth respondent (the Federal Court proceeding). This proceeding has since been transferred to the Western Australian Registry of this Court and is the proceeding to which much of this decision relates.

11    In this Federal Court proceeding, Mr and Mrs Thompson claim, as against the first, second and third respondents (who I will refer to as the State parties) damages, compensation and related orders, pursuant to the Trade Practices Act 1974 (Cth) (TP Act), Fair Trading Act 1987 (WA) and the Corporations Act, as well as under the general or common law. They have also sought a declaration that Works Approval No 3600 (the Works Approval) issued in 2002 in respect of the cattle feedlot to the company by the State parties “is a valid and continuing approval”. Additionally, they have sought a declaration that other restrictions and conditions imposed on a licence issued under the EP Act in 2008, by the first and second respondents, in respect of the cattle feedlot “are void and of no effect”, as well as other relief.

12    In the Federal Court proceeding, Mr and Mrs Thompson, as against NAB and the receivers, do not seek or appear to seek any final relief, in their application. However, they seek by way of interlocutory relief an order restraining the receivers and managers from entering into possession of the property of the sixth respondent and from trespassing. They also seek interlocutory relief with claims, on behalf of the company, the sixth respondent, pursuant to s 237 and/or s 1323 of the Corporations Act.

13    In a statement of claim filed in the Federal Court proceeding on 16 February 2011, Mr and Mrs Thompson plead material facts in support of a claim that NAB is liable to it for unconscionable conduct contrary to the TP Act (now the Competition and Consumer Act 2010 (Cth) (CAC Act) but which for convenience I will continue to refer to as the TP Act), a plea that seems to be related to the further plea in [81] that the sixth respondent is entitled to a declaration that the receivers have not been validly appointed. This claim seems more in the nature of final relief, rather than interlocutory relief, but that point may presently be left to one side.

14    The statement of claim filed 16 February 2011 by the applicants, suffers from some very obvious defects, for example, the inability of the applicants in [81] to seek relief on behalf of the sixth respondent. It may be that Mr and Mrs Thompson merely intended to claim on their own behalf that the receivers and managers had been invalidly appointed by reason of the conduct of NAB that they complain of. It also seeks to join an entity described as the Department of Environment and Conservation in Western Australia, which would appear not to be capable of being sued. On 1 April 2011, for the purposes of the hearing of the causes of action mentioned below, the Court received from counsel appearing for Mr and Mrs Thompson a document described as “amended minute of proposed statement of claim” in which some attempts have been made to remedy at least some of these obvious defects, for example, by seeking to describe the first respondent as the “Chief Executive Officer of the Department of Environment and Conservation”. I will make more observations about the pleadings in the statement of claim and the proposed statement of claim later.

15    On 1 November 2010, soon after commencing the Federal Court proceeding, Mr and Mrs Thompson unsuccessfully applied to the Supreme Court of Western Australia to transfer each of the Supreme Court of Western Australia proceedings to the Federal Court, pursuant to the Jurisdiction of Courts (CrossVesting) Act 1987 (WA) : see Martin Bruce Jones and Darren Gordon Weaver and Andrew John Saker as Receivers and Managers of Narrogin Beef Producers Pty Ltd (Receivers and Managers Appointed) v Narrogin Beef Producers Pty Ltd (Receivers and Managers Appointed) [2010] WASC 327.

16    Then, on 9 December 2010 Le Miere J, in the receivers’ proceedings for confirmation of their appointment as receivers, confirmed the validity of their appointment: see Martin Bruce Jones and Darren Gordon Weaver and Andrew John Saker as Receivers and Managers of Narrogin Beef Producers Pty Ltd (Receivers and Managers Appointed) v Narrogin Beef Producers Pty Ltd (Receivers and Managers Appointed) [No 2] [2010] WASC 365 (the Supreme Court proceedings).

17    In his judgment confirming the receivers’ appointment under s 418A of the Corporations Act, Le Miere J noted that in their written submissions Mr and Mrs Thompson claimed that the appointment of the receivers was invalid on the grounds that the conduct of NAB leading up to the appointment of the receivers was unconscionable in breach of s 51AC of the TP Act and constituted misleading or deceptive conduct in breach of s 52 of the TP Act and also because the accounting firm to which the receivers belonged owed a fiduciary duty to the company or NAB.

18    Justice Le Miere considered that the grounds of invalidity advanced did not allege that the receivers had engaged in contravening conduct and that whatever the power of the Court may be under other statutory provisions to declare the appointment of a receiver invalid by reason of the contravening conduct of an appointor, that was not the case advanced before him and did not justify an order declaring the appointment of plaintiffs invalid.

19    In relation to an argument put on behalf of Mr and Mrs Thompson that in all the circumstances where the receivers as partners of the accountancy firm that carried out an “independent business review” of the company in December 2008, pursuant to the facility arrangements between Mr and Mrs Thompson, the company and NAB, there was some conflict that presented their continuance as receivers, his Honour considered at [20] that the factual basis of the allegation of conflict of interest was not made out. His Honour made the point that the receivers were not engaged by the company at that earlier time.

20    At [23], Le Miere J considered no breach of fiduciary duty was demonstrated in those circumstances as there was no fiduciary relationship between the accountancy firm or between the accountancy firm and NAB and the company prior to the receivers being appointed as receivers and managers of the company.

21    Finally, Le Miere J noted, at [29], that the issue of the alleged unconscionable conduct of NAB was not raised until the hearing, NAB was not a party to the confirmation proceedings and the defendants' contentions were not sufficiently particularised or formulated. Accordingly, he did not determine those matters and made no finding whether or not NAB engaged in misleading or deceptive conduct or unconscionable conduct or contravened any other relevant statutory provisions that might enable Mr and Mrs Thompson to claim any relief concerning the receivers’ appointment. Those trade practices issues, it may be noted are now raised in the Federal Court proceedings.

notices of motion now before the court

22    On 1 April 2011, the following notices of motion (in the order they were filed) taken out by the various parties in the Federal Court proceeding were listed before me for hearing and determination:

(1)    the notice of motion of the fifth respondents, the receivers, filed 24 November 2010 to set aside the originating process issued against the fifth respondents or to permanently stay it;

(2)    the notice of motion of Mr and Mrs Thompson filed 16 February 2011 for leave to bring proceedings on behalf of the sixth respondent, the company, under s 237 of the Corporations Act 2001, and for leave to file and serve a statement of claim substantially in the terms of the minute of proposed amended statement of claim handed up that day to the Court;

(3)    the notice of motion of the State parties filed 28 March 2011 for orders that paras 44(b)(iii) and 44(c)(iii) and, in so far as they refer to the TP Act, para 45(a), (b) and (c) of the statement of claim be struck out on the grounds that they disclose no reasonable cause of action, or are frivolous or vexatious, or have no reasonable prospects of success; and

(4)    the notice of motion of NAB, the receivers and the company in receivership filed 29 March 2011 and the submissions of the State parties supporting the application, for orders striking out a number of paragraphs of: the affidavit of Mrs Thompson, sworn 19 October 2010, in support of the first and second applicants’ application; Mr Thompson, sworn 16 February 2011, in support of that notice of motion; Mr Thompson’s affidavit sworn 4 March 2011 in reply to affidavits of Gregory John  Daniel sworn 23 February 2011 and Darren Gordon Weaver sworn 24 February 2011, filed on behalf of those respondents in support of their notice of motion; Mrs Thompsons affidavit sworn 10 March 2011.

notice of motion of state parties to strike out paragraphs of statement of claim

23    It is convenient to deal with the notices of motion in (1), (3) and (4) before considering the applicants’ notice of motion for leave to file the proposed derivative action on behalf of the company. I will deal with (3), the State’s motion first.

24    It will be useful for these, and also later purposes to set out at this point, in a summary form the material facts pleaded in the applicant’s statement of claim against the State parties. They are that:

    On or about 30 August 2002, a delegate of the Chief Executive Officer (CEO) of the Department of Environmental Protection (DEP) in accordance with s 20 of the EP Act issued to the company, a Works Approval: [7].

    It was a condition of the Works Approval that:

(a)    the Works Approval holder would construct the works in accordance with the Works Approval application dated 15 February 2002, the feedlot proposal document and a letter from the company to DEP dated July 2002; and

(b)    if the details and commitments of the documents were inconsistent with any condition of the Works Approval, the condition of the Works Approval would prevail: [8].

    The Works Approval application stated that the proposed cattle feedlot would relevantly fall under category 68 of Sch 1 of the Environmental Protection Regulations (WA) (EPRs), having a capacity of 14,940 head of cattle and cost an estimated $2.5 million to construct: [9].

    The feedlot proposal stated that the proposed cattle feedlot would be built in three stages, with stage 1 having a feedlot capacity of 5,000 head of cattle, stage 2 having a feedlot capacity of 10,000 head and stage 3 having a feedlot capacity of 14,940 head, with the respective stages being completed in August 2002, August 2004 and August 2006: [10].

