428 Little Bourke Street Pty Ltd v Lonsdale Street Café Pty Ltd
[2009] VSC 133
•8 April 2009
IN THE SUPREME COURT OF VICTORIA AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL LIST
No. 2066 of 2008
| 428 LITTLE BOURKE STREET PTY LTD (ACN 132 085 468) | Plaintiff |
| and | |
| LONSDALE STREET CAFE PTY LTD (ACN 113 557 878) & ORS | Defendants |
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JUDGE: | JUDD J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 1 December 2008 | |
DATE OF JUDGMENT: | 8 April 2009 | |
CASE MAY BE CITED AS: | 428 Lt Bourke St Pty Ltd v Lonsdale St Cafe Pty Ltd & Ors | |
MEDIUM NEUTRAL CITATION: | [2009] VSC 133 | |
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PRACTICE AND PROCEDURE – Strike out Application – Whether pleading disclosed reasonable cause of action under s 52 Trade Practices Act 1974 (Cth) and s 9 Fair Trading Act 1999 - Whether nomination form constituted novation of contract of sale of real property – Plaintiff’s claim manifestly groundless – Proceeding dismissed
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M. Clarke | Madgwicks |
| For the First Defendant | Mr A. Archibald QC Mr P. Zappia | Griffin Hilditch Lawyers |
| For the Second Defendant | Mr C. Bujuttil | DLA Phillips Fox |
| For the Third Defendant | Mr J. Smith | Blake Dawson Waldron |
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HIS HONOUR:
This is an application by the first defendant, pursuant to rules 23.01 and 23.02 of the Rules of Court and the inherent jurisdiction of the Court, to dismiss this proceeding because it is bound to fail or alternatively, to strike out the statement of claim on the ground that it does not disclose a cause of action. The application is supported by the second and third defendants.
The principles applicable to such applications are well understood and are not in dispute.[1] Insofar as the defendants seek dismissal of the plaintiff’s case, they bear the onus of demonstrating that it is:
… so obviously untenable that it cannot possibly succeed; manifestly groundless; so manifestly faulty that it does not admit of argument; discloses a case which the Court is satisfied cannot succeed; under no possibility can there be a good cause of action; be manifest that to allow them (the pleadings) to stand would involve useless expense.[2]
[1]Dey v Victorian Railways Commissioners (1948) 78 CLR 62; Little v Law Institute of Victoria (No 3) [1990] VR 257; Hubbuck & Sons Ltd v Wilkinson Heywood & Clark Ltd (1899) 1 QB 86; Mutual Life and Citizens Assurance Co Ltd v Evatt (1970) 122 CLR 628; Batistatos v Roads and Traffic Authority of NSW (2006) 226 CLR 256; 275.
[2]General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 at 129, 130.
In Dey v Victorian Railways Commissioners, Dixon J said:[3]
A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.[4]
[3](1948) 78 CLR 62, 90
The first defendant is Lonsdale Street Café Pty Ltd, the vendor of a property at 428-432 Little Bourke Street, Melbourne. The contract of sale, dated 23 June 2008, identified the purchaser as “Mr Sam Cimino (and/or nominee)”. The purchase price was $8,370,000. Settlement was to take place on 30 September 2008.
The plaintiff is a company nominated by Mr Cimino, in August 2008, as substitute purchaser, to take a transfer or conveyance of the property. On or shortly after 30 September 2008, the plaintiff became the registered proprietor of the property. The plaintiff is the trustee of a unit trust in which four families hold units. Mr Cimino is and was a director of the plaintiff.
The plaintiff alleged in its statement of claim that prior to the date of the contract the second and third defendants, as agents for the vendor, made representations to Mr Cimino about the lettable area of the property. The representations are alleged to have been made in May and early June 2008. At the time the representations were made the plaintiff was not in existence. It was not incorporated until 7 July 2008. Nevertheless, the plaintiff alleged that Mr Cimino and the plaintiff were induced by the representations to enter into the contract and pay a deposit.
The plaintiff alleged that the representations were false in that the lettable area of the building was less than that which had been represented. It claimed damages from the defendants calculated by the difference between the market value, based on the actual lettable area as at the date of the contract, and the purchase price payable under the contract. The plaintiff also claimed an amount of additional stamp duty and interest.
