Eunson v Beaulieu United Ltd
[1999] FCA 1164
•24 AUGUST 1999
FEDERAL COURT OF AUSTRALIA
Eunson v Beaulieu United Ltd [1999] FCA 1164
PRACTICE AND PROCEDURE – Pleadings – whether statement of claim should be struck out – whether deed of arrangement prevented the applicant from bringing claims – whether actions statute-barred – whether the limitation question should be determined at an interlocutory stage – allegation of fraud – whether fraud pleaded with sufficient particularity.
Bankruptcy Act 1966 (Cth) Part X
Trade Practices Act 1974 (Cth) s 52 and s 82(2)
Federal Court Rules O 12 r 2 and r 3
Limitation of Actions Act 1958 (Vic) s 5In re Rhagg (Deceased) [1938] Ch 828 cited
Reference under the Electricity Commission (Balmain Electric Light Co. Purchase) Act 1950 [1957] SR (NSW) 100 cited
Top of the Cross Pty Ltd & Anor v Federal Commissioner of Taxation (1980) 50 FLR 19; affirmed (1981) 57 FLR 294 referred
Whittaker v Delmina Pty Ltd (unreported, Supreme Court of Victoria, Hansen J, 18 December 1998) [1998] VSC 175 cited
Gardner v London Chatham & Dover Railway Co (No 1) (1867) LR 2 Ch App 201 referred
Page v International Trust Agency & Industrial Trust Ltd (1893) 62 LJCh 610 cited
Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337 followed
Akai Pty Limited v The People’s Insurance Company Limited (1996) 188 CLR 418 cited
Wardley Australia Limited & Anor v The State of Western Australia (1992) 175 CLR 514 followed
Karedis Enterprises Pty Ltd & Anor v Antoniou & Anor (1995) 59 FCR 35 cited
Banque Commerciale SA, En liquidation v Akhil Holdings Limited (1990) 169 CLR 279 cited
Allstate Life Insurance Co & Ors v Australian and New Zealand Banking Group Ltd & Ors (1995) 57 FCR 360 cited
Baltic Shipping Company v Dillon (1993) 176 CLR 344 followed
Zoneff & Anor v Elcom Credit Union Limited (1990) ATPR 41-009; affirmed (1990) ATPR 41-058 cited
Argy & Anor v Blunts & Lane Cove Real Estate Pty Ltd & Ors (1990) 26 FCR 112 cited
Steiner & Anor v Magic Carpet Tours Pty Ltd & Ors (1984) ATPR 40-490 cited
Brickhill & Anor v Cooke & Anor [1984] 3 NSWLR 396 cited
Re Dowling; Ex parte Jamison; Jamison v Allen (1979) 36 FLR 384 cited
Re Armessen; Ex parte South Coast Timber Industries Pty Limited (1963) 19 ABC 190 citedELLIOT EUNSON v BEAULIEU UNITED LIMITED (ACN 010 727 992)
V 195 of 1999KENNY J
MELBOURNE
24 AUGUST 1999
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
V 195 OF 1999
BETWEEN:
ELLIOT EUNSON
ApplicantAND:
BEAULIEU UNITED LIMITED (ACN 010 727 992)
RespondentJUDGE:
KENNY J
DATE OF ORDER:
24 AUGUST 1999
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
(1)Paragraphs 4(a) and 7(a), and 9 to 20 (inclusive) of the statement of claim dated 23 April 1999 be struck out.
(2)The applicant have general liberty to re-plead the statement of claim.
(3)A re-pleaded statement of claim be filed and served by the applicant on or before 14 September 1999.
(4)Any request for further and better particulars of the re-pleaded statement of claim be filed and served by 21 September 1999.
(5)Any reply to such request be filed and served on or before 1 October 1999.