    Before issuing the Works Approval, the State through an officer made representations to the applicants and the company to the effect that the cattle feedlot they proposed to build needed a works approval under the EP Act, needed registration under the EPRs in order to operate and that DEP would not refuse a registration or licence if the cattle feedlot was built according to the Works Approval and operated according to the EP Act: [11].

    Further, the State through another officer made representations to the applicants and company to the effect that it did not matter whether the cattle feedlot was licensed or registered, as long as the cattle feedlot was constructed according to the works approval then licensing would be a formality: [13].

    Further, the State through another officer who was a delegate of the CEO of the DEP in accordance with s 20 of EP Act represented in the Works Approval issued that the cattle feedlot required licensing before it could be commissioned or operated: [15].

    The applicants relied on the State’s representations about the effect of the Works Approval: [17].

    Had the representations not been made, the applicants would not have proceeded with the construction of the cattle feedlot: [18].

    Just before the construction of the cattle feedlot, but after the applicants and the company had committed financial resources to the construction, the State, through an officer made representations to the applicants and the company to the effect that the cattle feedlot was within 100 metres of a water course, and as a result the DEP would designate the cattle feedlot as a cattle feedlot falling under category 1 of Sch 1 of the EPRs (a category 1 feedlot) for licensing purposes, and that given that licenses to operate the cattle feedlot were issued as a formality it would not be necessary to amend the Works Approval; and that DEP through its officers had the power to impose a licence in respect of the works constructed according to the Works Approval.

    Relying on some of these relevant representations, Mr Thompson on behalf of the company applied for and was granted licence 7873/1 on 1 December 2003, licence 7873/2 on 11 November 2004, licence 7873/3 on 28 September 2005, licence 7873/4 on 31 March 2008 and licence 7873/5 on 8 March 2010 in relation to the cattle feedlot: [21].

    From 19 November 2003 the cattle feedlot in fact did not require either registration or a licence to operate, provided it held an unexpired works approval and was a cattle feedlot that fell within category 68 of Sch 1 of the EPRs (a category 68 feedlot): [22].

    In representing the position differently to the applicants and the company, the State through its employees, breached its duty of care owed to the applicants and the company: [23].

    As a consequence of applying for all the licences the company incurred costs: [24].

    In any event, after issuing the Works Approval, the State through an employee made representations to the applicants and the company to the effect that the expiry date of 1 September 2005 that was recorded on the cover sheet of the Works Approval referred to the date by which the works needed to have been substantially commenced and that as long as the cattle feedlot had been substantially commenced by the expiry date, a new works approval would not be required in order to complete the cattle feedlot.

    In reliance on that representation, neither the applicants nor the company applied to renew the works approval prior to 1 September 2005 and continued to construct and operate the cattle feedlot in accordance with the Works Approval issued 1 September 2005 with the knowledge of the State through its employees: [27].

    In breach of its duty the State failed to provide complete information in this regard: [27A].

    As a result the applicants and the company have suffered loss and damage: [27B].

    At all material times, the Works Approval had not expired because the cattle feedlot had not been constructed to hold 14,940 head of cattle in accordance with the feedlot proposal referred to in the Works Approval: [28].

    From about 28 May 2007 in breach of duty the State through various officers asserted that the Works Approval expired on 1 September 2005 or had otherwise expired: [29].

    As a consequence of the State departing from the relevant representation earlier pleaded, the company incurred costs in applying to amend the works approval and in complying with licences 7873/4, 7873/4 as amended, licence 7873/5 and licence 7873/5 as amended, and ceased further construction on the cattle feedlot so that it did not reach the capacity of 14,940 head of cattle: [30].

    Further, that from about 28 May 2007 to 1 April 2008, the State or the CEO of DEP through an officer or alternatively another officer made representations to the applicants and the company to the effect that the number of cattle put through the cattle feedlot must be limited to 10,000 cattle or less: [31].

    During the period 28 May 2007 to 1 April 2008, the State or the CEO of DEP in fact had no power to regulate the head of cattle in the cattle feedlot beyond that provided in the Works Approval.

    The third respondent at all material times was the holder of a public office, namely Manager, Licensing Policy Section, Department of Environment and Conservation of Western Australia, who acted in bad faith with respect to the applicants and the company thereby causing them loss and damage: [34A].

    The applicants and the company ensured that the number of cattle put through the cattle feedlot did not exceed 10,000 head of cattle at any one time during the period 28 May 2007 to 1 April 2008 and that they ceased further construction of the cattle feedlot so that it did not reach the capacity of 14,940 head: [35].

    The State parties failed to inform him of the true position as the result of which the applicants and the company each suffered loss and damage: [35A] and [35B].

    There are a number of alternatives pleas concerning the conditions attached to the licences that provided the cattle feedlot, at material times, should not exceed 6,000 to 10,000 head.

    The applicants further plead that conditions in a number of a licences were not made for a proper purpose or were not made in good faith: [40], [40A] and [40B].

    As a result of such conduct the applicants complied with licences and incurred costs in relation thereto: [41].

    Other claims are formulated in the language of civil wrongs, including conspiracy, against the State parties: [43A], [43B], [43C] and [43D].

25    Then in [43E] of the statement of claim, the applicants plead that at material times after 1 December 2003, the State “has conducted an activity comprising the carrying on of business” in relation to the company within the meaning of s 2B(1) of the TP Act. The “activity” is particularised as “The taking of action beyond power by the State in restricting by purported licences the number of cattle at the Cattle Feedlot” and “The intervention by the State into the business of [the company] in operating a cattle feedlot in Western Australia by unlawful means and not in the interests of the community as authorised by any law”.

26    In [44] of the statement of claim, the applicants (and the company if the derivative action is allowed to proceed), seek declarations which include (b)(iii) as follows:

That the following licences issued under the EPA have constituted arrangements, further or alternatively understandings, which would likely have the effect of substantially lessening competition in breach of section 45(2)(a)(ii), further or alternatively section 45(2)(b)(ii) of the TP Act:

1.    Amended Licence 7873/3;

2.    Licence 7873/4;

3.    Amended Licence 7873/4;

4.    Licence 7873/5; and

5.    Amended Licence 7873/5.

27    Then in [44(c)(iii)] the following declaration is sought:

Amended Licence 7873/3 issued had a limit on cattle numbers that constituted an arrangement, further or alternatively an understanding, which would likely have the effect of substantially lessening any competition in breach of section 45(2)(a)(ii) of the TPA, further or alternatively section 45(2)(b)(ii) of the TPA.

28    Additionally, in [45(a)] and [45(b)] relief is sought by way of damages under s 82(1) of the TP Act and under [45(c)] aggravated damages are sought under s 82(1) of the TP Act.

29    It is in respect of these TP Act causes of action that the State parties seek to strike out the statement of claim.

30    In summary, the basis for the orders sought by the State parties is that s 45 of the Competition and Consumer Act 2010 (Cth) (CAC Act) (previously s 45 of the TP Act) does not apply to the State parties, pursuant to s 2B and s 2C of the CAC Act.

31    The test for striking out a pleading has long been the “no reasonable cause of action” test articulated in cases such as General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125. On this test, it has been accepted that the impugned portion of a statement of claim should be considered unarguable before it will be struck out: Murex Diagnostics Australia Pty Ltd v Chiron Corporation (1995) 55 FCR 194.

32    However, by amendments to the Federal Court of Australia Act 1976 (Cth) (FCA Act) if a proceeding or a part of a proceeding has no reasonable prospect of being successfully prosecuted at a trial, this Court may now summarily dispose of that proceeding or part of it: s 31A(2) FCA Act; Spencer v Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118 at [56] and [60].

33    Section 31A therefore signifies that it is no longer necessary to consider a pleaded cause of action unarguable or hopeless before striking it out: s 31A(3). Rather, it should go if it has no reasonable prospects of success.

34    The CAC Act, by s 2A applies to the Commonwealth and Commonwealth authorities. Section 2B deals with the application of the Act to States and Territories and provides as follows:

(1)     The following provisions of this Act bind the Crown in right of each of the States, of the Northern Territory and of the Australian Capital Territory, so far as the Crown carries on a business, either directly or by an authority of the State or Territory:

(a)     Part IV;

(b)     Part XIB;

(c)     the other provisions of this Act so far as they relate to the above provisions.

(2)     Nothing in this Act renders the Crown in right of a State or Territory liable to a pecuniary penalty or to be prosecuted for an offence.

(3)     The protection in subsection (2) does not apply to an authority of a State or Territory.

35    Whether or not relief is available to the applicant or to the company in a derivative action, under the CAC Act (as the former TP Act which had the identical provision s 2B) depends upon whether the Act binds the State parties. That in turn depends on the question whether it can be said that the Crown in right of the State of Western Australia “carries on a business” either directly or by an authority of the State.