The plaintiff alleged three causes of action, each based on the representations. It alleged a breach of s 52 of the Trade Practices Act 1974 or s 9 of the Fair Trading Act 1999; breach of warranty and negligent misstatement. The loss claimed in each case is identical. Damages were claimed under s 82 of the Trade Practices Act, s 159 of the Fair Trading Act and at common law.
At the hearing of the application the plaintiff propounded and sought to rely upon an amended statement of claim. The substantive amendments are found in paragraphs 11A and 11B. Paragraph 7 of the statement of claim was amended by adding the words “and/or nominee” to the description of the purchaser, identified as being Mr Cimino.
When pleading its subsequent nomination of purchaser, in paragraph 8, the plaintiff added the following particulars:
The nomination is in writing and is constituted by a Nomination Form which is in writing and is dated 15 August 2008 and was sent to the vendor’s solicitors on 20 August 2008.
By paragraphs 11A and 11B, of the amended statement of claim, the plaintiff now alleges:
11A.The representations were continuing representations.
11B.The purchaser by its directors, induced by the representations and acting on the truth and accuracy thereof, executed the Nomination Form to enable the purchaser to be nominated as purchaser under the terms of the contract.
In support of the cause of action based on negligent misstatement, the plaintiff repeated, in paragraph 19B that which was alleged in paragraph 11B. The claims for loss and damage, including particulars, remain unchanged.
By the amendments, the plaintiff sought to establish a connection between the representations and the loss claimed to have been suffered by it, sufficient to support its causes of action.
In the course of the hearing the plaintiff’s real case was enunciated and clarified. The plaintiff contended that it suffered the loss claimed because it became obliged to pay the purchase price. It argued that the obligation arose by reason of its nomination as substitute purchaser. The terms under which it was nominated are found in the contract of sale and the Nomination Form mentioned in its pleading. The plaintiff contended that by its nomination, it became a party to the contract, bound to pay the contract price. It claimed to be entitled to rely upon the representations made to Mr Cimino to establish the necessary connection between the representations and its loss.
While the defendants criticised the adequacy of the plaintiff’s proposed amended statement of claim, submitting that it did not plead a sustainable cause of action, they went further. They submitted that the plaintiff’s case was incapable of remedy; that it was not arguable.
The defendants submitted that the plaintiff could not maintain a claim for loss and damage based on the representations. They submitted that in order to maintain such a claim the plaintiff must demonstrate that it was or became a party to the contract of sale, with the same rights and obligations as Mr Cimino. They argued that the plaintiff’s nomination as purchaser under the contract did not have that effect. The nomination was no more than Mr Cimino exercising his contractual right to direct that the property be conveyed, upon payment of the purchase price, to the plaintiff. They argued that the plaintiff paid the purchase price and took a transfer at the direction of the purchaser, without any contractual obligation to do so.
The defendants’ challenge did not end with the plaintiff’s character as a mere nominee, paying the price and taking a transfer, with no contractual obligation to do so. It was common ground that by 10 September 2008 at the latest, being a date well in advance of settlement, Mr Cimino and the plaintiff knew of the true lettable area. With that knowledge, the plaintiff and Mr Cimino pressed on with completion. Thus, if the representations were made, the true facts were known to the plaintiff prior to payment of the purchase price. The defendants submitted that as a consequence the plaintiff could not establish the necessary connection between the alleged representations and the loss alleged by it.
Plaintiff’s contractual obligations
It is convenient to first address the plaintiff’s formulation of its case. The issue to be decided is whether there is an arguable case that the plaintiff was or became a party to the contract of sale, by novation or otherwise.
The plaintiff does not contend that it was a party because it was in the contemplation of the vendor and Mr Cimino at the time the contract was made and therefore should be taken to have been a party from inception.[5] The plaintiff’s case is based upon the legal effect of the nomination.
[5]Cf. Parland Pty Ltd v Mariposa Pty Ltd, Supreme Court of Tasmania, unreported, 11 August 1995.
The defendants relied on Tonelli v Komirra Pty Ltd[6] to argue that the nomination did not amount to novation of the contract, nor did it make the plaintiff a party. They referred to the distinction made by Smith J, between a party and a nominee to take the conveyance.
[6](1972) VR at 739.