(6)The applicant pay Beaulieu United Limited’s costs of the motion, notice of which is dated 24 June 1999.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
V 195 OF 1999
BETWEEN:
ELLIOT EUNSON
ApplicantAND:
BEAULIEU UNITED LIMITED (ACN 010 727 992)
Respondent
JUDGE:
KENNY J
DATE:
24 AUGUST 1999
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
By notice of motion dated 24 June 1999, Beaulieu United Limited (“Beaulieu”) seeks orders that:
(1)Paragraphs 3, 4(a), 7, 10, 11, 12, 13(a), 14 and 16 of the Statement of Claim be struck out.
(2)Further, or in the alternative, that the whole of the Statement of Claim be struck out.
(3)Further, or in the alternative, that the proceeding be dismissed.
(4)Further, or in the alternative, the Applicant provide the following particulars prior to the Respondent having to plead to the Statement of Claim, or any Amended Statement of Claim:
(a) as to the allegation in paragraph 6 of the Statement of Claim, particulars of the carpet supplied to customers, and the customers to whom it was supplied;
(b) as to the allegations in paragraph 8 of the Statement of Claim, particulars of the customers, and the carpet supplied to those customers, which is alleged to cause the loss referred to;
(c) as to the allegation in paragraph 14 of the Statement of Claim, particulars of the knowledge, and of the fraudulent intention therein alleged, including:
(i)the date or dates upon which the Respondent formed the intention to sell the Applicant carpet which [was] faulty;
(ii)the date or dates upon which the Respondent became aware that the carpet was faulty;
(iii)the person or persons on the board of directors of the Respondent who became so aware; and
(iv)the person or persons on the board of directors of the Respondent who made or took part in or otherwise ratified the decision to sell faulty carpet to the Applicant.
(5)Costs, including leave to tax such costs.
In support of the motion, Beaulieu relied on affidavits sworn by Mr Nigel Amphlett on 15 July 1999, by its solicitor, Ms J M Forbes, on 24 June 1999, and by Mr S A Simper on 24 June 1999. In opposition to the motion, Mr Eunson relied on his own affidavit sworn on 26 July 1999, an affidavit sworn by the controlling trustee, Mr P R Vince, on 4 August 1999, and an affidavit sworn by Mr Eunson’s solicitor, Mr Cesar Piotti, on 5 August 1999.
A notice to produce dated 3 August 1999 was served by Mr Eunson on Beaulieu and made returnable at the hearing. As it turned out, for the reasons that appear below, the notice did not bear on the outcome of the motion. There were some preliminary points taken by counsel for Mr Eunson relating to the form of the notice of motion. At the hearing, I accepted counsel for Beaulieu’s submission concerning those points. Counsel for Mr Eunson also submitted that she had had too little notice of some of the submissions made by Beaulieu. With one exception, I rejected that submission. The exception concerned Beaulieu’s submission that the causes of action in negligent and fraudulent misrepresentation were statute-barred. Counsel for Mr Eunson did not, however, press for any adjournment of the hearing or like matter and, as it turns out, nothing of that kind has proved necessary.
background facts
Mr Eunson operated a carpet-laying business, which traded as “Eunson’s Carpet Service”, between 1970 and December 1997. From March 1992, according to Mr Eunson, the business “devoted itself solely to the laying of Polytron carpet purchased from Beaulieu”. Mr Eunson deposed that from “about early 1994 I commenced to receive complaints from customers in relation to Polytron carpet manufactured by Beaulieu”. He further deposed that he stopped purchasing the carpet in January 1995 “because of the number of complaints being received from customers”. Although he knew then, it seems, that the carpet was defective, he did not, he deposed, know what was the cause of the defect until he received the results of tests conducted on a sample of Beaulieu’s Polytron carpet by AWTA Textile Testing in October 1997. Those tests showed, so Mr Eunson deposed, that, contrary to Beaulieu’s representations to him, the carpet had not been Scotchgarded (and made stain-resistant).
