AM Stevens Pty Ltd v Australian Red Cross Society

[2002] FCA 1287

FEDERAL COURT OF AUSTRALIA

AM Stevens Pty Ltd v Australian Red Cross Society [2002] FCA 1287

PRACTICE AND PROCEDURE – application to strike out cause of action – whether deficiency of pleading of loss or damage

Federal Court Rules O11 r 16A, O 13 r 2, O 20 r 2A

Bond Corporation Pty Ltd v ThiessContractors Pty Ltd (1987) 14 FCR 215 referred to
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 applied
Blacker v National Australia Bank Ltd [2001] FCA 254 referred to
Murphy v Overton Investments Pty Ltd (2001) 112 FCR 182 referred to

AM STEVENS PTY LTD v AUSTRALIAN RED CROSS SOCIETY and PRANK NOMINEES PTY LTD (FORMERLY NATIONAL CAPITAL PROPERTIES PTY LTD)
AG 99 of 1998

CANBERRA
GYLES J
8 OCTOBER 2002

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY	AG 99 OF 1998

BETWEEN:

AM STEVENS PTY LTD
APPLICANT

AND:

AUSTRALIAN RED CROSS SOCIETY
FIRST RESPONDENT

PRANK NOMINEES PTY LTD (FORMERLY NATIONAL CAPITAL PROPERTIES PTY LTD)
SECOND RESPONDENT

AND BETWEEN:

AUSTRALIAN RED CROSS SOCIETY
FIRST CROSS-CLAIMANT

PRANK NOMINEES PTY LTD (FORMERLY NATIONAL CAPITAL PROPERTIES PTY LTD)
SECOND CROSS-CLAIMANT

AND:

LEIGHTON CONTRACTORS PTY LTD
CROSS-RESPONDENT

JUDGE:

GYLES J

DATE OF ORDER:

8 OCTOBER 2002

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.   The motion is dismissed.

2.   The costs of the motion are reserved to the disposition of the docket judge.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY	AG 99 OF 1998

BETWEEN:

AM STEVENS PTY LTD
APPLICANT

AND:

AUSTRALIAN RED CROSS SOCIETY
FIRST RESPONDENT

PRANK NOMINEES PTY LTD (FORMERLY NATIONAL CAPITAL PROPERTIES PTY LTD)
SECOND RESPONDENT

AND BETWEEN:

AUSTRALIAN RED CROSS SOCIETY
FIRST CROSS-CLAIMANT

PRANK NOMINEES PTY LTD (FORMERLY NATIONAL CAPITAL PROPERTIES PTY LTD)
SECOND CROSS-CLAIMANT

AND:

LEIGHTON CONTRACTORS PTY LTD
CROSS-RESPONDENT

JUDGE:	GYLES J
DATE:	8 OCTOBER 2002
PLACE:	SYDNEY

EX TEMPORE REASONS FOR JUDGMENT

1. This case concerns a contract entered into in October 1994 and completed in September 1995.  The original Statement of Claim is dated 25 September 1998 and the immediate Statement of Claim is dated 6 September 2001.  The motion before me is by the respondents to the proceeding seeking the striking out of a cause of action pursuant to O 20   r 2A of the Rules of Court on the ground that no reasonable cause of action is disclosed, in the alternative, that certain paragraphs be struck out pursuant to O 11 r 16A for the same reason and in the further alternative, for particulars together with costs.

2. A number of matters have been argued and it is no disrespect to the arguments of counsel that I am able to come to a view about the matter today.  Indeed, it is because of those arguments that I have been able to come to that view.  Having in mind the time since the contract was entered into and the time since the proceedings were commenced it is, in my opinion, important that the question at issue be decided as promptly as possible to enable this litigation to be disposed of one way or another as expeditiously as possible.  In giving these reasons I do not propose to set out the pleadings or the evidence which has been tendered before me (which incorporates by reference some of the material which has been obtained in preparation for the case) or endeavour to summarise the careful submissions which I have received, both oral and written. I will assume knowledge of these.

3. First of all there is a question as to the amendment of par 13, which was foreshadowed in par 4 of the applicant's submissions in writing.  In my opinion that amendment should be allowed.  It does not constitute a new cause of action and has been foreshadowed (if necessary) for a long time.

