Australia New Zealand Migration Publications Pty Ltd v Business and Property Sales Pty Ltd
[2011] FMCA 250
•29 March 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| AUSTRALIA NEW ZEALAND MIGRATION PUBLICATIONS PTY LTD & ANOR v BUSINESS & PROPERTY SALES PTY LTD & ORS | [2011] FMCA 250 |
| CONSUMER LAW – Pleadings – application to strike out part of defence – offend rule against departure – application to strike out cross-claim – allegation of malicious prosecution dismissed – cross-claim seeks to enforce claim for damages based upon enforcement of undertaking as to damages in support of injunction – primary application not yet determined. |
| Federal Court Rules (Cth), O.11 r.8 Federal Magistrates Act 1999 (Cth), s.17A Trade Practices Act 1974 (Cth), s.52, s.75B |
| Phillips v Phillips (1878) 4 QBD 127 White Industries Australia Ltd v Commissioner of Taxation [2007] FCA 511 |
| First Applicant: | AUSTRALIA NEW ZEALAND MIGRATION PUBLICATIONS PTY LTD |
| Second Applicant: | CHASE MANHATTAN BUSINESS BROKERS PTY LTD |
| First Respondent: | BUSINESS & PROPERTY SALES PTY LTD |
| Second Respondent: | PNP PUBLICATIONS PTY LTD |
| Third Respondent: | NALA ANNE PERKINS |
| Fourth Respondent: | GLOBAL BUSINESS BROKERS PTY LTD |
| File Number: | BRG 628 of 2010 |
| Judgment of: | Burnett FM |
| Hearing date: | 18 February 2011 |
| Delivered at: | Brisbane |
| Delivered on: | 29 March 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr C. Johnstone |
| Solicitors for the Applicant: | Bennett & Philp |
| Counsel for the Respondent: | Mr J. Cremin |
| Solicitors for the Respondent: | Davellin Lawyers |
ORDERS
That the Respondents be granted leave to amend paragraphs 5 and 8 of their amended defence.
That the Respondents will be required to file and deliver a further amended defence correcting their amended defence on or before 4.00pm on 29 April 2011.
That there be summary judgment for the Respondents by the cross-claim against the Applicants by cross-claim ordering dismissal of the cross-claim.
That the First, Second, Third and Fourth Respondents by principle action pay the costs of the First and Second Applicants incidental to the application to be assessed or as otherwise determined by the Court.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRG 628 of 2010
| AUSTRALIA NEW ZEALAND MIGRATION PUBLICATIONS PTY LTD |
First Applicant
And
| CHASE MANHATTAN BUSINESS BROKERS PTY LTD |
Second Applicant
And
| BUSINESS & PROPERTY SALES PTY LTD |
First Respondent
And
| PNP PUBLICATIONS PTY LTD |
Second Respondent
And
| NALA ANNE PERKINS |
Third Respondent
And
| GLOBAL BUSINESS BROKERS PTY LTD |
Fourth Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
By orders made on 27 October 2010 I ordered: that their defence filed 19 July 2010 be struck out; that they have leave to file an amended defence on or before 10 November 2010; that the cross-claim filed by the respondents be struck out; and, that they have leave to file an amended cross-claim on or before 10 November 2010. I also adjourned the applicant’s application for summary dismissal in the original application pending the delivery of further pleadings.
A subsequent amended defence and cross-claim was filed by the respondents on 10 November 2010. In response to that pleading, the applicants have sought to renew their application filed on 3 August 2010. They now seek orders that certain paragraphs of the amended defence and cross-claim be struck out and that the entirety of the cross-claim be struck out. The particulars of the matters sought are contained in their submissions which are exhibit 4 in the proceedings.
For present purposes I will continue to adopt the nomenclature provided in my reasons for judgment in the first application.[1]
[1] Australia New Zealand Migration Publications & Anor v Business and Property Sales Pty Ltd & Ors [2010] FMCA 820
The Brokers also apply for orders in this application in a case. The orders which are contended for by the Brokers are not the subject of any discrete application and whilst addressed in their written argument were not addressed orally before me. They will not be addressed in this decision. If the Brokers propose to advance arguments in relation to the matters provided for in their written argument, they will need to do so on notice.