36    Section 4 of the CAC Act defines “authority” in relation to a State as a body corporate established for a purpose of the State or an incorporated company in which the State has a controlling interest.

37    It is clear on the evidence before the Court and the way the TP Act cause of action has been pleaded against the State parties that neither the first respondent, nor the third respondent is a body corporate or an incorporated company. The Chief Executive Officer of the Department of Environment and Conservation is similarly not a body corporate under the EP Act.

38    So far as the concept of “carrying on a business” is concerned, s 2C of the CAC Act lists activities that for the purposes of s 2B (and other provisions) do not amount to carrying on a business, although the list does not limit the things that do not amount to carrying on a business: see s 2C(2).

39    Section 2C(1)(a) provides that the following do not amount to carrying on a business:

(a)     imposing or collecting:

(i)     taxes; or

(ii)     levies; or

(iii)     fees for licences;

(b)     granting, refusing to grant, revoking, suspending or varying licences (whether or not they are subject to conditions);

40    Section 2C(3) provides that a “licence” means a licence that allows the licensee to supply goods or services.

41    The kind of licence referred to s 2C(1)(b) was discussed in the majority judgment in NT Power Generation Pty Ltd v Power and Water Authority (2004) 219 CLR 90 at [101], where their Honours held it is of the kind that licences conduct which, without the licence, would be illegal; for example, carrying on some profession or some trade or business.

42    In the present case, the Works Approval and licences granted under the EP Act are designed to provide a defence to various provisions of the EP Act, including s 49 and s 56, which make the cattle feedlot use of land illegal without a relevant authority. On the face of it – if the licences can be described as licences that allow the licensee to supply goods or services – the licences pleaded in relation to the relief sought under the TP Act (CAC Act) are the types of licences contemplated by s 2C.

43    For my part, I doubt that the licences in question here satisfy the definition in s 2C(3). They authorise the use of land – not the supply of goods or services. While the use of the land might later produce goods or lead to the supply of services, the licence is not to that end.

44    However, even if it be the case that licences here in question are unable to be characterised as licences that allow the licensee “to supply goods and services”, as s 2C(3) provides, I consider them, in any event, not to be the result of the State parties “carrying on a business”, but to be a governmental activity, as I will explain below.

45    However, the applicants contend that the licences are “nullities” because the State parties had no power to issue them, or they were unnecessary. But whether or not they are “nullities” would not somehow convert the activity of purportedly granting the licences from a governmental activity into one of “carrying on a business”.

46    In my view, the idea that the activities of the State parties in granting or purporting to grant licences and activities related thereto can in some way amount to carrying on a business stretches the legal imagination. The concept is simply not arguable as a legal proposition. One of the core functions left to governments in the early 21st century in Australia following decades of corporatisation and privatisation of governmental activities, is the regulation of activities carried out within their constitutional sphere. By the EP Act, the State of Western Australia seeks to ensure the environmental sustainability of activities carried out within the State. The public policy functions involved in such regulation is a public, not a private function and, in any event, having regard to the elements of the activity involved, does not look or involve anything like carrying on a business. It has no trading or commercial focus, it has no profit element, it is concerned with the wise use of resources in the public interest.

47    Not surprisingly, there are numerous authorities to support this view: see RP Data Ltd (ACN 087 759 171) v State of Queensland [2007] FCA 1639; (2007) ATPR 42-197 at [55][58]; Markit Pty Ltd v Commissioner of Taxation (Cth) [2006] QSC 157 at [29][35]; State of New South Wales v RT and YE Falls Investments Pty Ltd [2003] NSWCA 54; (2003) 57 NSWLR 1; at [33] per Spigelman CJ and [47] per Sheller JA and [134] per Hodgson JA; Sirway Asia Pacific Pty Ltd v Commonwealth of Australia [2002] FCA 1152; (2002) ATPR 46-226 at [62]; McMillan v Commonwealth (1997) 77 FCR 337 at 355 per Emmett J.

48    In these circumstances, I would order that the following paragraphs of the statement of claim be struck out:

(1)    [44(b)(iii)];

(2)    [44(c)(iii)];

(3)    In so far as they refer to the TP Act, [45(a), (b) and (c)].

objections to applicants’ affidavit evidence

49    The State parties object to portions of the affidavit evidence that the applicants seek formally to read in relation to their notice of motion filed 16 February 2011, to bring the derivative proceeding.

50    The objections to the affidavits of Mr and Mrs Thompson made by the State parties and the nature of the objection in each case is set out in Sch 1 of these reasons for judgment.

51    I uphold each objection on the ground specified and order that such affidavit evidence be struck out.

52    NAB, the receivers and the sixth respondent (in receivership) also object to portions of these affidavits. I rule as follows on their objections and order that:

(1)    As to the affidavit of Mrs Thompson sworn 19 October 2010 and filed 20 October 2010, the following portions be struck out on the basis indicated:

    [103], second and third sentences from “this development … shore up their position” (inadmissible speculation and opinion).

    [104], last sentence “we believe … purchaser(s)” (speculation and opinion).

    [118], the whole (irrelevant opinion).

    [130], the whole (hearsay).

    [137][141], (hearsay).

    [149], the whole (conclusory, vague and no basis).

(2)    As to the affidavit of Mr Thompson sworn 16 February 2010, the following portions be struck out on the basis indicated:

    [20], the whole (irrelevant).

    [21], the whole (irrelevant).

    [25], last sentence (opinion, irrelevant).

(3)    As to the affidavit of Mr Thompson sworn 4 March 2011 and filed 8 March 2011, the following portions be struck out on the basis indicated:

    [8(f)], “and Janet… did not see” (hearsay).

    [10], last sentence from “Janet informs me … to NBP” (hearsay).

    [13(c)(ii)], “neither Janet nor”.

    [14(b)], the whole (opinion, speculation).

    [19], the whole (speculative opinion and hearsay).

53    As to the affidavit of Mrs Thompson sworn 10 March 2011 and filed 11 March 2011, the following portions be struck out on the basis indicated:

    [8], the whole (conclusory, hearsay, opinion).

    [9], the whole (irrelevant and hearsay).

    [10], the whole (hearsay).

    [11], the whole (a combination of speculations, opinion, hearsay and relevancy).

54    I should observe that the applicants and particularly their legal advisors seem not to have exercised any or any real judgment in placing this affidavit evidence before the Court. The affidavits seek to tell a story without regard, in many respects, to the rules of evidence such that blatant hearsay evidence, irrelevancies and extraneous opinions have been allowed to remain in the affidavits. One really expects much greater discrimination than this from trained legal practitioners.

receivers application to strike out originating process

55    By notice of motion filed 24 November 2010, the receivers move for an order that the originating process issued against them in this proceeding be set aside or permanently stayed.

56    The application for such orders is made on the basis that so far as the applicants seek to challenge the validity of the appointment of the fifth respondents as receivers and managers of the company and its property, this issue has previously been determined in the Supreme Court of Western Australia proceeding by Le Miere J. The receivers submit it is an abuse of process for the applicants (or the company on the proposed derivative action) to raise the same issue in a different jurisdiction and “on grounds that are based on allegations asserted against the fourth respondent” – that is, NAB.

57    There is no doubt that Le Miere J in the Supreme Court proceedings confirmed the appointment of the receivers. His Honour did so on the receivers personal application under s 418A of the Corporations Act.

58    As noted above in relation to his Honour’s reasons for judgment, Le Miere J expressly did not consider, in the absence of the issues having been properly raised and in the absence of NAB, the claims of misleading and deceptive conduct or unconscionable conduct alleged as against NAB and its officers, which the applicants then claimed provided grounds for questioning the validity of the bank’s appointment of the plaintiffs in that proceeding (fifth respondents in this proceeding) as receivers and managers. His Honour expressly left the latter issue open.

59    The substance of the claims in the current proceeding in this Court against NAB and the receivers is that the bank, through its officers, acted contrary to the terms of the financial agreements and in an underhand way. The clear allegation is that at least one letter was falsely created and that in other respects the bank induced a certain belief in the applicants (and the company through them) that the bank would support their business through difficult times, when at all times the bank intended something different.

60    The applicants statement of claim in this Federal Court proceeding and the proposed statement of claim handed up to the Court on 1 April 2011 for the purposes of the application for leave to commence the derivative action, pleads out claims against NAB and the receivers in [47][86]. In summary, it is pleaded that:

    At all material times the persons now the receivers were partners or employees of the accounting firm Ferrier Hodgson: [47].

    On 15 August 2008, NAB and the company entered into a bill facility under which NAB agreed to provide the following loan facilities to the company:

(1)    “Farm Management Overdraft Facility”;

(2)    “Market Rate Facility”; and

(3)    “NAB Flexible Rate Bill Facility”: [50].

    The Bill Facility included a term that its expiry date was 10 March 2016: [51].

    The overdraft included a term that the expiry date was 10 March 2016: [52].