In Tonelli, the plaintiff brought an action for specific performance of an agreement for the sale of land, evidenced by a sale note, which provided that the land was “sold to the plaintiff and his nominees”. The defendant resisted performance on the ground that the agreement was void for uncertainty as to the identity of the purchasers. The Court held that the contract was enforceable despite the use of the words “and his nominees”. In that context, Smith J said:[7]
Upon this footing, that what the words ‘and his nominees’ have reference to is nomination pursuant to the sale note, there remains a question whether what the sale note authorises is a nomination of persons to whom the land is to be conveyed, or a nomination of persons who are to become contracting parties. Upon an examination of the whole of the terms of the document it appears to me that the former is the better construction… A further consideration is that an intention that one party to a contract of sale should have the right to nominate persons to become co-purchasers along with himself, would be a quite unusual one, whereas it would be quite normal to find an intention that the purchaser should have the right to nominate the persons to whom the conveyance should be made.
[7]Ibid, 739.
The plaintiff sought to distinguish Tonelli, submitting that a Nomination Form had not been used; and that there was no general condition in the contract providing for nomination. It submitted that the significance of the phrase, “and his nominees”, in the contract in Tonelli, confined the case to different facts.
The observations of Smith J cannot, in my view, be employed as a principle of general application to all contracts under which a nomination of a substitute purchaser is made. I do not understand the defendants to contend otherwise. The defendants submitted that the terms of the contract and the nomination that took place in the present case had the consequence that the plaintiff did not become a contracting party.
In Commissioner of State Revenue v Politis,[8] Nettle J had occasion to consider the legal consequence of a nomination provision in a contract for the sale of land. In that case a contract between the vendor and purchaser was terminated by a deed of cancellation and a new contract entered into between the vendor and the purchaser’s nominated company. The deposit under the first agreement was taken to be the deposit under the second agreement. Nettle J found that a novation had taken place. His Honour said:[9]
It is trite law that a novation denotes the rescission (scil the termination) of one contract and the creation of another under which acts that were to be performed by the parties to the original contract in accordance with their rights and obligations under the original contract are to be performed by the parties to the new contract in accordance with their rights and obligations under the new contract.
[8][2004] VSC 126.
[9]Ibid, 11.
Commenting on the effect of nomination clauses, his Honour continued:
Plainly, however, under most nomination clauses the nominee would not acquire any rights as against the vendor, let alone the rights of the purchaser; for most nomination clauses constitute no more than a power in the purchaser to require the vendor to complete the contract by transfer of the land to the purchaser’s nominee. In such cases the purchaser has rights as against the vendor to have the land transferred to the purchaser or to the purchaser’s nominee, at least upon payment of the purchase price. And the purchaser has an interest in the land, in the nature of an equitable fee simple (assuming that the contract provides for purchaser of the fee simple), although of course that really means no more than that the contract is susceptible to an order for specific performance at the suit of the purchaser. But the nominee does not acquire any rights as against the vendor, because the nominee is not privy to the contract. And for the same reason, the nominee has no standing in equity to obtain an order for specific performance of the contract. He must sue in the name of the purchaser or join the purchaser as a defendant. Therefore, such if any interest as the nominee may have in the land is one which derives from the purchaser, and relevantly the most that can be said is that the nominee may acquire an interest in the land equivalent to that which the purchaser had or would have had under the contract of sale.[10]
[10]Emphasis added.
Phillips JA also provided a helpful discussion of novation in Salter & Ors v Gilbertson & Ors[11] . His Honour stated:[12]
Ordinarily, where there is an agreement of purchase and sale expressed to be between A (the seller) and B "or the nominee of" B, B is regarded as having the power simply to nominate who shall be transferee (that is, B or another at the direction of B) and a transfer to B and a transfer to B's nominee are alike regarded as in fulfilment of the contract between A and B. Such is well established: for example Tonelli v. Komirra Pty Ltd (an agreement to sell to A "and his nominees"), Jenkins v. Smyth (applying Tonelli), Lambly v. Silk Pemberton Ltd, Hurrell v. Townend, Harry v. Fidelity Nominees Pty Ltd (where the purchaser was named with the addition "and/or nominee") and Karangahape Road International Village Ltd v. Holloway (where the purchaser was described as one Jackson "or nominee"). See also Vickery v. Woods and Power v. Nathan, in both of which the contracting party purported to act for a company yet to be formed and, though the parties expected performance under the contract by the company once formed, the contract remained throughout one between the original parties. As has been pointed out often enough, although it must be so if the context so demands, it is a strong thing to regard the words "or nominee" as authorising B, unilaterally and in his or her own absolute discretion, to nominate a purchaser to stand in the place of B, with all the attendant consequences for A. For such a construction "compelling language" is required, according to Lambly. In that case the appellant had agreed to sell her house by a standard form of contract in which the description of the purchaser had been completed with these words: "Nigel Pemberton of Auckland or his nominee or nominees"; yet that was held only to entitle the purchaser to nominate another or others to be transferee, not to nominate another to stand as purchaser in his place.