Dealing then with the complaints made by the Publishers against the amended defence filed by the Brokers.
Amended Defence Paragraph 2 – the Brokers have pleaded at paragraph 2(b) of the amended defence that the first respondent is “no longer trading nor active.” The Publisher contends that the allegation is inconsistent with allegations pleaded at paragraph 4(a) and 4(b) of the amended defence as to its general activity and offends Federal Court Rules (Cth) order 11, rule 8, the rule against departure.
The allegations in paragraph 7 of the statement of claim, which are traversed by paragraphs 4(a) and 4(b) of the defence, plead a future matter including future intention. That is a current and future intention by the first and second respondents to sell, distribute, promote and publish the magazine. Clearly, the fact that that future intention would no longer be realised is addressed by paragraph 2(b) of the defence. However, the underlying matter relevant to the Publisher’s complaint is that there was then extant intention to do something in the future. In that context it remains relevant.
The Broker’s pleading at paragraph 4(a) and 4(b) of the amended defence is directly responsive to the matter pleaded. It does not create confusion as it pleads to the fact of an intention then possessed and is not impacted by the Broker’s later decision not to fulfil its earlier held intention. It follows I am not persuaded that paragraph 2 is indeed entirely problematic as contended for.
The Brokers plead in paragraph 1 of the cross-claim that they together with the first applicant are in the business of publishing magazines. Clearly, this is no longer the case as paragraph 2(b) of the defence pleads. Perhaps the Brokers meant to plead that they were in the business (past tense). However, that matter is not clear. The pleading on this point as it presently stands offends the rule against departure Federal Court Rules Order 11, rule 8. But for reasons that I have outlined earlier, I am not satisfied that it necessarily occasions uncertainty, in the circumstances I am prepared to adopt a permissive view in relation to it remaining in the pleading and for reasons which follow, the pleading in the cross claim ought be ignored.
Amended Defence paragraph 5. The Publisher’s principal complaint concerning paragraph 5 of the amended defence is directed to the manner in which the pleadings are expressed and framed. The Publisher complains that in paragraph 5(a) the Brokers deny that they intended to make representations conveying the meanings as alleged because they had no intention to do so.
The statement of claim alleges inter alia, the Brokers made or intended to make representations (being the offending representations). The Publishers are correct in their submission that intention is not an element of infringing conduct. However while the Publishers are strictly correct in their complaint that there is no basis to plead to intention in the context of a claim pursuant to s.52 Trade Practices Act1974 (Cth) (TPA), it is difficult to criticise the Brokers for pleading to an allegation in circumstances where it was made against them.
As the allegation is made I assume it is material even if the matter alleged does not itself require proof to establish the cause of action. Certainly no issue has been taken by the Brokers as to its relevance. Indeed their pleading traverses the allegation. The fact is pleaded against the Brokers and in my view, it is appropriate to be traversed unless the allegation be withdrawn. Otherwise by not joining issue on the allegation the Brokers may be at risk of it being taken to be admitted. On that basis, I am not satisfied that the Brokers’ pleading is strictly defective.
The second complaint concerning paragraph 5 concerns allegations in paragraph 5(b)(i) at paragraphs A to K inclusive. Plainly the matters alleged at paragraphs A to K cannot be said to be material facts which of themselves warrant pleading. They have clearly been pleaded in an argumentative manner. The allegations, however, ought to be understood in the context of the purpose of pleadings. In that regard, I refer to the observations of the authors of Bullen & Leake, Precedents of Pleadings[2] where at page three the authors state in reference to pleadings:
“… They are the means by which the parties are enabled to state and frame the issues which are in dispute between them, without embarking at that stage on the evidence which each party may adduce at the trial. The system of pleadings operates to define and delimit with clarity and precision the real matters in controversy between the parties upon which they can prepare and present their respective cases and upon which the Court will be called upon to adjudicate between them. It thus serves the twofold purpose of informing each party what is the case of the opposite party which he will have to meet before and at the trial and at the same time informing the Court what are the issues between the parties which will govern the interlocutory proceedings before the trial and which the Court will have to determine at the trial.”
