Allen v Birdanco Nominees Pty Ltd

[2015] FCA 1501

FEDERAL COURT OF AUSTRALIA

Allen v Birdanco Nominees Pty Ltd [2015] FCA 1501

Citation:	Allen v Birdanco Nominees Pty Ltd [2015] FCA 1501
Parties:	NOEL LINDSAY ALLEN and CIBOREX PTY LTD v BIRDANCO NOMINEES PTY LTD
File number:	SAD 362 of 2015
Judge:	WHITE J
Date of judgment:	17 December 2015
Catchwords:	PRACTICE AND PROCEDURE – pleadings – application to strike out pleadings pursuant to r 16.21 of the Federal Court Rules 2011 (Cth) (FCR) – application for further particulars pursuant to r 16.45 of the FCR – whether statement of claim ambiguous, evasive or embarrassing or likely to cause prejudice or delay – whether claims and material facts properly pleaded – application dismissed
Legislation:	Australian Consumer Law (Cth) ss 60, 61 Competition and Consumer Act 2010 (Cth) Sch 2 Federal Court Rules 2011 (Cth) rr 16.21, 16.45
Date of hearing:	17 December 2015
Place:	Adelaide
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	30
Counsel for the Applicants:	Mr A Lazarevich
Solicitors for the Applicants:	RSA Law
Counsel for the Respondents:	Mr N Floreani
Solicitors for the Respondents:	Gilchrist Connell
Counsel for the Third Party:	Dr R Gray
Solicitors for the Third Party:	Norman Waterhouse

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION	SAD 362 of 2015

BETWEEN:

NOEL LINDSAY ALLEN
First Plaintiff

CIBOREX PTY LTD
Second Plaintiff

AND:

BIRDANCO NOMINEES PTY LTD
Defendant

JUDGE:	WHITE J
DATE OF ORDER:	17 DECEMBER 2015
WHERE MADE:	ADELAIDE

THE COURT ORDERS THAT:

1.The Light Regional Council (“the Council”) make discovery by filing and serving a list of the following documents in its custody, possession or power by Friday 26 February 2016:  

(a)All development applications under the DevelopmentAct1993 lodged with the Council (including all records, notes, communications (including emails) or other materials relating to such applications) relating to the proposal to develop a supermarket in the vicinity of the intersection of Main Street and Carrington Street, Kapunda (“the Proposed Supermarket Development”) from 2009 until the date of this Order excluding:

(i)materials contained within the Council’s public register;

(ii)materials already in the possession of the Applicants.

(b)All meetings, agendas, notes, records of outcome, resolutions and the like relating to the deliberations and any decisions of the Council in relation to the Proposed Supermarket Development excluding:

(i)materials already within the public domain;

(ii)materials which remain confidential under Ch 6, Pt 4 of the Local Government Act 1999.

(iii)materials which the Council holds subject to an obligation of confidentiality which it has reasonably undertaken.

(c)All records, notes, communications (including emails), memoranda and other materials, not otherwise falling within paragraphs 1.a. or 1.b. relating to the Proposed Supermarket Development excluding:

(i)materials which the Council holds subject to an obligation of confidentiality which it has reasonably undertaken.

2.The Council produce the documents so discovered for inspection and copying by the Applicants.

3.The Applicants pay the Council’s reasonable costs of making discovery and giving production of the documents.

4.Liberty to the parties, including the Council, to apply.

5.The Respondent’s interlocutory application filed on 8 December 2015 is dismissed.

6.The Respondent is to pay the Applicants’ costs of and incidental to that application.

7.The matter is adjourned for further directions at 9:00am on 13 May 2016.

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

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION	SAD 362 of 2015

BETWEEN:

NOEL LINDSAY ALLEN
First Plaintiff

CIBOREX PTY LTD
Second Plaintiff

AND:

BIRDANCO NOMINEES PTY LTD
Defendant

JUDGE:	WHITE J
DATE:	17 DECEMBER 2015
PLACE:	ADELAIDE

EX TEMPORE REASONS FOR JUDGMENT

1. In these proceedings the applicants seek damages from the respondent in consequence of the purchase by the second applicant in February 2014 of a supermarket business in Kapunda, South Australia.  The respondent was retained to provide valuation advice to the applicants in relation to that purchase.  The applicants now allege breaches of contract by the respondent, misleading or deceptive conduct and, or in the alternative, negligence in the advice provided.  They assert that, had it not been for the respondent’s conduct, they (the applicants) would not have proceeded with the purchase.

2. The respondent seeks the striking out of five paragraphs of the Statement of Claim or, in the alternative, further and better particulars of at least one of those paragraphs. 

3. In relation to the strike out, the applicants rely upon r 16.21 of the Federal Court Rules 2011 (Cth) (the FCR) which provides:

   16.21   Application to strike out pleadings

   (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.