    The Market Rate Facility included a term that the expiry date was 31 August 2013: [53].

    On 15 August 2008, Mr and Mrs Thompson entered into a written guarantee and indemnity in favour of NAB, which included terms to the following effect:

(1)    Under clauses 4, 7 and 8 Mr and Mrs Thompson unconditionally and irrevocably guaranteed payment to NAB for all amounts the company owed to NAB up to a limit of $3,160,000 each, plus interest and costs.

(2)    Under clause 10, Mr and Mrs Thompson indemnified NAB against any liability, loss or costs the bank suffered up to a limit of $3,160,000 if the company became insolvent: [54].

    On 15 August 2008, Mr and Mrs Thompson provided NAB with a mortgage over the property on which the cattle feedlot business was conducted: [55].

    The mortgage incorporated NAB’s Memorandum of Common Provisions Number G59MP and included terms:

(1)    That money secured by the mortgage includes Mr and Mrs Thompson’s liability under any guarantee.

(2)    That an event of default includes failing to perform any obligation under the agreement between Mr and Mrs Thompson and NAB and in the event of default NAB is entitled to demand from them all monies secured by the mortgage.

(3)    That upon an event of default if Mr and Mrs Thompson fail to pay on demand any monies secured, NAB is entitled to enter the property without any further notice to them.

(4)    Upon an event of default, if Mr and Mrs Thompson fail to pay on demand any amount secured, NAB is entitled to appoint a receiver to the property: [56].

    On 5 March 2009, Mr Daniel, on behalf of NAB, wrote to the company and notified them that the expiry date of the date of the overdraft was now 31 December 2009: [57].

    NAB’s shortening the expiry date of the overdraft from 10 March 2016 to 31 December 2009 was unconscionable conduct in breach of s 51AC of the TP Act: [58].

    On 17 September 2010, NAB served notices of demand on Mr and Mrs Thompson and the company asserting that the overdraft expired on 31 December 2009 and that the company had failed to repay NAB, that by reason of the default of the overdraft, the company had defaulted under the Bill Facility and the Market Rate Facility, that NAB was entitled to demand all monies payable under the facilities and guarantee and that the outstanding balance was $3,432,969.88 which was to be paid within four days of service of the notice of demand: [59].

    On 17 September 2010, NAB served notices of demand on Mr and Mrs Thompson under the guarantee in similar effect: [60].

    Mr and Mrs Thompson did not pay and have not paid the sum demanded by NAB: [61].

    On 21 September 2010, NAB purported to appoint the receivers as receivers and managers of the company’s assets and undertakings: [62].

    On 28 September 2010, NAB purported to appoint by deed the receivers as receivers of the property: [63].

    In the circumstances, NAB’s conduct in reliance on the notices of demand or guarantors’ demands was conduct in breach of s 51AC, further or alternatively s 52 of the TP Act: [64].

    NAB relied on the purported expiry of the overdraft on 31 December 2009 as the principal default upon which its subsequent actions are based, including enforcing the guarantee against Mr and Mrs Thompson: [65].

    By reason of these various matters, the company will suffer further or alternatively likely suffer loss and damage: [66].

    Mr and Mrs Thompson will also suffer or likely suffer loss and damage thereby if NAB enforces the guarantee against them: [67].

    Further, or alternatively, in or about August 2008:

(1)    The company through Mr and Mrs Thompson asked Mr Antonio of NAB to provide additional funding;

(2)    The company submitted to NAB a plan that incorporated substantial changes to its core business and indicated that with additional funding it could operate at about break even until 1 April 2009;

(3)    The company informed Mr Antonio to the effect that the plan was for the purposes of operating the company at about break even until the outcome of the company’s appeal of licence 7873/4: [68].

    In or about December 2008, Mr Antonio made representations to Mr and Mrs Thompson and the company to the following effect:

(1)    The company’s file would be transferred to NAB’s Strategic Business Services Division and that Mr Daniel would be in charge of the portfolio.

(2)    That the Strategic Business Services Division would be able to assist the company in financing its activities by extending the current facilities with the company or exploring alternative finance arrangements: [69].

    Further, neither Mr Antonio or alternatively Mr Daniel or NAB through any other employee or agent informed Mr and Mrs Thompson or anyone on behalf of the company that the reason the Strategic Business Services Division had taken over the company’s portfolio was that NAB regarded the company’s loans or securities as “impaired assets” and that a significant role of the division was recovering money for NAB for loans it regarded as in danger of not being repaid in part or at all: [70].

    Had Mr and Mrs Thompson or the company been informed of such matters, then would not have agreed to an independent business review and would have made arrangements for refinancing from a financier, other than NAB (incorrectly referred to in [71] as “NBP”): [71].

    Mr Antonio and Mr Daniel or NAB through its silence engaged in misleading or deceptive conduct in breach of s 52 of the TP Act or alternatively s 51AC of the TP Act: [72].

    Section 51A of the TP Act is relied upon in respect of Mr Antonio’s representations as to future matters: [73].

    Further or alternatively, on 8 December 2008, NAB through Mr Daniel made representations to Mr and Mrs Thompson and the company to the following effect:

(1)    That in order for NAB to consider providing additional funding to the company under the Bill Facility, the company must undergo an independent business review.

(2)    The company needed to chose one of the following parties to provide the independent business review: Ferrier Hodgson, PricewaterhouseCoopers or PPB Advisory: [74].

    In reliance on such representations on 8 December 2008, the company through Mr Thompson chose Ferrier Hodgson to perform the independent business review, contacted Mr Powell and agreed to enter into agreement with Ferrier Hodgson for it to conduct the independent business review: [75].

    Further, or alternatively, in reliance on the representations from about 8 December 2008 to about 23 January 2009, the company provided Ferrier Hodgson with information that was confidential or commercially sensitive: [76].

    Contrary to the NAB’s representations in breach of s 52 of the TP Act, Ferrier Hodgson had in fact been commissioned by NAB to act on NAB’s behalf to conduct an assessment of the company’s trading and financial position: [77].

    Further or alternatively, NAB had no reasonable basis for representing to Mr Thompson, Mrs Thompson and the company that Ferrier Hodgson would conduct an independent business review: [78].

    NAB’s representations constituted unconscionable conduct in breach of s 51AC(1) of the TP Act or it unreasonably failed to disclose to the company that Ferrier Hodgson’s relationship to the company would not be that of an independent business consultant or fail to disclose that the firm had been appointed under cl 11.6 of the General Conditions of the Bill Facility, the appointment under which clause meant NAB thought the company was in default under the Bill Facility and Ferrier Hodgson would assess whether the company was in fact in default and that NAB unreasonably failed to disclose to the company that if Ferrier Hodgson’s findings were adverse NAB could place the company into default under the Bill Facility or appoint Ferrier Hodgson as a receiver of the company: [79].

    NAB had no reasonable basis for representing that Ferrier Hodgson would conduct an independent business review: [80].

    Further or alternatively, on 8 December 2008, NAB and Ferrier Hodgson entered into an agreement in which, amongst other things, Ferrier Hodgson agreed it would keep confidential any information that the company provided: [81].

    From about 8 December 2008 to 23 January 2009 the company provided Ferrier Hodgson with information: [82].

    In Mr Powell’s reports to NAB a significant proportion of the information to which he was exposed was either not referred to at all or referred to in a way that it did not lose its confidentiality or commercial sensitivity: [83].

    Upon NAB’s appointment of the receivers, the receivers now threatened misuse of or have actually misused the residual information that the company provided to Mr Powell by providing it to NAB or using it for NAB’s benefit or to the company’s detriment: [84].

    Further or alternatively the actions of NAB or Ferrier Hodgson constitute unconscionable conduct in breach of s 51AC of the TP Act: [85].

    The applicants and the company are entitled to declarations concerning the expiry dates of the Bill Facility, the overdraft and related matters that the various demands are void and of no force or effect, that NAB’s appointment of the receivers is void and of no force or effect and that NAB’s appointment of the receivers is of no force or effect, a declaration under s 418A of the Corporations Act that the receivers have not been validly appointed; or alternatively an injunction permanently restraining NAB from appointing anyone as receivers or permanently restraining receivers from acting; damages under s 82(1) of the TP Act, alternatively damages for breach of contract for breaching the confidentiality term in the letter of appointment.

61    It is clear enough from the pleading that the relief sought in the Federal Court proceeding (and in the proposed derivative action) includes relief under s 418A of the Corporations Act to have the appointment of the receivers declared invalid.

62    In the Supreme Court of Western Australia proceeding, Le Miere J expressly considered the application of the receivers made personally for an order under s 418A confirming their appointment as receivers. His Honour upheld that application.

63    As noted above, his Honour also held in the course of so finding that there was no basis to a complaint made by Mr and Mrs Thompson of conflict of interest on the part of the receivers, by virtue of their membership of Ferrier Hodgson, or breach of fiduciary duty on their part.