According to Mr Eunson, his business had been “very profitable” until January 1995, but that:
[a]fter I ceased to purchase Beaulieu’s Polytron carpet I was unable to obtain other carpet from suppliers that I used prior to Beaulieu at competitive rates. The business continued to operate using a synthetic carpet of which I was able to obtain supplies but this product was not successful as it did not have the stain resistance characteristic. The downturn in the business became marked as time went on and by late 1997 my accountant advised me to seek the assistance of Ferrier Hodgson to order my financial affairs. After consultation with members of that firm I decided to propose a deed of settlement with my creditors.
On 27 January 1998, Mr Eunson entered into a deed of arrangement, pursuant to Part X of the Bankruptcy Act 1966 (Cth) (“the Act”). Clauses 5 and 6 of the deed provided as follows:
(5)The debtor [Mr Eunson] shall convey and assign to the Trustee all the divisible property UPON TRUST for realisation and distribution … with the exception of the assets and undertaking comprised in the business known as Eunson’s Carpet Service and the claims of the debtor against Beaulieu United Ltd and Dupont, with regard to faulty carpet and yarn respectively, and Philip Felman with regard to negligence and fraud (“the claims”).
(6)The debtor covenants to pay to the Trustee of the Deed 50 per cent of the net proceeds after legal costs of any settlement from any or all of the claims as defined in Clause 5 above.
The expression “divisible property” was defined to mean:
all property that belonged to or was vested in the debtor at the date of the execution of this Deed and the capacity to exercise or to take proceedings for exercising all such powers in over or in respect to property as may have been exercised by the debtor on his own behalf as at the date of execution of this Deed but excluding any property referred to in Section 116(2) which is to be read as if the word ‘debtor’ was substituted for the word ‘bankrupt’.
In his affidavit in support of the motion, Mr Amphlett, Beaulieu’s mill manager, deposed that Beaulieu had indeed manufactured Polytron carpet and sold it to Mr Eunson. Amongst other things, so he deposed, between October 1992 and October 1993, the carpet had been manufactured under the brand name “La Palette” and thereafter under the names Sheraton 48, Sheraton Suite, Sensation, Strathmore, Chateau Royale, Martinique, Martinique Mark II, Private Party and Conqueror. Mr Amphlett said further that any carpet that was the subject of complaint from the customers of Mr Eunson had been inspected, and the complaints had been subsequently settled in one way or another. Mr Simper, who also swore an affidavit in support of the motion, deposed that a company by the name of Simtex Agencies Pty Ltd, in respect of which he was director and shareholder, had acted as a commission agent in Victoria for Beaulieu between 1988 until mid to late 1992.
the pleadings
By a statement of claim dated 23 April 1999, Mr Eunson pleaded (1) an action for damages for breach of contract for the supply of carpet, including breach of terms as to the supply of carpet to Mr Eunson exclusively and as to the carpet’s quality, including its stain-resistance; (2) an action for damages for negligent misstatement; (3) an action for damages for fraud; and (4) an action for damages for misleading and deceptive conduct contrary to s 52 of the Trade Practices Act 1974 (Cth).
deed of arrangement
Beaulieu first challenged the statement of claim upon the basis that a number of the claims made in it had passed to the controlling trustee following the deed of arrangement. Following the deed of arrangement, it was not, so Beaulieu submitted, open to Mr Eunson to bring an action for damages for fraud, for negligent misrepresentation, or for breach of contract to grant an exclusive dealership. It submitted that, by referring specifically to “the claims of the debtor against Beaulieu” “with regard to faulty carpet”, cl 5 of the deed had, by implication, excluded any claims that might otherwise be brought by the debtor which did not fall within that description. Further, it submitted that, by virtue of the specific reference in cl 5 to claims in negligence and fraud against Philip Felman, claims in negligence and fraud against Beaulieu had, by implication, been excluded.