   (2)A party may apply for an order that the pleading be removed from the Court file if the pleading contains material of a kind mentioned in paragraph (1) (a), (b) or (c) or is otherwise an abuse of the process of the Court.

4. In relation to the request for further and better particulars, the applicants rely upon r 16.45 of the FCR which provides:

   16.45   Application for order for particulars

   (1)If a pleading does not give a party fair notice of the case to be made against that party at trial and, as a result, the party may be prejudiced in the conduct of the party’s case, the party may apply to the Court for an order that the party who filed the pleading serve on the party:

   (a)particulars of the claim, defence or other matter stated in the pleading; or

   (b)       a statement of the nature of the case relied on; or

   (c)       if there is a claim for damages — particulars of the damages claimed.

   (2)      An application under subrule (1) may be made only if:

   (a)       the particulars in the pleading are inadequate; and

   (b)the party seeking the order could not conduct the party’s case without further particulars.

   (3)A respondent who applies to the Court for an order under subrule (1) before filing the respondent’s defence must satisfy the Court that an order is necessary or desirable to enable the respondent to plead.

5. The principles upon which the Court acts when considering an application to strike out pleadings or when considering an application for further particulars are well known and need not be stated in detail. The power is discretionary. It is exercised only sparingly and generally only in clear cases. The exercise of each of the powers vested by rr 16.21 and 16.45 turns on the Court’s assessment of the interests of justice in the circumstances of the given case.

6. Rule 16.45 indicates that applications for further and better particulars should be made only if the party seeking the particulars may be prejudiced in the conduct of that party’s case.  Rule 16.45(2) requires that, in addition to showing that there is an inadequacy in the pleading, the party must also show that it cannot conduct its case without the further particulars which are sought.

7. Accordingly, a party must satisfy a reasonably high threshold in order to obtain the order for particulars.  In this way, the FCR evince a policy of discouraging interlocutory disputation about the adequacy of pleadings.  It can be taken that that policy is founded in the Court’s experience that interlocutory disputation about pleadings can be time consuming and expensive without advancing, in a significant way, the course of the matter to trial.

8. Having said that, parties are, of course, expected to comply with the FCR with respect to pleadings. 

9. Against that background, I turn to the particular applications made by the respondent.

   Paragraph 9

10. In paras 7 and 8 of the Statement of Claim, the applicants plead terms of the contract by which the second applicant agreed to purchase the supermarket business. One of the pleaded terms was a special condition which made the contract subject to the applicants obtaining finance of a defined kind.  Paragraph 9 then pleaded:

    It was an implied term of the Purchase Agreement that the Purchasers could nonetheless proceed with the Purchase Agreement at their election should they not be able to secure a loan from a major financial institution for the full $1.5 million amount specified in Financial Special Condition 5.

11. In correspondence between the parties, the applicants have asserted that the term pleaded in para 9 was implied as a matter of law but have not otherwise provided any particulars.  The respondent contends that para 9 is accordingly ambiguous, evasive and, or in the alternative, embarrassing or likely to cause prejudice or delay in the conduct of the proceedings and should be struck out. 

12. I do not accept that submission.  The principle that a party for whose benefit a condition in a contract is inserted may waive compliance with that condition is well established.  On my understanding, the applicants, in para 9, seem to be asserting only that principle.  Later, they allege, in effect, that the second applicant did waive the need for compliance with the finance condition.  Whether the applicants are correct to elevate the principle to the status of an implied term need not presently be decided because the respondent is adequately informed of what the applicants are, in substance, asserting.  Accordingly, they will not suffer the kind of prejudice they allege.

    Paragraph 14

13. Next, the respondent seeks the striking out of para 14 of the Statement of Claim.  In para 11 of the Statement of Claim, the applicants plead their agreement with the respondent for it to provide a valuation report.  Paragraph 12 pleads that the terms of the valuation agreement were in part oral and in part to be implied.  Paragraph 13 then pleads the oral terms.  Paragraph 14 pleads the implied terms.  It alleges, at least on its face, that there were 11 implied terms although it is apparent that some are no more than particulars of the terms pleaded earlier.

14. I accept that, on its face, para 14 does seem to plead numerous separate and distinct implied terms.  However, on my understanding, para 14, when read as a whole, is really in the nature of an allegation that the respondent was to undertake the valuation and to provide the valuation report with reasonable skill and care and to meet the standard of care to be expected of the ordinarily careful and competent valuer.  The various subparagraphs in para 14 seem to be particulars of matters which an ordinarily careful and competent valuer would address in the valuation report. 

15. I agree with the respondent that some of the subparagraphs of para 14 are not well pleaded and, taken literally, may give rise to some confusion.  However, on the understanding just outlined, I consider that para 14 will not cause the respondent the kind of prejudice about which the Court would need to be satisfied in order either to strike the paragraph out or to require further particulars.  I refuse that part of the application.