64    In these circumstances, it seems to me that it is not open in the proceedings in the Federal Court (or in the proposed derivative action) for the applicants to question the validity of the appointment of the receivers under s 418A of the Corporations Act, or on the grounds of their alleged conflict of interest or breach of fiduciary duty. Those issues were raised and dealt with by Le Miere J and it would an abuse of the process in this Court for those issues to be raised again for determination. In legal terms, the applicants are issue estopped in relation to those issues.

65    However, that is not to say that the applicants may not pursue the question of the validity of the appointment of the receivers in this Federal Court proceeding by seeking to undermine the conduct of NAB, that resulted in the appointment of the receivers, if such a cause of action is open to be pleaded on the evidence and is effectively pleaded. In this regard, Le Miere J recognised that he was not determining allegations made against NAB that might undermine the validity of the appointment that depended on claims of misleading and deceptive conduct and unconscionable conduct against NAB, pursuant to the TP Act. Justice Le Miere, at [16] of [2010] WASC 365, expressly noted in this regard that:

It may be arguable that if those contentions are established then the court has power under s 12GM of the ASIC Act to order NAB to terminate the receivership or to vary the Facility Agreements in such a way as to render the appointment of the Receivers invalid. The defendants did not elaborate upon how such relief might operate. Section 12GM of the ASIC Act, like s 87 of the Trade Practices Act, confers a wide power on the court to make remedial orders in appropriate cases relating to misleading or deceptive conduct or unconscionable conduct. Section 12GM of the ASIC Act and s 87 of the Trade Practices Act empower the court to make remedial orders against the person who has engaged in the contravening conduct. The defendants do not allege that the Receivers have engaged in contravening conduct. Section 12GM of the ASIC Act, or s 87 of the Trade Practice Act, do not empower the court to make an order against the Receivers declaring their appointment invalid.

66    In all of these circumstances, I consider it is not open to the applicants to seek any relief against the receivers, pursuant to s 418A of the Corporations Act or on the grounds that their appointment is invalid on the grounds of conflict of interest or breach of fiduciary duty. Accordingly, I would strike out [86(b)] of the statement of claim (and any other portion of the statement of claim that expressly refers to or relies upon that provision). I would also strike out any plea against NAB or the receivers that alleges the invalidity of the receivers’ appointment and relies on a finding in these proceedings that the receivers laboured under a conflict of interest or breached fiduciary obligation, such issues having been determined by Le Miere J in the Supreme Court proceeding adversely to the applicants.

67    However, other relief sought in [86] relies on s 87 of the TP Act or other provisions of the TP Act by reference to alleged misleading and deceptive or unconscionable conduct of NAB under the TP Act. There is no reason presently, on the abuse of process ground to strike this out.

68    In summary, once it is appreciated that a proceeding under s 418A of the Corporations Act in respect of the alleged conflict of interest or fiduciary breach is no longer available to the applicants against the receiver, but that in substance they seek to undermine the validity of the appointment of the receivers by the bank by reason of the misleading or deceptive or unconscionable conduct of NAB in contravention of the TP Act (now CAC Act), it can be seen that there is no irreconcilable conflict between what was decided by Le Miere J in the Supreme Court of Western Australia proceeding in relation to those claims now advised by the applicants in this Federal Court proceeding.

69    In these circumstances, I would order that [86(b)] of the statement of claim be struck out. The applicants may need to consider whether it is necessary to replead other parts of the statement of claim, if any, that relate to that paragraph.

application of Mr and Mrs thompson for leave to bring derivative proceeding

70    Introduction: Part 2F.1A of the Corporations Act 2001 deals with proceedings on behalf of the company by members and others. Section 236(1) provides that a person may bring proceedings on behalf of a company, or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for those proceedings, or for a particular step in those proceedings if the person is a member, former member, or person entitled to be registered as a member of the company or of the related body corporate or an officer or former officer of the company and the person is acting with leave granted under s 237.

71    In this case, Mr and Mrs Thompson are members of the company in that they hold shares in it and also are officers of the company in that they are directors of it. They now apply for leave under s 237 to bring a proceeding in the name of the company.

72    Section 237(2) provides that the Court must grant the application for leave if it is satisfied that:

(a)     it is probable that the company will not itself bring the proceedings, or properly take responsibility for them, or for the steps in them; and

(b)     the applicant is acting in good faith; and

(c)     it is in the best interests of the company that the applicant be granted leave; and

(d)    if the applicant is applying for leave to bring proceedings—there is a serious question to be tried; and

(e)     either:

(i)     at least 14 days before making the application, the applicant gave written notice to the company of the intention to apply for leave and of the reasons for applying; or

(ii)     it is appropriate to grant leave even though subparagraph (i) is not satisfied.

73    Section 237(3) provides that a rebuttable presumption that granting leave is not in the best interests of the company arises if it is established that:

(a)     the proceedings are:

(i)     by the company against a third party; or

(ii)     by a third party against the company; and

(b)     the company has decided:

(i)     not to bring the proceedings; or

(ii)     not to defend the proceedings; or

(iii)     to discontinue, settle or compromise the proceedings; and

(c)     all of the directors who participated in that decision:

(i)     acted in good faith for a proper purpose; and

(ii)     did not have a material personal interest in the decision; and

(iii)    informed themselves about the subject matter of the decision to the extent they reasonably believed to be appropriate; and

(iv)    rationally believed that the decision was in the best interests of the company.

74    It is accepted that the onus is on the applicant for leave to establish the requirements of s 237(2) to the Court’s satisfaction, because the application is for final, not interlocutory relief: see Swansson v RA Pratt Properties Pty Ltd [2002] NSWSC 583 (Swansson) at [24].

75    It is also well understood that if any of the prescribed conditions are not satisfied then the Court must refuse the application: Goozee v Graphic World Group Holdings Pty Ltd [2002] NSWSC 640; (2002) 170 FLR 451.

76    In the context of this claim, where Mr and Mrs Thompson on behalf of the company propose that the company should maintain proceedings against both the State parties and NAB, the elements of s 237 must be established in relation to each of these proposed causes of action.

77    Section 237(2)(a): By this provision the Court must be satisfied that it is probable that the company will not itself bring the proceedings or properly take responsibility for them or for the steps in them.

78    It is accepted that a test of probability applies to assessment of this criterion as the text of the paragraph suggests: see Ragless v IPA Holdings Pty Ltd (in liq) [2008] SASC 90; (2008) 65 ACSR 700 at [26].

79    The company is currently controlled by the receiver. Whether or not it is probable that it will not itself bring the proceedings depends on the attitude of the receivers.

80    On behalf of Mr and Mrs Thompson it is submitted that the receivers are not neutral but rather are partners or employees of a firm of accountants (Ferrier Hodgson) that has had significant prior dealings with the company in the following respects:

    They conducted the “independent business review” of the company, reference to which has been made above in relation to the findings of Le Miere J in the Supreme Court proceeding.

    During the conduct of the independent business review the company supplied Ferrier Hodgson with information that was commercially sensitive and confidential.

    The firm was obliged to keep confidential information.

    As partners or employees of the firm, the receivers are likewise obliged to keep the information confidential.

    However, the receivers threaten to misuse the confidential information.

81    Further, on behalf of Mr and Mrs Thompson it is submitted that:

    NAB can not be considered to be an arms length creditor rather, because of the conduct of the independent business review, it is closely associated with the company;

    that the appointment of the receivers by NAB is in dispute because of the alleged unconscionable dealings and the allegation that the receivers have aided and abetted or otherwise been knowingly concerned in the breach by NAB of relevant provisions of the TP Act;

    the appointment of the receivers constitutes a threatened or actual breach of confidence on the part of Ferrier Hodgson and to allow the receivership to continue risks further breaches of the TP Act.

82    Mr and Mrs Thompson also say that on 16 February 2011 they provided the receivers with the minute of proposed statement of claim concerning the State parties, but in the three weeks following up to the commencement of the hearing of the notice of motion had not received any contact from the receivers concerning its prosecution. On the contrary, they have continued to dispute the company’s claims against the State parties.

83    Additionally, the applicants say that it is absurd to contemplate a receiver instituting proceedings against the debenture holder claiming damages for misleading, deceptive or unconscionable conduct in breach of the TP Act.

84     At the hearing of the notice of motion, NAB and the receivers applied for an order that an affidavit filed or to be filed by the receivers but shown to the Court should be made the subject of a confidentiality order under s 50 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) and in effect not be disclosed to the applicants. I refused that application and indicated that the affidavit should be disclosed in the proceedings to the applicants. That was then done.

85    The subject matter of the affidavit was that the receivers had commenced proceedings in the name of the company in the Supreme Court of Western Australia seeking judicial review of certain decisions of the Environment Protection Authority concerning the issue of works approvals and licences pertaining to the operation of the cattle feedlot business at material times. However, as the receivers explained, pending further information relating to that possible cause of action, they had elected not to serve the originating process. They explained that the originating process had been filed to meet any time limit and avoid any delay claims that might subsequently be raised if such a cause of action were to be commenced later.

