FEDERAL COURT OF AUSTRALIA

Meaden v Bell Potter Securities Ltd (No 5) [2013] FCA 821

THE COURT ORDERS THAT:

1.    Melaim Pty Ltd ACN 055 880 290 atf Douglass Family Trust be joined as an applicant and have leave to file the affidavit which comprises annexure VAM-3 to the affidavit of Van Angelo Moulis sworn 19 April 2013.

2.    The Fortieth Applicant (Chagall International Pty Ltd ACN 084 160 583), Sixty-Fourth Applicant (Mistyglare Pty Ltd ACN 089 670 888) and Sixty-Eighth Applicant (Lee Miller) have leave to discontinue as applicants on the following terms:

(a)    Each of these applicants pay the respondent’s costs of the proceedings (such costs being limited to those specifically referable to the claims of those specific applicants); and

(b)    Such costs be payable forthwith.

3.    The applicants (other than the Fortieth Applicant (Chagall International Pty Ltd ACN 084 160 583), Sixty-Fourth Applicant (Mistyglare Pty Ltd ACN 089 670 888) and Sixty-Eighth Applicant (Lee Miller)) have leave to file the version of the amended application which comprises annexure VAM-1 to the affidavit of Van Angelo Moulis sworn 19 April 2013 subject to those applicants paying the respondent’s costs thrown away by reason of the amendments.

4.    The applicants (other than the Fortieth Applicant (Chagall International Pty Ltd ACN 084 160 583), Sixty-Fourth Applicant (Mistyglare Pty Ltd ACN 089 670 888) and Sixty-Eighth Applicant (Lee Miller)) have leave to file the version of the second further amended statement of claim which comprises annexure VAM-2 to the affidavit of Van Angelo Moulis sworn 19 April 2003, excluding paragraphs 18 and 23A, the last sentence in the particulars to paragraph 18 and all references to paragraphs 18 and 23A in subsequent paragraphs, subject to those applicants paying the respondent’s costs thrown away by reason of the amendments.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    On Friday, 19 July 2013, I heard an interlocutory application by the applicants, dated 19 April 2013, seeking various orders in this proceeding. The principal orders sought were opposed by the respondent and at the conclusion of the hearing I reserved judgment on all orders sought.

2    Some of the orders sought were not opposed. One such prayer (prayer 6), seeks the joinder of Melaim Pty Ltd ACN 055 880 290 atf Douglass Family Trust as an applicant and leave to file the affidavit of Robert William Douglass sworn 19 March 2013, being annexure “VAM-3” to the affidavit of Van Angelo Moulis sworn on 19 April 2013 (Ex 1 on the hearing). I was informed from the bar table: “[T]hat apparently the relevant share purchases [sic] of that [company] mean that the limitation period is likely to expire in relation to [its] claim by 23 August, at least on one view”. I therefore propose to make that order now, even though I am not yet in a position to determine all the prayers for relief.

3    Prayer 5, sought an order:

[T]hat the Fortieth Applicant (Chagall International Pty Ltd ACN 084 160 583), Sixty-Fourth Applicant (Mistyglare Pty Ltd ACN 089 670 888) and Sixty-Eighth Applicant (Lee Miller) be given leave to discontinue as applicants.

The Respondent did not oppose leave being granted on terms that:

(1)    Each of those applicants pay the respondent’s costs of the proceedings (such costs being limited to those specifically referable to the claims of those specific applicants); and

(2)    such costs be payable forthwith.

Those terms were not opposed and I therefore propose to make the order sought in prayer 5 on those terms.

4    Prayer 4, sought an order:

[T]hat the applicants (other than the Fortieth Applicant (Chagall International Pty Ltd ACN 084 160 583), Sixty-Fourth Applicant (Mistyglare Pty Ltd ACN 089 670 888) and Sixty-Eighth Applicant (Lee Miller)) be given leave to file the version of the amended application and second further amended statement of claim which comprises annexures VAM-1 and VAM-2 to the affidavit of Van Angelo Moulis sworn 19 April 2013.

5    Subject to the Court ordering that the applicants (other than those parenthetically referred to) pay the respondent’s costs thrown away by reason of the amendments, in large part this prayer was not opposed.

