Federal Court of Australia

Nawar v Newcrest Mining Ltd [2022] FCA 424

ORDERS

THE COURT ORDERS THAT:

1.    The name of the defendant on the Court record be corrected from “Newcrest Mining” to “Newcrest Mining Ltd”.

2.    The proceedings be summarily dismissed.

3.    The plaintiff pay the defendant’s costs of the defendant’s interlocutory application filed on 2 March 2022.

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

REASONS FOR JUDGMENT

CHEESEMAN J:

INTRODUCTION

1    The defendant, Newcrest Mining Ltd, applies under s 31A(2) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) or r 26.01(1) of the Federal Court Rules 2011 (Cth) to summarily dismiss the proceedings brought by the plaintiff, Botros Nawar, on the basis that Mr Nawar has no reasonable prospects of successfully prosecuting the proceeding. Alternatively, Newcrest applies under r 16.21(1) of the Rules to strike out the amended statement of claim (ASOC) without leave to re-plead.

2    Mr Nawar is a former Newcrest shareholder. Mr Nawar is self-represented. He is 70 years old. In his originating application and ASOC he seeks relief against Newcrest based on allegations that:

(1)    Newcrest’s directors failed to properly manage Newcrest’s affairs;

(2)    statements made by a former Newcrest director caused a drop in Newcrest’s share price and were made in breach of duty, relying on ss 182(1)(b), 183(1)(b), 184(1)(a), 184(2)(b) and 230 of the Corporations Act 2001 (Cth);

(3)    Newcrest’s directors engaged in misleading and deceptive conduct in breach of ss 180(1), 180(2)(c) and 1041H(1) of the Act; and

(4)    Newcrest’s directors engaged in conduct that was oppressive against him within the meaning of s 232 of the Act, in respect of which he seeks relief under s 233 of the Act.

3    Mr Nawar seeks relief in respect of loss and damage he claims to have suffered as a result of a drop in the Newcrest share price which he alleges was from “around $35 during early 2012” but dropped “to about $7 in the last month of 2013”.

ISSUES FOR DETERMINATION

Summary dismissal

4    The critical issue on the summary dismissal application is to determine whether Newcrest has established that Mr Nawar has no reasonable prospect of success having regard to the substance of the allegations made by Mr Nawar. That issue falls to be determined by asking two questions. First, has Mr Nawar identified a valid claim and delineated the factual materials necessary to found that claim? Secondly, if not, does he have reasonable prospects of doing so?

5    In determining the summary dismissal application it is necessary to consider the whole of the evidence on the application. The inquiry as to whether Newcrest has established that Mr Nawar has no reasonable prospects of success is not confined to an examination of the pleadings.

Strike out

6    The issue on the strike out application is to assess the form in which the claim is advanced in the current iteration of the pleadings. If the form is deficient on one of the bases identified in r 16.21(1) such that it should be struck out in whole or in part, then it is next necessary to consider whether leave to re-plead should be granted. The grant of leave to re-plead turns on whether, notwithstanding deficiencies in the pleading, there is utility in allowing Mr Nawar an opportunity to re-plead. When it comes to assessing whether there is utility in giving leave to re-plead it is relevant to consider whether Mr Nawar has a reasonable cause of action which may be articulated in a further attempt at pleading. Mr Nawar’s previous attempts to articulate his claims are relevant in this regard.

CONCLUSION IN SUMMARY FORM

7    For the reasons that follow, the proceedings are summarily dismissed. Had it been necessary to determine the alternative claim for relief, I would have ordered that the proceedings be struck out without leave to re-plead.

LEGAL PRINCIPLES

Summary dismissal

8    Section 31A(2) of the FCA Act provides:

(2)    The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:

(a)    the first party is defending the proceeding or that part of the proceeding; and

(b)    the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.

(3)    For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:

(a)    hopeless; or

(b)     bound to fail;

for it to have no reasonable prospect of success.

(4)    This section does not limit any powers that the Court has apart from this section.

…

9    Rule 26.01(1) of the Rules relevantly provides:

(1)    A party may apply to the Court for an order that judgment be given against another party because:

(a)    the applicant has no reasonable prospect of successfully prosecuting the proceeding or part of the proceeding; or

(b)    the proceeding is frivolous or vexatious; or

(c)    no reasonable cause of action is disclosed; or

(d)    the proceeding is an abuse of the process of the Court; or

(e)    the respondent has no reasonable prospect of successfully defending the proceeding or part of the proceeding.

