Austen, M.J. v Ansett Transport Industries (Operations) Pty Ltd

[1991] FCA 704

LIMITED DISTRIBUTION

C A T C H W O R D S

PRACTICE AND PROCEDURE - application for leave to amend statement of claim - negligent misrepresentation - whether plea bad - whether pleading discloses cause of

action

Federal Court Rules 0.13 r.2

Hedlev Bvrne & CO. Ltd. v. Heller and Partners
Ptv. Ltd. [l9641 A.C. 465
pinistrv of Housina and Local Government v. Sharp
[l9701 2 Q.B. 223

Everett v. Griff- [l9201 3 K.B. 163

BT Australia Ltd, v. Raine & Horne Ptv. Ltd.

(19831 3 N.S.W.L.R. 221

-.v. Public Trustee for Western Australia

119801 W.A.R. 97

v. i ~ e c ~ist;alia Ltd. & Crew [l9731 V.R. 39

puaheq v. Australian Blue Metal Ltd.

[1964-19651 N.S.W.L.R. 938

Bealey v. Bank of New South Wales (1898) 24 V.L.R. 405
San Sebastian Ptv. Ltd. v. Minister Administerina the
Environmental Plannina and Assessment Act 1979
11986) 162 C.L.R. 340 - ~~ -~ - -

REGISTRY

~abwahd	Ptv. Ltd. v. National Australia Bank Ltd.
[l9891 A.T.P.R.	40-950

MICHAEL JAMES AUSTEN V. ANSETT TRANSPORT INDUSTRIES

JOPERATIONS) PTY LTD and CIVIL AVIATION AUTHORITY

LEE J.

PERTH

7 NOVEMBER 1991 ... -

PRINCIPAL

IN THE FEDERAL COURT )

OF AUSTRALIA	1	No.WAG 3 of 1991
WESTERN AUSTRALIA	1
DISTRICT REGISTRY	I
GENERAL DIVISION
B E T W E E N :	MICHAEL JAMES AUSTEN

Applicant

- and -

ANSETT TRANSPORT
INDUSTRIES (OPERATIONS1

PTY LTD

First Respondent

- and -

CIVIL AVIATION AUTHORITY

Second Respondent

MINUTE OF ORDER

JUDGE MAKING ORDER: LEE J.

DATE OF ORDER:	7 November 1991
WHERE MAD&$	PERTH
THE COURT ORDERS THAT:

1.    The applicant's motion filed 9 October 1991 be dismissed.

2.    The words "and negligently misrepresented the applicant's character and medical fitness to be an Airline Pilot" contained in par.12C be deleted and

par.23(d) of the statement of claim and cl.l(f) of the prayer for relief be deleted.
3.	T h e a p p l i c a n t pay t h e f i r s t a n d second

respondents' costs to be taxed.

NOTE: Settlement and entry of Orders is dealt with in

Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT )

OF AUSTRALIA	No.WAG 3 of 1991
WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION	)
B E T W E E N :	MICHAEL JAMES AUSTEN

Applicant

- and -

ANSETT TRANSPORT
INDUSTRIES IOPERATIONSL

PTY LTD

First Respondent

- and -

CIVIL AVIATION AUTHORITY

Second Respondent

-:  LEE J.

DATE: 7 November 1991

REASONS FOR JUDGMENT

The proceedings in this matter commenced in

January 1991. Since then the statement of claim has

been amended on several occasions.

At a directions hearing held on 19 July 1991 the applicant ("Austen") sought to further amend the statement of claim by incorporating pleadings of defamation and negligent misstatement against the first respondent ("Ansett") based upon a single pleading of

material facts. Leave was granted to include the plea of defamation but refused in respect of the plea of negligent misstatement. With regard to the latter plea Austen was advised that if he wished to continue his application for leave to add that cause of action a fresh application for leave would be required supported by written submissions.

The directions hearing resumed on 13 September 1991 at which time an order was made that the parties attend on the Registrar for the purpose of arranging a preliminary conference. The preliminary conference commenced on 11 October 1991. On 9 October 1991 Austen filed a notice of motion seeking leave to further amend the statement of claim by adding a plea of negligent misstatement pleaded in the same form as in t h e previous application for leave.

In the proposed pleading Austen seeks to allege course of his employment with Ansett by a memorandum	that the Medical Director of Ansett, Dr Lewis, in the
addressed to persons named in a "Distribution List" made certain statements relating to Austen, which "negligently misrepresented the Applicant's character and medical fitness to be an Airline Pilot".

The proposed pleading is in the following form:

"particulars of Nealiaent Misre~resentations

The words above contain the following

negligent misrepresentations:

(a)	that the Applicant made a misleading statement to the First Respondent;
(b)	that the Applicant has made misleading statements on several occasions prior to applying to the First Respondent for employment;
(c)	that the Applicant has had psychiatric treatment;
(d)	that the Applicant has attempted suicide on two occasions;
(e)	that the Applicant has a heart irregularity;
(f)	that the Applicant was refused a Pilot's Licence in the United Kingdom;
(g)	that the Applicant had a psychiatric history;
(h)	that the Applicant made a false statement that he had no nervous disability.

And such negligent misrepresentations are	made in breach of a duty of care which	Dr Lewis had towards the Applicant.
Particulars of Duty of Care
Dr. D. Lewis, by virtue of his position as Medical Director of the First Respondent, had access to personal information concerning the Applicant's medical history for the purpose of communicating information to those vested with the responsibility of employing the Applicant and thus he stood in a special relationship of trust to the Applicant requiring him to exercise reasonable care in communicating that
information accurately, fairly and in exercise of his expertise as a medical practitioner."

