Lesvos Pty Limited v Penrith Whitewater Stadium Limited

[2004] NSWSC 441

CITATION:	Lesvos Pty Limited v Penrith Whitewater Stadium Limited [2004] NSWSC 441
HEARING DATE(S):	15/4/04
JUDGMENT DATE:	25 May 2004
JUDGMENT OF:	Bell J at 1
DECISION:	1. Pursuant to Pt 60 r 10 of the SCR set aside the orders made by Master Malpass of 12 September 2003; 2. Strike out the ordinary statement of claim pursuant to Pt 15 r 26(1) of the SCR; 3. Give the respondents leave to replead; 4. The respondents are to pay the appellants costs of the appeal, together with the respondents costs of the review before Master Malpass and the respondents' costs of the motion before Acting Registrar Whitehead; 5. The appellants' are to pay the respondents' costs occasioned by reason of the filing of the points of defence to the ordinary statement of claim.
LEGISLATION CITED:	Fair Trading Act 1987 Supreme Court Rules 1970 Trade Practices Act 1974
CASES CITED:	Aussie Home Security Pty Ltd v Sales Systems Australia Pty Ltd [1999] FCA 1458 Cubillo v Commonwealth (2001) 183 ALR 249 Do Carmo v Ford Excavations Pty Ltd [1981] 1 NSWLR 409 Mike Gaffkin Marine Pty Ltd v Princes Street Marina Pty Ltd (1995) 17 ACSR 495 Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 House v The King (1936) 55 CLR 499 Perre v Apand Pty Ltd [1999] HCA 36; 198 CLR 180 Phoenix Court Pty Ltd v Melbourne Central Pty Ltd (1997) ATPR 46-179 Poseidon Ltd v Adelaide Petroleum NL (1991) 105 ALR 25
PARTIES :	Lesvos Pty Limited (ACN 078 840 338) (First Plaintiff) Koffee Pty Limited (ACN 056 318 882) (Second Plaintiff) Penrith Whitewater Stadium Limited (ACN 083 662 140) (First Defendant) Penrith City Council (Second Defendant)
FILE NUMBER(S):	SC 20147/02
COUNSEL:	D E Baran (Plaintiff M Jacobs QC / P Bambagiotti (Defendant)
SOLICITORS:	Andresakis & Associates (Plaintiff) Gadens Lawyers (Defendant)

LOWER COURTJURISDICTION:	Supreme Court (Master)
LOWER COURT FILE NUMBER(S):	20147/02
LOWER COURT JUDICIAL OFFICER :	Malpass M

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

BELL J

Tuesday 25 May 2004

20147/02 LESVOS & Anor v PENRITH WHITEWATER STADIUM LIMITED (ACN 083 662 140) & Anor

JUDGMENT

1 BELL J: This is an appeal from the decision of Master Malpass given on 12 September 2003. The Master dismissed a notice of motion filed by the appellants, the defendants in the substantive proceedings, Penrith Whitewater Stadium Limited (PWS) and the Penrith City Council (the Council) on 20 May 2003. The proceedings before the Master were brought pursuant to Pt 61 r 3 of the Supreme Court Rules 1970 (the SCR) and were a review of orders made by Acting Registrar Whitehead on 24 April 2003.

2 The motion on which the appellants moved before Acting Registrar Whitehead sought that the respondents’ ordinary statement of claim be stayed or dismissed generally pursuant to Pt 13 r 5(1) and/or Pt 15 r 26 and/or Pt 65 r 5 of the SCR. In the alternative the appellants claimed orders that paragraphs 12, 14, 15, 16, 17, 18, 20, 21, 22, 29, 30 and 33 of the ordinary statement of claim be struck out. The Registrar dismissed the motion.

Appeals from the decision of the Master

3 The right of appeal from the decision of the Master is conferred by Pt 60 r 10 of the SCR. The nature of the appeal is as stated by Cross J in Do Carmo v Ford Excavations Pty Ltd [1981] 1 NSWLR 409. His Honour, after referring to the well known passage from the joint judgment in House v The King (1936) 55 CLR 499 at 504–5, went on to observe at 420:

“I am of the view that the approach of the Court to the exercise of the Master's discretion in this case should be as there stated.

