Kliese, Terrence Bertram v Johnston, William Ronald

I N THE	FEDERAL	COURT OF AUSTRALIA	1
)

QUEENSLOlD DISTRICT REGISTRY	)	No. G4 of 1984
)

GENERAL

D I V I S I O N

BETWEEN :

TERRENCE BERTRAM KLIESE

F i r s t

A p p l i c a n t

- and -

PEGGY KLIESE

Second

A p p l i c a n t

AND :

WILLIAM RONALD JOHNSTON

F i rs t

R e s p o n d e n t

JOHN WOODS

Second

R e s p o n d e n t

ALLIED MARKETING INDUSTRIES

PTY.

LIMITED

T h i r d R e s p o n d e n t

CLJDWORTH PTY.

LIMITED

Fourth

R e s p o n d e n t

DONALD

ATTHOW

F i f t h R e s p o n d e n t

- and -

RICHARD ANDREWS

Sixth

R e s p o n d e n t

O R D E R

JUDGE W I N G ORDER:	Neaves J .
DATE OF ORDER:	1 June 1984
T J H E R E FlADE:	Canberra
THE COURT ORDERS THAT:

1. The statement of claim f i led herein on behalf of the applicants on 1 February 1984 be struck

out.

2. The applicants have l iber ty to f i l e and serve an amended statement of claim within 28 days

af ter the date

this order.

3 .

The costs of this application

be the f irst ,

second,

th i rd and

fourth respondents' costs

i n the

cause.

IN THE FEDERAL COURT OF AUSTRALIA

)

) No.

G4 of 1 9 8 4

QUEENSL4ND DISTRICT

REGISTRY

DIVISION

GENERAL

)

BETWEEN

TERRENCE

BERTRAM

KLIESE

First Applicant

- and -

PEGGY KLIESE

Second Applicant

AND:

WILLIAN RONALD JOHNSTON

First Respondent

JOHN WOODS

Second Respondent

ALLIED PLARKETING INDUSTRIES

PTY. LIMITED

Third Respondent

CUDWORTH PTY. LIMITED

Fourth Respondent

DONALD ATTHOW

Fifth Respondent

- and -

RICHARD ANDREWS

Sixth Respondent

CORAM:

Neaves J.

DATE

1 June 1 9 8 4

REASONS FOR JUDGMENT

A proceeding has been

commenced

i n t h i s Court

by Terrence Bertram Kliese and Peggy

Kliese ("the appli-

cants")

t h e f i l i n g , i n a c c o r d a n c e w i t h

Order

4 ,

rule

of the Federal Court Rules,

an appl icat ion claiming

o rde r

r e l i ev ing

t he

app l i can t s

from

any

o b l i g a t i o n t o

pay any

f u r t h e r

sums

under

a franchise agreement

i n r e l a t i o n

t o

franchise

r e t a i l f u r n i t u r e o u t l e t

Lismore

i n t h e S t a t e o f

New

South

Wales made on or about 3 May 1983;

Damages of $40 ,000 for

b reach

sec t ions

and 59 of the

Trade

Prac-

tices

Act

1974 ,

breach of contract and

misrepresenta t ion

i n

r e l a t i o n t o t h e

re ta i l

f u r n i t u r e o u t l e t ;

and

3 . cos t s .

Sec t ion 52

of the Trade Pract ices

Act

1974

provides

that

co rpora t ion sha l l no t ,

i n

t r a d e o r

commerce, engage i n conduct

that

i s mis leading or

decept ive or

i s

l i ke ly

to mi l ead o r dece ive . Sec t ion

5 9 ,

far

mater ia l , provides

that where

corporat ion,

in t r a d e o r

commerce,

inv i tes , whether

o r o the rwise , pe r sons to

engage

o r p a r t i c i p a t e ,

t o

o f f e r t o a p p l y t o	engage	o r p a r t i c i p a t e , i n	a	business
2.

activity requiring the investment

of moneys by the

persons concerned and the performance

by them of work

associated with the investment, the corporation shall

not make, with respect to the profitability

or risk or

any other material aspect of the business activity,

statement that is false or misleading

in a material

particular (sub-section

( 2 ) ) .