I accept only part of these submissions. The intention of the parties was, plainly enough, to preserve for Mr Eunson’s benefit claims against Beaulieu with respect to faulty carpet, claims against Dupont with respect to yarn, and claims in negligence and fraud against Mr Felman. There is, however, nothing to support the contention that the debtor’s claims against Felman (or Dupont) were in some way to limit the claims against Beaulieu. The expression “the claims of the debtor against Beaulieu … with regard to faulty carpet” is of broad import and covers any claims concerning the supply by Beaulieu to Mr Eunson of carpet that was faulty. Understood in this way, the expression extends, in my view, to any claim of that kind, whether constituted in law as a claim for breach of contract, fraud, negligent misrepresentation, or breach of s 52 of the Trade Practices Act 1974 (Cth). I do not accept the submission made by Beaulieu that there is a valid distinction, for these purposes, between an allegation that the carpet was faulty (a claim that, so it said, was retained by Mr Eunson) and an allegation that the carpet was not of the quality represented (a claim that, so it said, was not retained by Mr Eunson). I do, however, accept Beaulieu’s submission that the expression, “the claims of the debtor against Beaulieu … with regard to faulty carpet”, does not extend to a claim for breach of contract in connection with an exclusive dealership arrangement. The last-mentioned claim has, it seems to me, nothing to do with an allegation that the carpet supplied by Beaulieu to Mr Eunson was faulty.
Mr Eunson sought to avoid the conclusion that it was not open to him to bring a claim for breach of an exclusive dealership arrangement by submitting that that claim (as well as the other claims made by him) were included in the expression “the assets and undertaking comprised in the business known as Eunson’s Carpet Service”. The effect of this submission was that cl 5 might have ended with the reference to “Eunson’s Carpet Service”, the remainder of the clause being mere surplusage. I reject the submission, because, so it seems to me, the terms of the deed draw a distinction between “the assets and undertaking comprised in the business” and the claims of the debtor against Beaulieu, Dupont and Felman. Although the terms of a deed of arrangement may not subordinate, overrule or neutralise the provisions of the Act, the terms may make any reasonable provision to give effect to the purpose of the deed and the creditors’ wishes: see Re Dowling; Ex parte Jamison; Jamison v Allen (1979) 36 FLR 384 at 389 and Re Armessen; Ex parte South Coast Timber Industries Pty Limited (1963) 19 ABC 190 at 191.
I accept that the expression “the assets and undertaking” of a business may frequently include tangible and intangible property used in connection with a business, and that the expression may well include claims against another arising out of the operation of the business. The meaning of the word “undertaking” necessarily depends, however, upon the context in which the word is used. In connection with “undertaking”, see, e.g., In re Rhagg (Deceased) [1938] Ch 828 and Reference under the Electricity Commission (Balmain Electric Light Co. Purchase) Act 1950 [1957] SR (NSW) 100 at 128-9; Top of the Cross Pty Ltd v Federal Commissioner of Taxation (1980) 50 FLR 19 at 36, affirmed (1981) 57 FLR 294; and Whittaker v Delmina Pty Ltd [1998] VSC 175 at par 47. As Woodward J observed in Top of the Cross at 36:
Frequently the word ‘undertaking’ is used in circumstances where it could be interchanged with either the word business or enterprise and with varying shades of meaning. Sometimes it is used alone, sometimes by way of distinction from the assets of the owner and sometimes as a synonym for business. Sometimes it is used to embrace the property which is used in connexion with the undertaking as well as the debts and liabilities which have arisen in relation thereto. For example, in relation to the provision of electrical power or the supply of a public service it can refer either to the business of the supply or service or to its assets or to both. Its meaning to a large extent will depend upon the circumstances and context in which it is used.
The word “undertaking”, so it has been said, is “the proper style, not for the ingredients, but for the completed work”: see Gardner v London Chatham & Dover Railway Co (No 1) (1867) LR 2 Ch App 201 at 217. The precise meaning of the word “assets” will also depend on the context in which it is used. For example, it may on occasion refer to the physical assets of a business (as Beaulieu submitted in this case); or, perhaps more commonly, it may refer to that which is available to meet the liabilities of a business: cf Page v International Trust Agency & Industrial Trust Ltd (1893) 62 LJ Ch 610 at 612-3.
