Anderson, J.H. v D & a Financial Services Pty Ltd

[1991] FCA 604

Re: JAMES HOWARD ANDERSON and RAYMOND WILLIAM GROSE
And: D. and A. FINANCIAL SERVICES PTY LIMITED; PAUL BRAZENOR; DONALD CHURCH
and MICHAEL CLAYTON
No. N G387 of 1991
FED No. 604
Practice and Procedure - Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Foster J.(1)

CATCHWORDS

Practice and Procedure - Statement of Claim - No reasonable cause of action - s.52(1) Trade Practices Act 1974 claim based on potential conduct only - Need to particularise alleged false and misleading qualities of conduct.

Trade Practices - Injunctive relief under s.80 Trade Practices Act 1974 - Whether s.52(1) Trade Practices Act 1974 can be breached by potential conduct - Pleadings.

Trade Practices Act 1974 ss.52(1), 75, 80(1), 80(4), 163A

Federal Court Rules O.11 r.2, O.11 r.16, O.12 r.2, O.20 r.2

Concrete Constructions (NSW) Pty Limited v Nelson (1990) 64 ALJR 293

HEARING

SYDNEY

#DATE 20:9:1991

Counsel for the applicants : N.A. Cotman

Instructed by : Moray and Agnew

Counsel for the respondents : T.M. Jucovic QC with J.W. Durack

Instructed by : Kalyk Nash Lawyers

ORDER

Paragraphs 7, 8, 9 and 12 of the Statement of Claim be struck out.

The following portion of paragraph 11 of the Statement of Claim be struck out:
"and has by its solicitor falsely alleged wilful
misconduct by each of the applicants".

Paragraphs 1 and 2 of the Application be stayed.

The applicants provide the particulars requested in paragraph 4, 5, 6 and 9 of the letter of Kalyk Nash Lawyers to Moray and Agnew of 15 August 1991.

The applicants pay the respondents' costs of the notice of motion heard today.

The applicants be granted leave to replead.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

The respondents notice of motion of 20 September 1991 seeks orders in relation to the applicants' application and statement of claim. It also seeks orders that certain particulars be supplied as requested in a letter from the respondents' solicitors to the applicants' solicitors dated 15 August 1991.

1. It is convenient to deal first with the respondents' claim that paragraphs 7, 8, 9, 11 and 12 of the statement of claim be struck out. This application is founded on Order 11 rules 16(a) and (b) of the Federal Court Rules on the basis that those paragraphs disclose no reasonable cause of action and/or have a tendency to cause embarrassment or delay in the proceedings. Reliance is also placed on Order 20 rule 2 in that these paragraphs disclose no reasonable cause of action.

2. Before turning to the paragraphs it is perhaps necessary to state that the applicants are ex-employees of the first respondent which is a company providing financial and advisory services to professional clients. The second, third and fourth respondents are directors of the company, as were the applicants before the termination of their employment at a meeting of directors on 16 July 1991. At that meeting a letter was handed to the applicants by the respondents and conversations took place that are referred to in the paragraphs sought to be struck out. These paragraphs read as follows:
   

"7. The respondents have by letter dated 16 July 1991 and by conversation at a meeting of directors dated 16 July 1991 represented that the applicants were dismissed for cause. PARTICULARS:

(a) Full particulars of these representations are found in the Affidavits of each of the applicants dated 18 July 1991 and filed herein.

8. The representations referred to in paragraph 7 are false and misleading.

9. If the representations were published the applicants would suffer loss and damage.

...

11. The first respondent has refused to pay the said long service leave and has by its solicitor falsely alleged wilful misconduct by each of the applicants.

12. If the allegations of misconduct were published the applicant would suffer loss and damage."

1. Each of the applicants has sworn an affidavit of 18 July 1991 in support of the application and statement of claim and I have been taken to the relevant parts of those affidavits. There is no need to set them out here.

2. These paragraphs of the statement of claim are intended to plead causes of action under section 52 and section 80 of the Trade Practices Act 1974 ("the Act"). It is the respondents' contention that they fail to do so and should accordingly be struck out.

3. Insofar as the paragraphs relate to events occurring between the applicants and the second, third and fourth respondents which amounted to internal communications between co-employees of the first respondent, it is conceded by counsel for the applicants that these events could not occur relevantly in trade and commerce and accordingly could not ground breaches of the Act. Concrete Constructions (NSW) Pty Limited v Nelson (1990) 64 ALJR 293.

4. It is put by the applicants, however, that paragraphs 7 and 8 are not intended in themselves to allege a cause of action but are merely prefatory to paragraphs 9 and 12 in which the cause of action is set forth as a breach of section 52 of the Act giving rise to a right to claim injunctive relief under section 80. The respondents say that even so, no cause of action is alleged as the paragraphs do not relevantly state any conduct or threatened conduct on behalf of the respondents or any of them. Indeed, it is clear that the paragraphs do not in fact make any such allegations. Counsel for the applicants says that this is of no consequence as the cause of action relied upon could be made out by establishing that the representations complained of in the letter and in the conversations of 16 July 1991 were relevantly false and misleading and then asserting that if these representations were published to third parties, then loss and damage would accrue to the applicants.