10    The applicable principles were recently summarised by Abraham J in Quail v Gibson [2021] FCA 1115 at [7] - [11]:

[7]    The power to dismiss an action summarily is not to be exercised lightly: Spencer v Commonwealth [2010] HCA 28; (2010) 241 CLR 118 (Spencer) at [60] and see [24], although it does not require that the proceedings to be seen as “frivolous”, “untenable” or “groundless”: Spencer at [24], [53]-[60]. The critical question is whether the moving party has persuaded the court that the opposing party has no reasonable prospect of success: Polar Aviation Pty Ltd v Civil Aviation Safety Authority (No 4) [2011] FCA 1126; (2011) 203 FCR 293 at [17].

[8]    The meaning of reasonable prospect of success in this provision was considered in Spencer with the plurality, Hayne, Crennan, Kiefel and Bell JJ observing at [59]-[60]:

[59]    In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like "clearly", "manifestly" or "obviously") as "frivolous", "untenable", "groundless" or "faulty". But none of those expressions (alone or in combination) should be understood as providing a sufficient chart of the metes and bounds of the power given by s 31A. Nor can the content of the word "reasonable", in the phrase "no reasonable prospect", be sufficiently, let alone completely, illuminated by drawing some contrast with what would be a "frivolous", "untenable", "groundless" or "faulty" claim.

[60]    Rather, full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied that there is "no reasonable prospect" of success…

[9]    The inquiry required under s 31A is “not an enquiry directed to whether a certain and concluded determination could be made that the proceeding would necessarily fail”: Spencer at [52].

[10]    The assessment of whether a proceeding has no reasonable prospects of success necessitates the making of value judgments in the absence of a full and complete factual matrix and argument, with the result that the provision vests a discretion in the Court: Kowalski v MMAL Staff Superannuation Fund Pty Ltd [2009] FCAFC 117; (2009) 178 FCR 401 at [28].

[11]    Rule 26.01 provides for circumstances in which a party can make an application to the Court for summary judgment which relevantly includes where the applicant has no reasonable prospects of successfully prosecuting the proceeding: r 26.01(a); where proceedings are vexatious or an abuse of process: r 26.01(b); and where no reasonable cause of action is disclosed: r 26.01(c).

11    The approach to be adopted when assessing whether an applicant has any reasonable prospects of success was summarised by Reeves J in Dowling v Commonwealth Bank of Australia [2008] FCA 59 at [31]. His Honour there approached the task in two stages. The first stage necessitates an examination of the materials filed to ascertain whether the applicant has identified a valid claim and delineated the factual materials necessary to found that claim. If the conclusion after that enquiry is that the applicant has not done so, a question will then arise as to whether the applicant has any prospect of ever providing either.

Strike out

12    Newcrest seeks relief, in the alternative, pursuant to r 16.21(1) of the Rules. Rule 16.21(1) provides:

(1)      A party may apply to the Court for an order that all or part of a pleading be struck out on the ground that the pleading:

(a)  contains scandalous material; or

(b)   contains frivolous or vexatious material; or

(c)  is evasive or ambiguous; or

(d)  is likely to cause prejudice, embarrassment or delay in the proceeding; or

(e)  fails to disclose a reasonable cause of action or defence or other case appropriate to the nature of the pleading; or

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

13    I interpolate to note that in the present application, Newcrest relies on rr 16.21(1)(c), (d) and (e).

14    Unlike summary dismissal, a strike out application is directed to the sufficiency of the pleadings rather than the underlying prospects of success of the proceeding: Spencer v Commonwealth [2010] HCA 28; 241 CLR 118 at 131 [23] citing Lindgren J in White Industries Australia Ltd v Federal Commissioner of Taxation [2007] FCA 511; 160 FCR 298 at 309 [47].

15    Where a pleading does not state with sufficient clarity the case that must be met, and therefore does not serve its basic procedural fairness function, it ought be struck out: see Guglielman v Trescowthick [2004] FCA 236; ATPR 41-995, 48-640 at [5] – [8] (Mansfield J). Similarly, a pleading is capable of being struck out if it does not plead facts which give rise to the cause of action relied upon: see generally Dey v Victorian Railway Commissioners [1949] HCA 1; 78 CLR 62 at 91 (Dixon J as his Honour then was); General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; 112 CLR 125 at 129–130 (Barwick CJ).

16    A strike out order is ordinarily accompanied by an order granting leave to re-plead, however, such leave ought not be given where it would be futile. Relevant to the utility of affording a party an opportunity to re-plead, is the process of amendment that has already occurred: Fuller v Toms [2012] FCA 27; 247 FCR 440 at 457 [87].