In the circumstances of this case, it is enough to say that, in my view, the expression “the assets and undertaking comprised in the business known as Eunson’s Carpet Service” is not intended to cover the claims of the owner of the business against Beaulieu, Dupont and Felman that are not included in the description of the debtor’s claims against those parties. The parties have, it seems to me, drawn a distinction in cl 5 between the claims against Beaulieu, Dupont and Felman that Mr Eunson retains for his own benefit and what might otherwise be regarded as the assets and undertaking of the business of Eunson’s Carpet Service.
The alternative construction would not only make the balance of cl 5 redundant, but it would, as counsel for Beaulieu submitted, give rise to anomalies in the application of cl 6 of the deed. If I am correct in this, then it follows that it is not open to Mr Eunson to plead a cause of action arising from breach of an alleged exclusive dealership agreement. That cause of action, if it subsists, has vested in the trustee. It follows that, subject to what follows, pars 4(a), 7(a), 10(a) and par (a) of the particulars under pars 13 and 14 of the statement of claim should be struck out.
Mr Eunson sought to avoid this conclusion by a second route, by seeking to rely upon pars 6 and 7 of the affidavit sworn by the trustee, Mr P R Vince, and par 13 of the affidavit sworn by Mr Eunson. Those paragraphs were to the effect that neither Mr Eunson nor the trustee had intended to limit Mr Eunson’s capacity to pursue any claims against Beaulieu, Dupont and Felman, whether or not they fell within the description of the claims retained by him. Beaulieu objected to the admissibility of that evidence. The objection should be upheld: see Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352. As Mason J said at 352:
[W]hen the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but in the objective frame of the facts within which the contract came into existence, and to the parties’ presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.
…
The existence of the remedy of rectification and the purpose which it serves makes it obvious that the actual intention of the parties cannot constitute the basis of an implied term.
See also Akai Pty Limited v The People’s Insurance Company Limited (1996) 188 CLR 418 at 441 per Toohey, Gaudron and Gummow JJ. I accept, as counsel for Beaulieu submitted, that pars 6 and 7 of the affidavit sworn by the trustee, Mr P R Vince, on 4 August 1999 and all save the first sentence of par 13 of the affidavit of Mr Eunson sworn on 26 July 1999 are inadmissible in so far as they are relied upon to assist in the construction of the deed of arrangement.
In the event that I found there was some ambiguity or lack of clarity in cl 5 of the deed of arrangement, Beaulieu relied on the evidence of surrounding circumstances said to be constituted by Mr Eunson’s statement of affairs of 3 December 1997, his proposal of 24 December 1997, and the report by the trustee of 31 December 1997. I have not found it necessary to rely on those matters in construing cl 5 of the deed.
Before turning to the next basis of Beaulieu’s challenge to the statement of claim, I note, in passing, that it was accepted by counsel for both parties that any valid claim on Mr Eunson’s part for personal injuries was unaffected by the deed of arrangement.
are the actions statute-barred?
Beaulieu submitted that any action for damages for breach of s 52 of the Trade Practices Act 1974 (Cth) (and the equivalent State legislation), or for fraud or negligent misrepresentation, were statute-barred.
In the case of an action for damages suffered by conduct in contravention of s 52, the action will be statute-barred if brought more than three years after the accrual of the cause of action: Trade Practices Act 1974 (Cth), s 82(2). The damages particularised by Mr Eunson in respect of his s 52 claim include loss of profits, loss of value of the business, loss of reputation and damages payable to customers who purchased the faulty carpet.
As the High Court of Australia made clear in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 529 (“Wardley”), where a contract is made in reliance on a misrepresentation, loss or damage is not necessarily suffered when the contract is made. The time when actual damage is suffered (and the cause of action accrues) is always a question of fact. In such a case as this, Mr Eunson’s cause of action arose when the loss and damage allegedly suffered by him was reasonably ascertainable: Wardley at 530 and Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35 at 43. Mr Eunson deposed that he did not know what was the cause of the defect in the Polytron carpet until he received the results of tests conducted on his behalf in 1997. The question for determination at trial will be whether his alleged loss and damage (or more than a negligible part of it) ought to have been reasonably ascertainable by him prior to 23 April 1996. (His application to this Court was, as already noted, filed on 23 April 1999.)