The application names as respondents to the

proceeding William Ronald Johnston (“the first respondent”),

John Woods (“the second respondent”), Allied Marketing

Industries Pty. Limited (“the third respondent”), Cudworth

Pty. Limited (“the fourth respondent”), Donald Atthow (“the

I .

fifth respondent“) and Richard Andrews (“the sixth respondent”).

With the application the applicants filed

statement

claim.

The

second

and

third

respondents

have applied by motion on notice, under Order

11, rule 16

of the rules, for an order striking out the whole

of the

statement of claim as containing matters which tend to

prejudice, embarrass or delay the proceeding. Alternatively,

the second and third respondents seek an order that speci-

fied paragraphs of the statement of claim be struck out

as containing matter which has a tendency to cause prejudice,

embarrassment or delay in the proceeding

or which is merely

evidence of the fact

supon which the applicants rely.

the further alternative, the second

and third respondents

3 .

‘m

seek

o rde r t ha t t he app l i can t s supp ly pa r t i cu la r s

o f spec i f i ed a l l ega t ions in the s t a t emen t o f

claim.

When

the ma t t e r

came

on fo r hea r ing

the first

and	four th respondents sought leave to in te rvene to

suppor t

the appl ica t ion

o f

the

second

and

t h i r d

respondents.

Leave

was

granted but ,

those

respondents

sought

t o raise

some

ma t t e r s add i t iona l

t o t h o s e r a i s e d

the second

and th i rd respondents ,

d i r e c t e d t h a t

the

first

and

fourth respondents

f i l e an

a p p l i c a t i o n s e t t i n g

o u t t h e

relief

which those respondents sought.

The

sFatement of claim begins by a l leging

the

sex

and

the r e s iden t i a l add res s o f each

the

app l i can t s

and t h a t t h e

second applicant

i s t h e wife

o f t h e

first

appl icant .

then a l l eges

the

sex and business

address

o f

each of the four respondents

who

are natural

persons.

a l leges tha t those four respondents

are

engaged

i n

i n t e r - S t a t e t r a d e

and

commerce

and

i n t r a d e o r

commerce

wi th in the

meaning of section

of the Trade Prac t ices

Act 1 9 7 4 .

The t h i r d and fourth

respondents

are a l leged

to be t r ad ing

o r f inanc ia l co rpora t ions

formed within

t h e

l i m i t s o f t he

Commonwealth r r i t h in the

meaning of

s ec t ion 51(xx)

of the Cons t i tu t ion

and

are

engaged

i n

i n t e r - S t a t e t r a d e

and

commerce

and

i n t r a d e o r

commerce

wi th in the

meaning of section

of the Trade Prac t ices

Act

1974.

4 .

i s

al leged that the respondents caused

advert isement to be publ ished

i n

newspaper

c i r c u l a t i n g

i n Lismore

Apr i l

1983. Neither

the subject

matter

nor the conten ts of the adver t i sement

are

d isc losed .

Thereaf te r fo l low

detai ls

i n n a r r a t i v e

form of conversa-

t i o n s

which one

or o ther of the appl icants had wi th the

f i r s t

and second respondents relating to

the

sale

t o the

appl icants of

a f r anch i se fo r

a new and used

furniture

s t o r e t o

open

i n Lismore. Paragraph 10 of

the

s ta tement

claim sets out

in sub-paragraphs le t te red

(a)

t o

( f ) what

the

first

respondent

i s a l l e g e d t o

have

" rep resen ted to

and

promised to" the applicants

a t a meeting held

8 A p r i l

1983.

Paragraph

sets

o u t f u r t h e r

matters

which

t h e

first

and second respondents are alleged to have "represented

. I I

t o and promised to" the applicants

a t a meeting

April

1983.

