Foster v Dangerfield

[2000] QDC 189

DISTRICT COURT OF QUEENSLAND

[2000] QDC 189

PARTIES:	CLIVE ARTHUR FOSTER and PATRICIA ANNE FOSTER (Plaintiffs) v. SHERRY DAWN DANGERFIELD (First Defendant) and ANSTA PTY LTD (Second Defendant)
FILE NO/S:	Plaint No. 146 of 1999
DELIVERED ON:	24 May 2000
DELIVERED AT:	Maroochydore
HEARING DATE:	17 April 2000
JUDGE:	K S Dodds DCJ
COUNSEL:	K B Varley for the applicant/defendant T F McLaughlin for the respondent/plaintiff
SOLICITORS:	Ryans Solicitors for the plaintiff David Alexander for the first and second defendants

1. This was an application by the first and second defendants for orders:

§  That the plaintiff’s action be struck out as failing to disclose a cause of action at law or alternatively as being frivolous, vexatious and embarrassing.

§  Alternatively, the plaintiffs deliver an amended plaint within seven days of the hearing of the application

§  Alternatively, the plaintiffs provide further and better particulars as requested in the applicant solicitor’s correspondence of 16 December 1999

1. According to an amended plaint;

§  the first defendant was employed as a real estate agent by a company Jadmont Pty Ltd which was licensed pursuant to the Auctioneers and Agents Act 1971 (the Act);

§  the first defendant was a director, secretary and shareholder of the second defendant and was a beneficiary under the terms of the W & S Dangerfield trust;

§  The second defendant carried on the business of real estate consultant. 

§  In or about June 1995 the second defendant, as trustee for the W & S Dangerfield Family Trust became the registered proprietor of shop premises (the shop) for $105000. 

§  On or about 19 April 1995 the first defendant introduced the plaintiffs to the shop and the plaintiffs entered into an agreement to lease the shop from the second defendant.  The plaintiff signed the lease on or about 2 June 1995.  The term was for 5 years at a rental of $18000 per annum. 

§  The link between the first and second defendants was not made known to the plaintiffs. 

§  Fair market rental for the shop at the time the lease was entered into was about $10500 per annum.

1. Paragraphs 11, 12, 13 and 14 of the amended plaint plead a breach of section 69(2) of the Act as a basis for damages.

1. Section 69(2) of the Act requires inter alia that a real estate agent who has for sale any property owned by such agent or in which such agent is beneficially interested, before making any agreement in respect of the sale of the property, notify the prospective purchaser in the approved form of the interest in the property and obtain from the purchaser an acknowledgment of receipt of the notification. 

1. The pleading asserts the subsection includes property which the agent has for lease.  The argument is that since the definition of ‘land’ in section 2 of the Act means “land held in fee simple or for an estate of leasehold”, the word ‘sale’ in section 69(2) includes property for lease.

1. ‘Sale’ is not defined for the purposes of section 69(2) in the Act.  ‘Sale’ in its ordinary meaning does not include a lease of property.  Section 72 of the Act which deals with false representations as to property, in subsection (1) deals with property an agent has for sale and in subsection (2) property an agent has available for letting.

1. It seems plain that section 69(2) does not apply to the lease of property.  There appears to be no basis upon which to conclude ‘sale’ in the subsection includes a lease.  Moreover I do not think that a breach of section 69(2) provides a statutory basis for a suit for damages.  Section 69(3) provides for a court which convicts an agent of a breach of section 69(1), in addition to any other penalty the court may impose, to order the agent pay over to the agent’s principal “such amounts in respect of profits resulting from the purchase in respect of which the offence was committed as is determined by the court”.

1. An order striking out pleadings will only be made in plain and obvious cases: General Steel Industry Inc v. Commissioner for Railways (1964) 112 CLR 125 at 128-9. I think a similar approach should be taken to an application under Rule 171(1)(a) of the Uniform Civil Procedure Rules 1999 (UCPR).  Paragraphs 11 to 14 may well be in that category.

1. Paragraphs 17 to 24 of the amended plaint plead that false representations were made by the first defendant both orally and in writing.  It is not alleged they were fraudulently made.  It is claimed in paragraph 24 that as a result, the first defendant or the second defendant or both are liable to the plaintiffs for loss and damage suffered by them.  The basis of that claim is not apparent.  An inducing misrepresentation may found recission but does not found an action for damages.  The alleged misrepresentations are not pleaded as contractual promises.

1. Paragraphs 25 to 32 of the amended plaint, appear to be pleading negligent misstatement or misrepresentation by the first and/or second defendant in reliance upon which the plaintiffs entered into the lease.

1. Liability may arise for the giving of negligent advice where:

“a person gives information or advice to another upon a serious matter in circumstances where the speaker realises or ought to realise that he is being trusted to give the best of his information or advice as a basis for action on the part of the other party and it is reasonable in the circumstances for that other party to act on that information or advice.” San Sebastian v. The Minister (1986) 162 CLR 340 at 356.

