Emirates Park Pty Ltd v Magic Millions Sales Pty Ltd

[2002] FCA 994

FEDERAL COURT OF AUSTRALIA

Emirates Park Pty Ltd v Magic Millions Sales Pty Ltd [2002] FCA 994

PROCEDURE – application to file amended statement of claim – whether leave should be granted – whether the general claim to be gleaned from the pleadings is a futile one

TRADE PRACTICES – whether the interstate transportation of livestock constitutes interstate trade or commerce for the purpose of the Trade Practices Act 1974

TRADE PRACTICES – whether accessorial liability requires actual knowledge of the essential matters alleged against the principal contravener – whether an allegation of wilful blindness sufficient to justify a claim of accessorial liability

Statutes

Sale of Goods Act 1896 (Qld)

Trade Practices Act 1974 (Cth)

Cases

Australian Competition and Consumer Commission v Maritime Union of Australia & Ors (2001) 187 ALR 487Refd to

Australian National Airways Pty Ltd  and Guinea Airways Ltd v The Commonwealth (1945) 71 CLR 29 Refd to

Lockhart v Osman (1981) VR 57 Refd to

W & A McArthur Ltd v State of Queensland & Ors (1920) 28 CLR 530

Yorke v Lucas (1985) 158 CLR 661 Refd to

EMIRATES PARK PTY LTD V MAGIC MILLIONS SALES PTY LTD
Q43 of 2002

KIEFEL J
9 AUGUST 2002
BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q43 OF 2002

BETWEEN:

EMIRATES PARK PTY LTD
APPLICANT

AND:

MAGIC MILLIONS SALES PTY LTD
FIRST RESPONDENT

STEWART RAMSAY
SECOND RESPONDENT

JUDGE:

KIEFEL J

DATE OF ORDER:

9 AUGUST 2002

WHERE MADE:

BRISBANE

THE COURT ORDERS THAT:

1.The applicant have leave to amend its application and the statement of claim within seven days from the date hereof in the form of annexure “B” to the affidavit of D.F. Jardine filed by leave on 2 August 2002, but taking these reasons into account.

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

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q43 OF 2002

BETWEEN:

EMIRATES PARK PTY LTD
APPLICANT

AND:

MAGIC MILLIONS SALES PTY LTD
FIRST RESPONDENT

STEWART RAMSAY
SECOND RESPONDENT

JUDGE:	KIEFEL J
DATE:	9 AUGUST 2002
PLACE:	BRISBANE

REASONS FOR JUDGMENT

1. The applicant purchased a colt at the Magic Millions Sale held at the Gold Coast on 10 January 2002 for the sum of $400,000.  It was subsequently discovered that the horse suffered a condition which made it unsuitable for racing.  It is alleged that the condition was present, but not detectable by ordinary veterinary inspection, at the time of the sale.  The applicant seeks damages against the first respondent, the auctioneer, and the second respondent, the owner of the horse.  The claims are the subject of a proposed amendment to the statement of claim, for which leave is sought.  The second respondent opposes the grant of leave on the basis that the claims are fundamentally flawed in a number of respects. 

2. The first claim pleaded against the auctioneer and the owner is of conduct contravening s 52 and s 53(a) of the Trade Practices Act 1974 (Cth) (“the TPA”). It is alleged that, in offering the colt for sale, it was represented that the colt was sound and suitable as a racehorse or would be suitable for that purpose; did not suffer from any easily detectable condition; and had been included in the auction catalogue because it had been selected as a yearling suitable to be trained as a racehorse. Reliance is placed upon the nature of the Magic Millions Sale as one relating to thoroughbred yearlings to be trained as racing horses. This is said to be derived from the promotional material in the auction catalogue and its reputation within the racing industry. The sale is said to be one of the most widely publicised and prestigious sales conducted in Australia.

3. I am advised that as against the second respondent, the applicant relies upon the extension provided by s 6(2)(a)(ii) of the TPA. It is not specified in the proposed pleading. It is thereby provided that sections of the TPA, which would include s 52 and s 53(a), are to be read as if they were, by express provision, confined to trade or commerce among the States. The applicant’s case is that this provision, if established in connexion with the other sections, will be sufficient to render a person liable. Whether that is so is not a point presently raised. Rather the second respondent argues that the case as it is presented, does not indicate the necessary interstate trade or commerce reference.

4. Putting aside the reference to a corporation, s 6(2)(a)(ii), read with s 52 (and s 53(a)), would require that the conduct engaged in took place in trade or commerce among the States. At par 17A, the proposed pleading alleges that “In offering the colt for sale … the owner was engaged in trade or commerce among the States”.  The other relevant facts alleged are that the applicant is a company incorporated in New South Wales;  the second respondent carried on business as a horse breeder at Casino in New South Wales;  for the purpose of that business horses were sent to Queensland, amongst other places, for sale;  and the sale was held on the Gold Coast, Queensland.

5. The second respondent correctly points out that the proposed pleading does not allege that the horse sold to the applicant at the auction was transported interstate, although I would have thought that such an assumption could be made.  The applicant has confirmed that assertion in writing to the second respondent.