[11] [2003] VSCA 1.
[12]Ibid, 17.
Windeyer J in Olsson & Anor v Dyson[13] said of novation:
Novation is the making of a new contract … in consideration of the extinguishment of the obligations of the old contract: if the new contract is to be fully effective to give enforceable rights or obligations to a third person, he the third person, must be a party to the novated contract.
[13](1969) 120 CLR 388.
In Scarf v Jardine,[14] Lord Selborne said that novation is a term derived from the Civil Law and means:
… that there being a contract in existence, some new contract is substituted for it, either between the same parties (for that might be) or between different parties; the consideration mutually being the discharge of the old contract.
[14](1882) 7 App. Cas 35 at 351.
In Vickery v Woods,[15] Vickery entered into a contract to purchase a pastoral property, purporting to act as agent for a company which had not then been incorporated. The contract did not contain a nomination provision. After the company was incorporated, it paid the balance of purchase money and took a transfer of the property. The Commissioner of Stamp Duties claimed that ad valorem duty was payable upon the transfer as well as upon the original contract. Vickery appealed on the ground that the original contract had been rescinded and a novation had taken place.
[15](1952) 85 CLR 336.
Dixon J was inclined to the view that the transfer was made pursuant to the original contract, whether or not the company was in existence, resulting in only one dutiable transaction. The Commissioner had, however, taken a different view. The appeal came before the High Court on a narrow issue – whether duty was refundable because there had been a recision and novation of the contract to the company. In deciding that there was no novation Dixon J said:
The purpose of the contract from the beginning, it was said, was for the appellant to occupy the temporary role of purchaser and then to drop out and this was effected in the result. To infer a novation would accord with the intention of all parties from beginning to end…
The short answer to all this is an old one. It is that to a company that is brought into existence and acts upon an agreement antecedently made in its interest an intention to contract is not to be imputed in order to give a legal basis or rationale to a transaction carried through upon an assumption, however incorrect, that no further contract was required and nothing more was necessary than to complete the transaction as initially provided in the contract.
Rescission and novation ultimately depend on intention.
The terms of the contract of sale and the Nomination Form provide the framework within which to analyse the legal effect of the nomination. General Condition 5 in the contract of sale authorised the purchaser to nominate a substitute or additional pruchaser. It stated:
If the contract says that the property is sold to a named purchaser ‘and/or nominee’ (or similar words) the named purchaser may, at least 14 days before settlement date, nominate a substitute or additional purchaser, but the named purchaser remains personally liable for the due performance of all the purchaser’s obligations under this contract.[16]
[16]Emphasis added.
Special Condition 6 in the contract set out the pre-conditions for a nomination to occur.
The purchaser shall only be entitled to nominate another or additional purchaser as the named purchaser if the purchaser -
a) Has purchased the property as ‘purchaser and/or Nominee’
b) Has strictly complied with General Condition 5; and
c)Strictly complies with Section 31 of the Duties Act 2000 and satisfies the Vendor’s solicitors that he has so strictly complied.
The nomination was made in writing, by the completion of the Nomination Form and its delivery to the vendor. The Nomination Form is dated 15 August 2008 and was sent to the vendor’s solicitors on 20 August 2008. The Nomination Form, executed by the plaintiff and Mr Cimino, stated:
As the property is expressed as sold to the purchaser “and/or Nominee” (or words of like effect) then pursuant to the conditions of the contract the purchaser nominates the Nominee as substitute purchaser to take a transfer or conveyance in lieu of the purchaser.
The purchaser and the Nominee acknowledge that they will henceforth be jointly and severally liable for the due performance of the obligations of the purchaser under the contract and payment of any expenses resulting from this nomination (including any stamp duty).[17]
[17]Emphasis added.
General Condition 5 authorised a substitute or additional purchaser. Does a nomination, authorised under the contract, cause the additional purchaser to become a party or in the case of a substitute purchaser, a party in lieu of the purchaser?
