Bunker v Bunker & Bunker Freight Lines P/L No. Scgrg-97-1148

[2000] SASC 132

BUNKER v BUNKER FREIGHT LINES (AUSTRALIA) PTY LTD  & BUNKER FREIGHT LINES PTY LTD
&  ORS
[2000] SASC 132

Appeal From a Master: Civil

1      GRAY J.            The plaintiffs are Ronald Bunker, Bunker Freightlines (Australia) Pty Ltd ("BFLA") and Bunker Freight Lines Pty Ltd.  The defendants are Wayne Ross Bunker, Bunker Bros Trucking Co Ltd, Raymond Bunker and Phillip Ian Bunker.  The defendants have appealed against a decision of a Master made on 4 February 2000 refusing their application to strike out the Statement of Claim.

2      The Master granted leave to the plaintiffs to amend the Statement of Claim to include a pleading relating to consumers of trucking services and potential consumers.  These amendments were made.  This appeal relates to the amended Statement of Claim.

3      By their Notice of Appeal the defendants pursue their application to have the entire Statement of Claim struck out. In the alternative, the striking out of discrete paragraphs is sought, being those paragraphs which "allege liability and/or claim to relief in respect of the plaintiff's alleged reputation with the organisations and bodies namely the Police Transport Industry Regulators, Transport Industry Employer and Employee Organisations."

4      The principles that guide this Court on dealing with an application to strike out a Statement of Claim are well established.  I refer in particular to Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (Reg)[1] where Olsson J said: 

“Rule 46.04 prescribes the fundamental requirements of a statement of claim.  Inter alia, it requires such a document to contain a statement, in summary form, of the material facts on which the relevant party relies, but not evidence by which the facts are to be proved.  It also stipulates that proper particulars of the claim be given, including specific particulars of the type adverted to in r 46.04(f)

It is elsewhere provided in r 46.18 that the whole or any part of a pleading which discloses no reasonable cause of action may be struck out at any stage of the proceedings.

As appears from the judgment of Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129 the test to be applied on such an application has been stated in a variety of forms: see also Egan v Commonwealth Minister for Transport (1976) 14 SASR 445. It is sufficient, for present purposes, merely to say that a pleading in a statement of claim will be struck out if, on the face of it, the alleged cause of action - as pleaded - is so obviously untenable that it cannot possibly succeed. The power to strike out is to be exercised with caution and the mere fact that the cause of action as alleged is weak, or not likely to succeed, is not sufficient to warrant a striking out order. The pleading must be so deficient that it is possible, unequivocally, to say that it does not, on any view, raise a case which is sustainable in the form in which it has been pleaded, even if the factual averments are made good.”

[1] (1994) 61 SASR 424 at 438

5      The approach of Olsson J was approved by the High Court in Esanda Finance Corporation Ltd v Peat Marwick Hungerfords[2]. 

[2] (1996 - 1997) 188 CLR 241; McHugh J at 271; Gummow J at 293-4.

6      The submissions of the appellant prompt an enquiry as to the purpose and function of the pleadings. As was said by King CJ in "Williams v Australian Telecommunications Commission [3]:- 

"The fundamental purpose of pleadings is to provide a structure or framework for the litigation designed to promote a just outcome.  Pleadings achieve this purpose by performing two basic functions.  The first is to define the issues between the parties thereby providing the basis for the determination of questions as to discovery before trial and admissibility of evidence at trial and of questions as to what the litigation has decided for the purpose of the Rules as to res judicata and issue estoppel.  The second function is to give to the parties fair notice of the case to be made against them at trial thereby minimising the risk of injustice resulting from surprise.

... that general principle which governs the application of all procedural rules, namely that 'rules and forms of procedure are not ends in themselves, but means to an end, which is the attainment of justice' "

[3]               Williams v Australian Telecommunications Commission, King CJ (1998-1990) 52 SASR 215 at 216.