Beaulieu submitted that the evidence would only permit the conclusion that any loss suffered by Mr Eunson was reasonably ascertainable by December 1995 (i.e., prior to 23 April 1996). In support of that submission, its counsel referred to Mr Eunson’s statement of affairs of 3 December 1997 in which he said that he believed the cause of his bankruptcy was “faulty product from different manufacturers” and that he had difficulty in meeting his debts in 1995. Beaulieu pointed out that Mr Eunson had deposed that he stopped purchasing the Polytron carpet in January 1995 because of the complaints received from his customers about the product. Accordingly, so Beaulieu submitted, on Mr Eunson’s own evidence as set out in his affidavit of 26 July 1999, the s 52 claim was necessarily statute-barred.
In reply, Mr Eunson’s counsel submitted that the issue, whether the cause of action was statue-barred, was essentially a matter for trial. She pointed out that the loss allegedly suffered by Mr Eunson may well have been suffered at different times, including after 1995. She added that there might well be evidence at trial to show, for example, that in 1995 tests were not available to identify the cause of the defect in the carpet; alternatively, that there might well be evidence to show that, in 1995, it would not have been reasonable to have carried out those tests.
I accept that the Court ought not to decide a limitation question of the kind now raised in interlocutory proceedings prior to trial “except in the clearest of cases”: see Wardley at 533-4. Whilst Mr Eunson may very well have significant difficulty in overcoming the limitation objection taken by Beaulieu, I am not disposed at this stage of the proceeding to strike out his s 52 claim upon the basis of the very slight material presently before the Court. In view of this conclusion, it is unnecessary to consider Mr Eunson’s further submission based upon fraudulent concealment of the cause of action (as to which, I was referred to A Bruce, “Legal Formalism and the Trade Practices Act – A Case of Concealed Fraud?” (1998) 72 The Australian Law Journal 216).
the fraud claim
Order 12 r 2 of the Federal Court Rules requires that a party pleading shall give particulars of any fraud on which he relies. Order 12 r 3 requires that a party pleading any condition of mind (which does not include knowledge but does include fraudulent intent) shall give particulars of the facts on which he relies. After pleading that representations relating to the quality of the carpet were false, the applicant pleaded, in pars 14 and 15 of the statement of claim:
14.Beaulieu made the representations fraudulently either well knowing the same to be false and untrue, or alternatively recklessly not caring whether the same were true or false.
Particulars
Beaulieu well knew:
(a)…
(b)That the carpet did not have the qualities [pleaded in the statement of claim].
15.By reason of the matters referred to in paragraph 14, Eunson has suffered loss and damage.
The pleading was, so counsel for Beaulieu submitted, defective in that it failed to particularise the fraud, or the fraudulent intent with sufficient specificity. That is, in my view, correct.
The function of pleadings is to state clearly the case that is to be made at trial. Because fraud may take a variety of forms and because of the seriousness of any allegation of fraud, fraud must be pleaded with specificity and particularity: see e.g., Banque Commerciale SA (En liq) v Akhil Holdings Limited (1990) 169 CLR 279 at 285-286. Broadly speaking, the elements of a fraudulent misrepresentation which must be pleaded are (1) a false representation that the representor did not honestly believe to be true (2) made knowingly or recklessly (3) with the intention that the plaintiff (in this Court, the applicant) would act upon it, and (4) where he or she does so act upon it to his or her (5) actual loss or damage. As already noted, the Rules of Court specifically require particulars of the fraud and of the facts relied on to establish fraudulent intent.