4. The second issue is that the applicants on the motion allege a deficiency in the pleading of loss or damage relying upon, in particular, the decision of French J in Bond Corporation Pty Ltd v ThiessContractors Pty Ltd (1987) 14 FCR 215 at 222. Even if this decision is correct (as to which I respectfully have some doubt) I would not exercise any strike out power under either rule on this account. The pleading in question has been part of the Statement of Claim at all times, and the particulars of damage which have now been provided do not, in my opinion, change the cause of action. Even if they did, in my opinion, they would arise out of substantially the same facts as those already pleaded, within the meaning of O 13 r 2.

5. Thirdly, in my opinion, the particularisation of the loss or damage has now adequately taken place, with the applicant pinning itself to the report of Dr Ferrier.  That report, of course, requires proof of the assumptions that he makes, but the methodology which is applied, and the detail of that methodology, is, in my opinion, very clearly set out.  There is no case for any further particularisation.

6. Fouthly, it is contended that it would not be just to allow any change of case at this stage.  Even if there were such a change of case, I do not think that there has been any evidence given of insuperable or serious difficulties of preparation of the case on the basis of the report which is now relied upon.  It is up to the respondents to the proceeding as to how and whether they counter that case and at what level they do so.  It should be clear that this view is based upon the applicants being held to the case on damages which they now particularise, both as to methodology and detail.  I, of course, cannot bind the trial judge in that respect, but what I have said will, no doubt, be noted.

7. The issue of substance which, in my opinion, arises on the motion is whether the case as particularised is so demonstrably misconceived as to meet the test for striking out laid down by the High Court in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 and the many cases which have followed it. The assumption upon which this argument takes place is that the representations in question induced the purchase of commercial premises and the consequent relocation of a medical practice from rented premises elsewhere. The basic contention of the applicant in the proceeding is that the overall effect of the relocation will leave the applicant considerably worse off financially by the time of the retirement from practice of Dr Mark Stevens than it would have been had the relocation not taken place. This comparison, according to the expert, takes into account a wide variety of factors including alternative investments. Counsel for the respondents suggests this is an unconventional approach to damages in cases such as this and has put forward various reasons why this approach, in the case of the purchase of commercial real estate, is flawed. Each side has referred me to a number of decisions including those of the High Court and this Court. Counsel for the applicant has not been able to cite any case directly in point to support its position, with the possible exception of Blacker v National Australia Bank Ltd [2001] FCA 254.

8. Counsel for the respondents is correct, I think, in putting that this is an unconventional approach to proof of damages in cases such as the present.  However, in my opinion, the decision of the Full Court in Blacker and the decision of another Full Court in Murphy v Overton Investments Pty Ltd (2001) 112 FCR 182 reveal that the issue which arises cannot be regarded as so clear that the applicant's position is so demonstrably misconceived as to fall within the General Steel test for striking out.  I therefore dismiss the application.  If it turns out that the applicant's approach is misconceived for the reasons now advanced on behalf of the respondents there may well be a case for a special order as to the costs of the action.  Again, however, I cannot bind the trial judge as to that.   

9. As far as costs of this motion are concerned, it is fair to say that the respondents to the proceeding, the applicants on the motion, have substantially failed.  On the other hand, the applicant in the proceeding did seek an amendment and, in my opinion, it was bound to seek an amendment.  I do not feel that I have a sufficient grip upon the whole history of these proceedings to make a sound order for the costs of this interlocutory motion.  What I propose to do, therefore, is to reserve the question of costs of this application for the docket judge who is familiar with the case.  He will have, of course, the benefit of these reasons together with the submissions, written and oral, which have been made to me today.

I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles.

Associate:

Dated:             21 October 2002

Counsel for the Applicant:	P Gray
Solicitor for the Applicant:	Minter Ellison
Counsel for the Respondents / Cross-Claimants:	RJ Arthur
Solicitor for the Respondents / Cross-Claimants:	Meyer Clapham
Counsel for the Cross-Respondent:	J Fenton
Solicitor for the Cross-Respondent:	Curwood and Partners
Date of Hearing:	8 October 2002
Date of Judgment:	8 October 2002