ALDALASH Investments Pty Ltd as Trustee for the Alan Lazarus Family Trust and John Stephen Drysdale as Trustee for the Drysdale Family Trust v Trackball Pty Ltd
[2005] WASC 11
ALDALASH INVESTMENTS PTY LTD as Trustee for THE ALAN LAZARUS FAMILY TRUST and JOHN STEPHEN DRYSDALE as Trustee for THE DRYSDALE FAMILY TRUST & ANOR -v- TRACKBALL PTY LTD & ORS [2005] WASC 11
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2005] WASC 11 | |
| Case No: | CIV:1712/2003 | 9 FEBRUARY 2005 | |
| Coram: | BLAXELL J | 18/02/05 | |
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Order striking out parts of pleading | ||
| B | |||
| PDF Version |
| Parties: | ALDALASH INVESTMENTS PTY LTD as Trustee for THE ALAN LAZARUS FAMILY TRUST and JOHN STEPHEN DRYSDALE as Trustee for THE DRYSDALE FAMILY TRUST ESCAPE AIRCONDITIONING PTY LTD TRACKBALL PTY LTD (010 352 701) JULIE XANTHI AVRAAMIDES GEORGIA LIMBEROPOULOS JOHN LIMBEROPOULOS ALDALASH INVESTMENTS PTY LTD JOHN STEPHEN DRYSDALE ALAN TERRENCE LAZARUS JARED DRYSDALE |
Catchwords: | Practice and procedure Pleadings Application to strike out defence and counterclaim Whether or not pleading discloses reasonable cause of action Whether or not embarrassing Turns on own facts |
Legislation: | Rules of the Supreme Court 1971 (WA), O 20, r 8, r 13, r 19 Trade Practices Act 1974 (Cth), s 51AA, s 51AC, s 52, s 53A |
Case References: | Bruce v Odhams Press Ltd (1936) 1 All ER 287 Gold and Birbeck and Bacon v Mount Oxide Mines Ltd (1916) 22 CLR 490 Queensland v Pioneer Concrete (Qld) Pty Ltd (1999) FCA 499 Emlen Pty Ltd v Walbrook Trustees (Jersey) Ltd, unreported; SCt of WA; Library No 970057; 19 June 1997 Gates v City Mutual Life Assurance (1986) 160 CLR 1 Marinkovich & Anor v Morkim Pty Ltd & Ors [2001] WASC 46 Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 Thorpe v Lock [2004] VSC 53 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- First Plaintiff
ESCAPE AIRCONDITIONING PTY LTD
Second Plaintiff
AND
TRACKBALL PTY LTD (010 352 701)
First Defendant
JULIE XANTHI AVRAAMIDES
GEORGIA LIMBEROPOULOS
Second Defendants
JOHN LIMBEROPOULOS
Third Defendant
(BY ORIGINAL ACTION)
(Page 2)
- TRACKBALL PTY LTD (010 352 701)
First Plaintiff
JULIE XANTHI AVRAAMIDES
GEORGIA LIMBEROPOULOS
Second Plaintiffs
AND
ALDALASH INVESTMENTS PTY LTD
First Defendant
JOHN STEPHEN DRYSDALE
Second Defendant
ALAN TERRENCE LAZARUS
Third Defendant
JARED DRYSDALE
Fourth Defendant
ESCAPE AIRCONDITIONING PTY LTD
Fifth Defendant
(BY COUNTERCLAIM)
Catchwords:
Practice and procedure - Pleadings - Application to strike out defence and counterclaim - Whether or not pleading discloses reasonable cause of action - Whether or not embarrassing - Turns on own facts
Legislation:
Rules of the Supreme Court1971 (WA), O 20, r 8, r 13, r 19
Trade Practices Act 1974 (Cth), s 51AA, s 51AC, s 52, s 53A
(Page 3)
Result:
Order striking out parts of pleading
Category: B
Representation:
Original Action
Counsel:
First Plaintiff : Mr M Solomon
Second Plaintiff : Mr M Solomon
First Defendant : Mr M Clay
Second Defendants : Mr M Clay
Third Defendant : No appearance
Solicitors:
First Plaintiff : Gadens Lawyers
Second Plaintiff : Gadens Lawyers
First Defendant : Martin de Haas
Second Defendants : Martin de Haas
Third Defendant : No appearance
(Page 4)
Counterclaim
Counsel:
First Plaintiff : Mr M Clay
Second Plaintiffs : Mr M Clay
First Defendant : Mr A G Jones
Second Defendant : Mr A G Jones
Third Defendant : Mr A G Jones
Fourth Defendant : Mr A G Jones
Fifth Defendant : Mr A G Jones
Solicitors:
First Plaintiff : Martin de Haas
Second Plaintiffs : Martin de Haas
First Defendant : Gadens Lawyers
Second Defendant : Gadens Lawyers
Third Defendant : Gadens Lawyers
Fourth Defendant : Gadens Lawyers
Fifth Defendant : Gadens Lawyers
Case(s) referred to in judgment(s):
Bruce v Odhams Press Ltd (1936) 1 All ER 287
Gold and Birbeck and Bacon v Mount Oxide Mines Ltd (1916) 22 CLR 490
Queensland v Pioneer Concrete (Qld) Pty Ltd (1999) FCA 499
Case(s) also cited:
Emlen Pty Ltd v Walbrook Trustees (Jersey) Ltd, unreported; SCt of WA; Library No 970057; 19 June 1997