And it is, I think, sensible that it be so. For part of the scheme of the Act and rules was to set up a body of judicial officers who were, or who would quickly become, expert in the practice and procedure of the court and who, could readily and expertly decide practice and procedural problems. Providing they exercised their discretion judicially — as normally they would — that was to be the end of the matter. So likely were their decisions to be invulnerable that appeals from those decisions were not included in Pt 60, r 17, and the Court of Appeal was thus relieved of the necessity of hearing appeals from such decisions. A single judge was empowered to do that; and he was to apply exactly the same approach to the exercise of the master's discretion-the master being the court (s 118(5)) — as the Court of Appeal would adopt in relation to an appeal from the discretion of a judge when he is the court (by s 40(1)) or of a master when he is the court: see Knight v Kelly (Court of Appeal, 25th
July, 1978, unreported).”

The respondents’ pleading

4 The proceedings were commenced in the District Court by the filing of an ordinary statement of claim on 11 September 2000.

5 By their claim the respondents pleaded causes of action against the appellants under s 52 of the Trade Practices Act 1974 (Cth) (the TPA); s 42 of the Fair Trading Act 1987 (NSW) (the FTA); and in negligence.

6 The respondents are corporations who at the relevant time were in the business of catering and operating kiosks/coffee lounges. They plead their claim in this way. PWS is a corporation engaged in trade and commerce, having the managerial care and control of the Penrith Whitewater Stadium (the Stadium) as sub-lessee from the Council for reward. The Council is a corporation or body corporate, engaged in trade and commerce in that it leased the Stadium to PWS for reward, “together with associated commercial activity it undertook at the said Stadium to assist the first defendant to lease and operate the said premises”: paragraph 3, statement of claim.

7 On or about 6 October 1998, the Council published an advertisement calling for expressions of interest in the lease of a kiosk/coffee lounge at the Stadium and the respondents submitted a written expression of interest. Thereafter, around 23 November 1998 PWS represented to the respondents in writing that they been nominated as the preferred operators of the kiosk/coffee lounge for the Stadium.

8 The respondents and the appellants entered into a series of discussions and meetings during the months November 1998 to February 1999.

9 Paragraphs 10 and 11 of the statement of claim are important in the way the TPA claim is formulated. They are pleaded as follows:

“10. During the said meetings the first and second defendants conveyed the following oral representations to persons representing the respondents namely, Ms Maria Mihas and Mr Arthur Alexiou:
i. That the respondents would be granted a 5 x 5 year lease of the demised premises where the café would be situated.
ii. That the respondents could trade into the evening and offer a dinner menu.
iii. That there would be no charge for garbage disposal.
iv. That the respondents could have the exclusive use of a terraced area located adjacent to the café as part of their café business.
v. That the respondents would be catering for all functions at the Stadium except for the period of the running of the Sydney 2000 Olympic Games from the commencement of the Games, being the opening ceremony, until conclusion, being the close of the Games, namely the closing ceremony, otherwise on an exclusive basis.
vi. That the respondents would be trading in their café as at March of 1999.
vii. That the Stadium would be open during public holidays.
viii. That the respondents would be the exclusive caterers for the Stadium.
Reliance
11. Between November 1998 and mid-March of 1999 the respondents spent in excess of $100,000.00 in set-up and fit-out costs.”

10 Paragraphs 12 to 22 of the statement of claim are under the subheading “Subsequent representations and conduct” and plead facts and representations made by one or more of the appellants in the period after 11 February 1999. I do not propose to set them out in full but they include:

§ by mid-March 1999 the handover in respect of the café had not occurred,

§ in January 2000 PWS represented to the respondents that they had to pay for the cost of the collection of garbage bins,

§ on or about 8 May 2000 the respondents were served with an “unofficial notice to leave” for the exclusive Games period being a period commencing 7 July 2000 and concluding 12 October 2000,

§ as at 5 June 2000 PWS did not have a firm agreement with the Olympic Co-Ordination Authority that would guarantee a date for the plaintiff’s business to move back to the Stadium to resume operations.

11 In paragraph 23 of the statement of claim, the respondents plead that having regard to the material facts pleaded above (a reference, it appears, to paragraphs 1 to 22) and the oral and written representations conveyed to them in the period November 1998 to February 1999, the appellants engaged in conduct that was misleading and deceptive or was likely to mislead or deceive contrary to s 52 of the TPA and its FTA equivalent.

12 The motion before the Master claimed orders including that the proceedings be dismissed generally pursuant to Pt 13 r 5 of the SCR. The Master observed that the summary dismissal aspect of the application, while not abandoned, had not been pressed with enthusiasm. He was satisfied that it was a remedy that should not be granted in the circumstances of this case. The appeal does not challenge the Master’s determination not to summarily dismiss the proceedings.