[2] Bullen and Leake and Jacob’s Precedents of Pleadings, Common Law Library Number 5, 12th Ed, Sweet-Maxwell London 1975
The allegations at paragraphs A to K do serve to inform the Publishers of the Broker’s case. However the matters contended appear to more appropriately fit the description of particulars. The description and purpose of particulars was detailed by Cotton LJ in Philipps & Philipps[3] where at [139] his Lordship stated:
“What particulars are to be stated must depend upon the facts of each case. But in my opinion it is absolutely essential that the pleading, not to be embarrassing to the defendants, should state those facts which put the defendants on their guard and tell them what they will have to assert when the case comes on for trial.”
[3] (1878) 4 QBD 127
I do not know from the defence the basis for the allegations. If a conventional approach is to be taken to the drafting of the defence, it is to be expected that some expert or other evidentiary basis for argument will be advanced to address the matters which are said to constitute the misleading deceptive character of the publications alleged by its use of the words “official guide” and the word “official”. I expect that the matters stated in subparagraphs A to K are particular facts to be proven and provide foundation for such evidence. If they were particulars then, of course, they would not have to be pleaded to. That would address an appropriate and legitimate concern of the Publisher which as is outlined in the Publisher’s argument.
It does appear to me that the pleading is defective in its present manner. The matters contained in paragraphs 5(b)(i) and 5(b)(ii) and in particular subparagraphs A to K ought to be pleaded as particulars of the denial in paragraph 5(b). If so, it would, in my view, satisfy the purpose of pleadings as addressed by the authors of Bullen & Leake and also the observations of Cotton LJ in terms of putting parties further on notice in respect of matters which are to be agitated at trial between them. The Brokers will be afforded an opportunity to make those amendments.
Amended Defence Paragraph 8. The Publisher makes a similar complaint concerning paragraph 8 as is made of paragraph 5. In addition, it is expressly contended that certain disclaimers and advice are pleaded but no attempt has been made to:
a)identify whether those disclaimers and advice were written or not; and/or
b)how the disclaimers and advice relate to the pleaded allegations of misleading and deceptive conduct.
Paragraph 8 of the defence responds to paragraph 11 of the statement of claim. Paragraph 11 of the statement of claim addresses an allegation of misrepresentation by the four respondents as is alleged at paragraph 10 of the statement of claim. That is that the respondents intended to make a misrepresentation related to the provision of migration services. Paragraph 8 of the defence denies that allegation. Its denial is based upon its earlier pleading. It then proceeds to allege in paragraphs 8(c)(i) and (ii) as follows:
“8. …(c) In any event:
(i) disclaimed and expressly gave no warranty in the said magazine as to the accuracy of any of the advertisements contained in the said magazine including that of the fourth respondent
(ii) expressly advised in the said magazine that prospective buyers should carry out their own due diligence inquiries and satisfy themselves as to the accuracy of any statements or photographs contained within the said magazine.”
It is those two paragraphs that occasion the Publisher difficulty. As with my observations concerning paragraph 5 of the defence, I do not consider it inappropriate to plead these matters. In fact, for the Brokers to run a positive defence at trial, these matters ought to be alleged so that the Publisher is on notice of the prospect of argument arising from them. However as earlier observed on clarity of issues, I am of view that these paragraphs more correctly ought to be pleaded as a separate paragraph and, I expect, directed to allegations made against all respondents.
Presently, the allegation only addresses the first and third respondents. However, the pleading more precisely concerns their conduct with the conduct of the fourth respondent. Paragraph 8(c) separately pleaded should clarify that matter. Again, there will be a direction requiring the respondents to address that issue.
Next is the matter of the defence of the third respondent. A matter of more significance arises concerning matters addressed by the Brokers in the pleading on behalf of the third respondent. For reasons which follow, I accept there are serious issues with the manner in which the third respondent has addressed the case against her. However, I am not presently satisfied at this time it is necessary to strike out parts of the pleading.
