Diploma Construction (WA) Pty Ltd v Best Bar Pty Ltd
[2012] WASC 135
•26 APRIL 2012
DIPLOMA CONSTRUCTION (WA) PTY LTD -v- BEST BAR PTY LTD [2012] WASC 135
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2012] WASC 135 | |
| Case No: | CIV:1270/2009 | 21 DECEMBER 2011 | |
| Coram: | ALLANSON J | 26/04/12 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Application granted in part | ||
| B | |||
| PDF Version |
| Parties: | DIPLOMA CONSTRUCTION (WA) PTY LTD BEST BAR PTY LTD |
Catchwords: | Practice and procedure Application to strike out Inconsistent pleas in contract and implied representation Embarrassing pleadings Turns on own facts |
Legislation: | Trade Practices Act 1974 (Cth), s 51AA, s 51AC |
Case References: | Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62 Fazio v Fazio [2012] WASCA 72 General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 Grainger v Williams [2009] WASCA 60 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191 Shelton v National Roads & Motorists Association Ltd [2004] FCA 1393 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
BEST BAR PTY LTD
Defendant
Catchwords:
Practice and procedure - Application to strike out - Inconsistent pleas in contract and implied representation - Embarrassing pleadings - Turns on own facts
Legislation:
Trade Practices Act 1974 (Cth), s 51AA, s 51AC
Result:
Application granted in part
(Page 2)
Category: B
Representation:
Counsel:
Plaintiff : Mr M J Feutrill
Defendant : Mr K L Christensen
Solicitors:
Plaintiff : Bowen Buchbinder Vilensky
Defendant : Gadens Lawyers
Case(s) referred to in judgment(s):
Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82
Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592
Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304
Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62
Fazio v Fazio [2012] WASCA 72
General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125
Grainger v Williams [2009] WASCA 60
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191
Shelton v National Roads & Motorists Association Ltd [2004] FCA 1393
(Page 3)
1 ALLANSON J: These are my reasons for upholding, in part, an application by the defendant to strike out particular pleas in the plaintiff's statement of claim.
2 The plaintiff is a registered builder. In February 2007, July 2007 and January 2008, the plaintiff entered into head contracts to carry out construction at three sites, conveniently described as the Sky Apartments, the Rise Apartments, and the Durack Centre.
3 The defendant supplies steel reinforcing bar (Rebar) used in the building industry. The defendant supplied Rebar to the plaintiff for use in construction on each of the three sites.
4 In an amended substituted statement of claim dated 25 November 2011, the plaintiff pleads a claim against the defendant for damages and other relief in relation to each of the construction projects. It pleads causes of action in contract and under the Trade Practices Act 1974 (Cth). The legal basis of the claims is essentially the same for each project, save that, in relation to the Sky Apartments, there is an additional claim that the defendant misrepresented the amount of Rebar it had supplied.
5 The defendant challenges the pleading in relation to each project on the same grounds. The issues can be discussed by reference to the pleading about the Sky Apartments.
The principles
6 The principles to be applied to an application of this nature are well known. The court will onlystrike out in a clear case: General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125, 129 - 130; Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62, 91. Under the prevailing system of case management, the court will seriously entertain criticisms of a pleading only where the defects complained of may significantly affect the proper preparation of the case and its presentation at trial: Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 [8]. But when a case proceeds on pleadings, they remain the primary way by which the parties identify the issues. A pleading should still fulfil its basic function by disclosing an arguable cause of action, and apprising the other party of the case it has to meet at trial: Barclay Mowlem Construction Ltd [5] - [9].
(Page 4)
The Sky Apartments - contract claims
7 The plaintiff pleads, in substance, that it had entered into a head contract to construct the Sky Apartments for a fixed sum, by a nominated date. It had agreed to pay liquidated damages under the head contract for delay in completion.
8 In or about March 2007, the plaintiff provided the defendant the specifications for Rebar required for the construction, and invited the defendant to quote for the complete supply of Rebar. The defendant quoted on 15 March 2007 at $1,285 per tonne plus GST. The quote was expressed to be 'subject to the defendant's terms and conditions', although those terms and conditions did not accompany the quote. They are not set out in the statement of claim.
9 On 31 May 2007, the plaintiff placed a written order with the defendant for the supply of 1,200 tonnes of Rebar at a total price of $1,542,000, exclusive of GST (that is, at $1,285 per tonne). The order was later updated, on a date not specified in the statement of claim, to a quantity of 1,749 tonnes. The order was expressed to be subject to the plaintiff's terms and conditions. The plaintiff's terms and conditions are also not set out.
10 The plaintiff alleges that the defendant delivered Rebar to the Sky Apartments site between about 19 June 2007 and 15 December 2008, and by that conduct it accepted the offer to contract in the plaintiff's order and on the plaintiff's terms and conditions.
