Advance Business Finance Pty Ltd v Zip Zap Pty Ltd - [2012] FMCA 185

FEDERAL MAGISTRATES COURT OF AUSTRALIA

ADVANCE BUSINESS FINANCE PTY LTD v ZIP ZAP PTY LTD

[2012] FMCA 185

CONSUMER LAW – Application for further and better particulars – alternatively to strike out of pleading – principles relevant to such application – case based upon documents – circumstances giving rise to questions of knowledge.

Trade Practices Act 1974 (Cth)

Banque Commerciale SA (In Liq) v Akhil Holdings Limited (1990) 169 CLR 279
Davey v Victorian Railways Commissioners
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1965] ALR 636; (1964) 38 ALJR 253
Harris v Cigna Insurance Australia Ltd (1995) ATPR 41-445

Applicant:

ADVANCE BUSINESS FINANCE PTY LIMITED

Respondent:

ZIP ZAP PTY LIMITED

File Number:

BRG 447 of 2011

Judgment of:

Burnett FM

Hearing date:

23 January 2012

Date of Last Submission:

25 January 2012

Delivered at:

Brisbane

Delivered on:

25 January 2012

REPRESENTATION

Counsel for the Applicant:

Mr M. Brady

Solicitors for the Applicant:

Clayton Utz

Counsel for the Respondent:

Mr P. Freeburn

Solicitors for the Respondent:

Biggs Fitzgerald Pike

ORDERS

That the applicant deliver a further amended statement of claim by 4.00pm on 22 February 2012.
That the respondent deliver an amended defence by 4.00pm on 7 March 2012.
That the applicant deliver its evidence in chief in affidavit form by 4.00pm on 14 March 2012.
That the matter be listed for further directions at 9.30am on 4 April 2012.
That costs be costs in the cause.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT BRISBANE

BRG 447 of 2011

ADVANCE BUSINESS FINANCE PTY LIMITED

Applicant

And

ZIP ZAP PTY LIMITED

Respondent

REASONS FOR JUDGMENT

(Revised from transcript)