BACKGROUND

Attempts to articulate the claim

17    Before outlining the allegations Mr Nawar makes against Newcrest, it is necessary to set out the procedural history, including in the period before the present proceedings were accepted for filing in this Court. This procedural history is relevant to the issue of whether there is utility in granting leave to re-plead if the strike out application is successful, in whole or in part.

18    Prior to commencing the current proceedings, in and around May 2017, Mr Nawar prepared a document summarising his complaints about events involving Newcrest in the period from 2010 to 2014. He refers to this document as his testimony. He says that he sent the document to the registries of the High Court, the Federal Court and the Supreme Court, amongst others. He also sent it to Slater & Gordon, the solicitors for the lead applicant in the class action proceedings against Newcrest, which are described at [33] below.

19    In October 2018, Mr Nawar received correspondence from this Court advising that he file an application before any steps could be taken. A communication from the Registry on 27 July 2020 encouraged Mr Nawar to seek legal advice. Thereafter in the period from 29 November 2019 to 21 October 2021 Mr Nawar submitted four successive documents styled as statements of claim. These documents were rejected by the Registry on the basis that they did not conform with the Rules.

20    Ultimately, Mr Nawar commenced these proceedings in late October 2021 and served the originating process and statement of claim on Newcrest in November 2021.

21    In his originating application, Mr Nawar relied on s 232 of the Act to claim an “oppression remedy”, which I understand to be a claim for relief under s 233 of the Act:

On the facts stated in Statement of claim, I claim that:

1 -The Australian gold miner Newcrest Mining(NCM) is responsible for the loss which I incurred as a shareholder in the company due to the negligence in managing the company affairs by the mentioned below former directors in breach of the corporation Act(2001)(Cth) section 232-oppression remedy.

The negligent two former directors are:

])Mr/Gregory Robinson, the former managing director and CEO of NCM

2)Mr/Don Mercer, the former chairman of Newcrest mining.

As a result of the negligence of the two former directors, the position of NCM became untenable with huge losses, a sharp drop in the company share price, and a stoppage of dividend payments.

-Fearing that NCM may collapse, I sold my share in the company at a fraction of the price I paid for it, and as a result, I lost most of my superannuation money which I used to make a living.

(As written, formatting corrected)

22    Shortly after being served, Newcrest, through its solicitors, wrote to Mr Nawar informing him of deficiencies in his claim and putting him on notice that Newcrest intended to apply for summary dismissal of the proceedings if the claim was not withdrawn or reformulated. The deficiencies identified by Newcrest in correspondence to Mr Nawar largely overlap with the submissions made by Newcrest in support of the present application.

23    Following further correspondence being exchanged between the parties in December 2021, Mr Nawar agreed to reformulate his claim and filed and served the ASOC in January 2022. Mr Nawar did not amend his originating application.

24    On 27 January 2022, Newcrest wrote to Mr Nawar informing him that the ASOC did not address the deficiencies that Newcrest had earlier drawn to his attention and that Newcrest would proceed to seek summary dismissal of the proceedings unless Mr Nawar withdrew his claim. Mr Nawar refused to do so and Newcrest served the present application.

The current ASOC

25    I turn now to the claim as pleaded in its current iteration, the ASOC.

26    As noted above, Mr Nawar sues as a former shareholder of Newcrest. Mr Nawar bought and sold Newcrest shares in various quantities in approximately 259 transactions in the period from November 2003 to August 2015 under two secured Holding Registration Numbers (HRNs) in his own name and under another HRN which appears to be in his and his wife’s names and in the name of their superannuation fund. The period which Mr Nawar contends gives rise to his loss is 15 March 2012 to 26 August 2015 (relevant period), being the period in which Mr Nawar says he was misled into acquiring shares. The drop in Newcrest’s share price of which Mr Nawar complains was in late 2013.

27    Mr Nawar pleads his alleged loss at a high level of generality in the ASOC. Mr Nawar alleges that misconduct by Newcrest’s former Chairman, Don Mercer, and former Chief Executive Officer, Greg Robinson, caused him to suffer loss during the relevant period, and that this loss is recoverable from Newcrest. Mr Nawar claims approximately $130,000 in respect of his alleged loss in selling his Newcrest shares at a price less than what he paid when he acquired the shares. Mr Nawar also claims approximately $100,000 for “a deterioration in [his] health as [he] developed type 2 diabetes and mild depression” and for “hardship for years as [he] lost [his] superannuation money, which [he] used to make a living”.

