Australian Research and Design Corporation P/L v Bull HN Information Systems Australia P/L

4-33/1993 /

JUDGMEI\I'T No. o ~ l ~ O o ~ I ~ O I O I I D ~ I 0 ........ .... ,

IN THE FEDERAL COURT OF AUSTRALIA ) No. QG 43 of 1993

OUEENSLAND DISTRICT REGISTRY 1
GENERAL DIVISION 1

BETWEEN: AUSTRALIAN RESEARCH AND DESIGN CORPORATION i

PTY. LTD. l
!

Applicant l:
i
, .

AND : BULL HN INFORMATION SYSTEMS AUSTRALIA PTY.

LTD. . \
Respondent

MINUTES OF ORDERS 0 2 J U L 1993
AUSTRALIA PRINCIPAL REGISTRY

JUDGE MAKING ORDER: Drummond J
DATE OF ORDER: 22 June, 1993
WHERE MADE: Brisbane
THE COURT ORDERS THAT:
1. Paragraphs 3(b) I 3(c), 3(d) (i) , (d) (ii), 3(e), 18(a), 18(b), 19, 20, 21, 22(a), 22(b), 25 and 27 of the amended statement of claim are struck out.
2. The words "could or" in paragraph 7 of the amended statement of claim are struck out.

struck out by order 2;

3. The applicant has leave to further amend its statement of claim to replead the allegations in paragraphs 3(b), 3(c), 3(d)(i), 3(d)(ii), 3(e) of the amended statement of claim in a context in which their relevance to the issues in the action is clear.
The applicant has leave to further amend its amended statement of claim so as to replead:

(a)

the allegation in paragraph 7 of the amended statement of claim which was

(b)

the allegations contained in paragraphs 18(a), 18(b) and 25 of the amended statement of claim;

(C)

the allegation in paragraph 22(b) of the amended statement of claim in the event that paragraph 18(b) is repleaded; and

(d)

the allegation in paragraph 26 of the amended statement of claim.
The costs of the respondent's notice of motion to strike out the amended statement of claim are reserved.

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

IN THE FEDERAL COURT OF AUSTRALIA )

No. QG 43 of 1993

QUEENSLAND DISTRICT REGISTRY 1
GENERAL DIVISION )
BETWEEN: AUSTRALIAN RESEARCH AND DESIGN CORPORATION
PTY. LTD.
Applicant

AND : BULL HN INFORMATION SYSTEMS AUSTRALIA PTY.
LTD.
Respondent

Coram: Drummond J
Place: Brisbane

Date : 22 June, 1993

REASONS FOR JUDl;MENT

By notice of motion, the respondent in the action sought an order striking out the amended statement of claim. However, the application developed into one seeking orders striking out only a number of paragraphs of the pleading and

replead should his application be successful. counsel for the respondent said he would not oppose leave to

By letter dated 17 June, 1993, the respondent set out various complaints it had in respect of the applicant's amended statement of claim, delivered on 8 June last. It is convenient to deal with such of the complaints made in this letter as are still maintained before dealing with a number of other complaints advanced by the respondent, without prior notice to the applicant, at the hearing before me yesterday. So far as the letter of 17 June, 1992 is concerned, I will deal with each of the numbered paragraphs containing the objections to the pleadings that are still maintained.
So far as paragraph 1 of the letter, which deals
with paragraph 2 of the pleading, is concerned, Mr. Harrison
Q.C. submitted on behalf of the applicant, as I understood

him, that it is really an unnecessary allegation. I disagree. However, as the respondent contends, paragraph 2 of the pleading is too wide, since it is an allegation that can be relevant only to the applicant's claim based on conduct infringing S. 52 of the Trade Practices Act 1974. But it cannot cause any real confusion or embarrass the respondent. I therefore decline to strike it out.
Paragraph 2 of the letter raised objections to a
number of sub-paragraphs of paragraph 3 of the statement of

my view, without foundation. The sub-paragraph contains a claim. The objection to paragraph 3(a) of the pleading is, in

proper foreshadowing of evidence that the applicant will need to adduce at the trial to explain the nature of the product which is the subject of the litigation. I do not propose to strike it out.
So far as paragraph 3(b), (c) and (e) are concerned,