5. I am satisfied that this submission must be rejected. Section 52(1) of the Act provides as follows:
   

"A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive." Section 80(1), so far as relevant, provides:

"Where, on the application of ... any ... person, the Court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute:

(a) a contravention of a provision of Part IV or V;

(b) attempting to contravene such a provision;

(c) aiding, abetting, counselling or procuring a person to contravene such a provision;

...

(e) being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or

(f) conspiring with others to contravene such a provision; the Court may grant an injunction in such terms as the Court determines to be appropriate."

1. I am clearly of the view that there can be no breach of section 52 by any person with a consequent involvement of section 80 unless that person engages in conduct of the kind described in the sections. I am further satisfied that, contrary to the submissions of counsel for the applicants, the provisions of section 80(4) do not alter this position.

2. Paragraphs 9 and 12 make no allegations of conduct in the way of publication of the relevant representations by the respondents. Paragraph 11, insofar as it relates to allegations by the solicitor of the first respondent is not, it is conceded, intended to allege publication in trade and commerce. Consequently, no cause of action under the Act is pleaded in these paragraphs.

3. I have considered whether paragraphs 7 and 8 might be retained while paragraphs 9 and 12 only be struck out. The course of argument, however, has made it quite plain that considerable ambiguity exists in these paragraphs as presently framed. It appears from reference to the relevant portions of the affidavits that it was stated by the respondents that the applicants were in fact being dismissed for cause, the reasons being given at some length. What is sought to be alleged is that those reasons, as given, were false and misleading. The pleading does not make this clear in my opinion. Indeed, particulars of the alleged false and misleading qualities of the representations would clearly be called for pursuant to Order 12 rule 2, if not under Order 11 rule 2. This is the more so as it appears that the applicants wish to challenge the dismissal itself as being in effect a sham or charade.

4. In short, I consider that these defects require that paragraphs 7 and 8 should also be struck out. Accordingly, I order the striking out of paragraphs 7, 8, 9 and 12. Because there is some ambiguity in the last part of paragraph 11, I order that it be struck out from the words "and has" to the words "of the applicants". I grant to the applicants leave to re-plead.

5. It follows in my view that the respondents' attack on paragraphs 1 and 2 of the application must succeed. No remaining paragraphs of the statement of claim, if proved, are capable of supporting the declaration sought in paragraph 1. The submissions by counsel for the applicant based upon section 163A of the Act do not cause me to alter this view. It also follows that for the same reasons paragraph 2 of the application cannot stand. I do not dismiss them as it seems more appropriate to stay proceedings in respect of them under Order 20 rule 2 and grant to the applicants leave to replead. I make order 1A of the notice of motion with this variation.

6. The respondents also claim in paragraph 1 of the notice of motion that the statement of claim be dismissed as against the second, third and fourth respondents. The statement of claim as it stood before the orders I have just made was, in my view, incapable of supporting any claims against these respondents for breach of the Act. It was deficient in any pleading that engaged section 75 of the Act and it did not attract the application of section 80(1)(b),(c),(e) or (f) as a basis for the granting of injunctive relief. Now that the other paragraphs are struck out the position is beyond doubt. I think it better, however, merely to stay the proceedings against the second, third and fourth respondents and grant leave as before to the applicants to replead.

7. There remains the application for the ordering of particulars. As I understand it, the respondents, in the event that I made the orders which I have now made, did not seek orders for the supply of any particulars except as asked for in paragraphs 4, 5, 6 and 9 of the letter of their solicitor of 15 August 1991. Paragraphs 4 and 5 of that letter sought particulars of the employment of the applicants with the first respondent. Although these facts should be in the possession of the respondents, I have decided after some hesitation, that the request should be answered. It is probably capable of being answered quite shortly with reference to documents. It is desirable that answers be given so that the issues can be fully defined for trial.

8. In relation to paragraph 6, although it seems most likely that the term is said to be implied merely from the fact of employment, I consider that an answer should be given so that that fact may be ascertained or, if there are any special facts or circumstances, they can be made known.

9. In answer to the request in paragraph 9, it is clear from what has been said in argument that the amount of $225,000 is said to be the annual earnings of the applicants. It does appear, however, that some computation is involved in arriving at this figure. It is reasonable that the request be answered so that this can be made clear and the manner in which the applicants make the calculation be made known.

10. Accordingly, I order that the applicants provide the particulars requested in paragraphs 4, 5, 6 and 9 of the letter of Kalyk Nash Lawyers of 15 August 1991, within 14 days.

11. I order the applicants to pay the respondents costs of the notice of motion.