7      Lander J discussed the relevant approach in Arthur Young & Anor v Tieco International & Ors[4]:-

"       Although the purpose of pleadings is clear, the pleadings themselves must not become a burden.  Whilst recognizing the due importance of pleadings and their role in the litigation process, they are not to be understood to be any more than statements of the case of the party; statements made with sufficient particularity to identify that case.  The rules of procedure do not require a party to include particulars of any more than the case to be made.  The rules require the pleader to be as brief as the nature of the case permits and further require that the material facts ought to be pleaded but specifically preclude the pleading of the evidence upon which those facts are to be proved.  It is therefore necessary, as only the material facts are to be pleaded, that some judgment has to be made in respect of any particular pleading as to whether or not the facts which are said to be omitted are material facts for the purpose of the party against whom the pleading is directed understanding the case, which is identified against that party.  It follows that having regard to the injunction that the pleadings be as brief as possible and that only material facts be pleaded, the law recognizes that some facts will not be pleaded because those facts do not identify the case that is raised against the party against whom the allegation is made, or further do not identify any issues or sub‑issues to which that party ought to apply that party’s mind.

The rules do require that the pleading will contain particulars of the claim, and particulars under the Rules must be understood to be part of the pleadings.  However, the rules make it plain that what is required is that there be sufficient particulars of the claim.  It follows therefore, as well, that the rules contemplate that not all particulars which may be identified by a party need to be pleaded.

In essence therefore it seems to me that a proper pleading will contain the material but not all facts and will contain sufficient particulars.

Whether the material facts and whether sufficient particulars have been pleaded must depend upon the cause of action, the complexities of the case and the whole of the circumstances of the case.  None of those matters can be considered in isolation any more than each of the paragraphs of the pleading can be considered in isolation."

[4] (1995) 182 LSJS 367 at 369-70.

8      Counsel on the hearing of the appeal expressly confined his attack to paragraphs 19-26 and 30-42 of the Amended Statement of Claim.

9      The Amended Statement of Claim pleads several causes of action, including breach of director's duties, the common law tort of passing off and breaches of s 52 and s 53 of the Trade Practices Act (Cth) 1974.

10     It is alleged that Wayne Ross Bunker owed fiduciary, statutory and common law duties to BFLA as a director including a duty not to misuse company property, not to misuse his office to his own advantage or to cause detriment to BFLA.  The company property identified is the trading name of the Company and its good reputation.  The reputation is pleaded as follows:-

"As a result of the operation of BFL described in paragraphs 1 and 2 hereof, Ronald Bunker and BFL created a reputation with the public generally and, inter alia, consumers of trucking services in Australia and potential consumers of those trucking services, the State and Federal and Government authorities, employee representative organisations and industry bodies within the road transport industry in Australia and within the road transport industry in Australia generally for quality of service, honesty, reliability, integrity and safety and for working for the continuous improvement of the road transport industry."

11     It is alleged that Wayne Ross Bunker acted in breach of his duties as a director by using the good name established by the plaintiffs for his own personal advantage and to the detriment of BFLA.  It is alleged in paragraphs 19, 27 and 28 that the conduct was deliberate and designed in part to deflect attention and blame away from the defendants in regard to a serious incident and a subsequent coronial inquest.

12     It is further alleged by paragraphs 20-24, 26, 29 and 30-42 that, as a result of the defendant's conduct, confusion has occurred in the minds of regulators, trucking organisations, consumers and potential consumers with resultant loss and damage to the plaintiffs.  Paragraph 25 pleads steps taken by the plaintiffs in an attempt to avoid confusion.  This plea may strictly be unnecessary, but it does inform the defendants of steps taken to mitigate loss and damage. Paragraphs 19-26 and 30 - 42 plead material facts concerning the deliberate nature of and the consequences of the breach of director's duties.

13     The tort of passing off has three elements: goodwill, misrepresentation and damage.  The matters of goodwill and misrepresentation are conceded to be adequately pleaded.  However it is contended that the allegations of confusion in the minds of  regulators and trucking organisations have no relevance to the claim for passing off.

14     The pleas support the likelihood of confusion in the minds of consumers and potential consumers. Indirect loss and damage may result to the business and goodwill.  It cannot be said that that these matters are wholly untenable.  I consider that it is tenable that the paragraphs are relevant to this cause of action.