28    Broadly, Mr Nawar’s complains that the drop in the Newcrest share price was related to Newcrest’s acquisition of a gold mining company, Lihir Gold, in or about 2010 and the subsequent management and operation of the Lihir mine. Mr Nawar alleges that the Lihir mine acquisition turned into a “fiasco that caused losses to [Newcrest] of nearly six billion dollars”.

29    Mr Nawar’s allegations may be broadly summarised in the four overlapping categories set out at [2] above.

The Newcrest Class Action

30    As important matter of context relevant to Mr Nawar’s claim against Newcrest is that representative proceedings against Newcrest were brought in this Court in 2014 (the Newcrest Class Action). As noted above, Slater & Gordon acted for the lead applicant. The Newcrest Class Action settled in March 2016 with orders being entered finalising the proceedings on 3 May 2016.

31    It is common ground that Mr Nawar was an eligible group member for the purpose of the Newcrest Class Action because he held Newcrest shares during the period the subject of the claim. It is also common ground that he did not participate in the Newcrest Class Action. That is to say, he did not opt out of the group and did not register to participate. He did not receive a benefit as a result of the settlement. An overarching theme that may be gleaned from the ASOC is Mr Nawar’s complaint that he lost an opportunity to join the Newcrest Class Action.

32    The Second Further Amended Statement of Claim filed in the Newcrest Class Action is in evidence. The Newcrest Class Action was for misleading and deceptive conduct in respect of production guidance in the period from 13 August 2012 to 6 June 2013.

33    The Newcrest Class Action was commenced by Earglow Pty Ltd as the lead applicant. The parties to the Newcrest Class Action executed a deed of settlement on 21 February 2016 by which Earglow, as the lead applicant, on its own behalf and on behalf of group members released and discharged Newcrest from any claim arising out of, or related to, matters which could have been the subject of the class action. The terms of the settlement deed entitled Newcrest to plead the deed as a bar to any claim or proceeding by a group member arising out of, or related in any way, to the matters the subject of (or could have been the subject of) the class action. Orders made on 29 July 2015 in the Newcrest class action provided, amongst other things, that a group member who did not opt out and did not register (i.e., Mr Nawar’s position) “shall be barred from making any claim against [Newcrest] in respect of or relating to the subject matter of this proceeding”. The dismissal of the Newcrest Class Action was on the express basis that it is a defence and absolute bar to any claim or proceeding by a group member in respect of, or relating to, the subject matter of the proceeding.

34    Newcrest relies on orders made in the Newcrest Class Action as a bar to Mr Nawar making a claim against it in respect of, or relating to, the subject matter of the Newcrest Class Action.

CONSIDERATION

35    I note at the outset that Mr Nawar tendered evidence and made submissions in opposition to Newcrest’s application. I am mindful of the difficulties faced by unrepresented litigants and have taken this into account in considering Mr Nawar’s submissions and in exercising the discretion on the present application.

Summary Dismissal

Claims based on alleged mismanagement and breach of duty by former directors of Newcrest

36    It is convenient to deal with the first two categories of Mr Nawar’s allegations against Newcrest together. As noted above, these categories concern the alleged mismanagement of the company and breaches of directors’ duties. Mr Nawar points to three matters to support the allegations of mismanagement and breach of duty.

37    First, Mr Nawar alleges that Mr Mercer and Mr Robinson failed to properly manage Newcrest’s affairs. The alleged management failures appear to concern a failure by Mr Mercer and Mr Robinson to “correctly assess the various risks involved in dealings with the tax office, landlords and leases contracts of [Newcrest’s] mines and watchdog authorities ASIC and ASX”. Mr Nawar contends that these alleged management failures constituted a breach by Newcrest of ss 180(1) and 181 of the Act.

38    Secondly, Mr Nawar alleges that Mr Mercer and Mr Robinson’s approval of Newcrest’s purchase of the Lihir mine in November 2010, without conducting proper investigations, amounted to a breach by Newcrest of ss 180(2)(c) and 184(1)(a) of the Act.

39    Thirdly, Mr Nawar contends that a public statement by Mr Robinson on 8 February 2013 to the effect that “it would be hard for the gold miners if the price of gold dropped under US$1,400 per ounce” was a breach of ss 182(1)(b), 183(1)(b), 184(1)(a), 184(2)(b) and 230 of the Act because the statement caused detriment to the company. Mr Nawar contends that the statement was (a) “unsolicited and outside the written material”; (b) “distributed to the shareholders”; (c) made during a “difficult period for Newcrest”, and (d) “untrue as in the whole history of gold trading until the day of the statement, the price of gold was under $1400 per ounce and only above this value for about two years around the year 2011”.

