Chan v Macarthur Minerals Ltd

Case [2017] QSC 13

SUPREME COURT OF QUEENSLAND

CITATION:

Chan & Ors v Macarthur Minerals Ltd & Ors [2017] QSC 13

PARTIES:

SING CHUK CHARLES CHAN

(first plaintiff)

WAI LAP VICTOR CHAN

(second plaintiff)

WAI KAK KWOK

(third plaintiff)

v

MACARTHUR MINERALS LTD

(first defendant)

ALAN PHILLIPS

(second defendant)

JOE PHILLIPS

(third defendant)

FILE NO/S:

SC No 518 of 2016

DIVISION:

Trial Division

PROCEEDING:

Applications for strike out

DELIVERED ON:

1 March 2017

DELIVERED AT:

Brisbane

HEARING DATE:

31 August 2016

JUDGE:

Bond J

ORDER:

The order of the Court is that:

Paragraphs [40], [53], [61], [63], [64], [65], [66(c)], [67(b)], and [67(d)] to [67(g)] of the statement of claim be struck out, with leave to re-plead.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – STRIKING OUT – GENERALLY – where the first and third plaintiffs became the owners and directors of a new company on the basis of representations by the first defendant that it would enter into an agreement with the new company – where it is alleged that the first defendant continued to represent that it would enter into the agreement despite having put the decision ‘on hold’ – where the plaintiffs allege a breach of s 52 of the Trade Practices Act 1974 (Cth) – where the defendants apply to strike out the statement of claim either wholly or partially – whether the evidence referred to in the particulars supports the pleaded allegation of misleading or deceptive conduct

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – STRIKING OUT – GENERALLY – where the first and third plaintiffs became the owners and directors of a new company on the basis of representations by the first defendant that it would enter into an agreement with the new company – where it is alleged that the first defendant continued to represent that it would enter into the agreement despite having put the decision ‘on hold’ – where the plaintiffs suffered loss – where the plaintiffs claim damages pursuant to s 82 of the Trade Practices Act 1974 (Cth) for breach of s 52 of that Act – where the defendants apply to strike out the statement of claim either wholly or partially – whether causation of loss was adequately pleaded in respect of the claim for damages for misleading and deceptive conduct

Corporations Act 2001 (Cth), s 588M(2)

Trade Practices Act 1974 (Cth), s 52, s 82

Chan v First Strategic Development Corporation Limited (in liq) [2015] QCA 28, cited
First Strategic Development Corporation Limited (in liq) v Chan [2014] QSC 60, cited
Graham & Linda Huddy Nominees Pty Ltd v Byrne [2016] QSC 221, cited
Henville v Walker (2001) 206 CLR 459, cited
I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109, cited
Lee v Abedian [2016] QSC 92 , cited
March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506, cited
Medlin v State Government Insurance Office

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AGLC
Chan v Macarthur Minerals Ltd [2017] QSC 13
Case
[2017] QSC 13
Decision Date

CaseChat Overview and Summary

The case of Chan v Macarthur Minerals Ltd involved plaintiffs who alleged that they suffered losses due to misleading and deceptive conduct by the defendants. The plaintiffs claimed that they became the owners and directors of a new company based on representations by the defendants that an agreement would be entered into. However, the defendants allegedly continued to make these representations despite having put the decision on hold. The plaintiffs sought damages for breach of section 52 of the Trade Practices Act 1974 (Cth) and under section 82 of the same Act. The defendants applied to have the statement of claim struck out either in part or entirely.

The central legal issues in the case revolved around whether the evidence referred to in the particulars supported the pleaded allegation of misleading or deceptive conduct and if the causation of loss was adequately pleaded in respect of the claim for damages. The court needed to determine whether the plaintiffs had provided sufficient details to establish a causal connection between the alleged misleading and deceptive conduct and the losses they claimed to have suffered.

The court examined the particulars of the statement of claim and found that they did not adequately support the pleaded allegations of misleading and deceptive conduct. The court noted that the plaintiffs needed to provide more than general allegations and had to set forth facts and circumstances leading to a reasonable inference that the misleading and deceptive conduct caused the injuries complained of. The court also found that the plaintiffs had not adequately pleaded the causation of loss in respect of their claim for damages. The court concluded that the plaintiffs’ statement of claim needed to be more detailed and specific to meet the legal standards for pleading.

The court struck out certain paragraphs of the statement of claim, with leave to re-plead, as they did not sufficiently support the pleaded allegations and did not adequately establish causation of loss. The plaintiffs were given the opportunity to amend their statement of claim to provide more detailed and specific information to meet the legal standards for pleading.

Orders

Orders of the court

The order of the Court is that:

Paragraphs [40], [53], [61], [63], [64], [65], [66(c)], [67(b)], and [67(d)] to [67(g)] of the statement of claim be struck out, with leave to re-plead.

Background

Background to the litigation

In Graham & Linda Huddy Nominees Pty Ltd v Byrne [2016] QSC 221, Jackson J collected some further general statements of principle, to similar effect (emphasis added and footnotes omitted):[26] However, there is no shortage of relevant case law [concerning the extent of pleading required to establish causal link between breaches of contract or negligence and loss]. In Southern Cross Mine Management Pty Ltd v Ensham Resources Pty Ltd, Chesterman J said:“In any cause of action in respect of which causation is an essential element it is necessary to plead the material facts which are said to give rise to the causal connection. In particular it is necessary to plead the facts which lead to a reasonable inference that the acts complained of (here the relevant non-disclosure) and the alleged later event (here the making of the dragline agreement) stand to each other in the relation of cause and effect. …[27] Another well-known judgment in this area is Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd, where French J said:“The material facts establishing the necessary causal link should be pleaded. In cases of contravention of s 52 said to be constituted by misrepresentation this will generally require more than appears in the opening words of par 50: ‘by reason of such conduct ...’. Some guidance to the proper approach may be derived from the ordinary rule of pleading applicable in cases of fraud of which Lord Watson said in Dow Hager Lawrance v Lord Norreys(1890) 15 App Cas 210 at 221: ‘... The ordinary rule of pleading applicable to cases of fraud, ... was thus expressed by Earle Selborne in Wallingford v Mutual Society(1880) 5 App Cas 685 at 697: “General allegations, however strong may be the words in which they are stated, are insufficient to amount to an averment of fraud of which any court ought to take notice.” It is not a sufficient compliance with the rule to state facts and circumstances which merely imply that the defendant, or someone for whose action he is responsible, did commit a fraud of some kind. There must be a probable, if not necessary, connection between the fraud averred and the injurious consequences which the plaintiff attributes to it; and if that connection is not sufficiently apparent from the particulars stated, it cannot be supplied by general averments. Facts and circumstances must in that case be set forth, and in every genuine claim are capable of being stated, leading to a reasonable inference that the fraud and the injuries complained of stood to each other in the relation of cause and effect.’A perusal of the relevant precedents in [Bullen, Leake & Jacob’s Precedents of Pleadings 12th ed, pp 702–7] supports the view that the approach enunciated by Lord Watson is equally applicable to actions for negligent misstatement.” The plaintiffs claim to have suffered the following types of losses in consequence of defendants’ misleading and deceptive conduct:(a)the amounts paid by the first plaintiff for legal services relating to the appointment of the liquidators and for the services of the liquidators; (b)the expenses incurred by the plaintiffs in unsuccessfully defending the Insolvent Trading Proceeding; (c)the amounts paid by the plaintiffs pursuant to the judgment of this Court in the Insolvent Trading Proceeding, both for the principal sum and for costs; and(d)the amounts paid by the first plaintiff to First Strategic to enable it to meet debts incurred by it.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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