Fat-Sel Pty Ltd v Brambles Holdings Ltd

[1985] FCA 127

Re: FAT-SEL PTY. LIMITED
And: BRAMBLES HOLDINGS LIMITED
No. G16 of 1985
Trade Practices
(1985) ATPR para 40 - 545

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES REGISTRY
GENERAL DIVISION
Beaumont J.

CATCHWORDS

Trade Practices - damages under s.82 Trade Practices Act, 1974 - claim for "promissory" rather than "reliance" damages.

Gates v. City Mutual Life Assurance Society Ltd. (1983) ATPR 40.335 - con.

T.N. Lucas Pty. Ltd. v. Centrepoint Freeholds Pty. Ltd. (1984) ATPR 40.440 - con.

HEARING

SYDNEY
#DATE 3:4:1985

ORDER

1. Order that the statement of claim herein be struck out.

2. Reserve liberty to the applicant to file and serve a fresh statement of claim upon the condition that such statement of claim, if any, is filed and served on or before 15 April 1985.

3. Order that the applicant pay the respondent's costs of the application to strike out the statement of claim.

4. Order that the respondent's application for summary judgment be stood over to 18 April 1985 at 10.15 a.m.. Reserve the costs of that application.

JUDGE1

(ON APPLICATIONS TO AMEND STATEMENT OF CLAIM, TO STRIKE OUT STATEMENT OF CLAIM AND FOR SUMMARY JUDGMENT)

1. This is an application by the applicant to amend its statement of claim. The application is opposed by the respondent which in turn has made alternative applications to strike out the statement of claim or for summary judgment for dismissal of the proceedings.

2. The general nature of these proceedings is described in the reasons for judgment on the application for security for costs. At that stage of the litigation, the applicant foreshadowed an application to amend its statement of claim in a number of significant respects: first to add claims for alleged breach of collateral warranties; secondly, to add claims for alleged breaches of the option deed; and thirdly, to add a claim alleging misuse of confidential information. The respondent opposes the application to amend on the ground that the amendments sought are futile because, it says, if allowed, they would be struck out on a number of grounds: the collateral warranty claims will fail because the warranties are inconsistent with the express terms of the option deed (see Hoyt's Pty. Ltd. v. Spencer (1919) 27 CLR 133; cf. Seddon - "A plea for the reform of the rule in Hoyt's Pty. Ltd. v. Spencer" (1978) 52 ALJ 372); further, it says that those persons said to have made the warranties lacked authority to bind the respondent in that behalf; the respondent also urges that the Court lacks jurisdiction, even in its accrued jurisdiction, to entertain the non-federal claims in respect of the breaches of contract alleged and the misuse of the information said to be confidential, the suggestion being that these issues are separate and disparate from the claims under the Trade Practices Act.

3. The respondent also relies upon these grounds in support of its applications to strike out the statement of claim and for summary judgment in its favour. In these applications, the respondent also points to the difficulty confronting the applicant in the form of the limitations on the type of damages available for award under s.82 of the Trade Practices Act, even if a contravention of s.52 were established. This problem was adverted to in the reasons for judgment on the application for security for costs. In an affidavit sworn on 27 February 1985, Mr. P.K. Ray, the managing director of the applicant, seemed to put the applicant's case fairly and squarely as one of loss of potential earnings in the transaction now complained of: that is to say, the damage suffered for the purposes of s.82 was, apparently, perceived by the applicant to be a loss of profit which potentially might have been made by the applicant out of the deal done with the respondent, rather than the conventional "reliance" damages awarded under the statute to compensate for detriment actually suffered by an applicant by reason of his reliance on the misleading conduct complained of.

4. There can be no doubt that such a claim for loss of profits under the statute is, to say the least, a novel one. Although it is true, as the Full Federal Court observed in Gates v. The City Mutual Life Assurance Society Ltd. (1983) ATPR 40.335 at p 44.045 that there has not been a universally applicable definitive statement of the appropriate measure of damages recoverable in connection with a breach of a provision of Part V of the Act and that probably it is better that some flexibility be maintained, nonetheless, as their Honours there held (ibid):
   
   

"... sec.87 like sec.82 is concerned with loss or damage 'by' the offending conduct and it is sufficient for present purposes to observe that, in this case, the

question is not how much better off Mr.