The Publisher complains that the Brokers for whom the alter ego is the third respondent has pleaded a defence which at its heart is deliberately evasive. But as a matter of pleading, there are deemed admissions by her of significant allegations in the case advanced by the Publisher. However, when dealing with the accessorial factors relevant to the third respondent’s involvement in the role and conduct of the corporate respondent; the pleading appears to be deliberately evasive in its attempt to argue that some unnamed third party engaged in the allegedly offending conduct and that accordingly the third respondent had no responsibility for the conduct of the unnamed third person in carrying out those instructions.
In particular, the Publishers contended at paragraphs 37, 38 and 46 of their outline that the effect of the deemed and express admissions is that: the third respondent is a sole director and shareholder of the first and second respondent; is the acting chief executive officer; the agent of the first and second respondents; is in effective control of the first and second respondents; is in particular the control of the day-to-day management of the first and second respondents’ businesses; and as well as being aware of, is instrumental in the actions and conduct of the first and second respondents. The submissions contend the only conclusion available is that the third respondent, who has made admissions concerning the first and second respondents and as pleaded in paragraph 11 of the statement of claim, must have authorised the first respondent to have made the representations as pleaded because she is the controller with day-to-day management of the corporate respondents.
It was contended that whilst the denial of the first, second and fourth respondents is unsustainable for the reasons submitted, the difficulty was made worse by the manner in which the allegations are pleaded. Namely, that the magazine was produced by third persons and that the productions were carried out by third persons. As the Publisher says, if that is the intent of the pleading, it is a nonsense and the pleading if not the pleading is embarrassing. But the allegations by the Publisher are clear. The first and second respondents are corporations of which the third respondent is the sole shareholder and director. Those facts have been the subject of admission. Those matters are admitted by all respondents except the third respondent. The third respondent herself does not plead to the allegations and by operation of order 11 rule 13 has been deemed to admit them.
In summary, the third respondent eschews any knowledge or involvement with the alleged offending conduct. However, in the absence of any positive case to allege otherwise, she says it was conduct of some unidentified third person. It is a trite proposition that the Body Corporate acts through its corporate officers and agents. Here the corporation here had only one officer.
The fact that the officer was also the only shareholder leaves open a very strong inference that it acted only through her. No facts otherwise are alleged and thus the Publisher’s submission that the Broker’s pleading on this point is a nonsense and has some merit.
If indeed that is the Broker’s submission, then evidence at the trial should not be lengthy and matters relative to liability should be capable of resolution largely by legal argument. It is because of that matter that I do not propose to strike out the pleading as sought by the Publisher. If as the Publisher has contended, the respondents have no answer to the question of the third respondent’s accessorial liability, as appears to be the case from the pleadings as they presently exist, it is always open to move for summary determination on that issue.
Alternatively, if it is genuinely unsure of the allegation, a request for particulars at paragraph 14(b) will cause the respondents to identify whom they now contend are responsible and then permit consideration of whether or not there is a need for a trial on this point. Ultimately, the respondents will be constrained to prosecute their case as pleaded. I note in passing that it is difficult to conceive of circumstances where the third respondent, despite being sole shareholder and director of the first and second respondents, could deny involvement for the purposes of s.75B of the TPA unless she could positively identify the third party who is alleged to have engaged in the contravening conduct. However, if that is the case she wishes to run, she can run it on the current pleadings. As a matter of law, it can probably be disposed off quickly and summarily. If that is not the case she intends to run, then she will need to address this matter quickly.
The language of the pleading does give rise to some difficulty as identified by the Publishers in its submissions, but I am satisfied that the Publishers do have a handle on the Broker’s case. So much is evident from their pleading and to a large extent their submissions. It should be comforted by knowing that the parties will be confined to prosecuting the case by reference to the pleadings. That appears possible in this case and despite the apparent hopelessness of the third respondent’s case as matters now stand. How the Publishers deal with that is a matter which I will leave to it.