40    In essence Mr Nawar asserts that these alleged contraventions caused Newcrest’s share price to fall and that he suffered loss as a shareholder because he was forced to sell his shares at a fraction of their price.

Has Mr Nawar identified a valid claim?

41    In respect of the claims based on mismanagement and breach of directors’ duties, I am satisfied that Mr Nawar has not identified a valid claim against Newcrest for the reasons that follow.

42    The majority of the allegations pleaded in the ASOC are alleged breaches by two former Newcrest directors of the duties owed by them as directors to Newcrest. The duties set out in ss 180 to 183 of the Act, are, by their terms, owed by directors and officers to the company. The duties are not duties owed by the company to shareholders. Newcrest submits, and I accept, that it is not open to Mr Nawar, as a shareholder, to sue Newcrest in respect of the alleged conduct which he asserts to constitute a breach of duty by the former directors. Mr Nawar does not have standing to do so in his personal capacity. He has not identified a valid claim by which he as a shareholder could obtain the relief he seeks against Newcrest in respect of his personal claims for loss and damage on the facts he alleges to comprise a breach of duty by the former directors.

If not, does he have any reasonable prospects of doing so

43    For the same reasons expressed at [42] and having regard to the nature of the facts alleged in the ASOC, I am satisfied that Mr Nawar does not have reasonable prospects of identifying a valid claim against Newcrest based on the facts alleged and taking into account the whole of the materials before me, other than a claim for misleading and deceptive conduct, which is addressed at [52] to [61] below.

Claims based on oppression

44    It is convenient to next address the claim for alternative relief under s 233 of the Act.

45    Mr Nawar claims, in the alternative, relief under s 233 of the Act on the basis that he was unfairly discriminated against in his capacity as a minority shareholder. To establish that he was unfairly discriminated against, or oppressed, he points to two things. First, he says that the impact of share price declines were felt more acutely by him than institutional shareholders. Secondly, he says that he was denied a chance to join the Newcrest Class Action. Mr Nawar contends that both these outcomes comprised oppressive conduct by Newcrest against him within the meaning of s 232(e) of the Act.

Has Mr Nawar identified a valid claim?

46    Mr Nawar’s claim is misconceived. Mr Nawar seeks compensation for loss he alleges he experienced as a shareholder as a result of mismanagement or alleged breaches of duty by the former directors of Newcrest. The oppression remedy does not exist to compensate for legal or equitable wrongs nor does it contemplate an order for payment of compensation for a shareholder’s loss by a director’s breach of statutory duty: See Crawley v Short [2009] NSWCA 410; 262 ALR 654 at 677 [158] (Young JA with whom Allsop P and Macfarlan JA agreed); Vinciguerra v MG Corrosion Consultants Pty Ltd [2010] FCA 763; 79 ACSR 293 at 313 [123] (Gilmour J); Lukaszewicz v Polish Club Ltd [2019] NSWSC 446; 370 ALR 698 at 779 [271] (Black J) and cases cited therein.

47    Mr Nawar appears to contend that as a small shareholder (in contradistinction to an institutional shareholder) he felt the losses occasioned by a decline in the Newcrest share price more acutely and in this way he was oppressed or discriminated against. Even if it is assumed that the loss Mr Nawar sustained as a result of a decline in Newcrest’s share price was felt by him more acutely than some other shareholders because a greater proportion of his investment portfolio was invested in Newcrest, that is not commercial unfairness of the kind to which the ‘unfairly prejudicial and discriminatory’ language in s 232(e) is directed. Mismanagement or poor management does not constitute oppression: Ananda Marga Pracaraka Samgha Ltd v Tomas (No 6) [2013] FCA 284 at [417] (Dodds-Streeton J); Donaldson v Natural Springs Australia Ltd [2015] FCA 498 at [250] (Beach J); Hylepin Pty Ltd v Doshay Pty Ltd [2020] FCA 1370 at [25] (O’Bryan J).

48    Further, the Court will not assess fairness by reference to one member of the company: RBC Investor Services Australia Nominees Pty Ltd v Brickworks Ltd [2017] FCA 756 at [38] (Jagot J), quoting Thomas v H W Thomas Ltd [1984] 1 NZLR 686 at [66] (Glazebrook, Hammond and O’Reagan JJ). Where, as here, the consequence of Newcrest’s alleged conduct applies in a like manner to all shareholders, such conduct cannot be unfairly discriminatory or prejudicial: Catto v Hampton Australia Ltd (in liq) (No 3) [2004] SASC 242; 89 SASR 234 at [94] (Vanstone J).