Plainly enough, those requirements have not been met. It is simply not sufficient to assert that the representations were made fraudulently in the knowledge they were false and to provide, by way of particulars, a further assertion of knowledge on Beaulieu’s part that the carpet did not have the qualities that it was said to have. I would, therefore, strike out pars 14 and 15 of the statement of claim. There will be liberty to re-plead: see Allstate Life Insurance Co v Australian and New Zealand Banking Group Ltd (1995) 57 FCR 360 at 369.
Before leaving the fraud claim, I note a further submission made by counsel for Mr Eunson to the following effect:
If the allegation is proved that the carpet was represented to be Scotchgarded and in fact is not Scotchgarded, the applicant will be in a strong position to prove fraud against Beaulieu. If Beaulieu sold carpet to Eunson knowing that it contained a defect that gave rise to the soiling alleged by Eunson, it may be argued that Beaulieu knew that the carpet was not stain-resistant or top quality and therefore Eunson would have a strong case to prove fraud against Beaulieu.
That submission cannot, I think, be accepted. There would need to be more to found a case of fraudulent misrepresentation.
supplementary submissions
In addition to the matters already discussed, Beaulieu raised a number of other matters, some in supplementary submissions filed on 5 August 1999 and some at the hearing of the motion. These matters arose out of Mr Eunson’s affidavit of 26 July 1999 and out of the oral submissions made by his counsel.
In those supplementary submissions, Beaulieu submitted that the whole of the statement of claim should be struck out, because Mr Eunson’s claim proceeded on the untenable basis that breaches of the agreement with Beaulieu pleaded in par 7 of the statement of claim, or misrepresentations pleaded in pars 10, 13 and 14, caused the loss and damage pleaded at par 9. Paragraph 9 reads as follows:
9.By reason of the matters referred to in the preceding paragraph hereof Eunson has suffered loss, damage and injury.
particulars
(a) Loss of profits of the business.
(b) Loss of value of the business including loss of goodwill, property, building, plant and equipment upon which the business operated.
(c) Loss of reputation.
(d) Damages payable to customers who purchased portions of the goods.
(e) (i) stress and anxiety,
(ii)hypertension,
(iii)pain and suffering in respect of untreated hernia.
By his affidavit of 26 July 1999, Mr Eunson swears (1) his business was very profitable until January 1995; (2) he ceased purchasing Beaulieu’s product in January 1995; (3) after January 1995 he was unable to obtain supplies of carpet from other suppliers at competitive rates; and (4) thereafter he made a loss. In those circumstances, the cause of Mr Eunson’s loss was not, so Beaulieu submitted, the matters pleaded in the statement of claim but Mr Eunson’s inability to obtain sufficient supplies of competitively priced carpet or the loss of previous contacts. There is much force in that submission.
Mr Eunson submitted, however, that the evidence at trial as to loss and damage would be complex and that he ought to have an opportunity to make out his case. I accept that he ought to have that opportunity. Having heard his counsel at the hearing of the motion, I do not consider, however, that the case pleaded in the statement of claim is the same case as that outlined by his counsel (or supported by his affidavit). In this circumstance and for this reason, I am of the view that such of pars 9 to 20 (inclusive) of the statement of claim as remain should be struck out, with liberty granted to Mr Eunson to re-plead. That, it seems to me, would be in the interests of the parties and the more efficient conduct of the litigation.
Beaulieu also challenged the inclusion of a claim for personal injuries for breach of the carpet supply contract. In Baltic Shipping Company v Dillon (1993) 176 CLR 344 at 361 Mason CJ (with whom Toohey J and Gaudron J relevantly agreed) said that damages for breach of contract are “in essence compensatory and … are confined to the award of that sum of money which will put the injured party in the financial position the party would have been in had the breach of contract not taken place” (emphasis original). As Mason J noted, there were exceptions to that general rule and, for example, damages were recoverable for pain and suffering, including anxiety, (1) where a defendant’s breach of contract caused physical injury to a plaintiff; (2) where the plaintiff sustained physical inconvenience as a result of a breach of contract and the mental suffering was directly related to that physical injury; and (3) where the very object of the contract was to provide pleasure, relaxation or freedom from molestation: 176 CLR 344 at 362-3 per Mason CJ, 371 per Brennan J, 380-381 per Deane and Dawson JJ and 404-407 per McHugh J. For the reasons set out above, par 9 of the statement of claim is to be re-pleaded. It, therefore, suffices to say that I think it highly unlikely that Mr Eunson’s case for breach of contract for the supply of carpet would be capable of falling within any of the recognised exceptions to the general rule against an award of damages for personal injuries for breach of contract.