The final matter of complaint by the Publisher concerns the cross-claim advanced by the Brokers in their amended defence. The cross-claim is not clear in its present format. As has been contended by the Publishers in their submissions, the case fails to plead any material facts to support a cause of action or plead a proper cause of action. I agree it does appear from the pleading that the Publishers are attempting to plead that the Brokers committed the tort of malicious prosecution in pursuing this proceeding. As was identified by the Publishers in their outline, in order to successfully demonstrate such a right of action, it is necessary to demonstrate first that the defendant was:
a)actively instrumental in instituting or continuing the proceedings complained of;
b)the proceedings were terminated or where capable of termination in favour of a party, in favour of the person against whom they were brought;
c)the proceedings were brought without reasonable and probable cause;
d)in bringing the proceedings the defendant was motivated by malice; and
e)damage was caused to the plaintiff.
Referring to Halsbury’s Laws of Australia[4] at [415-1695], they contended:
“The tort protects the public interest in deterring the improper use of legal procedures and protects the individual’s private interest in freedom from malicious and unjustifiable legal proceedings. However, since legal procedure requires the cooperation of the public, the tort must preserve and balance the public interest in allowing justifiable, even if mistaken, use of legal process.”
[4] Halsbury’s Laws of Australia (Lexis Nexis Online, 2011) Tort “Malicious Prosecution” at [415-1695]
There is a further submission that the action is deficient because there was a need to demonstrate damage. As was stated in Halsbury’s Laws of Australia:
“In an action for malicious prosecution the plaintiff must establish that damage has been caused by the bringing of the improper proceedings. Three heads of damage are recognised, (1) damage to reputation, (2) damage to the person and (3) damage to property. The three heads of damage act as a restriction on the availability of the tort and the plaintiff must establish loss under at least one of these heads.”
It is contended that the damages that are presently claimed for do not fall within any of those heads. In addition to the observations in Halsbury’s Laws of Australia, I think useful reference can be made to the observations of Balkin and Davis in their publication Law of Torts[5] in paragraph [25.23], where they discussed principles governing a related cause, abuse of process, and noted:
“This tort is clearly quite distinct from that of malicious prosecution. As was made clear from those cases which established this form of liability, a plaintiff arguing collateral abuse of process does not have to show that any earlier proceedings taken against him or her by the defendant have terminated (whether favourably or not) and, as a corollary, the tort does not require proof that the defendant lacked a reasonable and probable cause for bringing proceedings against the plaintiff. And, since the tort was seen as filling a lacuna in the law, it would clearly be going too far to allow a plaintiff to claim that there had been a collateral abuse of process by showing no more than the defendant’s malice in setting the law in motion. Indeed, as the High Court has more recently reiterated, to commence proceedings for an unworthy or reprehensible motive will not amount to the commission of this tort. …”
[5] 4th Ed Lexis Nexis, Butterworths, Australia 2009
As the Publisher has submitted in its outline, what the Broker actually seeks to do is to prosecute a claim in respect of its undertaking as to damages.
It seems from a review of the cross-claim as it is presently pleaded that the requisite matters for an action in malicious prosecution or abuse of process have not been pleaded. What is sought by the Brokers is to recover in accordance with the undertaking as to damages that which was afforded on the granting of the injunction. In that regard, the relevant principles are addressed by Spry in his text on equitable remedies[6] where at [654-655] he made these observations:
“It is clear that the making of the interlocutory order itself cannot involve a breach of the rights of the defendant and also that any acts of compliance with, or execution of, an interlocutory injunction cannot be regarded as unlawful, whatever the court might have done at the interlocutory application had it been more fully informed and whatever may be decided ultimately at the final hearing; and accordingly the use of the word “damages” would be inappropriate here if it were intended to suggest that a breach of legal or equitable rights may have taken place. The better view appears to be that when, in an undertaking of this nature, reference is made to an order as to damages it is intended simply to ensure that there will be an obligation on the part of the plaintiff to abide by any order that is subsequently made directing him to make a pecuniary recompense to the defendant for any prejudice or loss that he may have suffered.
It is necessary, in order that an award of damages may be made pursuant to an undertaking of the kind here being considered, that the damages in question should have been sustained by reason of the order itself. The loss or inconvenience in question must have been sustained by reason of compliance with the interlocutory or interim injunction in question, on the part of the defendant, and hereby questions of causation may be raised.