49    The second basis on which Mr Nawar contends he has a claim in oppression is because he says he was excluded from participating in the settlement of the Newcrest Class Action. Mr Nawar alleges in his ASOC that despite being an eligible group member, he was not asked to join the class action before the settlement was reached. Without in any way criticising Mr Nawar, I note that in making his submissions, in a way that is not uncommon for self-represented litigants, he oscillated between making submissions and giving unsworn evidence. In doing so, he said that he first became aware, in March 2016, that Slater & Gordon had “won” a case against Newcrest and that there was a settlement when he saw something on the internet, either on the Newcrest website or on the website of the Sydney Morning Herald. He says that the understanding he gained at this time was that there was a deadline to join in the settlement but that it had passed about a year earlier. He was surprised by this information. He said if the deadline was open, he would have applied to join in the settlement. He did not contact Slater & Gordon at this time. Later in around May 2017 he sent his detailed complaint (his “testimony”) about Newcrest to Slater & Gordon (see [18] above). That document included complaints about Slater & Gordon.

50    In the Newcrest Class Action the date fixed before which a group member could opt out of the proceedings was 28 August 2015 pursuant to orders made on 29 July 2015 by Beach J. At that time, orders were made approving the terms of, and the procedure for giving group members, an opt out notice. Similarly, orders were made for registration of group members. Newcrest led evidence on this application which demonstrates that the notice requirements reflected in the orders made in the Newcrest Class Action were compiled with. As noted above, in March 2016 a settlement agreement was agreed and on 3 May 2016, the settlement was approved by the Court. Against this background, Mr Nawar has not identified a valid basis on which he has a claim for relief against Newcrest under s 233 of the Act based on his non-participation in the Newcrest Class Action.

If not, does he have any reasonable prospects of doing so

51    For the reasons outlined, even assuming, as I am prepared to do for the purpose of this application, that Mr Nawar was not aware of the Newcrest Class Action and missed his chance to participate, and even if his losses on his Newcrest shares were of relatively greater impact in his individual circumstances, than the losses experienced by those with larger and more diversified portfolios, I am satisfied that Mr Nawar does not have reasonable prospects of obtaining relief under s 233.

Claims based on misleading and deceptive conduct

52    The third category of Mr Nawar’s claim consists of an allegation that Mr Robinson and Mr Mercer engaged in misleading and deceptive conduct in breach of ss 180 and 1041H of the Act by making alleged misrepresentations including:

(1)    “[t]hat the upheaval in Newcrest was only due to the drop in the gold price”;

(2)    “[t]hat the write-down of more than half the price paid for the Lihir mine was due to the drop in the gold price”; and

(3)    misrepresentations as to the “moderate and expected correction” in the gold price which happened around 2013.

53    In his oral submissions, Mr Nawar focussed on an allegation of misleading and deceptive conduct which is not clearly articulated as such in the ASOC. The claim was based on Newcrest’s position as a “blue-chip” company at the time he acquired shares in March to May 2012. Mr Nawar appeared in his oral submissions to contend that in acquiring Lihir Gold, Newcrest acted in a way that was contrary to its position as a “blue-chip” company and in some way this of itself was misleading and deceptive.

54    Mr Nawar claims to have suffered loss on the same basis as set out in [40] above.

Has Mr Nawar identified a valid claim?

55    Mr Nawar, as a former shareholder, has standing to bring a claim for misleading and deceptive conduct. However, for the reasons that follow, I am satisfied that Mr Nawar has no reasonable prospects of successfully prosecuting a claim in misleading and deceptive conduct on the facts disclosed in the ASOC.

56    First, Mr Nawar has not identified the statements by which the alleged representations are said to have been conveyed. The factual basis for Mr Nawar’s misleading and deceptive conduct claim is not clearly identified in the ASOC. The only apparent foundation for the alleged representations on which Mr Nawar relies is a statement allegedly made during a presentation given by Mr Robinson summarising Newcrest’s interim earnings in 2013. Mr Nawar says that Mr Robinson said that “[i]t would be hard for the gold miners if the price of gold dropped under US$1400 per ounce”. The evidence upon which Newcrest relies includes ASX releases and the transcript of the presentation given by Mr Robinson on 8 February 2013. That material does not include a statement of the kind alleged by Mr Nawar. There are no other public statements of Mr Mercer, Mr Robinson or any other representative of Newcrest which have been identified that are capable of conveying the alleged representations. Mr Nawar’s pleaded case does not, beyond mere assertion, identify how the impugned statements (if made) convey the alleged representations. In failing to do so, Mr Nawar has not delineated the factual foundation for his claim that Newcrest engaged in misleading and deceptive conduct: Dowling at [57]; Devon v Thirteenth Kaysan Pty Ltd [2016] FCA 357 at [31] (Davies J); Mulhern v Bank of Queensland [2015] FCA 44 at [60] – [61] (Gleeson J). Based on the ASOC, the evidence on this application and the submissions I am satisfied that Mr Nawar does not have reasonable prospects of establishing misleading representations in the form he alleges were made by Newcrest.

