Bill Acceptance Corp Ltd v GWA Ltd

[1984] FCA 110

Re: BILL ACCEPTANCE CORPORATION LIMITED
And: GWA LIMITED
No. G166 of 1983
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Lockhart J.

CATCHWORDS

TRADE PRACTICES - consumer protection - misleading and deceptive conduct - second application to strike out amended statement of claim - allegation in amended statement of claim of representations made with knowledge of, or reckless indifference as to, their falsity - nature of such representations.

TRADE PRACTICES ACT 1974: s.52

HEARING

SYDNEY

#DATE 18:4:1984

ORDER

1. That the motion of the respondent to strike out the amended statement of claim be dismissed;

2. That the costs of the motion be the applicants costs in the proceeding; and

3. That the applicant pay the costs of, and occasioned by, the amendment to the amended statement of claim the subject of the application for leave to amend made and granted on 2 April 1984.

JUDGE1

This is a motion to strike out the amended statement of claim on the ground that it fails to disclose a cause of action or is frivolous and vexatious or is an abuse of the process of the Court.

An earlier application was made by the respondent, GWA Limited ("the respondent") to strike out the statement of claim; and I ordered on 21 October 1983 that it be struck out as disclosing no cause of action. I subsequently gave leave to the applicant, Bill Acceptance Corporation Limited ("the applicant") to file an amended statement of claim which is the document under challenge in the present motion.

I append to these reasons for judgment the amended statement of claim; the amendments are underlined. During the hearing of the present application I gave leave, which was unopposed, to the applicant to further amend its statement of claim as follows:-

"1. By adding the following new paragraph after para. 22:

22A. At no time prior to 29 April 1983 did the respondent in any way indicate any intention not to pay moneys to the applicant, or any incapacity to pay such moneys.

2. By adding the following words to each of sub-paragraphs 23(A) to 23(L):-

or was recklessly indifferent as to whether any such payment would be made, or any such intention adhered to.

Hence the amended statement of claim appended to these reasons must be read as if those further amendments had been made. I reserved the costs of, and occasioned by, the amendment.

The applicant alleges that the respondent, in trade or commerce, engaged in conduct that was misleading or deceptive or was likely to mislead or deceive and therefore contravened s. 52 of the Trade Practices Act 1974 ("the Act"). The applicant seeks damages pursuant to s. 82 and orders pursuant to s. 87.

In my earlier reasons, when considering the statement of claim before the present amendments were made to it, I said:-

The applicant's case rests upon the correctness of the proposition that a contravention of s. 52 may occur merely if a representation by the respondent as to future conduct does not come to pass, notwithstanding that, at the time it made that representation, the respondent may have believed that it would come to pass or that it was not recklessly indifferent as to what it said. In short, if A, being a corporation, says to B, in trade or commerce, that it will pay a sum of money to him on the happening of a certain event, and the event occurs, but the money is not paid, the respondent has, without more, engaged in conduct that is misleading or deceptive or is likely to mislead or deceive. . . .

Counsel for the applicant summarised the applicant's case as pleaded in its statement of claim as a series of representations or statements, which were not misleading or deceptive to the knowledge of the respondent at the time they were made but which, when taken together and viewed in the light of two subsequent events, were misleading or deceptive. The two events were first, that the applicant facilitated or procured the disposition of the respondent's shares in Midland Credit Limited to a purchaser acceptable to the respondent and second, that the respondent did not pay the agreed procuration fee of $124,000 to the applicant. Counsel for the applicant argued that this chain of events, without more, could constitute a breach of s. 52. . . .

So far as I am able to characterise the allegations in the statement of claim as representations or statements as to future conduct of the respondent they involve no element of absence of belief by the respondent in the truth of the statements and no element of reckless indifference to their accuracy. They are simply promises by the respondent that it will pay a certain sum of money on a particular event. That event occurred, but the money was not paid. . . .