86    Primarily, though, the receivers submit that the applicants, Mr and Mrs Thompson, have been uncooperative to the extent that they have been refused access to the company’s books and records and through their solicitors have failed to articulate the basis upon which a claim for relief could be advanced against the State parties.

87    The State parties also rely on the uncooperative conduct of Mr and Mrs Thompson towards the receivers. The affidavit of Mr Weaver, dated 24 February 2011, at [24][31] provides something of the flavour of that. Mr Weaver was required for crossexamination on his affidavit. Again, he, albeit politely, confirmed the difficulty the receivers had experienced in obtaining information, documents and generally the cooperation of the applicants in the receivership.

88    In my view, the fact that the receivers have commenced the judicial review proceedings in the Supreme Court of Western Australia as upholding action indicates considerable good faith on their part. It leads me to not be satisfied that it is probable that the company will not itself bring the proceedings, or properly take responsibility for them or for the steps in them should there appear to be a good case for proceeding against the State parties, principally in respect of the declaration of invalidity points but even more generally.

89    As discussed further below, there are real difficulties with the proposed causes of action against the officers of the State that are framed in trade practices and negligence terms and which also include allegations of bad faith. One would not expect the receivers to institute such proceedings except on sound legal advice given in light of all the factual circumstances. Without the support and cooperation of the applicants, that is a difficult thing to do, for which the receivers cannot presently be criticised.

90    As to the probability that the company through the receivers will bring the proposed proceeding for the company against NAB, it perhaps fairly goes without saying that in the ordinary course of events, it is unlikely that the receivers would ever turn on their appointors. That comment really ought only be applied as a generality in respect of the formal issues that might arise in confirmation proceedings under s 418A of the Corporations Act. What the applicants wish to agitate through the company in the derivative proceeding is that the company engaged in sharp trading practices to the extent that their conduct may be considered misleading or deceptive at material points and was otherwise unconscionable, and that by way of remedy they are entitled to dislodge the receivers from their appointment and thereby recover control of the company.

91    It may well be that the general statement that receivers cannot usually be expected to turn on their appointors would require some qualification where a claim of this nature is made. One would expect, that in accordance with their legal and ethical duties, if receivers in the course of a receivership observed what appeared to be misleading or deceptive conduct or unconscionable behaviour in contravention of statutory trade practices provisions, they would in fact ignore it.

92    The trouble in this case, however, is that to some extent the factual allegations made by the applicants on behalf of the company seek to entwine the receivers with the appointor.

93    I think in all the circumstances I am satisfied that it is probable that the company will not itself bring the proceedings or properly take responsibility for them or for steps in them, in relation to the proceedings proposed against NAB, that would also see the receivers formally joined in the proceeding – having regard to my earlier strike out orders in the current proceedings maintained by the applicants against the receivers.

94    Section 237(2)(b): By this provision, the Court must be satisfied that the applicant is acting in good faith. The parties accept that there are two aspects to this criterion. First, whether the applicant honestly believes a good cause of action exists and has a reasonable prospect of success; and secondly, whether the applicant is bringing the derivative action for such collateral purpose as would amount to an abuse of process: Swansson at [36].

95    The applicants contend that where applicants are directors or shareholders it will generally be easy to show they have a legitimate interest in the welfare and good management of the company itself, warranting action to recover property or to ensure that the majority of the shareholders or of the board do not act unlawfully to the detriment of the company as a whole: Swansson at [38].

96    The applicants submit that having regard to the proposed statement of claim and their affidavit evidence and submissions they believe they have a strong case against the State parties as well as against NAB and the receivers.

97    The applicants also say that their affidavit evidence discloses they are acting in good faith in the matter as the founding directors and shareholders who have owned and operated the company since its incorporation and that they have consistently tried to advance and protect the interests of the company.

98    They deny there is any collateral purpose for instituting the proceedings.

99    NAB and the receivers recognise the above principles and also that if a wrong appears to have been done to a company, and those in control refuse to take proceedings to address it, then the Court will permit a derivative action if a real and substantive injury would be suffered. They emphasise that the injury must necessarily be dependent upon or connected with the applicants’ status as a director or shareholder and the remedy afforded must be reasonably capable of addressing the injury: Swansson at [42].

100    So far as the proposed action against the State parties is concerned, NAB and the receivers submit that the applicants cannot genuinely assert that the receivers have refused to institute proceedings to address any wrong committed against the company by the State parties. Rather, it has been the lack of cooperation of the applicants with the receivers that have resulted in the receivers not being in a position to make an informed decision about any potential proceedings or the merits of them.

101    This submission does not directly address the criterion in this paragraph. The question is whether the applicants believe honestly they have a good cause of action. What, in effect, the receivers say is that they are unable properly to comment on whether or not there is a good cause of action against the State parties and whether there are reasonable prospects of success because the applicants have failed or refused to properly informed them in that respect.

102    On the face of it, it seems to me that the applicants do honestly believe they have a good cause of action and there does not appear to be some collateral purpose that would amount to an abuse of process, so far as this proposed action against the State parties is concerned.

103    There is, however, a separate question as to just how plausible the proposed cause of action is and whether it may be described as good and may be considered to have reasonable prospects of success. I will return to that issue below under the serious issues to be tried criteria.

104    So far as the proposed claim against NAB and the receivers is concerned, it is plain enough from the account of the decision of Le Miere J in the Supreme Court proceedings whereby he affirmed the validity of the appointment of the receivers, that the question of the other or foreshadowed claim of the applicants against NAB for relief on the basis of the bank’s misleading, deceptive or unconscionable behaviour was not determined by that Court and indeed the Court expressly declined to deal with that issue, as I have noted earlier in striking out aspects of the current claim of the applicants against the receivers.

105    On the face of it, the applicants appear honestly to believe that they have a good cause of action against the NAB on TP Act grounds. Whether or not, however, it may be thought that they have a good cause of action which has reasonable prospects of success is another issue to which I will come.

106    So far as such a proposed action might be said to have a collateral purpose, NAB and the receivers refer to submissions or assertions by counsel for the applicants in the Supreme Court proceedings to the effect that the truth of the position of the receivers and managers will then be put to the test in practice by bringing proceedings. It is submitted that it is apparent from these comments that there is collateral purpose for instituting the proceedings, against the fifth respondents at least.

107    For my part, I have some difficulty in attributing collateral purpose, bad faith or an abuse of process to the applicants by reason of these expansive submissions or assertions made by their counsel in the Supreme Court proceedings. Their leading counsel tended to make “strong” submissions in this Court on this application. I do not consider the applicants’ bona fides should be doubted on that account. It is necessary to put aside any expansive or boastful submissions or assertions of counsel in determining whether a proposed cause of action against NAB and derivatively against the receivers, relying on the alleged unconscionable behaviour of NAB, has any prospects of success.\

108    I find this criteria is satisfied.

109    Section 237(2)(c): By this provision the Court must be satisfied that it is in the best interests of the company that the applicant be granted leave.

110    The parties accept it is not enough for the applicants to say that the proposed action may be, appears to be, or is likely to be, in the company’s best interest. The applicants must establish, on the balance of probabilities, the fact that it is in the best interests of the company that leave be granted: Swansson at [55] and [56].

111    In Swansson, at [57]]60], Palmer J said what is required in this regard is evidence:

    of the character of the company for the purposes of considering the effect of the proposed litigation will have on the company;

    of the business of the company so that the effects of the proposed litigation on its proper conduct may be appreciated;

    enabling the Court to form a conclusion whether the substance of the redress which the applicants seek is available by a means which does not require the company to be involved in litigation against its will; and

    of the ability of the proposed defendant to meet at least a substantial part of any judgment in favour of the company.

112    The parties also agree if the redress sought is available by other means in that the applicants can achieve the desired results and proceedings in their own name then it will not be in the best interest of the company to be involved in the litigation: Talisman Technologies Inc v Queensland Electronic Switching Pty Ltd [2001] QSC 324.

113    As to the latter proposition, the applicants contend that this should be treated with caution as it appears to place an additional criterion on those already found in s 237.

114    However, the applicants also contend that, in any event, the evidence demonstrates the company has a substantial damages claim in its own right against, at the very least, the State and that the company needs to apply to obtain remedies against NAB and the receivers, if not the firm to which the receivers belong, in view of their actions.

115    The applicants say another point should be made, where the evidence demonstrates serious issues concerning the validity of the appointment of a receiver. They say this is a matter where the company has a wide scope of action through Mr and Mrs Thompson as directors. Mr and Mrs Thompson indeed can bring claims on behalf of the company without leave of the Court, provided they indemnify the company for any liability in costs: see Deangrove Pty Ltd v Commonwealth Bank of Australia [2001] FCA 173; (2001) 108 FCR 77 at [40]; and Newhart Developments Ltd v Cooperative Commercial Bank Ltd [1978] 1 QV 814 at 821.

