Madeleine Pharmaceuticals P/L v South Australian Health and Medical Research Institute Ltd - [2018] SADC 135

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
MADELEINE PHARMACEUTICALS P/L v SOUTH AUSTRALIAN HEALTH AND MEDICAL RESEARCH INSTITUTE LTD
[2018] SADC 135
Judgment of His Honour Judge Dart
12 December 2018
APPEAL AND NEW TRIAL - PROCEDURE - SOUTH AUSTRALIA - HEARING OF APPEAL - OTHER MATTERS
A Master struck out two paragraphs of the Second Statement of Claim - paragraph 54 was struck out as containing impermissible inconsistent plea - plaintiff appealed against the decision of the Master.
Held: Appeal dismissed.
District Court Civil Rules 2006 r 98(7), referred to.
Riverland Fruit Cooperative Ltd (in liq) v 007 953 380 Pty Ltd & Ors [2008] SASC 258; Brailsford v Tobie (1889) 10 ALT 194; Ciavarella v Balmer (1983) 153 CLR 438, considered.

MADELEINE PHARMACEUTICALS P/L v SOUTH AUSTRALIAN HEALTH AND MEDICAL RESEARCH INSTITUTE LTD
[2018] SADC 135
JUDGE DART:

This is an appeal from a Master. The defendant made an application seeking to strike out paragraphs 50 and 54 of the Second Statement of Claim.[1] The Master allowed the application and delivered reasons in respect of his decision.
[1] FDN9, filed 25 August 2017.
The plaintiff (“appellant”) then purported to file a Third Statement of Claim[2] (“TSOC”) in compliance with the orders made by the Master. In the TSOC paragraph 50 was struck out completely and paragraph 54 remained in a slightly modified form.
[2] FDN21, filed 30 August 2018.
The defendant was dissatisfied with the amended form of paragraph 54, on the basis that it did not comply with the orders made by the Master. The further dispute was dealt with by the Master, who held that paragraph 54 in its modified form did not comply with his orders, and delivered a second set of reasons for that conclusion.
The plaintiff says that this appeal is from the second set of reasons. The defendant says that is not the case and the appeal goes back to the original decision to strike out paragraph 54.
The reasons of the Master
No issue was taken by the plaintiff in respect to the decision of the Master to strike out paragraph 50. On the appeal the Court is simply dealing with paragraph 54, which is in the following terms:
Further and in the alternative, Madeleine is entitled to an order under the ACL that the Contract and the Amending Deed be set aside and/or that Madeleine be awarded damages under the ACL.
The complaint of the defendant is that in the TSOC the plaintiff sues on a contract entered into between the parties. It seeks damages in respect of breach of contract. The defendant’s position is that that is an affirmation of the contract and an election to sue on the contract. It says that, by pleading in paragraph 54 that the contract should be set aside pursuant to the provisions of the Australian Consumer Law, the plaintiff is pursuing an impermissibly inconsistent case. That is, on the one hand affirming the contract and suing for its breach and, on the other hand, seeking to have the contract set aside.
The Rules of Court provide that a party may, in appropriate circumstances, make inconsistent allegations of fact in the alternative.[3] The Master considered a number of authorities, including Riverland Fruit Cooperative Ltd (in liq) v 007 953 380 Pty Ltd & Ors.[4] Many of the cases referred to by the Master deal with pleading inconsistent factual allegations. That is what the pleading rule referred to above allows. Parties are not allowed to plead an alternate version of the facts when they know one of the versions of fact to be false.[5]
[3] District Court Rule 98(7).
[4] [2008] SASC 258.
[5] Brailsford v Tobie (1889) 10 ALT 194.
Much of the reasoning in the Master’s first reasons dealt with the pleading in paragraph 50 of the Statement of Claim. That paragraph contained the proposition that, if the contract did not contain particular expressed or implied terms, the contract was void for uncertainty. As mentioned above, that is no longer in issue. In any event, the relevant reasoning of the Master was as follows:[6]
The court will avoid the situation where a party will plead one issue, namely, that there was a contract and as an alternative, that if the court were to find to the contrary, then a different outcome would arise, as in the Riverland case. To paraphrase Bleby J, as the plaintiff had not adequately nailed its colours to the mast.
[6] Madeleine Pharmaceuticals Pty Ltd v South Australian Health and Medical Research Institute Limited, Master Rice, Decision No 24 of 2018, 13 August 2018.
Consideration
The plaintiff’s position is that the defendant is impermissibly seeking to deny it a remedy available under the Australian Consumer Law (“ACL”). In the pleadings there are allegations that the defendant made false and misleading representations and that, accordingly, relief is available under the relevant provisions of the Australian Consumer Law. The difference between the parties can be distilled down to the question of whether the pleading is dealing with inconsistent rights or inconsistent remedies. The plaintiff correctly says remedies are a matter to be dealt with at the end of trial.
In the second set of reasons the Master said:[7]
11The court cannot limit the terms of the Australian Consumer Laws. To the extent that the plaintiff is pursuing a case to set aside the contract on the grounds that the contract did not adequately define responsibility for the recruitment of the 65 patients, that is impermissibly inconsistent with its contract claim.
…
15If the plaintiff seeks to broaden the argument and re-plead it so that it is clear what is being sought and in fact claim relief under the ACL for damages, then it would be entitled to do so and I would give that leave.
[7] Madeleine Pharmaceuticals Pty Ltd v South Australian Health and Medical Research Institute Limited, Master Rice, Decision No 34 of 2018, 19 September 2018.
The plaintiff relies on the authority of Ciavarella v Balmer.[8] In particular, what the (whole) Court said:[9]
Election between inconsistent rights differs from election between inconsistent remedies. The distinction and its consequences are fundamental as Lord Atkin was at pains to demonstrate in United Australia.[10] Indeed, the doctrine of election is directed to the making of a choice between alternative and inconsistent rights (see Sargent). [11] A party is not called upon to elect between inconsistent remedies in litigation until a point is reached when the remedies are pursued to judgment. Then the plaintiff must elect because the judgment to be pronounced will give effect to one right rather than the other.
[8] (1983) 153 CLR 438.
[9] Ciavarella v Balmer (1983) 153 CLR 438 at 449.
[10] [1941] AC 1, at p 30.
[11] (1974) 131 CLR 634, at p 655.
The position of the plaintiff is that the pleading does not set out impermissible inconsistent facts. The pleading merely sets out remedies and a plaintiff is not obliged to make a choice between alternate remedies until the end of the trial. It is not an inconsistent plea, the plaintiff says.
The defendant disputes that position. It makes a number of concessions. It says that the plaintiff is able to plead a claim for damages arising from the ACL if it provides sufficient particularity. It notes the Master has already told the plaintiff that.
The defendant says the plaintiff cannot make its primary case that there was in existence between the parties a binding contract and that it is entitled to damages for breach of that contract, but then seek to have the contract set aside. On the face of the pleadings, the principal case advanced by the plaintiff is the breach of contract case. It is the request to set aside the contract that the defendant says is impermissible. Put succinctly, the defendant says if the plaintiff wants to affirm the contract and claim damages at common law and/or pursuant to the ACL, they are entitled to do so, but they cannot do that and also run a no transaction case by seeking to set aside the contract. They must do one or the other.
Arguing about pleadings is not often a productive exercise. That is particularly so if the dispute is more about form than substance. In the end, here I think the Master was right to strike out paragraph 54. That said, I also think the plaintiff could repair the position with a different drafting focus, but that is a matter for the plaintiff, not the Court.
The appeal is dismissed. I will hear the parties as to consequential orders.