6    The respondent did not oppose the filing of the amended application comprised in annexure VAM-1 to Ex 1. I will therefore grant the applicants (other than those parenthetically referred to) leave to file that amended application subject to those applicants paying the respondent’s costs thrown away by reason of the amendments.

7    The proposed second further amended statement of claim (“SFASOC”) comprised in annexure VAM-2 to Ex 1 is not opposed, save for the amendments to include new paragraphs 18 and 23A and all paragraphs which reflect claims based upon these paragraphs (e.g. paragraphs 24, 36, 49, 61, 72, 84, 97 etc., which rely on paragraph 23A in addition, or in the alternative, to other anterior paragraphs of the proposed SFASOC).

8    Paragraph 18 of the proposed SFASOC pleads:

At all material times during the Period, the contraventions (and each of them) as pleaded in paragraphs 13 and 17 (‘Contravening Conduct’) above caused the market price of PGL Shares to be greater than:

(a)    Their true value; and/or

(b)    The market price that would have prevailed but for the Contravening Conduct.

9    The particulars following this paragraph now include the following statement:

Particulars of the amounts by which PGL Shares were trading at amounts greater than their true value or the market price that would otherwise have prevailed will be provided at the time of service of expert evidence.

10    Paragraph 23A of the proposed SFASOC pleads:

Further or alternatively, in the event that the Contravening Conduct had not occurred the market price of the PGL Shares would have been:

(a)    The true value of the PGL Shares; and/or

(b)    A lower market price that would have prevailed.

11    The respondent opposes these amendments on the basis that the plea is vexatious and embarrassing for the following reasons:

First, as is made plain above, the alleged “Contravening Conduct” is the whole raft of misleading or deceptive conduct alleged by [the respondent] arising out of the Value Representations, Modeling Representations, Buy Recommendations and the First Implied Representations. Each of these are relied upon individually and collectively in any combination. They all directly or indirectly depend upon the First to Tenth Updates, individually or in any combination. The number of combinations involved is literally in the thousands. Whilst in a multi-application suit where each applicant is required to give evidence, and [the respondent] can see in advance from that evidence what each applicant says he, she or it received, read and relied upon, and then did as a result, [the respondent] may be able to deal with such allegations, they are plainly vexatious and oppressive where [the respondent] is forced to deal with an allegation which is not particularised or limited in any way, that all of those many thousands of potential combinations of conduct may have had an impact on the market price of PGL over an 11 month period. It is simply impossible for [the respondent] to understand and to be able to fairly respond to such an allegation. It is vexatious and oppressive and would be liable to be struck-out. The Court should not permit leave to amend to add it.

Additionally, there is no pleading of any material fact alleging how it is that the “Contravening Conduct”, in all of its thousands of potential combinations, caused the market price to be affected. That is a serious and critical gap in the applicants’ pleaded case. [The respondent] and the Court are left to guess as to how it is said that [the respondent’s] making of the alleged representations and to whom is said to have affected the market price. The pleading is also deficient for this reason.

12    At this point in time, I do not think I am in a position to conclude one way or another whether this pleading is vexatious and embarrassing. I incline to the view that it is, on the ground that it is too general, in the absence of specific particularisation, for the respondent to deal with, but concede my view may change once the foreshadowed expert evidence goes on.

13    I therefore propose to make orders in relation to this particular prayer as follows: I will grant leave to the applicants to file the proposed SFASOC, excluding paragraphs 18, 23A and reference to either of those paragraphs in subsequent paragraphs of the SFASOC, subject to the applicants (other than those parenthetically referred to) paying the respondent’s costs thrown away by reason of the amendments.

14    I indicate to the parties that once the relevant expert evidence goes on, I will entertain a further application by the applicants to amend the SFASOC by the inclusion of pleadings of the kind presently excluded. This is not to say anything about the prospects of success of any further application, but I expect that I will be in a much better position to properly adjudicate on the issue with the benefit of that evidence.

15    I remain reserved on the prayers for relief in the interlocutory application of 19 April 2013 not dealt with in these reasons.

Associate:

Dated:    15 August 2013