Gates would have been if the statements

had been true but how much worse off he is by reason of having taken the steps which he did in reliance on the statements."

1. The applicant sought to distinguish Gates on its facts and also relied on the reasoning of Jenkinson, J. in T.N. Lucas Pty. Ltd. v. Centrepoint Freeholds Pty. Ltd. (1984) ATPR 40-440. It was there held that the applicant was entitled to damages under s.82, inter alia, in respect of monetary gains it would have achieved had it not been induced to enter the lease by the respondent's misleading conduct. (Reference might also be made by way of analogy, to the measure of damages in the general law of deceit, considered in the recent decision of the High Court in Gould v. Vaggelas (1984) 58 ALJR 560 per Gibbs, C.J. at p 562.) But in Lucas, the loss of profits component of the damages awarded was, in truth, damages of a "reliance" type: the applicant was compensated for deprivation of profits he would have earned in another venture he would have embarked upon had he not been misled by the respondent's conduct to enter into the transaction complained of (see at p.45,066). This may be contrasted with the present case where the applicant seeks to recover damages of a "promissory" type in respect of its failed expectations in the transaction itself. In my opinion, such damages fall outside the purview of s.82 for the reasons advanced in Gates.

2. In any event, the applicant now seeks to avoid entirely the limitation on the type of damages available under s.82 indicated in the reasoning in Gates by advancing a new case of the more conventional "reliance" type. This was done, after the respondent had put its submissions in the present applications, by the applicant's re-calling Mr. Ray to give oral evidence to the effect that the applicant arguably suffered damage in reliance on the misleading conduct of the respondent's agents, specifically the respondent's alleged failure to honour its several undertakings to the applicant's representatives. The suggestion in Mr. Ray's fresh evidence is that the applicant was out of pocket to the tune of some hundreds of thousands of dollars as a consequence of the respondent's failure to consummate the deal in the fashion intended by the applicant. Although, in money terms, this "reliance" claim is but a fraction of the "loss of profits" claim originally launched, it does have the merit that it avoids the limitations in principle on statutory damages discussed in Gates.

3. The present position then is that during the course of the litigation, the applicant's case has evolved beyond recognition. Not only does the applicant now seek to add the general law claims mentioned but it also seeks to make a claim for damages under s.82 which, factually and conceptually, is radically different from that originally pleaded. Most important, the fresh claim for damages, which is now central to the applicant's case, has never been pleaded in any form - a totally unsatisfactory situation.

4. It follows that if leave were granted to the applicant to make the several amendments it now seeks, the amended statement of claim would be fundamentally different from the claims originally made. In the circumstances, I do not think that any useful purpose would be served by maintaining the statement of claim in its original form. Thus, the appropriate course is to order that the statement of claim be struck out, reserving liberty to the applicant to file and serve a fresh statement of claim should it be so advised. I propose to fix a time limit within which any fresh statement of claim is filed. The applicant must pay the costs of the respondent's application to strike out the statement of caim.

5. In the circumstances, it is also appropriate that the respondent's application for summary judgment should await the filing of the applicant's fresh statement of claim, if any. I propose to stand that application over to 18 April 1985 when the matter is next before the Court. I will reserve the costs of that application.

6. I make the following orders:
   
   1. Order that the statement of claim herein be struck out.
   2. Reserve liberty to the applicant to file and serve a fresh statement of claim upon the condition that such statement of claim, if any, is filed and served on or before 15 April 1985.
   3. Order that the applicant pay the respondent's costs of the application to strike out the statement of claim.
   4. Order that the respondent's application for summary judgment be stood over to 18 April 1985 at 10.15 a.m.. Reserve the costs of that application.