Paragraph

a l l eges tha t on o r abou t

May

1983

t h e f i rs t

appl icant w a s handed by

t h e first

and second

respondents a

franchise agreement between

the

appl icants

of the one par t

and

S t r a t a I n d u s t r i e s I n t e r n a t i o n a l o f

t h e o t h e r p a r t .

The

second

respondent

is a l leged

have

r ep resen ted tha t t he con t r ac t

was

in accordance with the

s tandard format of the Real Estate Inst i tute of Queensland.

The	appl icants a l lege tha t they s igned the f ranchise

agreement on 3 May 1983. They say

tha t

they pa id

sums

t o t a l l i n g

$23,800.

The

s ta tement of c la im then de ta i l s

certain

events

which the appl

icants

lege took place,

including

the de l ive ry

f u r n i t u r e by

the respondents

t o the

app l i can t s ,

and

c e r t a i n a l l e g e d d e f a u l t s o n t h e p a r t

o f

the

respondents.

It is a l l e g e d

t h a t

the Lismore

franchise

s t o r e opened on

June 1983 but

that business

"failed

to reach the leve l of gross earn ing and

otherrrise

the

levels

o f r i s k o r p r o f i t a b i l i t y r e p r e s e n t e d

and promised"

by the

respondents

(see paragraphs

and

26).

The

bus iness

c losed ,

so it

i s a l l eged ,onor abou t

16 October 1983.

Paragraph

a l l eges tha t i n b reach o f

the

franchise

agreement and

i n breach o f

the representat ions and promises

made

the respondents to the appl icants , the respondents

f a i l e d o r r e f u s e d t o f u l f i l t h e i r o b l i g a t i o n s

number

spec i f ied

respec ts . Paragraph

p a r t i c u l a r i s e s

t h e

r e spec t s

i n which

a l leged tha t the conduct

t h e

respondents

has

been mis l ead ing o r decep t ive o r l i ke ly to

mislead or deceive within

the

meaning of section 52 of the

Trade P rac t i ces Act

1974.

Paragraph 30 s a y s

t h a t

the

app l i -

c a n t s r e l y

upon

t h e

same

mat te rs to suppor t the

claim

under

sec t ion

that Act .

The

appl icants

claim t h e r e l i e f

spec i f i ed

i n

the app l i ca t ion to

which

h a v e a l r e a d y r e f e r r e d .

A properly drawn statement of

claim will conta in

and conta in only ,

a s ta tement in

a summary form of

the

6 .

material facts

on which the party relies, but not the

evidence by which those facts are

to be proved (see Order

11, rule 2).

The material facts should

be stated accur-

ately, clearly and intelligibly and must be sufficient

raise the legal claim on which the party relies.

The statement

of claim filed

on behalf of the

applicants falls far short

of complying with the above

principles. A consideration of paragraph 29 indicates

the difficulties with which the respondents are faced

drawing a defence. The misleading or deceptive conduct

relied upon is alleged to consist, in

part, of false

representations and promises made by

the respondents.

The first comment to be made is that there is no co- relation between the representations and promises specified

in paragraph

29 as being false and those alleged to have

been made by the first and second respondents elsewhere

in the statement

of claim. For example, sub-paragraph

29(a)(i) implies that

a representation or promise had

. I

been made

by the respondents that

“a chain of such retail

franchise outlets” had been or would be established.

representation or promise

in those terms

is alleged else-

where in the statement

of claim. Similarly paragraph

29(a)(v)

implies that a representation

x-7a.s made that the

average weekly gross earning

of the Lismore franchise was or

would be

$1,800 whereas a representation

in those terms is

not alleged

to have been made. Again one may

infer from

7. !

sub-paragraph

29 (a) ( v i i i ) t h a t

representa t ion

was

made tha t the respondents

o r one or more of them answered

the desc r ip t ion o f

“a

n a t i o n a l r e t a i l f u r n i s h e r ” y e t

such representat ion

i s a l leged .