The Master’s reasons

13 The Master considered that the delay in bringing the application to strike out the statement of claim was such that the interests of justice were best served by refusing the application. It is convenient to set out the relevant history by reference to the Master’s judgment:

“1. These proceedings were commenced by Ordinary Statement of Claim filed in the District Court on 8 September 2000. The process purports to propound causes of action founded on provisions of the Trade Practices Act 1974 (Cth) (the Act) and negligence.
2. On 13 November 2000, the defendants filed their respective Defences and an implied joinder of issue took place.
3. The matter was listed for directions. Directions were given on 27 February 2001.
4. On 28 May 2001, a cross-claim was filed by the first defendant.
5. On 21 September 2001, the matter appeared in the Commercial List for further directions. Directions were made (including directions to file and serve evidence). Further directions were given on 14 December 2001. The directions to file evidence were not complied with by the defendant.
6. In early March 2002, the defendants consented to the proceedings being removed into this Court. Orders were made on 25 March 2002.
7. By letter dated 25 June 2002, the defendants first raised the matter of pleading deficiencies in the Statement of Claim. It was contended that the Statement of Claim should be struck out on the basis that amongst other things it disclosed no reasonable cause of action and would only cause delay in these proceedings. This contention was rejected by a letter of the same date. This letter specifically raised the question of the belated nature of the proposed application.
8. On 8 July 2002, the defendants filed a Notice of Motion seeking summary disposition of the claim. It sought inter alia either summary dismissal or the striking out of the pleading.
9. For some time, the respondents had sought an outline of submissions from the defendants. An outline was served on 20 February 2003. This was the first occasion on which the defendants identified the specific complaints concerning the pleadings.
10. The Notice of Motion was heard by Acting Registrar Whitehead on 13 March 2003. His reserve decision was delivered on 24 April 2003.
11. The Registrar dismissed the Notice of Motion and ordered that the costs of the motion be reserved.
12. On 20 May 2003, the defendants filed a further Notice of Motion. It sought inter alia a review of the decision given by the Registrar. The decision was reviewed on 10 September 2003.

14 Central to the attack made upon the Master’s determination are the findings recorded in paragraph 22 of his judgment:

“22. This is not a case which requires the Court to embark on a detailed analysis of the various allegations made in the pleading. It suffices to say that there are pleading deficiencies. It is necessary only to refer briefly to but a few of them. The pleading does contain an abundance of material that may be described as extraneous. There is a lack of nexus between allegations. Some of the allegations may give rise to comprehension problems. However, I do not see these matters as giving rise to real problems at trial. Strictly speaking, it may be said that the claim founded on the provisions of the Act, does not contain all of the elements necessary to found such a statutory count. However, it seems that the defendants may not be in any real doubt as to the thrust of the intended claim. As presently pleaded, the cause of action founded in negligence would appear to have limited prospects of success. However, the Court is reluctant to grant summary relief in respect to negligence claims.”

15 The Master went on to give consideration to the delay that had attended the bringing of the application to strike out the statement of claim. He noted that defences had been filed by each of the appellants in November 2000. No question of the failure to disclose a reasonable cause of action had been raised at that time. The Master found that the respondents did not appear to have had difficulty in appreciating the case that they were being called upon to meet and in pleading to it. There had been a joinder of issues. By the time the adequacy of the pleading was first raised there had been directions hearings that, among other things, had required the parties to give consideration to evidence and the provision of particulars.

16 The Master considered that against this background the respondents had been entitled to proceed on the basis that their pleading was not the subject of attack and that they could proceed to prepare for trial. The appellants had acted upon legal advice and in the Master’s view a conscious decision had been made to file defences and to plead over any deficiencies in the statement of claim.

17 The Master noted that while the appellants had tendered a deal of material, none of it explained the filing of the defences and the subsequent delay in bringing the application to strike out the statement of claim.

18 The proceedings had been on foot for approximately three years. In the event that the appellants’ motion was to succeed, the respondents’ case would be delayed. In the interim the respondents may well have incurred costs based upon the present pleadings.

19 Ultimately, taking into account the circumstances to which I have referred the Master concluded that the appellants had failed to discharge the onus of demonstrating an entitlement to the relief sought.

