John Stanley Carter and Christine Rae Craig v Lemongrove Holdings Pty Ltd

[1999] WADC 107

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION:   JOHN STANLEY CARTER and CHRISTINE RAE CRAIG -v- LEMONGROVE HOLDINGS PTY LTD & ORS [1999] WADC 107

CORAM:   REGISTRAR KINGSLEY

HEARD:   10 AUGUST 1999

DELIVERED          :   26 NOVEMBER 1999

FILE NO/S:   CIV 4318 of 1997

BETWEEN:   JOHN STANLEY CARTER and CHRISTINE RAE CRAIG

First Plaintiffs

AND

LEMONGROVE HOLDINGS PTY LTD
First Defendant

JOHN JEREMIAH DURACK
Second Defendant

JENNIFER ANNETTE DURACK
Third Defendant

DARRYL STANLEY NELSON
Third Party

Catchwords:

Practice - Application for leave to amend Statement of Claim - Plea of cause of action under s82, Trade Practices Act, against individuals - No corresponding plea of cause of action against a corporation - Leave refused to amend Statement of Claim.

Legislation:

Trade Practices Act

Result:

Leave refused to amend Statement of Claim.

Representation:

Counsel:

First Plaintiffs               :     Mr M S Barrett-Lennard

First Defendant             :     Mr Steedman

Second Defendant         :     Mr Steedman

Third Defendant           :     Mr Steedman

Third Party                   :     No Appearance

Solicitors:

First Plaintiffs               :     M S Barrett-Lennard & Co

First Defendant             :     Karp & Steedman

Second Defendant         :     Karp & Steedman

Third Defendant           :     Karp & Steedman

Third Party                   :     Not Applicable

Case(s) referred to in judgment(s):

Nil

Case(s) also cited:

Nil

1. REGISTRAR KINGSLEY:  In May 1999 I gave leave to the plaintiff to bring in a fresh minute of amended Statement of Claim on the basis that I had refused leave to amend the previous Statement of Claim to effectively plead a cause of action after the expiration of limitation period.  The plaintiff brought in a fresh minute of a further amended Statement of Claim dated 24 May 1999 of which the defendants take further exceptions.

2. The essence of the plaintiffs' action is that during the course of negotiations by the plaintiffs to purchase the defendants' business, the second and third defendants, through their agents, made representations as to the income, expenses and profits of the business.

3. The plaintiffs seek to plead a cause of action under the Trade Practices Act in that the second and third defendants were knowingly concerned in contravention by a corporation of the Trade Practices Act.  The plaintiffs also seek to plead a contravention of s53(a) or (aa) of the Trade Practices Act. 

4. The question of contravention of s53(a) or (aa) of the Trade Practices Act can be shortly dealt with.  Section 53 provides that a corporation shall not in trade or commerce in the connection with supply or possible supply of goods or services, falsely represent that the services are of a particular standard of quality, value or grade.  I am of the opinion that there is nothing in the pleading that points to making a representation as to the quality of the services and accordingly, there are no material facts to support such a contention and this aspect of the claim ought to be struck out.

5. The substance of the defendants' argument is that the claim under the Trade Practices Act is statute barred against the corporation then can a plea of misleading and deceptive conduct be raised against the individuals when the corporation primarily liable is statute barred.  Further under s82 an action for damages can be brought in relation to conduct of another person that was done in contravention of a provision under Part V may recover the amount of loss against any person involved in contravention.  Of course the contravention in s52 is contravention by a corporation.

6. In my opinion the material allegation of fact needed to be pleaded by the plaintiffs to maintain their claim against the second and third defendants under the Trade Practices Act is that there was a contravention by s52 by a corporation in the course of trade and commerce and the second and third defendants were involved in that contravention.  It is a material allegation that the corporation contravened either Part IV or Part V of the Trade Practices Act.  Following that material allegation there must follow the material facts that natural persons knowingly concerned in that contravention.  In this pleading there has never been any material allegation of fact attributed to the first defendant.  Thus, there was never the material allegation of fact to enable the claim to be maintained under s82 of the Trade Practices Act against the second and third defendants.

7. In addition there was the headed difficulty that the cause of action is statute barred against the corporation.  For the plaintiffs to maintain a prayer for relief under the Trade Practices Act the plaintiffs must establish that notwithstanding the cause of action being statute barred against the corporation, the same cause of action may be maintained against natural persons. 

8. I have sought authority for the proposition but have been unable to find any.  Bearing in mind that this is a pleading issue the question for me is whether this plea is wholly unsustainable.

9. Having regard to the constitutional basis of the Trade Practices Act where the ambit of the legislation is in relation to the corporation with natural persons being drawn into liability for the acts of those corporations, I am of the opinion that if there is no primarily relief against a corporation then the Trade Practices Act cannot be used against natural persons.  Accordingly I would strike out the pleas against the second and third defendants under the Trade Practices Act.

10. A cause of action under s82 accrues when a person suffers loss of damage by the conduct of another person in contravention of Parts IV and V of the Trade Practices Act.  Under s82 the claimant must show that they have suffered loss of damage by the conduct.  The conduct is of course the conduct of the body corporate.  A corporation can only act through the agency of individuals.  That it is the corporation that is primarily liable I think is supported by s84(2) which provides that conduct engaged in on behalf of the body corporate by a director, agent or servant is deemed for the purposes of the Trade Practices Act to have been engaged in also by the body corporate.  In my opinion the scope in s82 does not enable the plaintiffs to plead that it can recover damages against the second and third defendants directly.  Section 82 enables the range of potential defendants to be broadened from the person, this case the corporation, being primarily responsible for the contravention to, usually, the directors of the corporations.  In the context of these proceedings in my opinion s63(c) also gives no assistance to the plaintiffs in this pleading.

11. In my opinion there is no arguable basis for the pleas pursuant to the Trade Practices Act by the plaintiffs against the defendants in this action.  Those pleas are struck out.  As there has always been an arguable case in relation to claims pursuant to the Fair Trading Act the plaintiffs are to bring in a fresh minute of Statement of Claim within 21 days of publication of these reasons confined to breach of the Fair Trading Act and a plea arising from breach of collateral contract.

12. I would hear counsel on the issue of costs.