Conversely, an examination of paragraphs

and

of the s ta tement of c la im d isc loses a l lega t ions

of representations and promises being

made

respect of

which

no a l l ega t ion o f f a l s i t y

i s

made.

t h a t e x t e n t

t he a l l ega t ions

would

seem

i r r e l e v a n t t o

any claim which

the app l i can t s s eek to

make.

further d i f f i c u l t y t o which paragraph

gives r i se is t h a t i n

a number

i t s sub-paragraphs the

f a l s i t y a l l e g e d

i s simply the non-fulfi lment

the promise

o r

r ep resen ta t ion a l l eged :

t he re

i s no a l l ega t ion

i n those

ins tances tha t the promise or representa t ion

was

false

a t

the

t ime it was made (cf

sub-paragraphs (i),

(ii),

( iv) , and

( v i ) on the

one

hand

and

sub-paragraphs

(iii),

(v) ,

( v i i ) ,

( ix) and (X) on the

o the r ) .

Fu r the r ,

r e l a t i o n

t o

t h e

l a t te r

group of sub-paragraphs

p a r t i c u l a r s

are

given

the respondents’

lack

i n t e n t i o n t o c a r r y o u t

what

i s

a l l e g e d

t o

represented

promised.

Again,

i s

no t a l l eged tha t t he app l i can t s r e l i ed

upon

the r ep res -

entat ions or promises a l leged as inducing

them

t o e n t e r

i n t o t h e f r a n c h i s e	agreement	or o therwise to	act	t o their
detr iment .

Another difficulty with the statement

of claim

is that the representations and promises relied upon are

said to have been made only by the first and second res-

pondents.

It is not alleged that they did

so as the

servants or agents

of the other respondents

or, in the case

of the respondent corporations, as directors thereof.

Indeed, except

in so far as the statement

of claim alleges

matters against "the respondents" in general terms

provides no basis

for relief in relation to the corporate

respondents or the

fifth and sixth respondents.

There are also difficulties

so far as the claim

. is said to arise in contract. An allegation

is made that

a franchise agreement was entered into by the applicants,

the other party to the agreement being identified only

by the business name "Strata Industries International"

(paragraph 16).

It is not alleged that that business

namewasused by any of the respondents, the only allega-

tions being

that the first respondent represented and

promised that he and the

fifth respondent were duly

authorised by their respective principals, including the applicants for the franchise outlet (sub-paragraph

lO(c))

and that the first and second respondents repres-

ented and promised that the second respondent was the

managing director of Strata Industries International

(paragraph 13).

9 . i

The statement of claim does not set out the

terms of the contract relied upon nor identify clearly

the breaches which are alleged.

The matters identified

in paragraph 27, for example, as being matters

in re-

lation to which the respondents failed or refused to

fulfil their obligations are indifferently described as

being "In breach of the franchise agreement and

in breach

of the representations and promises made by the Respondents

to the Applicants."

It is apparent from what has been said that the statement of claim does not define with reasonable clarity and precision the matters on which the applicants rely as

being sufficient to support the claim for damages which

they seek to maintain against each

of the respondents.

, -

It does not give fair and proper notice to the respondents

of the case they have to meet.

During the course

of argument criticism was

made of

a number of individual paragraphs

of the statement

of claim.

In the light of the conclusion to which

I have

come and as the defects

in the statement of claim cannot.

be cured by piecemeal amendment

I have found it unnecessary

to deal with each of those matters seriatim. They are,

however, matters that should be brought

to he attention of

the draftsman

so that he may consider them

in drawing an

amended statement of claim.

10.

For the reasons

I have given the statement

of claim

is struck out, the applicants

t o have

l iber ty

t o f i l e and

serve on

a l l t h e respondents against

whom

they wish to proceed an amended statement of claim

within 28 days

a f te r the da te

this order .

The costs

this application

will

t h e f i r s t ,

second,

t h i r d and

fourth respondents' costs

i n t he

cause.

1-ce r t i fy tha t t h i s

and

the preceding

ten (10) pages are a t rue copy herein of

the Reasons for Judgment of the Honourable

M r .

Jus t ice Neaves.

Date: 1 June 1984

mog-	Ass ci e. '

11.

[1984] FCA 158

1 Jun 1984