11 By reason of these facts, the plaintiff pleads that the parties entered into a contract, partly written (although the written terms are not specified) and partly implied by the defendant's conduct on or about 19 June 2007. On the proper construction of that contract, the defendant agreed to supply and the plaintiff agreed to take delivery of and purchase 1,749 tonnes of Rebar at a fixed price of $1,285 per tonne plus GST.
12 On three occasions, in April, June and August 2008, the defendant gave notice of price increases. In late 2008, the defendant informed the plaintiff that unless the plaintiff paid the increased prices the defendant would not supply Rebar to the plaintiff.
13 On 15 December 2008, the plaintiff issued a notice of termination to the defendant. The plaintiff says the defendant's conduct, in stating that it would not supply further Rebar unless the plaintiff paid the increased
(Page 5)
- prices, was a repudiation of the contract and that the plaintiff accepted that repudiation.
14 The plaintiff also claims that the defendant invoiced it for 1,762 tonnes of Rebar, but supplied only 1,543.48 tonnes pursuant to the contract. The plaintiff says that it paid the full amount of the defendant's invoices by mistake and seeks restitution of the amount mistakenly paid.
15 The plaintiff also seeks damages by reason of the defendant's repudiation of the contract, being the additional cost of obtaining Rebar from another supplier.
The Sky Apartments - Trade Practices Act claims
16 In addition to the claims in contract, the plaintiff pleads claims based on the provisions formerly found in pt V of the Trade Practices Act.
17 First, the defendant represented to the plaintiff that the defendant had a contractual entitlement to increase prices and that representation was false, misleading or deceptive or likely to mislead or deceive.
18 Second, in invoicing for 1,762 tonnes the defendant falsely represented that it had supplied the plaintiff with that quantity pursuant to the contract when it had supplied only 1,543.48 tonnes pursuant to the contract.
19 Third, the defendant made an implied representation to the effect that it did not have a contractual right, or it would not rely on any contractual right it had, to increase the price of Rebar from that stated in the order: par 29A. Those (mutually inconsistent) representations are said to be implied by reason of the facts set out in pars 8 to 14 of the statement of claim. Those facts (omitting particulars) are:
8. In response to the Sky Quote the Plaintiff, on 31 May 2007, placed a written order with the Defendant for the supply of 1,200 tonnes of Rebar at a total price of $1,542,000.00 exclusive of GST and then at a later date provided an updated written order for 1,749 tonnes of Rebar ('the Sky Order').
9. Prior to submitting the Sky Order, the Plaintiff had not accepted the Defendant's Terms and Conditions for the supply of Rebar.
10. The Sky Order was expressly stated to be subject to the Plaintiff's terms and conditions which formed part of the Sky Order ('the Plaintiff's Terms and Conditions').
(Page 6)
- 11. At no material time did the Defendant reject the terms of the offer to contract contained in the Sky Order and the Plaintiff's Terms and Conditions.
13. The Defendant accepted the offer to contract contained in the Sky Order and the Plaintiff's Terms and Conditions by conduct through the delivery of Rebar to 148 Adelaide Terrace, Perth between on or about 19 June 2007 and on or about 15 December 2008.
14. By reason of the facts pleaded in paragraphs 4 to 13 above, the Plaintiff and the Defendant entered into a contract that was partly written and partly implied by conduct on or about 19 June 2007 ('Sky Contract').
20 In pars 29B and 29C, the plaintiff pleads that the implied representation was, in part, a statement of existing fact, that the defendant did not have a contractual right to increase the price of Rebar from that stated in the Sky Apartments order; and, in part, a statement as to a future matter, that the defendant would not rely on any contractual right it had to increase the price of Rebar.
21 The plaintiff pleads that in reliance on that implied representation it assumed the price of Rebar was fixed and accepted delivery of and paid for Rebar supplied on that basis: par 29D. The plaintiff pleads in par 30, in the alternative to its claims in contract, as follows:
[I]f the Sky Contract contained a term that gave the Defendant the right to increase the price of Rebar from that stated in the Sky Order (which is denied), then by reason of the facts pleaded in paragraphs 29A to 29D above, the Defendant engaged in conduct that was misleading and deceptive or likely to mislead or deceive contrary to sections 52, 53(e) and 53(g) of the TPA.
22 The plaintiff also claims under the Trade Practices Act that, in refusing or failing to supply Rebar to the plaintiff if it did not pay the increased prices, when the plaintiff was at risk of incurring significant liability for damages under the head contract, the defendant intended to take advantage of the plaintiff's position of weakness for the purpose of obtaining higher prices than those provided in the contract, further or alternatively than those represented: par 31C. The plaintiff pleads that the defendant's conduct was unconscionable under s 51AA, alternatively s 51AC(2), of the Trade Practices Act.
The application to strike out
23 The defendant brought an application to strike out based on an earlier incarnation of the plaintiff's pleading. In that plea, now superseded, the
(Page 7)
- plaintiff pleaded that the defendant's conduct gave rise to quite different representations:
1. That the defendant was able to supply the quoted quantity of Rebar at the price contained within its quote and the contract.