I reject the submissions by the applicant's counsel that they
are proper explanatory or introductory matters. They might, but for one thing, be allegations of material facts, i.e., facts that the applicant would have to plead to properly alert
the respondent to the case it intends to run at the trial, concerning how, as a result of the applicant's reliance on the representations alleged in paragraphs 5 and 6 of the amended statement of claim that are said to have induced the applicant to enter into the manufacture, licence and distribution agreement, the applicant came to suffer the damage referred to in paragraph 26. However, the position in the pleading in which these allegations appear is quite inappropriate. Their relevance is thus not clear. Assuming they have the relevance suggested, the draftsman here shows no sign of having made a serious attempt to draw a coherent or intelligible pleading. Further, I do not think these allegations have any relevance to the claim based on breaches of implied terms, as such breaches can only have occurred after the agreement (which was executed on 8 May, 1990, and most recently amended on 10 March, 1992) was concluded. There are no allegations that

agreement was made, might be connected with the applicant's show how these breaches of implied terms occurring after the

loss, referred to in paragraph 26(a) of the pleading, of the chance to enter into profitable agreements for the manufacture and distribution of the product with British Aerospace, NEC and Exicom, with whom the applicant says it negotiated in the period January to March 1990, prior to the agreement being made, or with the loss of the opportunity referred to in paragraph 26(b), which the applicant there claims to have foreseen as far back as 1989.

I therefore strike out paragraph 3(b), (c) and (e), but give leave to the applicant to amend, if it wishes to do so, to set up those allegations in a context in which their relevance to issues in the action is clear.

So far as the challenge to paragraph 3(d) (i) of the pleading is concerned, the allegation contained therein is, in my view, irrelevant to any issue in the action. Mr. Harrison submitted, among other things, that it was relevant to the case based on the existence of a fiduciary relationship between the applicant and the respondent, that is later set up. But even if it might possibly have some such relevance, its position in paragraph 3 of the pleading prevents a reader of the pleading identifying any issue to which it might relate. Again, the draftsman has made no attempt to draw an intelligible pleading. I therefore strike it out, but I give

have given to replead in relation to paragraph 3(b), (c) and leave to the applicant to replead on the same basis that I (e)

So far as paragraph 3 of the letter is concerned, it contains an attack on, paragraph 3(d)(ii) of the pleading. Even if this allegation might be relevant to some issue, such as breach of fiduciary duty, its presence in this paragraph of the amended statement of claim obscures any such relevance. It is therefore embarrassing, because of the failure of the draftsman to meet his basic responsibility to draw an intelligible pleading. I therefore strike it out but, again, give leave to replead on the same basis that leave was given in relation to paragraph 3(b), (c) and (e).

Paragraph 4 of the letter attacks paragraph 4(a) of the pleading. In my view, the respondent's objection is quite unfounded. I cannot accept that the respondent is in any way confused by this paragraph. It clearly contains particulars that identify the occasions on which the misrepresentations alleged in paragraphs 5 and 6 were made, which the applicant would have to give to properly warn the respondent of the case it intended to make out, in this respect, at the trial. Although this paragraph would more appropriately appear after paragraphs 5 and 6 of the pleading, I do not think the drafting here is such as to lead to any confusion. I decline to strike this paragraph out.

Paragraph 5 attacks paragraph 4(b) of the pleading. In my opinion, the allegation in paragraph 4(b) is clear. The misrepresentations set up in paragraphs 5 and 6 are said to be made in the course of executing instructions given by the respondent's chairman of directors. While it might be thought to add little to paragraph l(£) of the amended statement of claim, it does serve to alert the respondent to the particular basis on which the applicant proposes to prove that the subordinate officers of the respondent were acting on behalf of the respondent when they performed the actions identified in paragraph 4(a). It also legitimately serves to make it clear that any such instructions must be discovered. I decline to strike out this paragraph of the pleading.

I will deal with paragraphs 6 and 7 of the letter together. I disagree with the objections there made. Depending on the evidentiary context in which the statements particularised are made, they may, in combination with one another, entitle the applicant to a finding that each of the representations in paragraphs 5 and 6 of the pleading was made to the applicant. I decline to strike out either of these paragraphs.

As to paragraph 9 of the letter, which attacks paragraph 7 of the pleading, the complaint is limited to that allegation in the pleading that asserts that the respondent did not have reasonable ground for representing that it could manufacture the product expeditiously. The respondent

on in relation to the other part of the other allegation in understands that S. 51A of the Trade Practices Act is relied

paragraph 7 of the pleading, relating to an absence of grounds for representing that the respondent would manufacture the product expeditiously. Mr. Harrison says with respect to the "could" allegation, as I will term it, that the applicant does not rely on S. 51A. He submits that to represent you can do something in the future, when, at the time, you know you will not be able to do so, is to make a misleading representation as to an existing fact. I agree. But in a paragraph of a pleading in which S. 51A is being relied on, it is not clearly apparent that the "could" allegation may not also involved an assertion as to a future fact. The respondent is entitled to be told with precision what the representation here in question involves, particularly as it might mask a representation of the kind that would attract the operation of S. 51A. I therefore strike out the words "could or" in paragraph 7. I will give leave to the applicant to replead in relation to this particular allegation.