In the submissions made by counsel in support of
the motion it was said that the pleaded duty of care

was based upon the principles established in Hedley

Bvrne & Co. Ltd. v . Heller and Partners Ptv. Ltd.

119641 A.C. 465 and Ministrv of Housina and Local

Government v. Sharr, [l9701 2 Q.B. 223 and that Austen

relied on any statements made by Dr Lewis being an accurate connnunication to the relevant decision-makers of Ansett of the facts provided to Dr Lewis by the Civil Aviation Authority. (See also: Everett v. Piffiths [l9201 3 K.B. 163.)

The proposed pleading does not allege that Ansett owed and breached a duty of care to its employee, Austen, to exercise reasonable care in considering his suitability for assignment to duties as a pilot.

Order 13 r.2 of the Federal Court Rules provides

that the Court may grant leave to amend pleading as

follows :

(1) The Court may, at any stage of any proceeding, on application by any party or of its own motion, order that any document in the proceeding be amended, or that any party have leave to amend any document in the proceeding, in either case in such manner as the Court thinks fit.

(2) All necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceeding, or of correcting any defect or error in any proceeding, or of avoiding multiplicity of proceedings."

Recovery for negligent misstatement where the applicant (or plaintiff ) is not the recipient of the

information but has nevertheless suffered loss due to the use of that information by the representee is not unknown under Australian law (see BT Australia Ltd. v.

m i n e & Horne Ptv. Ltd. (1983) 3 N.S.W.L.R. 221).

-	W
v. public Trustee for Western Australia [l9801 W.A.R. 97 established a similar right of recovery for economic loss suffered by a third party in consequence of the negligent performance of professional work by a solicitor for a client.

If a point of law raised by a plea is arguable,

doubt as to the validity of the plea will not cause the

plea to be bad (see A v. Ivec Australia Ltd. & Crew

[l9731 V.R. 39, at p.53; Huahes v . Australian Blue petal Ltd. [1964-19651 N.S.W.L.R. 938, at pp.940-941). In such a case it will be necessary for the question to be put in issue by further pleading. Thereafter it may be appropriate to have the question determined as a preliminary issue (see Healev v. Bank of New South

Wales (1898) 24 V.L.R. 405, at p.407).

However, a statement of claim must plead clearly and precisely all the material facts which disclose the basis of liability contended for. For example, it is necessary in a pleading of negligent misstatement to plead matters of reliance and proximity if the misstatement is to be actionable. The facts relating to reliance are relevant to an actionable negligent misstatement in two ways. First the facts as pleaded must disclose that the representor intended or knew that the representee would place reliance on the statement and hence would be induced to act in a particular manner. Such reliance is a necessary part of the ascertainment of a relationship of proximity and assists in showing that the representor came under a duty of care when making the representation (see	San Sebastian Ptv. Ltd. v. Minister Administerina the	Environmental Plannina and Assessment Act 1979 (1986)
162 C.L.R. 340, at pp.355 and 372). Secondly the facts
as pleaded must disclose that it was reasonable for the representee to rely, and that the representee did rely, on the statement or was in fact induced thereby to act to the representee's detriment or, in this case, to the
detriment of the person to whom the duty of care was owed. There must be a connection between the negligent misstatement and the economic loss suffered, being the reliance of the representee upon the misstatement, such reliance being intended or known to the representor and the suffering of loss in consequence of such reliance being reasonably foreseeable to the representor.
The absence of such particulars in the proposed amendment would provide a deficient pleading if the amendment were allowed. Furthermore, the proposed amendment has an additional problem. It seeks to claim relief from the representee (Ansett) not the representor (Dr Lewis), and pleads a cause of action which relies upon the pleading of a duty of care owed
by the representor (Dr Lewis) to Austen, and upon the
pleading of facts to establish a particular relationship of proximity between Dr Lewis and Austen to support such a duty of care. It is said that the duty of care arises out of a "special relationship of trust" between Dr Lewis and Austen. The nature and
thrust of that particular pleading does not indicate reliance upon a doctrine of vicarious liability.
It is pleaded that Dr Lewis acted in the course of his employment with Ansett which is relevant to the
liability of Ansett for the alleged defamation but the further pleading that the duty of care owed by Dr Lewis to Austen was in respect of the exercise by Dr Lewis of his expertise as a medical practitioner does not indicate that the pleading of a temporal connection between Dr Lewis's actions and his employment is intended to allege vicarious liability against Ansett in respect of the exercise by Dr Lewis of his professional skill.
A pleading in that form could not establish a right of action against Ansett and a grant of leave to amend the statement of claim to include a pleading able to be struck out for disclosing no cause of action would be an exercise in futility (see Kabwand Ptv. Ltd. v. National Australia Bank Ltd. [l9891 A.T.P.R. 40-950,
at p.50,375).
The motion must be dismissed with costs and consequential orders made to delete the words "and negligently misrepresented the Applicant's character
and medical fitness to be an Airline Pilot" contained in par.lZC, and to delete par.23(d) of the statement of claim and cl.l(f) of the prayer for relief.

I certify that this and the preceding
eight (8) pages are a true copy of the
Reasons for Judgment of his Honour

Justice Lee.

Associate:

Counsel for the Applicant:  Mr G.M.G. McIntyre

Solicitors for the Applicant: Corser & Corser

Counsel for the First Respondent:	Mr K. de Kerloy
Solicitors for the First Respondent:

Freehill Hollingdale & Page

Counsel for the Second Respondent: Mr W.G. Groves

Solicitors for the Second Respondent: Parker & Parker

Date of Hearing:	21 October 1991
Date of Judgment: 7 November 1991