2. That the defendant would only seek to increase the price of Rebar where it incurred an increase in the cost of producing and/or delivering the Rebar, and not as a consequence of an increase in the cost of raw materials from the defendant's suppliers.
24 Despite those quite significant changes in the plaintiff's case, the defendant submitted that the underlying deficiency remained the same, and maintained substantially the same objection to the pleading. The defendant argued that the essential dispute between the parties is as to the terms and conditions of the contract. The dispute is about determining what are the terms of the contract and, in relation to the Sky Apartments, what quantity of Rebar was supplied. The defendant submitted that if the plaintiff's misleading or deceptive conduct claims are reasonable then the vast majority of contractual claims should include those alternative statutory claims.
The plaintiff's submissions
Misleading or deceptive conduct
25 The plaintiff submitted that its claims for misleading or deceptive conduct fall into two types:
1. The post-contractual conduct in claiming a contractual entitlement to increase prices and, in the case of the Sky Apartments contract, in representing the amount of Rebar that the defendant had supplied to the plaintiff.
2. The pre-contractual conduct giving rise to implied representations regarding the price at which the defendant intended to supply Rebar for the duration of the contracts.
26 The pleading relating to post-contractual conduct is perhaps unnecessary, because the plaintiff can only succeed if it succeeds in its contract claim. That is, it was only misleading or deceptive for the defendant to represent that it had a contractual right to raise prices if it had no such right. Further, the plaintiff's loss would arguably be caused by the defendant's breach of contract rather than by its misleading or deceptive conduct. Similarly, the plaintiff should succeed in its claim
(Page 8)
- regarding the quantity delivered if the defendant invoiced it for the incorrect quantity.
27 But those are not reasons to strike out the past contract claims. They are unlikely to result in the unnecessary expenditure of either time or cost in preparation or at trial; if there is any unnecessary expense, it is likely to be small and could be compensated by an appropriate costs order.
28 The claim for pre-contractual misleading or deceptive conduct is of greater concern. The plaintiff pleads in par 14 that by reason of the facts pleaded in pars 4 to 13 of the statement of claim, the plaintiff and the defendant entered into a contract. It pleads by reason of the facts pleaded in pars 8 to 14, the defendant made an implied representation that it did not have a contractual right or would not rely on any contractual right it had to increase the price of Rebar (par 29A).
29 Most significantly, the plaintiff pleads in pars 29A and 30 that if the contract contained a term that gave the defendant the right to increase the price of Rebar, then, by reason of the same facts that give rise to the contract, there is an implied representation to the effect that there is no such contractual right. The plaintiff submitted that
if, as a matter of objective contract theory, the contracts incorporate terms that allow the defendant to increase the price of Rebar in certain circumstances the defendant's pre-contractual conduct was such that it conveyed to the plaintiff the impression that the defendant had accepted fixed prices.
30 Contract theory is, as the plaintiff submitted, objective: see, for example, the recent discussion in Fazio v Fazio [2012] WASCA 72 [188] - [191]. The law relating to implied representations is also objective. The question whether conduct is misleading or deceptive or likely to mislead or deceive requires consideration of whether the impugned conduct, viewed as a whole, has a tendency to lead persons into error. The test is necessarily objective: Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 [25]; Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 [109]; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191, 199; Grainger v Williams [2009] WASCA 60 [26].
31 If the facts and conduct give rise to a contractual term that the defendant was entitled to increase the price of Rebar, those same facts could not objectively constitute an implied representation that there was
(Page 9)
- no such contractual entitlement, or it would not be relied upon. I stress that the agreement and the implied representation are said to arise from the same facts, and the representation is said to be as to the defendant's contractual entitlement. The plaintiff does not rely on any additional statements or further conduct by the defendant to give rise to the representation.
32 A pleading may contain, in the alternative, inconsistent allegations. But a pleading may be embarrassing where it contains inconsistent allegations or alternatives that are confusingly intermixed: Shelton v National Roads & Motorists Association Ltd [2004] FCA 1393 [18]. The plea regarding the contractual representations is embarrassing.
33 The pleas based on s 51AA, alternatively s 51AC(2) of the Trade Practices Act must also fail, at least in their present form, as the plaintiff pleads that the unconscionability arises, further or alternatively, from the pre-contractual representation.
Conclusion
34 For these reasons, I would strike out:
1. in relation to the Sky Apartments plea, pars 29A, 29B, 29C, 29D, 30, 31; and pars 31B, 31C, 32 and 33 to the extent they rely on the pleaded fixed price representation.
2. in relation to the Rise Apartments plea, pars 57A, 57B, 57C, 57D, 5859, 59AB; and pars 59B, 59C, 60 and 61 to the extent they rely on the pleaded fixed price representation; and
3. in relation to the Durack Centre plea, pars 84A, 84B, 84C, 84D, 85 and 86; and pars 86B, 86C, 87 and 88 to the extent they rely on the pleaded fixed price representation
35 I will hear the parties as to any consequential orders.
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