57    Secondly, I am satisfied that in substance Mr Nawar’s complaint is in respect of, or relating to, the subject matter of the Newcrest Class Action and as such, attracts the bar that was put in place as part of the resolution of those proceedings. Mr Nawar’s misleading and deceptive conduct case is concerned with representations made by former directors about the gold price and the purported detrimental impact of those statements on Newcrest. It is true that there appears to be a distinction in the case brought in the Newcrest Class Action and that brought by Mr Nawar in the present proceedings. In the Newcrest Class Action, the lead applicant relied on the declining gold price to contend that Newcrest misleadingly understated or did not adequately take into account the impact of the declining gold price in its forecasting processes. In the present proceedings Mr Nawar appears to rely on the declining gold price to argue that Newcrest misleadingly overstated the causative impact of the declining gold price on Newcrest’s share price. Notwithstanding this difference, Mr Nawar also complains about Newcrest’s missed production forecasts in the ASOC. Another area of overlap between the two proceedings is the claim for misleading and deceptive conduct based on the impairment of the carrying value of the Lihir mine. Similarly there is an overlap in the measure of loss. The measure of loss claimed in the ASOC is asserted to be calculated by reference to the difference in the share price between acquisition and disposal. This overlaps with one of the four loss methodologies pleaded in the Newcrest Class Action. Doing my best to follow the ASOC, I am satisfied that notwithstanding the different way in which Mr Nawar articulates his complaints, the subject matter of his misleading and deceptive conduct claim is so intertwined with the conduct which was the subject of the Newcrest Class Action that it is caught by the procedural bar. That bar against bringing proceedings applies to any subsequent claim by a group member (including an eligible group member) in respect of, or relating to, the subject matter of the Newcrest Class Action.

58    Thirdly, Newcrest has available a limitation defence in respect of the misleading and deceptive conduct claim which Mr Nawar seeks to pursue. An “action” for recovery of loss or damage caused by conduct in contravention of s 1041H must be “begun” within 6 years of the day on which the cause of action arose: s 1014I(2). A cause of action for damages for contravention of misleading and deceptive conduct statutory provisions accrues on the date when damage is first suffered: City Pacific Ltd (in liq) v CBRE (V) Pty Ltd [2021] NSWSC 456 at [548] (Walton J) citing Deane J in Hawkins v Clayton [1988] HCA 15; 164 CLR 539 at 587 - 588; Wardley Australia Ltd v Western Australia [1992] HCA 55; 175 CLR 514 at 525 (Mason CJ, Dawon, Gaudron and McHugh JJ). An action is only brought when an originating process is sealed by the Court’s Registry: Cameron v National Mutual Life Association of Australasia Ltd (No 2) [1992] 1 Qd R 133 at 136 (McPherson SPJ). The bringing or commencement of an action halts the running of time only for the purposes of the action in question; it does not preclude time running vis-à-vis other actions: Re Idylic Solutions Pty Ltd; Australian Securities and Investments Commission v Hobbs [2012] NSWSC 1276 at [2437] (Ward J, as her Honour then was), citing Terence Prime and Gary Scanlan, The Law of Limitation (Oxford University Press, 2nd ed, 2001) and Leferve v White [1990] 1 Lloyd’s Rep 569.

59    Mr Nawar pleads that he bought a number of parcels of shares between 2012 and 2015, selling his last parcel of shares on 26 August 2015. In these circumstances, and assuming for present purposes that Mr Nawar could establish he suffered a loss on the sale of his shares, it appears that the latest date Mr Nawar’s cause of action in misleading and deceptive conduct could have expired is 26 August 2021. Mr Nawar did not file an originating process until 27 October 2021. Further, the first time he pleaded a claim under s 1041H of the Act in a pleading accepted for filing by the Court was 4 January 2022. It follows that he is out of time. This is another reason why I am satisfied that Mr Nawar does not have reasonable prospects in respect of the claim for misleading and deceptive conduct.