Paragraph 10 of the letter contains a more general complaint. In my view, the objection is unfounded. The objection does not, in any event, accurately reflect the pleading in paragraph 26. It is "by reason of the respondent's conduct" in breach of S. 52, that loss and damage of a particular kind set out in paragraphs 26(a), (b) and (c), is clearly enough said to flow. I decline to strike out the portions of the pleading complained about here.

As to paragraph 12 of the letter, I do not think it is possible to decide on the basis of the pleading alone whether the allegation in paragraphs 12(i), (iii) and (iv) of the letter (the matters referred to in (ii) having already been struck out of the pleading) are all of relevance in determining whether a fiduciary relationship existed between the applicant and the respondent. I was referred by the respondent, in the course of the applicant's submissions, only
to the High Court decision in HoSDital Products Ltd. v United States Suraical Cor~oration (1984) 156 C.L.R. 41, in particular to two passages: one at 72, which might support the respondent's objection, the other at 97, which might contradict that objection. I do not propose to embark upon any detailed investigation of my own into the cases, in view of the economical efforts of counsel for the respondent in researching the law. I decline to strike out the portions of the pleading here complained about.
As to paragraph 13 of the letter, this attack on paragraph ll(a) of the pleading, the objection, in my view, is incomprehensible. That it is maintained when the respondent has put into evidence before me the agreement, including the amendments which are very clearly identified in the relevant exhibits, suggests that no real thought has been given to identifying whether the amended statement of claim is here open to any justifiable objection. I decline to strike out this paragraph.

As to paragraph 14 of the letter, an attack on paragraph ll(b) of the pleading, this is, in my view, another vexatious objection, as is apparent from the citations from various clauses of the agreement in paragraph 12 of the pleading, which refer to "ARDC" and "Bull HN". I decline to strike out this paragraph.
I do not think the validity of the objection in paragraph 15 of the letter can be determined on a consideration of the pleading in the absence of evidence. As to the odd looking implied term set out in paragraph 18(b)(i),
if the applicant's only remedy for a breach of the promise in clause 11.3 of the agreement is to give the notice to the respondent there referred to, it may possibly be that such a term should be implied. However, in my view, paragraphs 18(a) and (b) of the pleading are embarrassing in that they do not plead the material facts that the applicant will have to rely on to justify the implications contended for. I strike out these two paragraphs, 18(a) and (b), but give leave to the applicant to replead in relation to the matters there raised.
As to paragraph 16 of the letter, the respondent submits that it is genuinely confusing for the applicant, in view of what it says in its letter of 8 June, 1993, to allow paragraph 25 of the pleading to stand with the reference to clause 11.3 of the agreement included in it. I do not accept

that. In any event, the applicant sought, and was given, leave to amend, to delete the offending reference to that clause, something clearly enough foreshadowed as necessary by
the letter of 8 June, 1993.

I do not agree that the reference to repudiation in paragraph 25 of the pleading legitimately causes any difficulty in understanding that document. However, for the same reasons that I think paragraph 3(b), (c) and (e) of the

pleading is embarrassing, I think that paragraph 25, when read with paragraph 26, is embarrassing in that it is alleged that the conduct referred to in paragraph 25, which all occurred after the agreement was concluded, caused the loss and damage alleged in paragraph 26 (a) and (b) . I therefore strike out paragraph 25, with leave to amend.

I also strike out paragraph 27. It appears to me to

be irrelevant to any issues in the action. There is no claim
made for any relief to which this allegation might relate.
As to paragraph 17 of the letter, I do not think this pleading gives rise to any confusion. The objection is more indicative of an exercise in criticising the pleading for the sake of criticising it, than it is of any real embarrassment in understanding the pleading. Leave to amend is not necessary, but it has been sought and there is no reason to deny it. I decline to strike out this portion of the pleading.