1. Chapter 6 Part 2 of the UCPR sets out rules of pleading. Each pleading must inter alia, contain a statement of all the material facts on which the party relies (Rule 149(1)(b)); state specifically any matter that if not stated specifically may take another party by surprise (Rule 149(1)(c)). It is not clear from the facts pleaded in paragraph 25 to 32 why the first defendant was under the duty pleaded viz a viz the plaintiff. Ordinarily, a real estate agent with property to lease would not incur liability for negligent misstatement for telling potential lessees about the suitability of the property for their purpose or for their intended business venture. Moreover in paragraph 29 (a) and (b) the pleading of particulars is meaningless.

1. Paragraphs 33 to 40 of the amended plaint include allegations which may be relevant to a plea of negligent misstatement or advice but these paragraphs do not appear to be concerned with such a claim.  They appear to be in relation to an allegation that the first and/or second defendant and the plaintiff were in a fiduciary relationship so far as entering into the lease was concerned.

1. It is not clear from the pleading what is the basis of the claimed fiduciary relationship.  The critical feature of such a relationship is as Mason J said in Hospital Products Ltd v. United States Surgical Corporation (1984) 156 CLR 41 at 96-7:

“that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will effect the interests of that other person in a legal or practical sense.  The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position.”

1. As the pleading stands it is doubtful that the facts set out provide a basis for the claimed fiduciary relationship.  All that is pleaded is that the plaintiffs had on prior occasions appointed the first defendant to act as their agent in the sale of businesses, on one prior occasion the first defendant had advised the plaintiffs in the establishment of a business, she had held herself out as qualified to provide expert advice with respect to the establishment, purchase, sale and viability of commercial business, had acquired intimate knowledge of a confidential nature about the plaintiffs financial affairs and assumed a position of trust and influence in relation to the plaintiffs. 

1. Paragraph 41 goes on to set out the alternative bases upon which damages are calculated.

1. I turn to the defendant’s complaints about specific paragraphs of the amended plaint. 

1. The particularity required in a pleading may be gathered from the requirements of the UCPR. I have set out some of the rules above. In R v. Associated  Northern Colleries (1910) 11 CLR 738 at 740-741, Isaacs J said:

“I take the fundamental principle to be that the opposite party shall always be fairly apprised of the nature of the case he is to be called upon to meet, shall be placed in possession of its broad outline and the constitutive facts which are said to raise his legal liability.  He is to receive sufficient information to ensure a fair trial and to guard against what the law terms “surprise” but he is not entitled to be told the mode by which the case is to proved against him”.

1. In Trade Practices Commission v. Total Australia Limited (1975) 24 FLR 413 at 417 Joske J said:

“The defendant is entitled to ask for the material facts upon which the plaintiff will rely and he may make his request for the facts and matters relied on which is taken to mean the same thing.  When he asks for the facts and circumstances relied on he is going beyond the scope of particulars and is probing for evidence…The principle that material facts are to be pleaded and not evidence is well established and a fundamental rule of pleading…”

1. The defendants are concerned to understand what is alleged against the second defendant in paragraph 2 (e) of the amended plaint.  ‘Real estate consultant’ is not defined in the Act.  They are entitled to know about what is, for the purposes of this case, encompassed by the phrase ‘real estate consultant’.

1. In paragraph 8 of the amended plaint there is reference to a lease the plaintiffs signed.  Rule 222 requires it be produced by the plaintiffs to the defendants upon a written notice requiring its production. 

1. Paragraph 14(a)(iii) of the amended plaint is meaningless in  its present form. 

1. Paragraph 17(a) of the amended plaint - Rule 222 UCPR applies. The “written material” must be produced for the defendant’s inspection upon written notice.

1. Paragraph 17(b) of the amended plaint - the first defendant is entitled to particulars of the representations referred to.  Such particulars should include so far as possible the form in which it is alleged they were made, by whom, to whom and when.

1. Paragraph 22(a)(i) of the amended plaint asserts the laundry/laundromat established at the shop was substantially less profitable than represented.  The level of profitability of the business should be particularised.  There is no good reason why it should not be.  It would in any event be discoverable on interrogatory.

1. I have discussed earlier the shortcomings of the pleading in paragraphs 17 to 24 of the amended plaint.  At present fraud is not pleaded although particulars provided by the plaintiffs apparently assert that the representations in paragraph 22 were either made negligently or in a manner calculated to deceive.  There is no pleading of primary facts to support a claim based on negligent misrepresentation and there are no particulars of fraud provided.

1. I have already discussed paragraphs 25 to 32 of the amended plaint.  It is necessary to plead with sufficient particularity the material facts alleged to cause the duty alleged to exist.  The duty alleged should be clearly pleaded.  Reference to what that duty might include is not proper (my emphasis).  The pleading should also set out how it is alleged the first defendant’s conduct fell short of the standard.

1. Paragraph 29 of the amended plaint - the first defendant is entitled to particulars of how the plaintiffs allege the contents of the written material were inaccurate.

1. Paragraph 41 (d) and (e) - the plaintiff’s pleading should include the basis upon which the amount of the capital value of the business has been arrived at – Rule 155(c) UCPR.

1. The amended plaint is lengthy.  However, it does not fully come to grips with material facts and legal liability.  It suggests insufficient attention has been given to the facts and the relief which may be properly claimed.

1. The outcome of what I have said is that if the matter is to continue, amendment and further particularisation must occur.  The most satisfactory course may be to replead an amended pleading addressing the matters that have been referred to.