116    However, the grant of leave under s 237 would avoid the need for Mr and Mrs Thompson to indemnify the company.

117    The applicants also say the company has reasonable prospects of avoiding an order for security for costs given that:

    the grant of an order for security depends upon the circumstances of the case.

    the company is able to press strong claims against the State, NAB and the receivers and an order for security for costs will be considered oppressive.

    the conduct of the State, NAB and the receivers precipitated a significant reduction in the company’s means to meet any order for security for costs, a factor recognised in Octocane Pty Ltd v SRJ Property Development [1999] SASC 231; (1999) 74 SASR 471 at 479.

118    The applicants also say there should be evidence as to the ability of a defendant to meet a substantial part of any judgment in favour of the company in the proposed derivative action so that the Court may ascertain whether the action would be of any practical benefit to the company: Swansson at [60].

119    NAB and the receivers again complain, in relation to the proposed action against the State parties that the receiver has been denied access to the company’s books and records and so has been impeded in forming a view about the merits of the potential claims. Until they have been afforded that opportunity it cannot be said to be in the best interests of the company to involve it in litigation against its will.

120    These respondents also contend that the applicants have not advanced any evidence that it is in the best interests of the company to embroil it in litigation when:

    it is no longer trading as a going concern.

    it does not have the funds to support any lengthy litigation.

    the redress sought can be pursued by the applicants in their own right.

121    The respondents note that the applicants have instituted proceedings against the State parties, and that the allegations are substantially similar or the same as those in the proposed statement of claim that will be filed in the derivative action.

122    So far as the NAB claim is concerned, these respondents say the applicants in their own right have instituted proceedings against NAB and the receivers and the allegations are also substantially the same as those in the minute of proposed statement of claim in the derivative action.

123    The respondents also contend that the allegations of misleading and deceptive conduct and unconscionable conduct asserted are more appropriately dealt with in the ambit of that claim (although refuted by NAB) rather than in a derivative action on behalf of the company.

124    In the event, I am not satisfied that it is in the best interests of the company that the applicant be granted the leave it seeks.

125    The points made on behalf of the respondents, which were amply developed by Mr Weaver when he was crossexamined by counsel for the applicants at the hearing, is that the company no longer is a going concern, it lacks any funds to support any lengthy litigation but the applicants have in their own right commenced proceedings seeking virtually the same relief.

126    While, from the applicants’ point of view, there are real benefits – if funding for an action were available – in the company take any action – because the applicants will then not be themselves obliged to fund complicated proceedings – the reality is the applicants have commenced their own proceedings, these issues, if they are to be pressed, will be resolved in that way.

127    As discussed further below, the proposed proceedings against the State parties either have absolutely no prospects of success or are very flimsy indeed. One would not expect the company to throw good money after bad in proceeding against the State parties. It certainly would not be in the best interests of the company to involve itself in such litigation.

128    Broadly speaking, in my view, while, as explained below, there is some basis for suggesting the arguability of aspects of the proposed claim against NAB is at a higher level than that against the State parties, the company would want to know much more about the prospects of success of the litigation before pursuing it. In other words, in my view, it plainly is not in the best interests of the company to involve itself in litigation, certainly at this point.

129    In all I am simply not satisfied that it can be said to be in the best interests of the company that the applicant be granted leave. This criterion is therefore not satisfied.

130    Section 237(2)(d): By this provision the Court must be satisfied that there is a serious question to be tried.

131    The parties accept that the test used is the same as that used for an interlocutory injunction: Goozee at [32]. The Court must determine whether the applicant is able to identify the rights to be determined at trial in respect of which final relief is sought: Ragless at [40].

132    The parties recognise that it is perhaps arguable whether the applicants must establish that there is a sufficient likelihood of success to justify the grant of leave, having regard to the discussion of what is required to obtain an interlocutory injunction in Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [65], or merely that there is a real question to be tried that is not frivolous or vexatious (as suggested by the decision in American Cyanamid Co v Ethicon Ltd [1975] AC 396 at 407).

133    The respondents make the point that a mere indication of evidence without any actual evidence is insufficient and the onus is on the applicants to provide sufficient material to the Court to enable the Court to make a determination: Vinciguerra v MG Corrosion Consultants Pty Ltd [2010] FCA 763; (2010) 79 ACSR 293 at [140][142], Gilmour J.

134    The applicants say that no matter what test is used, they satisfy the test. In short, they contend that the claims made against the State parties, NAB and the receivers involve the “principled development of the law” particularly concerning s 45(2)(b)(ii) and s 51AC of the TP Act (now CAC Act) and the Court should be careful not to stifle the development of the law by summarily throwing out court actions in respect of which there is a reasonable possibility that it will be found, in the development of the law, that a pleaded cause of action does lie. The risk of injustice to a plaintiff by summary termination of claims should firmly be borne in mind. Counsel emphasises what was said in this regard in Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365 at 373374.

135    I will deal first with the question of serious issue to be tried in respect of the proposed derivative action against the State parties, the substance of which I have already referred to above in some detail in dealing with the strike out application of the State parties. In the course of dealing with that issue I outlined the nature of the causes of action pleaded against the State parties that would be pleaded in the proposed derivative action.

136    For the reasons I have already given above on the strike out application of the State parties, there is in my view no serious question to be tried on any test in relation to the proposed application of provisions of the CAC Act to the State parties.

137    So far as the derivative action would involve a claim for damages against the State respondents, based upon negligence and misfeasance in public office or lack of good faith, I consider there is insufficient evidence placed before the Court to raise a serious question to be tried. The evidence is simply that letters were written and advice given, with which the applicants now take issue.

138    A number of points should be made, first s 121(1) of the EP Act relevantly provides for immunity for certain acts in these terms:

An action in tort does not lie against –

(a)    a person for anything that the person has done, in good faith, in the performance or purported performance of a function under this Act.

139    To the extent that there is a claim in tort (or otherwise) against the third respondent the immunity provision would apply to the extent that these acts were done in good faith.

140    The conspiracy claim, on its own, is singularly lacking in evidentiary foundation.

141    It is therefore incumbent upon the applicants to show some evidence that the third respondent acted otherwise than in good faith. In my view, there is virtually none. There is an argument constructed that having regard to the circumstances in which regulatory decisions were made, the third respondents’ actions were other than in good faith. It seems to me that this contention is artificial, incapable of being sustained and has no chance of success if it were to go to trial.

142    It is well understood that to make allegations of bad faith, as to allege fraud, is a very serious matter and involves imputing personal fault on the part of a decisionmaker. The allegation is not to be lightly made and must be clearly alleged and proved. The circumstances in which bad faith has been found in precedent cases are few. Mere error or irrationality does not equate to bad faith. Errors of fact or law or illogicality do not demonstrate bad faith. More needs to be shown than that a decision was wrong. See generally in this regard SBBS v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 361; (2002) 194 ALR 749 at [42][48], the Full Court of this Court.

143    Therefore, to the extent that the proposed derivative action against the first, second and third respondents – the State parties – depends upon bad faith, in my view there is no serious issue to be tried.

144    Furthermore, in respect of the impugned behaviour of the Chief Executive Officer of the Department of Environment and Conservation, the first respondent, and Mr Byrnes, the third respondent, the immunity provision would apply in respect of other conduct.

145    The likelihood of an action against the first respondent and the third respondent personally succeeding is extremely unlikely and I do not consider there is a serious issue to be tried in respect of those proposed actions.

146    So far as the relief sought against the State of Western Australia is concerned, by way of various applications for declarations concerning the invalidity of authorities issued under the EP Act, counsel for the State does not seek to contend there is no serious action to be tried, but counsel contends that, so far as the s 237 criteria are concerned, the receivers have filed proceedings in the Supreme Court of Western Australia and plainly are prepared to take such action in that regard as may be appropriate.

147    To the extent that the proceedings proposed against the State parties rely upon the TP Act, they would in all relevant respects appear to be, in my view, misconceived as the licensing functions relied on do not constitute the carrying on of business as discussed in relation to s 2B and s 2C of the CAC Act, and there is no other relevant conduct in trade or commerce for the purpose of maintaining an action based on deceptive conduct or the like.

148    So far as the claim against the NAB and the receivers are concerned, much attention was given in the calling and crossexamination of the bank officers and the receivers in order to establish some factual basis to an allegation of deceptive or misleading conduct and unconscionable conduct.

149    In the event, one of the principal planks of the applicants’ argument seems to be is that on a proper construction of the various financing facilities, it was not open to NAB to change the expiry date upon which financing had initially been granted. The applicants contend the evidence shows a “unilateral variation” by NAB of the facility obligations of the borrowers.