The discretion that in these circumstances is given to the court is expressed in quite general terms, and any order that is made hence reflects an application of ordinary equitable principles, in view of such accepted considerations as laches, unfairness and hardship.”
[6] Spry I C F, The Principles of Equitable Remedies: Specific Performance, Injunctions, Rectification and Equitable Damages (8th ed, Lawbook Co, 2010)
The effect of learned author’s observations are that the Court in equity exercises its power in order to determine that the beneficiary of an undertaking should be compensated pursuant to an undertaking given earlier given by a plaintiff. It would follow that no such consideration would be given to such a claim until after the substantive matter at trial has been determined. Accepting the author’s observations at [656], such a claim ought be brought within a reasonable time after that trial and upon demonstrating the actual damages that have been suffered and is subject to discretionary factors. It follows, in my view, that the cross-claim as pleaded does not plead a course of action as it presently stands.
The Publisher submits that in view of the fact that there is no cause of action, it ought be summarily dismissed.
The matters relevant to summary dismissal have been particularly addressed by the Full Federal Court in White Industries Australia Limited v Commissioner of Taxation (2007) FCA 511.
Section 17A of the Federal Magistrates Act provides:
“(1) The Federal Magistrates Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is prosecuting the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.
(2) The Federal Magistrates Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is defending the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.
(3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:
(a) hopeless; or
(b) bound to fail;
for it to have no reasonable prospect of success.
(4) This section does not limit any powers that the Federal Magistrates Court has apart from this section.”
In White Industries Australia Limited v Commissioner of Taxation (supra) Lindgren J noted at [50]: “Section 31A of the FCA Act, like
0 20 of the Rules, is concerned with the bringing and defending of proceedings, not just with pleadings; with substance, not just with form…” His Honour continued:“ [51] Is there a difference between the concept of no reasonable cause of action being disclosed (O 20 r 2(1)(a)) and no reasonable prospect of successfully prosecuting a proceeding (s 31A(2))? The only difference that suggests itself to me is that the latter makes plain that there may be taken into account the unavailability of evidence necessary to bring success at trial, whereas it is arguable that the former does not permit the unavailability of such evidence to be taken into account.
52. In the present case, the unavailability of evidence is not an issue. The respondents' motion for summary dismissal is founded on their notice of objection to competency and on facts that are not in dispute:…
53. The "no reasonable prospects of success" formula of s 31A is that which was adopted in r 24.2 of the United Kingdom's Civil Procedure Rules ("CPRs") following the recommendation of Lord Woolf, Master of the Rolls, in his Access to Justice: Final Report to the Lord Chancellor on the Civil Justice System in England and Wales (HMSO, 1996), ch 12, ss 31-36. The same test has been adopted in rr 292(2) and 293(2) of Queensland's Uniform Civil Procedure Rules 1999.
54. Under s 31A I must be satisfied that the applicants have no reasonable prospect of success, but as s 31A(3) makes clear, this does not mean that I must be satisfied that the proceeding is hopeless or bound to fail. I suggest that the legislature's intention in enacting s 31A was to lower the bar for obtaining summary judgment (including summary dismissal) below the level that had been fixed by such authorities as Dey v Victorian Railway Commissioners (1949) 78 CLR 62 at 91-92, and General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129-130: see Lawrenson Light Metal Die Casting Pty Ltd (in liq) v Cosmick Pty Ltd [2006] FCA 753 at [15].”
His Honour noted at [55] that section 31A was identically worded in s.17A of the Federal Magistrates Act and accordingly it follows that those principles should apply to that section.
In this case, I am satisfied that the cross-claim as it presently stands pleads a case which has no reasonable prospects of success on trial because it does not plead a cause of action recognised in law.
I apprehend it seeks to prosecute a claim in support of the undertaking as to damages in which case it is premature. The matter of damages in respect of any undertaking cannot be adjudicated upon until after the principle proceeding has been resolved and the question of whether or not the undertaking is to be called upon examined. I will direct that the cross-claim be struck out.
I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of Burnett FM
Associate:
Date: 14 April 2011
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