6. The second respondent submitted that, in any event, the fact that goods or livestock are transported interstate is not itself sufficient to establish that there has been trade or commerce among the States.  The cases referred to in argument:  W & A McArthur Ltd v State of Queensland & Ors (1920) 28 CLR 530 and Australian National Airways Pty Ltd and Guinea Airways Ltd  v The Commonwealth (1945) 71 CLR 29, were more concerned with the question whether there was trade or commerce where transport was absent as a factor (see respectively at 546-547; 56). “Trade and commerce” is capable of wide meaning.  In W & A McArthur Ltd (at 547) reference was made to mutual communings, negotiations, the bargain, and transport, among other things.  In Australian Competition and Consumer Commission v Maritime Union of Australia & Ors (2001) 187 ALR 487, 503 [77], a case to which the applicant referred, Hill J warned against breaking up the concept of trade and commerce into its individual components and assessing them as a separate activity. His Honour was there concerned with a provision which required only a connection with the trade and commerce in question.  Nevertheless his Honour’s warning is apposite here. 

7. The second respondent pointed out in argument that what had to be borne in mind was that the focus of the applicant’s case was upon the second respondent’s conduct.  So much may be accepted, but the conduct does not define the interstate trade or commerce as taking place when the conduct was engaged in.  Nor does it seem to me that trade or commerce is necessarily limited to the various aspects of the contract between the parties.  The conduct, after all, is alleged to have occurred as part of the auction.  It is not too difficult to infer from what is pleaded that it has inter-state aspects by reference to the publicity and the participants.  There may be others.

8. I accept that the applicant’s case as proposed, is not properly particularised in this regard.  I do not however accept that what may presently be gleaned from the pleadings renders the general claim a futile one.  It is to be recalled that the transport of the horse here was for the purpose of a sale in another State.  Presumably there were negotiations antecedent to that between the first respondent and the second respondent.  The applicant may also draw upon the characteristics of the auction itself as I have already mentioned.  The applicant should however plead full particulars of the allegation at par 17A.

9. The second respondent is also alleged to be liable under s 75B TPA. Accessorial liability requires actual knowledge of the essential matters alleged against the principal contravener, the first respondent: see Yorke v Lucas (1985) 158 CLR 661, 667. Actual knowledge on the part of the second respondent is here alleged in par 22(c) and particulars have been provided of the facts from which that inference is to be drawn. The particulars should be included in the statement of claim. Paragraph 22(c) also alleges that the second respondent “should have been aware”  of the condition.   The second respondent submits that this alleges constructive knowledge only and that to permit it to stand would be likely to create irrelevant issues.  The applicant counters that it is really a plea that takes account of the prospect of the applicant having the facts at hand but being wilfully blind to them.  If that is the case the applicant should plead the facts which it is said the applicant must have known of, unless he chose not to.  In that way the relevant facts are identified and the issue limited.  It may be that they are the same as those already particularised, in which case it would be necessary only to state the conclusion in the alternative to that of actual knowledge.

10. In relation to the claims based in contract, the second respondent points out that what is pleaded as an express term, namely that the horse be sound and suitable for racing, is not to be found in the contract.  This is not a case where an advertisement for the sale can be incorporated as one of the express terms of the contract (see Lockhart v Osman (1981) VR 57).  Rather, it seems to me, what is sought is to imply a term by reference to the nature of the circumstances surrounding the sale.  It should be re-cast in that way. 

11. Terms to be implied from the Sale of Goods Act 1896 (Qld) are relied upon by the applicant.  They concern correspondence with the description, fitness for purpose and merchantable quality.  That Act also permits parties to negative those implications.  The second respondent will plead cl 15.1 of the contract as having that effect.  The applicant in turn will rely upon cases which show that it is necessary that there be an express bilateral agreement to render such a clause effective, referring to Lockhart v Osman.  It was submitted, and I accept, that it would have been premature to raise this answer.  Now that it is plain that the second respondent will do so, it would be as well for the applicant to plead it in anticipation, so that the defence will be complete and a further pleading by the second respondent rendered unnecessary.  I do not think either party will be disadvantaged by this course.

12. There was one aspect of the applicant’s submissions which was not entirely clear to me.  In connexion with the application of the exclusion clause, the applicant referred to cases concerning the subject matter of the agreement.  I took it to be submitted that any exclusion clause must be read in light of the subject matter of the argument, and that the terms of the parties’ agreement be construed by reference to it.  This is not the same as arguing for express terms about the quality of the horse or statutory implied terms about its description.  If it is intended to allege that the subject matter of the contract was a horse of a particular type it should be distinctly pleaded, with particulars of the facts from which that conclusion is to be drawn.

13. There will be orders granting leave to amend the statement of claim in the form of Annexure “B” to Mr Jardine’s affidavit filed by leave on 2 August 2002 but taking these reasons into account.

14. So far as concerns the question of costs, I anticipate each party to contend that they have had a measure of success.  I am presently minded to make an order that the costs of the application be each of the applicant’s and the second respondent’s costs in the proceedings, but I will hear submissions on the point.

I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel J.

Associate:

Dated:             9 August 2002

Counsel for the Applicant:	Mr P E Hack SC and Mr A Musgrave
Solicitor for the Applicant:	Hopgood Ganim
Counsel for the First Respondent:	Mr A Crowe SC and Mr A Barlow
Solicitor for the First Respondent:	Hannigans
Counsel for the Second Respondent:	Mr N Thompson
Solicitor for the Second Respondent:	Freestone & Kumnick
Date of Hearing:	7 August 2002
Date of Judgment:	9 August 2002