I turn now to objections raised in argument and not covered in the letter. As to the attack on paragraph 20 of the pleading, notwithstanding what is said in paragraph 25 of the pleading, I cannot identify any obligation or duty resting on the respondent that the conduct here referred to might breach, the reference to clause 11.3 having been deleted at the request of the applicant in the course of argument. I

therefore strike out paragraph 20. Paragraphs 19 and 21 must,
in consequence, also go out.
As to the complaint about paragraph 22(a), notwithstanding the reference to paragraph 22 in paragraph 25 of the pleading, I think this paragraph is embarrassing. The crux of the allegation is a failure to do what was necessary to enable the respondent to market the product "skilfully or competently"; but there is no allegation of any obligation or duty that such a default on the respondent's part might breach. Mr. Barrison points out that there is an allegation in paragraph 6 of the pleading, to which paragraph 22(a) might relate. But paragraph 6 is part of a case that the applicant was induced to enter into the agreement with the respondent because of the misrepresentations therein referred to. Paragraph 6 has nothing to do with the post-agreement conduct pleaded in paragraph 22(a), since it is not suggested that the representation in paragraph 6 became a term of the agreement.
I therefore strike out paragraph 22(a).

I do not propose to give any leave to replead with respect to either paragraph 20 or paragraph 22(a). I cannot, of course, prevent the applicant seeking leave to amend, if it takes the trouble to identify a basis on which some case that may be buried in these two paragraphs might be able to be properly set up.

As to the attack on paragraph 22(b) of the pleading, the applicant sought an amendment to substitute a reference to

l :
I:

!
i.

"using its best endeavours", which is the expression used in

clause 11.3 of the agreement, for the expression, "making such I
l
I .

reasonable endeavours", which appears in the pleading. Even , .
I

if this amendment were granted, it would not save this I
paragraph, given that paragraph 18(b) of the pleading has

, .

already been struck out. I therefore strike out paragraph

22(b) of the pleading, but give leave to replead in the event I
that paragraph 18(b) is repleaded in accordance with the leave i ,
already given.
i-

The argument about the pleading was in large part, a particularly sterile one in that the respondent made and
maintained a number of unjustified and vexatious objections to
the pleading, and the applicant sought to maintain a pleading 1 .
that was in a number of respects obviously defective and which , .
betrays a failure on the part of the pleader to give the I
attention that is necessary to formulate a clear and concise i
L.

statement of claim: it is essential that this be done if a I.'

complicated claim is to progress to trial as efficiently and ,..

in as cost-effective a way as possible. The dispute should, :I
in very large part, have been resolved by a sensible approach

by the legal representatives on both sides without the need . '
for the lengthy hearing that counsel for both sides were keen
I-:
should take place yesterday.

My general view, having regard to the outcome of the argument, is that there should be no order for costs in this case. However, having indicated that at the moment that is my view, I will accede to Mr. Harrison's request and will reserve the question of costs.
I certify that this and the preceding
12 pages are a true copy of the
reasons for judgment herein of the
Honourable Mr. Justice Drummond.
Associate: ALLY' -

Date : 22 June, 1993

IN THE FEDERAL COURT OF AUSTRALIA )	No. QG 43 of 1993
OUEENSLAND DISTRICT REGISTRY	1
GENERAL DIVISION	1

JUDGE MAKING ORDER:	Drummond	J
DATE OF ORDER:	22 June,	1993
WHERE MADE:	Brisbane
THE COURT ORDERS THAT:

(b)	the allegations contained in paragraphs 18(a), 18(b) and 25 of the amended statement of claim;
(C)	the allegation in paragraph 22(b) of the amended statement of claim in the event that paragraph 18(b) is repleaded; and
(d)	the allegation in paragraph 26 of the amended statement of claim.

that. In any event, the applicant sought, and was given, leave to amend, to delete the offending reference to that	clause, something clearly enough foreshadowed as necessary by
the letter of 8 June, 1993.
I do not agree that the reference to repudiation in paragraph 25 of the pleading legitimately causes any difficulty in understanding that document. However, for the same reasons that I think paragraph 3(b), (c) and (e) of the

therefore strike out paragraph 20.	Paragraphs 19 and 21 must,
in consequence, also go out.

As to the attack on paragraph 22(b) of the pleading, the applicant sought an amendment to substitute a reference to	l :
I:

clause 11.3 of the agreement, for the expression, "making such	I
l
I .

reasonable endeavours", which appears in the pleading.	Even	, .
I

by the legal representatives on both sides without the need	. '
for the lengthy hearing that counsel for both sides were keen
I-:
should take place yesterday.
My general view, having regard to the outcome of the argument, is that there should be no order for costs in this case. However, having indicated that at the moment that is my view, I will accede to Mr. Harrison's request and will reserve the question of costs.
I certify that this and the preceding 12 pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Drummond.
Associate: ALLY' -
Date :	22 June, 1993

[1993] FCA 433

22 Jun 1993