The words - substitute or additional purchaser - are qualified by the words - but the named purchaser remains personally liable for the due performance of all the purchaser’s obligations under this contract. These words confirm, in my view, the intention of the contracting parties that there is to be no change in the identity of the parties to the contract or their respective obligations.
If there was any doubt about the effect of a nomination under General Condition 5, it is resolved by the Nomination Form, which confines the nomination to a substitute purchaser who is to take a transfer or conveyance in lieu of the purchaser. This instrument does not purport to amend the contract by substituting a party.
Insofar as the Nomination Form constituted the expression of an intention, it is the intention of Mr Cimino and the plaintiff. The vendor is not a party to the document. The Nomination Form is no more than the instrument by which the nominee accepts nomination and the vendor is notified of the nomination. It was the intention of the parties to the instrument that the plaintiff’s role was only to take a transfer or conveyance in lieu of the purchaser.
Under the Nomination Form, the obligation to complete is that of Mr Cimino, although the plaintiff has acknowledged joint and several liability for performance. Obligations arising thereunder, if any, are between the parties to the Nomination Form. It is not, in my view, an instrument which might have the effect of enabling the vendor to obtain specific performance against the nominee.
In my opinion the terms of the contract and the written nomination are not sufficient to distinguish the legal effect of the nomination in this case from the common effect of a nomination clause described by Nettle J in Politis.
Causation
Notwithstanding the way in which the plaintiff advanced its case for a causal connection between the representations and the loss claimed, it is necessary to consider whether some other connection might be made. The necessity arises because the defendants apply to have the plaintiff’s case dismissed. In other words, is the plaintiff’s case capable of resurrection by the advancement of some other arguable basis for its claim?
The plaintiff submitted that s 82 of the Trade Practices Act was not to be limited in its scope by a requirement that only the party actually induced by the representation to act to their detriment could claim loss and damage.
It is not in doubt that third party reliance may cause loss to a claimant.[18] As McHugh J pointed out in Henville v Walker:[19]
[18]Finishing Services Pty Ltd v Lactos Fresh Pty Ltd [2006] FCAFC 177 at [30]-[31]; Janssen-Cilag Pty Ltd v Pfizer Pty Ltd (1992) 37 FCR 526; McCarthy v McIntyre [1999] FCA 784.
[19](2001) 206 CLR 459 at 489-90.
This Court's decision in Wardley Australia Ltd v Western Australia established that the term ‘by’ in s 82 invokes the common law concept of causation. In Wardley, Mason CJ, Dawson and Gaudron JJ and I said:
‘The statutory cause of action arises when the plaintiff suffers loss or damage ‘by’ contravening conduct of another person. ‘By’ is a curious word to use. ... But the word clearly expresses the notion of causation without defining or elucidating it. In this situation, s 82(1) should be understood as taking up the common law practical or common-sense concept of causation recently discussed by this Court in March v Stramare (E & MH) Pty Ltd, except in so far as that concept is modified or supplemented expressly or impliedly by the provisions of the Act. Had Parliament intended to say something else, it would have been natural and easy to have said so.’
But this does not mean that common law conceptions of causation should be rigidly applied without regard to the terms or objects of the Act. Section 82 now applies to the contravention of any provision of Pt IV, IVB or V, or s 51AC of the Act. In Marks v GIO Australia Holdings Ltd, Hayne and Callinan JJ and I pointed out that the section can apply to many different kinds of cases, not just those where a breach of s 52 is alleged. Moreover, the objects of the Act indicate that a court should strive to apply s 82 in a way that promotes competition and fair trading and protects consumers. The width of the potential application of s 82 and the objects of the Act tell against a narrow, inflexible construction of the section. No doubt in most cases, applying common law conceptions of causation will be sufficient to answer the issues posed by s 82 in its application to contraventions of the Act. But care must be taken to avoid a mechanical application of those conceptions to issues arising under the section. In Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd [No 2] , Gummow J pointed out:
‘[I]t would be an error to translate automatically to the particular statute what appeared the closest analogue from the common law `rules' as to causation. It is rather a question of statutory construction.
...
Thus, in construing s 82 it is appropriate to bear in mind such matters as the scope and purpose of Pts IV and V ... [and] the wide range of subject matters dealt with in Pts IV and V but all linked to s 82 ...’