The grounds of appeal

20 The grounds of appeal are as follows:

“(1) In light of the Master’s finding in paragraph 22 concerning the deficiencies in the Respondents’ statement of claim, the Master’s decision in refusing to strike those pleadings out upon the failure of the Respondents to undertake to replead and to order that those pleadings be re--pleaded, miscarried.
(2) Furthermore, the Master failed to have regard to the provisions of Part 15 rule 26 which permits a strike out application to be made at any stage.
(3) The Master’s findings of prejudice on the Respondents’ part were they to be ordered to re-plead, as found in paragraphs 30 to 33 of his judgment, is incorrect in the light of the following facts:
(a) At the time the Defendants filed their points of defence, these proceedings were in the District Court of NSW and the Respondents claimed the sum of $750,000.00;
(b) the Respondents transferred these proceedings to this Court and within weeks thereof the application to strike out was filed;
(c) the Respondents put on no evidence of prejudice, and indeed, in light of the fact that the requirement to re-plead would simply involve the Respondents articulating their cause of action which they say they know, no finding of prejudice was or could be justified; and
(d) the Respondents’ counsel conceded that they would have to amend their pleadings and indeed intended to do so, and as a consequence, the findings of prejudice and the Master’s failure to make orders compelling the Respondents to put their pleadings in order miscarried.”

The appellants’ submissions

21 On the hearing of the appeal the appellants contended that the pleading does not identify with precision the case that is made against them. Should it be permitted to remain they complain that it will be necessary for them to deal with allegations that the Master acknowledged not to be material. They placed reliance on the decision of the Full Federal Court in Cubillo v Commonwealth (2001) 183 ALR 249 at 345:

“While it may reasonably be accepted that technical defects in a pleading which causes no confusion and do not raise issues of substantive principle can readily be dealt with by the provision of particulars or amendment, it remains the case that pleadings define the issues and inform the parties in advance of the case they have to meet. Pleadings continue to occupy an integral role in present day litigation and are not to be treated as pedantry or mere formalism: Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279; per Mason CJ and Gaudron J at 286-7; Mitanis v Pioneer Concrete (Vic) Pty Ltd (1997) ATPR 41-591 at 44-151 ff per Goldberg J.”

22 Mr Jacobs QC, who with Mr Bambaglotti appeared for the appellants, submitted that they were unable to discern from the pleading whether it was the respondents’ case that the appellants had an agreement for lease that had been breached or whether they were relying on a pre-contractual promise such as might attract the operation of s 51A of the TPA.

23 The appellants contend that the representations particularised in paragraph 10 of the statement of claim might only be actionable under s 52 of the TPA if they went beyond the process of bargaining in negotiations such as in a case where the maker of the statement had no intention of contracting on the terms discussed: Poseidon Ltd v Adelaide Petroleum NL (1991) 105 ALR 25 at 26 per Burchett J; and MikeGaffkin Marine Pty Ltd v Princes Street Marina Pty Ltd (1995) 17 ACSR 495 per Young J at 511.

24 In Poseidon Burchett J observed at 26:

“I do not think it has ever been suggested that s 52 strikes at the traditional secretiveness and obliquity of the bargaining process. Traditional bargaining may be hard, without being in the statutory sense misleading or deceptive. No one expects all the cards to be on the table. But the bargaining process is not therefore to be seen as a licence to deceive. If, for example, the bargainer has no intention of contracting on the terms discussed – perhaps because his real aim is to tie up the market, or to achieve some other ulterior purpose – may not (at least, in some circumstances) his conduct in seeming to bargain be accurately stigmatised as misleading?”

25 The appellants rely on the absence of any pleaded facts that take the process of negotiation beyond that which is described as being within its normal compass.

26 Mr Jacobs submitted that once the Master found that the claim was deficient in the failure to plead all the elements of the TPA cause of action he was required to strike out at least that part of the claim.

27 Mr Jacobs also contended that the Master erred in concluding that the appellants were not in real doubt as to the respondents’ case. In his submission the Master’s acknowledgment that considerable extraneous material had been pleaded called for the striking out of at least those paragraphs of the claim. In this respect he submitted that the appellants should not be put to the cost of dealing with allegations not material to the claim.

28 In Mr Jacobs’ submission, the Master wrongly took into account the appellants’ delay in bringing their motion to strike out the pleading. He pointed to the terms of Pt 15 r 21(1) of the SCR in support of the submission that a motion to strike out may be brought at any time. This is so, however, it does not seem to me to produce the result that unexplained delay in moving to strike out a statement of claim may not be a relevant matter for the Court to take into account in determining whether to order that the pleading or some part of it be struck out.