15     The most authoritative statement in regard to damage sustained as a result of passing off is the decision of the Court of Appeal in Draper v Trist& Ors [5] .  At page 526 Goddard LJ said:-

"In passing off cases, however, the true basis of the action is that the passing off by the defendant of his goods as the goods of the plaintiff injures the right of property in the plaintiff, that right of property being his right to the goodwill of his business.  The law assumes, or presumes, that, if the goodwill of a man's business has been interfered with by the passing off of goods, damage results therefrom.  He need not wait to show that damage has resulted.  He can bring his action as soon as he can prove the passing-off, because it is one of the class of cases in which the law presumes that the plaintiff has suffered damage.  It is in fact, I think, in the same category in this respect as is an action for libel.  We know that for written defamation a plaintiff need prove no damage.  He proves his defamation.  So it is with a trader.  The law has always been particularly tender to the reputation and goodwill of traders.  If a trader is slandered in the way of his business, an action lies without proof of damage.  That does not mean to say that the plaintiff cannot give evidence showing that he has suffered damage in fact.  The more he can show that he has suffered damage in fact, the larger the damages he can recover. The more the defendant can show that he has suffered no damage in fact, the less he will recover.  In the case of a libel published to a person who knew the true facts, and to him only, although the plaintiff would have a cause of action, the damages would necessarily be very small.  In the case of a libel published in a newspaper with a large circulation, the damages would naturally be larger."

[5] [1939] 3 All E.R. 513

16     This authority would sustain the cause of action of passing off even if the challenged paragraphs were struck out.

17     Counsel's primary submission to support the striking out of the pleas as being irrelevant to the Trade Practices Act causes of action was that they fail to identify confusion in the minds of consumers or potential consumers of the services in question.  Counsel submitted that confusion in the mind of regulators or transport organisations was of no relevance.  A distinction was drawn between matters that are an incident of trade or commerce and matters that are in trade or commerce.  Reference was made to Concrete Constructions (NSW) Pty Ltd v Nelson[6] and the example given of a truck driver in the course of a commercial operation giving a false hand signal that was misleading and deceptive.  As the High Court pointed out, with nothing more, that conduct would be characterised as being an incident of trade and commerce and not in trade or commerce. As was said at 604:-

"On the other hand, the mere driving of a truck or construction of a building is not, without more, trade or commerce and to engage in conduct in the course of those activities which is divorced from any relevant actual or potential trading or commercial relationship or dealing will not of itself constitute conduct 'in trade or commerce' for the purposes of that section.  That being so, the giving of a misleading hand signal by the driver of one of its trucks is not, in the relevant sense, conduct by a corporation 'in trade or commerce'.  Nor, without more, is a misleading statement by one of a building company's own employees to another employee in the course of the ordinary activities. The position might well be different if the misleading statement was made in the course of, or for the purposes of, some trading or commercial dealing between the corporation and the particular employee."

[6] (1989-1990) 169 CLR 594

18     There is a need to examine whether the conduct in question is associated with any relevant commercial relationship or dealing.

19     It is pleaded that the defendants engaged in deliberate conduct designed to cause confusion in the industry in the minds of regulators, transport organisations, and of consumers and potential consumers with a view to damaging the plaintiffs in their commercial and trade dealings.  That conduct, it is pleaded, caused confusion with the result that the trading and commercial dealings of the plaintiffs were damaged.  Further, the role of the regulators and transport organisations identified is specific to the trucking industry.  It is alleged that the conduct complained of was undertaken for the purpose of damaging the plaintiffs in their trading and commercial dealings.  The regulators and transport organisations may have, at the very least, an indirect effect on trading and commercial dealings.

20     In my opinion it cannot be said that this aspect of the plaintiffs' case is plainly untenable or wholly unarguable. 

21     Counsel for the defendants contended that if the impugned paragraphs were struck out then, the entire statement of claim should be struck out.  Even assuming the impugned paragraphs were struck out, there would still remain a sustainable statement of claim.  The impugned paragraphs in any event are sustainable in their entirety as relevant to the causes of action alleging breach of director's duties.   Further the causes of action for passing off and breach of the Trade Practices Act are both sustainable by reason of other paragraphs in the statement of claim alleging confusion in the minds of consumers or potential consumers.

22     The order of the Master was correct. The order of the court is that the appeal is dismissed.

JUDGMENT CITATIONS
LISTED IN ORDER OF APPEARANCE IN JUDGMENT

(1994) 61 SASR 424 at 438

2 (1996 - 1997) 188 CLR 241; McHugh J at 271; Gummow J at 293-4.

3Williams v Australian Telecommunications Commission, King CJ (1998-1990) 52 SASR 215 at 216.

4 (1995) 182 LSJS 367 at 369-70.

5 [1939] 3 All E.R. 513

6 (1989-1990) 169 CLR 594