These observations apply equally to a claim for damages under s 159 of the Fair Trading Act. While s 82 of the Trade Practices Act provides for recovery of loss and damage where “a person suffered loss or damage by conduct … in contravention”, s 159 of the Fair Trading Act authorises recovery by “a person who suffers loss, injury or damage because of a contravention”.
Notwithstanding the broad scope of s 82, there must be some connection between the proscribed conduct, in this case representations, and the loss. The conduct must be at least a cause of the loss.[20] There must be a sufficient and direct link between the claimed loss and the conduct.[21] The test was stated by Lockhart J in Janssen-Cilag[22] thus:
Loss or damage must directly result from or be caused by the respondent’s conduct. The respondent’s conduct must be the real or direct or effective cause of the applicant’s loss; it must have been ‘brought about by virtue of’ the conduct which is in contravention of s 52.
[20]Ibid, [158] and [164].
[21]McCarthy v McIntyre supra at [48].
[22](1992) 37 FCR 526, 530.
Ultimately, the proximity of or the connection between the representations and the loss must commence with an analysis of the nature of the loss claimed, which in this case is said to flow from the contractual obligation to complete and pay the contract price. Does the nomination of the plaintiff, in the absence of any contractual obligation, enable it to claim damages for having paid more than it contends the property is worth?
The plaintiff’s introduction to the transaction was by way of Mr Cimino’s nomination. He had a contractual right to substitute any third party. His choice may have had stamp duty implications under s 31 of the Duties Act 2000, or the other families, who own units in the trust. But the nomination was a unilateral act by which the plaintiff was procured by Mr Cimino, or agreed, to pay the price and take the conveyance. If the plaintiff was not a volunteer, it is because it was required by the purchaser to pay the balance of the purchase price.
I have found that there was no novation and the plaintiff did not become a party to the contract of sale. By the time the plaintiff paid the price and took the conveyance, whether as a true volunteer or having been procured by Mr Cimino to do so, it was aware of the true lettable area of the property.
Thus, the cause of the plaintiff’s loss, if any, was either an informed choice to pay a price for the property and take the conveyance or if payment was involuntary, it was because the plaintiff was caused by its director or directors, in full knowledge of the true facts, to make the payment.
If a volunteer, the information available to the plaintiff prior to settlement eliminated the representations as having any relevant connection with its perceived loss. Put another way, if the plaintiff paid too much for the property it chose to complete and take the conveyance and therefore suffered no loss at all.
If, on the other hand, the plaintiff was procured by Mr Cimino, or its other directors or shareholders, to complete the purchase, any loss suffered by it was imposed upon it. But for the nomination it would not have suffered any loss. Having no obligation to complete, any loss to the plaintiff was caused by its nomination, not the representations.
The plaintiff’s claim for negligent misrepresentation must also fail for the same reason. The plaintiff’s claim for breach of warranty is misconceived in that if the representations are to be characterised as a warranty, it is because Mr Cimino entered into the contract of sale in reliance upon them. He is the only person entitled to rely upon them under the common law causes of action.
It is unnecessary to decide whether the plaintiff may have an arguable case against Mr Cimino or whether Mr Cimino may have an arguable case against any of the defendants. Mr Cimino is not a claimant in the proceeding, nor is he a defendant. This proceeding is confined to a claim by the plaintiff for damages based on the difference between the contract price and the market price as at the date of the contract.
The proposed amended statement of claim does not adequately plead the case now advanced by the plaintiff. It does not allege that the plaintiff became a party to the contract, required to perform the contract in lieu of Mr Cimino, or how and when that occurred. But even if satisfactorily pleaded in form, it would not assist the plaintiff. Any such pleading would be struck out as a whole as failing to disclose an arguable cause of action.
I adopt with respect, the concluding words of Barwick CJ in General Steel, where his Honour said:
This is not a case in which the plaintiff by amendment of the pleading could improve its position. I have been mindful throughout my consideration of this matter of the principles to which I have called attention and which govern the exercise of the power summarily to terminate an action. I have reached the firm conclusion that consistently with those principles I ought to intervene by order under this rule to prevent further proceedings in this action, as, in my opinion, to use one of the expressions which I have quoted, the plaintiff’s claim is so ‘manifestly groundless’ that to allow it to proceed ‘would involve useless expense’. In my opinion the proper course is to dismiss the plaintiff’s action, which I now do.
Accordingly, I propose to dismiss the proceeding.
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