60    The final issue in relation to Mr Nawar’s misleading and deceptive conduct claim is that Mr Nawar has not pleaded, in a meaningful way, a causal link between the alleged conduct and his alleged loss. He has asserted that Newcrest’s alleged misleading conduct has deflated the value of his shareholding insofar as he sustained a loss upon selling his shares in August 2015. There are a number of problems with this part of Mr Nawar’s claim. First, a shareholder is not entitled to recover damages for a diminution in the value of their shareholding which merely reflects the loss suffered by a company: Colin Lockhart, The Law of Misleading or Deceptive Conduct (LexisNexis, 5th ed, 2018) 430 citing Groeneveld Aust Pty Ltd v Nolten [2010] VSC 249 at [36] (Ferguson J); see also Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] 1 Ch 204 at 222 (Cumming-Bruce, Templeman and Brightman LJJ); Thomas v D’Arcy [2005] QCA 68; 1 Qd R 666 at [18] – [21] (McPherson JA (Williams JA and White JA agreeing)). Secondly, the evidence reveals that the majority of Mr Nawar’s dealings in Newcrest shares (on his own behalf and jointly with his wife) occurred during the period from 15 March 2012 to 26 August 2015. Newcrest submits that Mr Nawar’s contention that he was misled into acquiring Newcrest shares does not withstand scrutiny in circumstances where Mr Nawar’s trading behaviour reveals he was, and continued to be, a “high volume trader” even after the drop in Newcrest’s share price in late 2013. The evidence demonstrates that Newcrest’s share price fluctuated between September 2012 and December 2013 but otherwise generally increased from 11 December 2013 to 26 August 2015 (when Mr Nawar sold his last parcel of shares). Mr Nawar continued to buy and sell shares well after the December 2013 share drop. Mr Nawar would have difficulty in establishing that the alleged representations caused him loss given the lengthy period in which he continued trading in Newcrest shares after 10 December 2013.

If not, does he have any reasonable prospects of doing so

61    Having regard to the difficulties identified in [56] to [61] above and, with all due respect to Mr Nawar’s efforts noting he has not had the benefit of legal assistance, taking into account the nature of the ASOC with its focus on mere contention without identification of material facts, I am satisfied that Mr Nawar does not have reasonable prospects of articulating a valid claim based on misleading and deceptive conduct arising from the complaints he makes in the ASOC. In reaching this conclusion I have considered the evidence on this application including the evidence tendered by Mr Nawar.

Strike out

62    Newcrest seeks relief, in the alternative, that the ASOC be struck out in its entirety on the basis of rr 16.21(c), (d) or (e) of the Rules. Even if I had found against Newcrest on summary dismissal, I would strike out the ASOC relying on rr 16.21(c), (d) and (e) in combination for the following reasons.

63    First, for reasons already set out and for present purposes focusing on pleadings alone, the ASOC does not disclose a reasonable cause of action.

64    The ASOC is in a form that is not conducive to achieving the purpose to which a pleading is directed. The ASOC is convoluted and suffers from a lack of coherence. It contains a host of irrelevant material and omits essential allegations of material fact. It does not delineate the factual foundation for the claims contained in it in a way which would enable Newcrest to first understand, and second, respond by way of defence to the claims made against it.

65    The ASOC in its current form is not likely to facilitate the identification and refinement of the real issues in dispute. Had it been necessary to strike out the ASOC, I would have struck it out in its entirety because it is not in a form where it would be possible to excise the objectionable material to arrive at a pleading that conforms to the basic requirement of fairness: see McGuirk v the University of New South Wales [2009] NSWSC 1424 at [35] (Johnson J).

66    Further, having regard to both Mr Nawar’s previous attempts to formulate his claim and the nature of allegations made in the ASOC I am persuaded there would have been no utility in granting leave to re-plead.

CONCLUSION

67    For the reasons above, I am satisfied that Mr Nawar has no reasonable prospects of successfully prosecuting the proceedings. Accordingly, the proceedings will be summarily dismissed.

68    If I had not been satisfied that the proceedings be summarily dismissed, I would have struck out the ASOC under a combination of rr 16.21(1)(c), (d) and (e) of the Rules. Having regard to the lack of utility in doing so, and taking into account Mr Nawar’s earlier attempts at articulating his claim, I would not have given leave to re-plead.

69    I see no reason why costs should not follow the event.

Associate:

Dated:    22 April 2022