Gates v City Mutual Life Assurance (1986) 160 CLR 1
Marinkovich & Anor v Morkim Pty Ltd & Ors [2001] WASC 46
Sellars v Adelaide Petroleum NL (1994) 179 CLR 332
Thorpe v Lock [2004] VSC 53
(Page 5)
1 BLAXELL J: This is an application to strike out certain portions of the first and second defendants' substituted defence and counterclaim on the grounds that the same:
(1) Disclose no reasonable cause of action (or defence).
(2) May prejudice, embarrass or delay the fair trial of the action.
2 The claim and counterclaim each arise from the circumstances surrounding the sale of a supermarket business by the second plaintiff ("Escape") to the first defendant ("Trackball"). At all material times the supermarket operated in shop premises leased from the first plaintiff, and contemporaneously with the sale of the business there was an assignment of the lease from Escape to Trackball.
3 There are issues as to which parties negotiated on behalf of whom at the time of the agreements for the sale of the business and assignment of the lease. The plaintiffs contend that the relevant negotiations were between the second-named first plaintiff ("Drysdale Senior") on behalf of all plaintiffs, and the third defendant ("Limberopoulos") on behalf of all defendants. As I understand the first and second defendants' pleading, they admit that the relevant negotiations were largely between Drysdale Senior and Limberopoulos, but also say that at various times the third defendant by counterclaim ("Lazarus") negotiated on behalf of the first plaintiff, the fourth defendant by counterclaim ("Drysdale Junior") negotiated on behalf of himself and Escape, and the second defendants also became involved on behalf of themselves and Trackball.
4 The pleadings in this matter are very difficult to digest, but I understand the following matters to be either common ground or not seriously challenged:
• The supermarket was situated in the Lynn Street Shopping Centre at Trigg and was the major tenancy in that centre. Prior to the supermarket being acquired by Escape, it had not been operated in a manner that was satisfactory to the first plaintiffs.
• In September 2001 the first plaintiffs procured an agreement from the then owner of the supermarket business to sell it to Escape. The sole director and shareholder of Escape was Drysdale Junior who was the son of Drysdale Senior.
(Page 6)
- • During July and August 2002 there were negotiations between the parties, culminating in the agreement for the sale of the supermarket and the assignment of the lease from Escape to Trackball.
• Each side to the negotiations alleges that there were representations and warranties by the other which induced and were relied upon in entering into the agreement.
• Trackball acquired a lease of the supermarket for a period of 5 years from 1 September 2002 but vacated the premises on 21 May 2003. (The circumstances in which this occurred are very much in issue).
5 It is against this background that the plaintiffs claim that during the course of the negotiations Limberopoulos made certain representations and warranties which were either false or were subsequently breached. These representations and warranties were to the effect (inter alia) that he had the skill and experience to make the supermarket and the whole of the Lynn Street Shopping Centre very profitable, and would ensure that the supermarket would be operated by people with the right skill and experience. It is said that by making the representations Limberopoulos engaged in misleading and deceptive conduct contrary to the Fair Trading Act which has caused the plaintiffs loss and damage.
6 The statement of claim also pleads that by vacating the supermarket on 21 May 2003, Trackball repudiated the lease, which repudiation was accepted by the first plaintiffs and has resulted in loss and damage. The damages allegedly suffered include unpaid rent and outgoings, and the same are also claimed against the second defendants as guarantors.