Advance Business Finance Pty Ltd (ABF) is the applicant in proceedings against Zip Zap Pty Ltd (Zip Zap), the respondent, and seeks to recover $560,862.88 damages for contraventions of the Trade Practices Act 1974 (Cth) and/or for money had and received. At this stage the applicant’s pleadings have closed and pleadings have been exchanged. A request for particulars has been made by each of the parties against each other.
The respondent, Zip Zap, considers that matters the subject of their complaint have not been adequately addressed by the applicant ABF. They have brought this application seeking orders for the applicant’s proceeding to be stayed; alternatively they request that paragraphs 17, 17(a), 17(b) and 24 of the amended statement of claim be struck out; or in the further alternative that, within 14 days of the order of the court, the applicant file and serve affidavits or statements representing the evidence in chief that the applicant proposes to adduce at the trial of this proceeding and the proceeding be further reviewed by the court; and filing for costs of and including application.
Before examining the complaints and considering the arguments, something must first be said of ABF’s case. ABF is a financier which in this instance advanced a sum of about $500,000.00 to enable an entity, ACD Scaffolding Pty Ltd (ACD), to purchase scaffolding. The negotiations were conducted on ACD’s behalf by ADI Finance brokers. An agreement was reached and AFB agreed to provide finance to ACD to purchase scaffolding to the value of approximately $500,000.00. That was on terms which are not relevant to this application.
The vendor of the scaffolding was Zip Zap. It raised an invoice for the sale of the scaffolding dated 15 May 2007 for the supply of scaffolding to ACD. The invoice particularised scaffolding which was to be delivered. The invoice was in turn also provided to ABF and ultimately funds were disbursed by ABF to Zip Zap in the expectation by ABF that Zip Zap would complete the sale and transfer possession of the scaffolding which had been defined and particularised to ACD.
The transaction provided that ABF was to receive a bill of sale by way of security over the chattels. To this point the transaction had all the characteristics of a common chattel finance arrangement, however, what appears to have occurred here, on the applicant’s case, is that despite ABF transferring a sum of about $500,000.00 to Zip Zap in the expectation that Zip Zap would in turn pass possession of the particularised scaffolding to ACD, only some of the scaffolding was delivered. In lieu of delivery of the balance of the scaffolding by Zip Zap to ACD, Zip Zap refunded to ACD its money’s worth, that is to say, the value of the undelivered scaffolding.
Needless to say, ABF was not aware of this arrangement until long after these events and presumably after ACD fell into insolvency. The specific allegations dealing with these events were initially pleaded at paragraph 17 of the statement of claim. The pleading was subsequently amended to allege a course of conduct of previous like transactions to support the allegation that the specific arrangement of 15 May was of this kind (see generally paragraphs 9(a) and 9(11) of the amended statement of claim), and that such an arrangement was consistent with the practices pleaded at paragraph 9(a) (see paragraph 17(a) and 17(b) of the amended statement of claim).
Knowledge in respect of these matters was alleged in paragraph 24 which sought to pick up those earlier allegations. Concerning the request for particulars and the complaints, in respect of paragraph 17 of the amended statement of claim, Zip Zap contended that the agreement lacked particularity and/or had other difficulties. It was contended for instance that the date of the alleged expressed oral agreement was not identified except to say that it occurred sometime between “the beginning of time and 30 May 2007.” It was further complained that the persons who may have struck the oral agreement were either of a number of people including Messrs Philp, Dipman and Potts or any combination of them.
It was complained that the place of these conversations was not adequately particularised such that the conversations may have been by telephone or in person at an address at Maroochydore. It was further complained that the legal effect of the conversation was pleaded rather than the material words or the substance of what was said. Furthermore, it was contended that the pleading asserts that particulars would be given after disclosure and interrogatories and whilst disclosure has been given and no interrogatories had been sought the particulars still remained in a vague and embarrassing form.
Concerning paragraphs 17(a) and 17(b), Zip Zap made similar complaints as it made in respect of paragraph 17 concerning the embarrassing nature of the allegation about the disbursement arrangement or understanding, likewise complaining that it had not been properly particularised in paragraph 17(a) and 17(b) and similarly in respect of the arrangement or understanding inconsistent with practice described in paragraph 9A.
In respect of paragraph 24, complaints were made that the 12 paragraphs which identified matters Mr Philp either knew or ought to have known, and of themselves were said to support his implicit knowledge of facts and circumstances, do not, of themselves, address that matter. For instance, it was discretely identified that alleging Mr Philps’ directorship as a basis for knowledge seemed of itself to be irrelevant and immaterial.
Before addressing each of those complaints, I should first make some observations about the general principles to be applied. Generally, in terms of pleadings, it is well settled, as was stated by Mason CJ and Gaudron J in Banque Commerciale SA (In Liq) v Akhil Holdings Limited:[1]
“The function of pleadings is to state with sufficient clarity the case that must be met. In this way pleadings serve to ensure the basic requirement of procedural fairness and the party should have the opportunity of meeting the case against him or her and incidentally to define the issues for decision.”
[1] (1990) 169 CLR 279
However, the power to strike out pleadings is one that ought be exercised cautiously (see generally the observations in Harris v Cigna Insurance Australia Ltd).[2] Similarly, the power to dismiss an application is one too that ought to be exercised with some caution - see Davey v Victorian Railways Commissioners and General Steel Industries Inc v Commissioner for Railways (NSW).[3]
[2] (1995) ATPR 41-445
[3] (1964) 112 CLR 125; [1965] ALR 636; (1964) 38 ALJR 253
Without seeking to gloss over the complaints made by Zip Zap which, in my view, do have merit, the applicant contends that matters complained of have been addressed or at any event would not occasion surprise to the respondent such as they are presently alleged. ABF seeks in this case to rely upon inferences it contends ought to be drawn from documents and other source material such as bank statements included in its filed material because, as is self-evident, the effect of the allegations against Zip Zap are that it was a party to an arrangement with a third party to which the applicant was alien and very much kept in the dark.
Accordingly, its case has undergone some significant transformation since its inception, in part because of the material that has come to light in the course of the interlocutory stages including disclosure. As its case developed, the applicant has amended its pleading and advised the respondent of matters within correspondence in response to a request for particulars. To some extent the action now prosecuted requires the parties and the court to distil essential allegations from matters to be cobbled together from various instruments exchanged between the parties.
I do not regard this state of affairs to be either satisfactory or fair; particularly in respect of the complaint that the various statements themselves are internally inconsistent, a complaint made by Zip Zap, especially with respect to the paragraphs in agreement but also generally. These matters, in my view, should be tidied up. To some extent, the application as prosecuted by ABF has moved on since the filing of this interlocutory application. While to be efficacious the pleading itself would not ordinarily be embellished with detailed particulars of the kind sought by Zip Zap, it is in my view best in this case that those particulars be provided, especially because of the various allegations concerning its agreement and that the allegations be contained and appropriately particularised in one compendious document.
In coming to this view I am also mindful that the case run by the applicant is largely one where it seeks for findings of fact to be made premised upon circumstantial evidence. I was taken by counsel for ABF to various bank statements and invoices which clearly give rise to argument about whether or not an inference might be drawn for the result at the conclusion of the case. The case as it presently stands is not so weak as to warrant its immediate dismissal because in my view, if one accepts the illustration made by counsel for ABF as being indicative of other instances, there are indeed questions to be addressed by the respondent.
However, the circumstances of this case do suggest that although the pleadings have closed they require further attention, especially1 given that in this instance, as counsel for ABF accepts, there will be no direct evidence by officers within ABF to assist in unravelling the intention, if any, of the parties to any third-party transaction, and the case is one that will largely be prosecuted on the documents. Accordingly it is an appropriate case in my view for the respondent to deliver evidence-in-chief at any early time in support of the application. Otherwise I will make orders as follows.

Orders

That the applicant deliver a further amended statement of claim by 4.00pm on 22 February 2012.
That the respondent deliver an amended defence by 4.00pm on 7 March 2012.
That the applicant deliver its evidence in chief in affidavit form by 4.00pm on 14 March 2012.
That the matter be listed for further directions at 9.30am on 4 April 2012.
That costs be costs in the cause.

I certify that the preceding twenty-two (22) paragraphs are a true copy of the reasons for judgment of Burnett FM.

Date: 21 March 2012