In an appropriate case too, damages for distress may be recoverable for breach of s 52 of the Trade Practices Act 1974 (Cth), as well as for negligent and fraudulent misrepresentation: see e.g., Zoneff & Anor v Elcom Credit Union Limited (1990) ATPR 41-009; affirmed (1990) ATPR 41-058; Argy & Anor v Blunts & Lane Cove Real Estate Pty Ltd & Ors (1990) 26 FCR 112 at 151; Steiner & Anor v Magic Carpet Tours Pty Ltd & Ors (1984) ATPR 40-490; and Brickhill & Anor v Cooke & Anor [1984] 3 NSWLR 396 at 401. There is, however, much to be said for Beaulieu’s submission that, in the circumstances of this case, damages of that character are unlikely to be regarded as relevantly foreseeable. Having noted as much, I am not inclined, at this stage of the proceeding, to strike out this aspect of Mr Eunson’s claim without affording him the opportunity to adduce relevant evidence.
Beaulieu’s final major submission was to the effect that the actions for damages for negligent and fraudulent misrepresentation were statute-barred: see Limitation of Actions Act 1958 (Vic), s 5. That submission depended on the proposition that any damage relevantly suffered by Mr Eunson was suffered in March 1992 when he terminated his arrangements with previous suppliers and entered into an arrangement with Beaulieu for the supply of Polytron carpet. It seems to me, however, that the principles relating to loss and damage in the context of negligent and fraudulent misrepresentations are not relevantly different from those relating to Mr Eunson’s claim under s 52 of the Trade Practices Act1974 (Cth), discussed earlier: see Wardley at 527-533. For the reasons already given in relation to that claim, I am not disposed at this stage of the proceeding to strike out Mr Eunson’s pleading in so far as it alleges negligent or fraudulent misrepresentation, on the ground that the relevant causes of action are statute-barred.
Before turning to the orders that I propose to make, I note Beaulieu’s submission that Mr Eunson had not sought to apportion his damages between compromised and non-compromised claims: see Beaulieu’s supplementary submissions, par 4. Mr Eunson might give the matter consideration in re-pleading the loss and damage suffered by him.
As I have indicated, I would accede to Beaulieu’s submissions that paragraphs 4(a) and 7(a), and 9 to 20 (inclusive) of the statement of claim be struck out. Mr Eunson shall have general liberty to re-plead his statement of claim. Any re-pleaded statement of claim is to be accompanied by adequate particulars of claim. The orders I propose are:
(1) Paragraphs 4(a) and 7(a), and 9 to 20 (inclusive) of the statement of claim dated 23 April 1999 be struck out.
(2) The applicant have general liberty to re-plead the statement of claim.
(3) A re-pleaded statement of claim be filed and served by the applicant on or before 10 September 1999.
(4) Any request for further and better particulars of the re-pleaded statement of claim be filed and served by 17 September 1999.
(5) Any reply to such request be filed and served on or before 1 October 1999.
(6) The applicant pay Beaulieu United Limited’s costs of the motion, notice of which is dated 24 June 1999.
I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny. Associate:
Dated: 24 August 1999
Counsel for the Applicant: Ms M Loughnan Solicitor for the Applicant: Slater and Gordon Counsel for the Respondent: Mr R Lilley Solicitor for the Respondent: Deacon Graham and James Date of Hearing: 9 August 1999 Date of Judgment: 24 August 1999
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