7 Escape also alleges that there was misleading and deceptive conduct by Limberopoulos in the course of negotiations, and claims damages including the loss of an opportunity to sell the supermarket business for a greater sum. Escape further claims the sum of $11,927.44 said to be due from Trackball pursuant to the purchase agreement.
8 The first and second defendants' substituted defence and counterclaim pleads that during the course of the negotiations certain representations and warranties were made by various defendants to the counterclaim. These included representations or warranties that the supermarket had a certain turnover, that the stock was of a certain value, that the plant and equipment was unencumbered and was suitable for particular purposes, that the shopping centre was fully let, that adjoining vacant shops would be occupied by a gymnasium, that an Indian restaurant in the centre would open during the day as a coffee shop, and
(Page 7)
- that a neighbouring service station would not be operated as a supermarket or delicatessen.
9 The defence and counterclaim asserts that all of the representations were false, that all of the warranties were breached, that there was misleading and deceptive conduct contrary to s 52 of the Trade Practices Act 1974 (Cth) ("TPA"), false and misleading representations contrary to s 53A of the TPA, unconscionable conduct contrary to s 51AA and/or 51 AC of the TPA, as well as breaches of the lease agreement entitling a termination of the same. It is further pleaded that the purchase contract was uncertain in its terms.
10 The first and second defendants counterclaim damages for breach of contract or pursuant to the TPA and also seek other relief including a declaration that the agreement or agreements "do not constitute a valid contract or contracts" or are void for uncertainty. They further seek a declaration that they validly terminated the lease, purchase contract, and/or guarantee; and claim relief pursuant to s 87 of the TPA.
11 The application to strike out lists three paragraphs of the first and second defendants' pleading which are said to disclose no reasonable cause of action, and a further 89 paragraphs or subparagraphs which the plaintiffs contend may prejudice, embarrass or delay the fair trial of the action. In support of this application, the plaintiffs rely upon comprehensive written submissions which were touched upon only briefly by counsel at the time of the hearing.
12 The first and second defendants contend that the bulk of the objections to their pleading are pedantic and unreasonable, and have chosen not to address the plaintiffs' submissions in any detail. Their counsel points out that the application to strike out was made some five months after the filing of the defence and counterclaim, and he has made submissions which would be appropriate if the plaintiffs were in need of any extension of time. However, a case management direction by Registrar C Boyle made on 6 August 2004 specifically ordered that "any time limit for a party to apply to amend, seek particulars of, or strike out a pleading is not to begin to run until after the parties have attended a mediation conference." As the parties are still to attend a mediation conference, the present application is within time.
13 Counsel for the first and second defendants has also submitted that the plaintiffs had no difficulty in pleading a defence to the counterclaim, and that if they were in need of clearer understanding of the defence case,
(Page 8)
- they should more appropriately have requested further and better particulars. Quite obviously, this submission cannot answer any failure of the counterclaim to disclose a reasonable cause of action, nor can it overcome the requirement (in Rules of the Supreme Court 1971, O 20 r 13) that the pleading contain the necessary particulars. As to the latter, the particulars that are "necessary" are those that:
" … fill in the picture of the plaintiff's cause of action with information sufficiently detailed to put the defendant on his guard as to the case (that) he (has) to meet and to enable him to prepare for trial."
(Bruce v Odhams Press Ltd (1936) 1 All ER 287, 294).
14 Notwithstanding these requirements, the present regime of case flow management often results in the Court being tolerant of minor infringements of the pleading rules. The Court will look to whether the defects have substance, or whether, notwithstanding any deficiencies in the pleading, the fundamental function of pleading is still served. (Queensland v Pioneer Concrete (Qld) Pty Ltd (1999) FCA 499 at [18]). That fundamental function of pleading is served if the party's case is stated with "sufficient clearness". (Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (1916) 22 CLR 490, 517).
15 In the present instance, the plaintiffs contend that three paragraphs of the defence and counterclaim should be struck out as disclosing no reasonable cause of action. The first of these is par 5.2 which pleads that:
"The plaintiffs, further and alternatively, any one or more of them, engaged in conduct in trade or commerce that … constituted the making of a false and misleading representation in contravention of s 53A of the TPA … concerning:
(a) the use to which shop 8 was capable of being put or might be put; and
(b) the existence and availability of facilities associated with shop 8 and the premises."