    Paragraph 21 

16. Paragraphs 20 and 21 appear under the heading “Breach of Contract”.  Paragraph 20 is a long plea by which the applicants particularise various breaches of the contract.  Paragraph 21, in contrast, is short saying only:

    Further, the [Applicants] rely on sections 60 and 61 of Schedule 2 of the [Competition and Consumer Act 2010 (Cth)].

17. The Australian Consumer Law (ACL) is contained in Sch 2 of that Act.

18. Sections 60 and 61 of the ACL provide for statutory guarantees in relation to the supply in trade or commerce of services to a consumer, being (in effect) guarantees that the services will be rendered with due care and skill.

19. The respondent complains that the applicants have not particularised how it is that they come within the category of a “consumer” to which ss 60 and 61 refer. However, the relevant definition of “consumer” in s 3(3) of the ACL is expressed in the alternative, namely:

    A person is taken to have acquired particular services as a consumer if, and only if:

    (a)the amount paid or payable for the services, as worked out under subsections (4) to (9), did not exceed:

    (i)        $40,000; or

    (ii)if a greater amount is prescribed for the purposes of subsection (1)(a)—that greater amount; or

    (b)the services were of a kind ordinarily acquired for personal, domestic or household use or consumption.

20. The Statement of Claim pleads in para 13.4 that the applicants were to pay the respondent the sum of $5,000 (plus GST) for the valuation and the valuation report.  Hence, there is apparent in the pleading a factual basis upon which it appears that the applicants will be able to bring themselves within the first limb of the definition.  That being so, I do not accept the respondent’s critique of para 21. 

21. I also consider it is apparent from the pleading, although it may be somewhat inelegant, that the applicants are relying upon the matters pleaded in para 20 for their allegation of breaches of the statutory guarantees.

    Paragraph 23

22. Paragraph 23 of the Statement of Claim contains the pleading of the negligent misstatement.  The respondent contends that this pleading is inadequate because it makes a bare assertion that it owed a duty of care to the applicants but without any particularisation of the basis upon which that duty arose; because it asserts that the representations which they are alleged to have made both in the valuation report and, later, orally, were negligent misstatements but without particularising that assertion; and because the applicants plead reliance upon the negligent misstatements without particularising that reliance.

23. I do not accept any of those submissions.  It is apparent from what I said earlier that the duty of care which the applicants allege is the well‑recognised correlative duty of care arising in almost all retainers of a person to provide professional advice or assistance.  I take the view that that being so, the respondent does not need further particulars in order to understand the way in which the applicants contend that the duty of care arose.  I do not accept the submissions with respect to the second and third of the two matters just identified, because paras 23.3 and 23.4 each contain, respectively, cross-references to earlier pleadings by which the applicants identified the negligent misstatements and their reliance.

    Paragraph 24.3

24. Paragraph 24.3 of the Statement of Claim is the complaint upon which counsel for the respondent placed the most emphasis.  The respondent needs to know, he submitted, how the applicants frame their case and also the particular quantum which they allege in the context of that case as framed. 

25. As to the first, the applicants have made it plain that they plead a no‑transaction case.  This is evident in para 24.1, by which the applicants plead expressly that, had they known the actual market value of the supermarket business, they would have taken steps immediately to invoke the first applicant’s right to terminate the purchase agreement having regard to the finance special condition.  That is plainly a plea that the applicants would not have proceeded with the contract. 

26. As to the second, the applicants have pleaded in para 24.3 as part of their loss, an assertion that the supermarket business which they purchased was of no value, because of then‑current plans for the establishment of a competing supermarket business in the relatively near vicinity to the purchased business.  The applicants plead, in the alternative, that if the business did have some value, it was significantly less than the amount which they had paid.  The primary plea, however, as I understand it, is that the supermarket business would have had no value.  That being so, it is not reasonable to require the applicants to plead a figure for their alternative position; it is sufficient for the respondent to know that the applicants allege that the value of the supermarket business, given the establishment or potential establishment of the competing business, was somewhere between nil and the amount which they paid. 

27. Accordingly, I am not satisfied that the respondent will suffer the kind of prejudice upon which the application is made.  I take into account in reaching that conclusion that the applicants have provided at least some form of formulated claim by which they have sought to quantify their loss.  I also take into account that an expert report is to be provided.  I am not satisfied at the moment that the respondent is not able to instruct its own expert in order to prepare a report in relation to the applicants’ allegations.  It may well be that, as the matter gets closer to trial, it will be appropriate for the applicants, in the light of the further material they obtain, to provide a further articulated statement of loss the allege, and for the respondent to provide an answering statement.  That is something which can be addressed as part of the ordinary directions in due course. 

28. The respondent did not pursue those parts of its application which concerned paras 20, 22 and 24.6 of the Statement of Claim and, accordingly, it is not necessary for the Court to address those. 

29. The respondent’s interlocutory application is dismissed.

30. The applicants’ application for non‑party discovery by the Light Regional Council is allowed by consent.

I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White.

Associate:

Dated:       23 December 2015