150    By doing the best one can with the proposed statement of claim and summarising the causes of action in the way I have above, it is at least clear that very little is pleaded or produced by way of evidence against the receivers in this action, that can support any allegations of unconscionable conduct or misleading or deceptive conduct on their part. The same point was made by Le Miere J in the Supreme Court of Western Australia proceeding. Nothing much has changed in this proceeding. The only reason the receivers need to be a party to any current or proposed action in this Court is because they need to be enjoined in the event that the applicants are successful in their trade practices claims against NAB and are entitled to an order displacing the receivers.

151    I have already upheld the submission of the receivers to strike out parts of the application as it affects the receivers in the current proceeding of the applicants and the same rulings apply to this proposed action of the company.

152    So far as the claims of the NAB acting unconscionably or in a misleading and deceptive way so far as the facilities are concerned, the constructional issues concerning the changed expiry date, while tenuous, are perhaps arguable. However, those pleas that seek to infer bad, that is to say unconscionable and reprehensible conduct, on the part of the officers of the NAB are, in my view, untenable. There is no evidentiary base to them. The arguments rather are about misconstruction of agreements and misinterpretation, not about “moral obloquy” or the like: see Australian Securities and Investments Commission v National Exchange Pty Ltd (2005) 148 FCR 132, Full Court at [32][43]. The evidence suggestive of personal unconscientious misbehaviour by officers of the bank is slight and the claim would be very difficult to maintain at trial. One would doubt that this claim could succeed. The issue was developed to some extent by viva voce crossexamination of the relevant bank officer for the purposes of this hearing. The evidence, for example, that the officer fabricated a letter is, on any view, weak.

153    As to the constructional argument on the bank facilities and the allegation that the bank unreasonably contracted the expiry date and did so unilaterally depends not upon the evolution of some new legal principles that the Court should not unreasonably shut off by refusing leave to the derivative action, but depends ultimately on proper construction of the agreements. There is something to be argued, although on the face of it the bank has simply acted according to the letter of its contractual entitlements.

154    In summary, in my view, while the constructional arguments about the expiry date of the facility might possibly be arguable, the unconscionability case has no prospects of success. This criteria is then only partly satisfied in respect of only one cause of action.

155    Section 237(2)(e): This requires written notice to the company of the intention to apply for leave and the reasons for applying. The evidence suggests this criterion has been satisfied in this case.

156    Summary of findings: In the event, I am not satisfied that each of the criteria specified in s 237(2) has been met and accordingly I would refuse the applicants leave to bring the proposed proceeding on behalf of the company against the State parties, NAB and the receivers.

157    I am not satisfied that it is probable that the company will not itself bring the proceedings for properly taking responsibility for them against the State parties, if there appear to be further grounds for doing so.

158    In relation to any such proceeding against the State parties in that regard, I accept the submissions of NAB and the receivers that until at least relatively recent times the applicants themselves, who would need assist and support an action, have not been entirely forthcoming with such support and assistance and the receivers unreasonably have been able to substantiate or particularise or plead out in a general sense, any claim that might be made in this regard.

159    However, the actions of the receivers in lodging originating process with the Supreme Court to protect the interests of the company in maintaining any proceedings against the State parties indicates to me, that if properly advised there is an appropriate proceeding, there is no reason to think that the company will not itself bring the proceedings at the instance of the receivers.

160    I generally accept that the applicants are acting in good faith in bringing the application to bring these derivative proceedings. I do not accept that this is just a testing out exercise against NAB, as these respondents suggest, although no doubt the applicants would hope that their dispute with the NAB and the receivers might be resolved in ways advantageous to them. However, I do not see the proposed derivative action as simply a stalking horse designed to help resolve the personal interests of the applicants as against NAB.

161    I am, however, not satisfied that it is in the best interests of the company that the applicants be granted leave. There are a number of reasons for this. The company is in receivership. The cattle feedlot business is not running. The business is hopelessly insolvent as things stand and there are no funds to support the action. The issues that the applicants seek to agitate may be advanced in their current proceeding in the Federal Court in which they seek to claim relief in the same terms or virtually the same terms as they propose the company should pursue in the derivative action. While there no doubt would be some advantages from their point of view in the company pursuing the derivative action, the applicants are themselves able to pursue the same issues and the same relief in the proceeding they have already commenced in this Court.

162    I am also quite unsatisfied that there are serious questions to be tried in respect of nearly all claims. While there may be questions concerning the validity of authorities granted under the EP Act, as discussed above, I consider the personal actions reliant on tort or under the TP Act/CAC Act against the State parties to be hopeless. I consider the proposed trade practices proceedings against the State of Western Australia to be utterly hopeless.

163    As noted above, to the extent that there may be the possibility of an action concerning the invalidity of authorities issued or things done under the EP Act by relevant agencies or officers, I have already indicated that there is no reason to think that the company will not pursue those if properly advised.

164    So far as the proposed proceedings against the receivers are concerned, it seems to me they are very much ruled out by the decision of Le Miere J in the Supreme Court and are otherwise hopeless, save to the extent that the receivers would need to be a party in the event that the proceedings foreshadowed against NAB, designed to undermine the validity of the appointment of the receivers, were to succeed.

165    So far as the proposed action against NAB on the grounds of misleading and deceptive conduct and unconscionable conduct are concerned, they in the end primarily rely on construction of contractual financing documents and the argument that the bank unreasonably and invalidly contracted the period – the expiry date – by which funds were to be repaid. In my view, on a proper construction of the relevant facilities documents the likelihood of the company succeeding with its constructional arguments is slim. However, on balance I would probably not rule out the contractual construction arguments on the basis that it is completely hopeless. However, I do consider the misleading and deceptive and unconscionability claims to have no reasonable prospects of success.

166    In any event, so far as that or those tenuous causes of action against the NAB are concerned, I am of the view that it is not in the best interests of the company that the derivative proceedings be permitted. As I have indicated above, the issues that the applicants wish to pursue, that would see them compensated for any contravening conduct of NAB, may be pursued through the proceedings they have commenced in their own names in this Court.

167    In all of these circumstances, all of the criteria specified in s 237(2) have not been met and therefore leave should be refused to the applicants to commence a proceeding in the name of the company on any of the bases outlined in the proposed statement of claim.

168    The applicants notice of motion should be dismissed.

orders

169    I order as follows:

1.    On the notice of motion of the first, second and third respondents dated 25 March 2011, it is ordered that the following paragraphs of the applicants’ statement of claim be struck out: [44(b)(iii)], [44(c)(iii)], and in so far as they refer to the Trade Practices Act 1974 (Cth), [45(a), (b) and (c)].

2.    On the objections of the first, second and third respondents, it is ordered that those portions of the affidavits of Mr and Mrs Thompson filed in support of the applicants’ notice of motion filed 16 February 2011, and referred to in the attached Schedule be struck out on the basis indicated.

3.    (a)    On the objections of the fourth, fifth and sixth respondents as to the affidavit of Mrs Thompson sworn 19 October 2010 and filed 20 October 2010, the following portions be struck out on the basis indicated:

    [103], second and third sentences from “this development … shore up their position” (inadmissible speculation and opinion).

    [104], last sentence “we believe … purchaser(s)” (speculation and opinion).

    [118], the whole (irrelevant opinion).

    [130], the whole (hearsay).

    [137][141], (hearsay).

    [149], the whole (conclusory, vague and no basis).

(b)    As to the affidavit of Mr Thompson sworn 16 February 2010, the following portions be struck out on the basis indicated:

    [20], the whole (irrelevant).

    [21], the whole (irrelevant).

    [25], last sentence (opinion, irrelevant).

(c)    As to the affidavit of Mr Will Thompson sworn 4 March 2011 and filed 8 March 2011, the following portions be struck out on the basis indicated:

    [8(f)], “and Janet… did not see” (hearsay).

    [10], last sentence from “Janet informs me … to NBP” (hearsay).

    [13(c)(ii)], “neither Janet nor”.

    [14(b)], the whole (opinion, speculation).

    [19], the whole (speculative opinion and hearsay).

(d)    As to the affidavit of Mrs Thompson sworn 10 March 2011 and filed 11 March 2011, the following portions be struck out on the basis indicated:

    [8], the whole (conclusory, hearsay, opinion).

    [9], the whole (irrelevant and hearsay).

    [10], the whole (hearsay).

    [11], the whole (a combination of speculations, opinion, hearsay and relevancy).

4.    On the fifth respondents’ notice of motion dated 24 November 2010, [86(b)] of the applicants’ statement of claim be struck out.

5.    The applicants’ notice of motion filed 16 February 2011 be dismissed

170    The Court will hear from the parties as to the question of costs and any further directions that should now be made in this proceeding.

Associate:

Dated:    3 June 2011

Schedule

Affidavit of Janet Hufgnagel Thompson sworn 19 October 2011

Para                                        Objection

Affidavit of Matt Willis Thompson sworn 16 February 2011

Para                                    Problem