16 This claim is said to arise from the "matters pleaded in paragraphs 4" which the plaintiffs say do (or does) not plead all of the elements of a claim under s 53A. Paragraph 4 is a cumbersome plea which stretches over 17 pages of the pleading, and it would have been very helpful if par 5.2 had specified the particular subparagraphs relied upon. Nevertheless, after re-reading these 17 pages a number of times, it seems
(Page 9)
- to me that the alleged misrepresentations that fall within s 53A could only be those relating to the air-conditioning (subpar 4.6(d) and 4.19(f)) and the power supply (subpar 4.6(e), (f) and 4.19(g), (h)).
17 In each instance it is pleaded that the misrepresentation is to be inferred from the silence of the plaintiffs about particular matters in the course of the negotiations for the lease of shop 8. The first and second defendants do not plead any circumstances which might give rise to a duty to disclose the matters complained of. Although the alleged conduct of the plaintiffs could conceivably amount to misleading or deceptive conduct contrary to s 52 of the TPA, in my view, the first and second defendants have not pleaded all of the elements of a claim under s 53A. Accordingly, par 5.2 of their defence and counterclaim should be struck out.
18 The first and second defendants also have a problem with par 8.2 of their defence and counterclaim which, in my view, fails to disclose a reasonable cause of action. Par 8.2 pleads that:
" … the plaintiffs, further and alternatively, any one or more of them, engaged in conduct in trade or commerce that … was unconscionable in contravention of the unwritten law of Western Australia, s 51A of the TPA, further and alternatively, s 51AC of the TPA."
19 One minor problem with this plea is that s 51AA(2) of the TPA effectively prevents claims under both s 51A and s 51AC. Of greater concern is the failure of the first and second defendants to plead any circumstances which resulted in them being under a special disadvantage viz-a-viz the plaintiffs. In the well-known decision of the High Court in Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447, Deane J stated at 474 that for unconscionable conduct to exist there must be:
" … circumstances in which (i) a party to a transaction was under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them and (ii) that disability was sufficiently evident to the stronger party to make it prima facie unfair or "unconscientious" that he procure, or accept, the weaker party's assent to the impugned transaction in the circumstances in which he procured or accepted it."
(Page 10)
20 Paragraph 11.10(a) of the defence and counterclaim claims that there was misleading and deceptive conduct contrary to s 52 of the TPA "by reason of the matters pleaded in the preceding subparagraphs". The preceding subparagraphs assert that the first and second defendants were without any copy of the purchase contract at any material time, and that when paying certain moneys they relied on advice from either Drysdale Junior or Drysdale Senior as to certain of its terms. It is not pleaded that any of that advice was false and accordingly par 11.10(a) does not disclose a reasonable cause of action. (In my view, the same applies to par 11.10(b), but this subparagraph has not been included in the application to strike out.)
21 It is clear from the above that there are substantial problems with the defence and counterclaim and for this reason I do not propose to deal seriatim with the remaining 89 objections set out in the plaintiffs' application. Suffice it to say that I consider the bulk of the plaintiffs' objections to be valid, and I accept all of their written submissions other than for the following paragraphs of the same:
"12(b)-(d), 14, 17, 21, 24, 28, 39, 44-48 inclusive, (as to 46, note that par 9.7 of the counterclaim appears to be anticipatory of the defence and should not be there in any event), 51, 57, 60, 65-77 inclusive (which I consider to be unnecessarily pedantic), and 83."
22 As I have accepted the bulk of the plaintiffs' submissions, it follows that a very substantial proportion of the defence and counterclaim must be struck out. Nevertheless, the first and second defendants should be afforded the opportunity to recast their defence and counterclaim, and in my view they should be allowed an extended period in order to ensure that their new pleading is soundly based. Accordingly, the first and second defendants will have leave to file a further amended defence and counterclaim within 28 days.
23 I would urge whoever is responsible for this exercise to pay particular regard to the requirement of Rules of the Supreme Court 1971, O 20 r 8, that the pleading be as brief as the nature of the case admits. I also suggest that a "scattergun" approach to pleading might, in the end, be counterproductive. In the unfortunate event of this matter ever proceeding to trial, the judge hearing the case is more likely to be impressed by a pleading which focuses on the real issues between the parties than one when canvasses every conceivable defence and counterclaim.
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