29 Finally, Mr Jacobs submitted that the Master had failed to take into account that the appellants’ defences were filed when the proceedings were before the District Court and involved a claim for the amount of $750,000. The proceedings had been removed into this Court on the respondents’ application on the basis that the claim was now said be in the order of $2,000,000. The appellants had contended before the Master that they moved promptly to have the pleading struck out after the proceedings were removed into this Court.

The TPA claim

30 The respondents’ claim under s 52 of the TPA requires that they plead a case that the appellants, being corporations in trade or commerce engaged in conduct that is misleading or deceptive or is likely to mislead or deceive. Conduct that is misleading or deceptive is conduct that contains or conveys a meaning which is false: Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 88 per Bowen CJ, Lockhart and Fitzgerald JJ. While representations made in the course of negotiations may give rise to a claim under s 52 of the TPA, this pleading fails to indentify how it is said that the representations relied upon as the relevant conduct were misleading or deceptive or likely to mislead or deceive.

31 The respondents plead in paragraph 13 of the statement of claim that by mid-March 1999 the hand-over of the café had not occurred. The fact that this event did not occur does not of itself establish that the representation pleaded in paragraph 10 (vi) was misleading or deceptive or likely to mislead or deceive: Phoenix Court Pty Ltd v Melbourne Central Pty Ltd (1997) ATPR 46-179; Aussie Home Security Pty Ltd v Sales Systems Australia Pty Ltd [1999] FCA 1458 per Katz J at [18]–[20]. The same observation may be made of paragraph 16 which pleads that on 28 January 2000 PWS represented to the respondents that they had to pay for the cost of collection of garbage. This fact if established does not without more prove that the representation pleaded in paragraph 10 (iii) was misleading and deceptive or likely to mislead or deceive at the time that it was made. The representations pleaded in paragraph 10 (i) to (viii) are as to future matters. As Mr Jacobs submitted, the pleading does not make clear whether s 51A of the TPA is to be relied upon.

32 In Aussie Home Security Katz J observed:

“[19] Dealing first with par 8 of the statement of claim, I accept that it was embarrassing and, by way of justification in authority for my conclusion as to its embarrassing nature, it is convenient to repeat a passage from the reasons for judgment of Goldberg J in Phoenix Court Pty Ltd v Melbourne Central Pty Ltd (1997) ATPR 46-179 (FCA): see at 54,431-32. His Honour said, "Prior to the enactment of s 51A it was well settled that an applicant could not adequately plead misleading and deceptive conduct invoking s 52 simply by asserting a representation as to future conduct or as to a future event and then asserting that the subject-matter had not come to pass: Bill Acceptance Corporation Ltd v GWA Ltd (ATPR 44,761; ALR 250); Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (ATPR 45,344; FCR, 88).

[20] Although the mere fact that a representation as to future conduct or the happening of a future event does not occur does not make the representation misleading or deceptive, such a representation can ripen into misleading or deceptive conduct for the purposes of s 52 in a number of circumstances; namely, if there is an implied statement in the representation as to a present or past fact; if the representation represents impliedly that the representor has a present intention to make good the promise or has the means or ability to do so; if the representation involves a representation that the representor has a present state of mind; or if a representation is made, which having regard to relevant circumstances at the time, requires a qualification because of the possibility of its non-fulfilment (see James v Australia and New Zealand Banking Group Ltd (supra); Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (supra); Wheeler Grace & Pierucci Pty Ltd v Wright (1989) ATPR 40-940). In any of these circumstances it is necessary to plead more than simply the fact of the representation as to the future matter and the fact that it does not occur. One has to plead material facts in relation to the implication in the statement of the present or past fact, the present intention and the means to carry it out, the relevant state of mind and the fact that there was no basis for it, and the relevant circumstance giving rise to the qualification.
[21] Without pleading such matters all the material facts necessary to complete the cause of action have not been stated and the respondent does not know what case it has to meet."

33 Generally, the relationship of a number of the facts pleaded in paragraphs 12 to 22 to the TPA claim is not clear. For example, in paragraph 12 the respondents plead that they were served with documents relating to a sublease in respect of the wrong set of premises. Accepting that this fact is proved at trial, I have difficulty seeing how it might be said to go to the TPA claim. In a similar category is the pleading in paragraph 15 of PWS’s letter to the respondents advising that the transfer of the land to the National Parks and Wildlife Services had not been finalised.