The mere fact that representations as to future conduct or events do not come to pass does not make them misleading or deceptive notwithstanding that the applicant has relied on them and has altered his position on the faith of them. In this case, the lone fact that the agreed procuration fee was not paid did not transmute the conduct of the respondent from conduct that was not, to conduct that was, misleading or deceptive. That conduct, namely the relevant representations or statements retained the same character throughout. The only variable was that the agreed fee was not paid. That was the cause of the applicant's loss or damage, if any. If the respondent had made representations or statements with knowledge of their falsity or with reckless indifference to their accuracy the applicant's case may then fall within what I believe to be the present law on this subject as expressed by Fitzgerald J. in Stack's Case to which I have already referred. However the applicant has not pleaded any intent on the part of the respondent to mislead or deceive, nor has it pleaded any reckless indifference as to the accuracy of the statments made."

The amendments to the statement of claim supplemented the previous allegations by alleging essentially:-

(a) that the representations or statements pleaded in paras. 3-19 were both express and implied and, to the extent that they were implied, the respondent represented to the applicant that the respondent intended to pay the applicant for the applicant's services to be rendered to the respondent, "and/or" that the respondent had the capacity to pay the applicant the agreed remuneration for the performance of those services;

(b) that when each of those representations or statements was made the respondent did not intend to pay the agreed remuneration for the applicant's services; it did not have the capacity to pay it; and it was recklessly indifferent as to whether any such payment would be made or as to its capacity to pay it or as to whether its intention would be adhered to (para. 23).

What the amendments do, therefore, is to introduce into the statement of claim allegations that the representations or statements were made by the respondent knowing that they were false or with reckless indifference to their accuracy.

Although the relevant amendments are not free from some ambiguity, I interpret them as meaning that the alleged representations or statements of the respondent's intention to pay for the applicant's services were representations of the intention of the respondent existing at the time they were made; that the alleged representations or statements of the respondent's capacity to pay any agreed remuneration for the applicant's services were representations or statements that it had the capacity at the time they were made and that there was no reason to doubt that such capacity would change before the time arrived for payment.

It may be, as the respondent contended, that an allegation that the respondent had the capacity to pay at the time the representations were made is not relevant; or that an allegation that the respondent would have the capacity to pay when the time for payment arrived is properly characterised as a prediction rather than a statement of intent; but it is unnecessary to resolve these questions at this stage of the case.

Elements are now present in the statement of claim which were absent when I struck out the previous statement of claim. The arguments of counsel for the respondent may prove to be correct at the trial; but I am not satisfied that the applicant's cause of action, as presently pleaded, is so clearly untenable that it cannot possibly succeed or is "manifestlty groundless": see Dev v. Victorian Railway Commissioners (1949) 78 C.L.R. 62, especially per Dixon J. (at p. 91); General Steel Industries Inc. v. Commissioner for Railways (N.S.W.) (1964) 112 C.L.R. 125 per Barwick C.J. (at pp. 129 & 130); Hanimex Pty. Ltd. v. Kodak (Australasia) Pty. Limited (1982) A.T.P.R. 40,287; Universal Telecasters (Queensland) Ltd. v. Ainsworth Consolidated Industries Ltd. (1983) A.T.P.R. 40,384 (at pp. 44,525-6).

I propose to dismiss the motion to strike out the statement of claim. The proper order for costs of the motion is that they be the applicant's costs in the proceeding. The costs of and occasioned by the further amendment to the statement of claim, which I allowed during the course of the hearing on 2 April 1984, should be paid by the applicant in any event. The matter will be relisted for further directions. I expect the parties to have then agreed or, failing agreement, to be in a position to argue any outstanding interlocutory matters so that the case may proceed to trial as soon as possible.

The orders of the Court are :

1. That the motion of the respondent to strike out the amended statement of claim be dismissed;

2. That the costs of the motion be the applicant's costs in the proceeding; and

3. That the applicant pay the costs of, and occasioned by, the amendment to the amended statement of claim the subject of the application for leave to amend made and granted on 2 April 1984.