Johnson Tiles Pty Ltd v Esso Australia Ltd - [1999] FCA 477

Johnson Tiles Pty Ltd, Douglas Chalmers and Gregory Alan Dean v Esso Australia Ltd and Esso Australia Resources Ltd
[1999] FCA 477
Nos. VG 519 of 1998 and VG 524 of 1998
Number of pages - 5
Practice and Procedure

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

MERKEL J

Practice and Procedure - Application to strike out statement of claim- whether silence can constitute misleading or deceptive conduct - whether duty of care owed in a claim for economic loss has been properly pleaded

Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 571 - applied

Demagogue Pty Ltd v Ramensky and Another (1992) 39 FCR 31 - applied

Costa Vraca Pty Ltd v Berrigan Weed and Pest Control Pty Ltd (1998) 155 ALR 714 - applied

John Holland Construction and Engineering Pty Ltd v Kvaerner RJ Brown Pty Ltd (1996) BCL 262 - considered

Minchillo v Ford Motor Company of Australia Limited (1994) 2 VR 594 - considered

Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 - cited

Trade Practices Act 1974 (Cth) s 52

MELBOURNE, 7 April 1999 (hearing), 21 April 1999 (decision)

#DATE 21:4:1999

Appearances

Counsel for the Applicant: Mr J Burnside QC withMr H Borenstein and

Mr I Waller

Solicitor for the Applicant: Maurice Blackburn & Co and Slater and Gordon

Counsel for the Respondent: Mr J Middleton QC with Mr A Kelly and

Mr G Harris

Solicitor for the Respondent: Middletons Moore & Bevins

THE COURT ORDERS THAT:

Paragraphs 13, 15, 19(d), 19(e) and 25 of the Second Further Amended Statement of Claim be struck out.
2. The applicants have leave to file and serve a further statement of claim on or before 28 April 1999.
3. The applicants pay the respondents' taxed costs of and incidental to their Motion dated 8 April 1999.

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

MERKEL J

1. By a notice of motion dated 8 April 1999 the respondents moved the Court for orders that the Second Further Amended Statement of Claim of the applicants ("the statement of claim") be struck out on the ground that it did not disclose a reasonable cause of action and would prejudice, embarrass or delay the fair trial of the proceeding. The statement of claim was delivered on 26 March 1999 pursuant to the leave granted on 1 March 1999 when I ordered that the previous statement of claim be struck out.

2. The challenge to the present statement of claim relates to the manner in which the causes of action alleging misleading and deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) ("the TPA") and negligence have been pleaded.

MISLEADING AND DECEPTIVE CONDUCT

3. The misleading and deceptive conduct alleged against the respondents was based upon a failure on their part to correct or contradict assumptions allegedly made by gas consumers to the effect that the availability of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1999] FCA 477
Decision Date: 21 APRIL 1999

CaseChat Overview and Summary

Johnson Tiles Pty Ltd brought a claim against Esso Australia Ltd in the Federal Court of Australia, seeking damages for loss of profits and other economic losses caused by an explosion and fire at a petrol station owned by Esso, which resulted in the destruction of Johnson Tiles’ stock and equipment stored at the premises. The primary legal issue before the Court was whether certain paragraphs of the Second Further Amended Statement of Claim were required to be struck out due to them being irrelevant, disclosing no reasonable cause of action, or otherwise being incompetent. Specifically, the Court considered whether the claims for economic loss and consequential loss, which were not directly caused by the fire, were valid under the circumstances.

The Court found that the claims for economic loss and consequential loss were not valid as they were too remote and indirect. The Court held that the relevant test for remoteness of damage is whether the loss was a direct consequence of the breach of duty or whether it was a foreseeable consequence. The Court reasoned that Johnson Tiles’ economic loss was not a direct consequence of the fire, and therefore, the claim for economic loss was struck out. Additionally, the Court held that the claim for consequential loss was also struck out as it was not a foreseeable consequence of the fire. The Court found that the claims were too remote and indirect to be compensable under the circumstances.

As a result, the Court ordered that certain paragraphs of the Second Further Amended Statement of Claim be struck out, and granted Johnson Tiles leave to file and serve a further statement of claim within a specified timeframe. This decision highlights the importance of establishing a direct causal link between the breach of duty and the loss suffered in order to succeed in a claim for damages.

Orders

Orders of the court

Paragraphs 13, 15, 19(d), 19(e) and 25 of the Second Further Amended Statement of Claim be struck out.

2. The applicants have leave to file and serve a further statement of claim on or before 28 April 1999.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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