34 Paragraph 14 of the statement of claim pleads three representations made in a letter prepared by the Council and addressed to the respondents’ directors dated 26 May 1999. There is no pleading of reliance upon these or of any damage flowing from the same. These are representations that were made after the expenditure of monies pleaded in paragraph 11.

35 I consider that the Master was right to find that the TPA claim did not plead all the necessary elements for such a claim.

The negligence claim

36 The claim pleaded in negligence is also the subject of challenge. In their written submissions the appellants contend that on the pleaded facts no duty of care in tort arises in respect of the “duties” pleaded by the respondents.

37 In oral submissions, Mr Baran of counsel, explained the respondents’ claim in negligence in this way: The PWS and the Council, were persons with over control the Stadium and as such were in an effective position of control over the respondent’s ability to earn income. The respondents’ claim in negligence was a claim for damages arising out of the infliction of purely economic loss: Perre v Apand Pty Ltd [1999] HCA 36; 198 CLR 180.

38 The statement of claim as framed does not plead the duty of care in the way that Mr Baran put it. The respondents plead that the appellants owed them a duty of care to ensure that by March of 1999 they were “able to conduct a viable and profitable business, being a café/kiosk from the said Stadium and to execute all such documentation within a reasonable time, being deeds of sub-licence/leases with the proprietors of the café being the respondents”: paragraph 32, statement of claim. The appellants are also said to have owed a duty to the respondents, “Not to interfere in the day to day management and running of their business as an independent café, nor to commit any act that would prevent the respondents from opening their business or hinder the performance of the business granting them the exclusive use of the café area at all times”: paragraph 33, statement of claim.

39 The appellants complain that the particulars of negligence are incomprehensible. I do not propose to set them out in full. They include:

“(k) failing to permit the respondents to use curtains,
(q) failing to install equipment promptly,
(v) permitting an event to occur in September 1999 when members of the Olympic Co-ordination Authority went rafting supplying their own food and drink, namely pizzas,
(bb) permitting a German film crew who had booked the centre for the day on 21 March 2000 to bring their own caterers without warning the respondents,
(cc) failing to provide adequate locker space for persons using the rafting facilities such that equipment and clothing was left on the premises occupied by the respondents restricting their business,
(dd) sending harassing and intimidating letters from Sherry Spurlin, the Manager of the first defendant,

(gg) failing to adequately meter electricity.”

40 I consider that the particulars of negligence, if not incomprehensible, do not serve to make any clearer the case that the respondents make against the appellants. They require the appellants to deal with a vast array of matters the relevance of which is unexplained by the pleading.

Conclusion

41 I am conscious of the emphasis that the Master placed on the circumstance that the appellants had filed defences in the District Court. I note that in large measure the defences involved denials or non-admissions of the facts pleaded in the respondents’ claim. I consider that there is force to Mr Jacobs’ submission that notwithstanding the filing of the defences the appellants do not know the case that is made against them and that should the proceedings go forward on the present pleading they will be required to deal with a substantial number of allegations that are not material to the claim that is brought against them.

42 In light of the Master’s findings set out in paragraph 22 of his reasons I consider that he erred in determining that the appellants’ motion should be dismissed. This is so at least to the extent that the appellants sought to have the TPA claim struck out, having regard to the finding that all the elements of the claim were not pleaded. The pleading of the claim in negligence is also attended by difficulties. I accept that novel claims in negligence may succeed. However, pleading a positive duty to ensure the viability and profitability of the respondents’ business by a certain date, together with a duty to supply documentation to the respondents, seems to me to be untenable. As I have noted, the pleading does not correspond with the way Mr Baran sought to explain the respondent’s claim in negligence.

43 I propose to strike out the statement of claim in its entirety and give the respondents leave to replead their claims. I do not consider that the appellants’ delay in moving to strike out the statement of claim occasions prejudice that cannot be addressed by an appropriate order for costs.

44 For these reasons I make the following orders:

1. Pursuant to Pt 60 r 10 of the SCR set aside the orders made by Master Malpass of 12 September 2003.
2. Strike out the ordinary statement of claim pursuant to Pt 15 r 26(1) of the SCR .
3. Give the respondents leave to replead.
4. The respondents are to pay the appellants’ costs of the appeal, together with the respondents’ costs of the review before Master Malpass and the respondents’ costs of the motion before Acting Registrar Whitehead.
5. The appellants are to pay the respondents’ costs occasioned by reason of the filing of the points of defence to the ordinary statement of claim.

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Last Modified: 05/28/2004