Matthews v Go Pacific Retail Pty Limited
[2014] FCCA 2632
•14 November 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MATTHEWS & ANOR v GO PACIFIC RETAIL PTY LIMITED & ORS | [2014] FCCA 2632 |
| Catchwords: CONSUMER LAW – Costs – application in a Case dismissed by consent – application for costs by applicant in substantive proceedings – whether costs should be awarded – costs awarded. |
| Legislation: Competition and Consumer Act 2010 (Cth), s.138A Federal Court Rules 2011 (Cth), rr.16.41, 16.43 Federal Circuit Court of Australia Act 1999 (Cth), s.3 |
| Meskenas v ACP Publishing Pty Ltd (No.2) [2006] FMCA 1461 Top Plus Pty Ltd & Ors v K Square Pty Ltd & Ors (No.4) [2010] FMCA 671 |
| First Applicant: | PETER STEPHEN MATTHEWS |
| Second Applicant | MARGARET GAE MATTHEWS |
| First Respondent: | GO PACIFIC RETAIL PTY LIMITED (ACN 106 440 199) |
| Second Respondent | NICOLA FAY MILLS |
| Third Respondent | GO SUSHI ORANGE PTY LIMITED (ACN 118 431 959) |
| File Number: | SYG 508 of 2014 |
| Judgment of: | Judge Nicholls |
| Hearing date: | 25 July 2014 |
| Date of Last Submission: | 25 July 2014 |
| Delivered at: | Sydney |
| Delivered on: | 14 November 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr C D Freeman |
| Solicitors for the Applicant: | Bruce Graham Lawyers |
| Counsel for the Respondent: | Mr K Odgers |
| Solicitors for the Respondent: | redchip lawyers |
ORDERS
The application in a case made on 14 April 2014 is dismissed.
The respondents in the substantive application pay the applicants in the substantive application costs of and incidental to the application in a case pursuant to Part 1 of Schedule 1 of the Federal Circuit Court Rules 2001 (Cth) as agreed or assessed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 508 of 2014
| PETER STEPHENS MATTHEWS |
First Applicant
MARGARET GAE MATTHEWS
Second Applicant
And
| GO PACIFIC RETAIL PTY LIMITED (ACN 106 440 199) |
First Respondent
NICOLA FAY MILLS
Second Respondent
GO SUSHI ORANGE PTY LIMITED (ACN 118 431 959)
Third Respondent
REASONS FOR JUDGMENT
The issue in this judgment concerns the matter of costs arising from interlocutory proceedings commenced by the respondent on 14 April 2014 with the filing of an Application in a Case (“the AIC”).
Before the Court
Before the Court, Mr C D Freeman of counsel appeared for the applicants (the respondents in the AIC). Mr K Odgers of counsel appeared for the respondents (the applicants in the AIC). [For convenience I will refer to the respective parties in terms of the substantive application, and not the AIC.]
Background
The background to this can be summarised as follows.
On 4 March 2014 Mr Peter Stephen Matthews (“the first applicant”) and Ms Margaret Gae Matthews (“the second applicant”) commenced proceedings in this Court against Go Pacific Retail Pty Ltd (“the first respondent”), Ms Nicola Fay Mills (“the second respondent”) and Go Sushi Orange Pty Ltd (“the third respondent”).
The proceedings were commenced pursuant to s.138A of the Competition and Consumer Act 2010 (Cth) (“the CCA”). The orders sought by the applicants were:
“1. An order for damages pursuant to section 82 of the Trade Practices Act 1974 (Cth).
2. An order for damages pursuant to section 236 of Schedule 2 of the Competition and Consumer Act 2010 (Cth) (‘ACL’).
3. An order pursuant to section 237 ACL that the respondent pay the applicants such amount as the Court shall think fit.
4. Damages.
5. Interest at the rate under rule 26.01 of the Federal Circuit Court Rules 2001.
6. Costs.”
The grounds of the application were initially set out in a Statement of Claim (“SOC”) filed on 4 March 2014. In essence, the original dispute between the parties arises out of conduct in relation to, and consequent upon, a Franchise Agreement in May 2010 said to be wholly contained in a Deed (“Franchise Agreement Go Sushi Tweed City Shopping Centre”) and an Occupation Licence Agreement between Go Pacific and the applicants, entered into in respect of certain premises.
In short, the applicants allege unconscionable conduct and misleading and deceptive conduct variously against the respondents, and seek damages in general law against the first respondent and an associated entity, the third respondent. Further, the applicants assert claims of direct and ancillary liability against the second respondent.
The originating matter first came before the Court on 2 April 2014. By consent, the matter was adjourned for two weeks to enable the respondents to consider whether to file an AIC.
Such an application was filed on 14 April 2014. The respondents sought the following orders:
“1. Paragraphs 8(b)-(c) & 9 (inclusive) of the Statement of Claim be struck out, pursuant to Rules 16.21(1)(a), 16.21(d) & 16.21(1)(f) of the Federal Court Rules 2011 (Cth) (which rules are rendered applicable to this application by reason of s 43(2)(b)of the Federal Circuit Court of Australia Act 1999 (Cth) and Regs 1.05 ( and Schedule 3) & 4.05(2) of the Federal Circuit Court Rules 2001 (Cth));
2. The Applicants provide further particulars to paragraphs 33(ii), 81(b)-(c), 85(a)-(c), 86(b) and 92(b) (inclusive) (to the extent paragraph 92(b) alleges that the Second Respondent had actual knowledge of the matters alleged in paragraphs 72 & 74 of the Statement of Claim), pursuant to Rules 16.42, 16.43, and/or 16.45 of the Federal Court Rules 2011 (Cth) within 2 weeks of the date of the order.
3. In the event that the Applicants fail to provide the said particulars, or adequate particulars, the Respondents have liberty to apply to strike out the paragraphs referred to thereof.
4. Such further or other orders as the Court thinks fit.
5. An order for costs of the interlocutory application”
What is of relevance to note from the orders sought is that what can be seen to have underpinned the respondents’ AIC was first (“order 1”), the view that a part of the SOC involving the second respondent was not appropriate, and second (“order 2”), that the applicants’ SOC in considerable part lacked clarity and sufficient detail. It therefore required further particulars and explanation before the respondents could be said to be in a position to properly respond. That is, to know the case against them.
On 15 April 2014 a number of orders were made by consent for the progress of the AIC. The AIC was set down for hearing on 25 July 2014.
In the meantime the following events are of relevant note.
On 1 May 2014, the respondents filed written submissions in support of the AIC pursuant to orders made on 15 April 2014 [subsequently marked as “A2” before the Court on 25 July 2014]. The submissions note that the respondents made a request of the applicants for further particulars of some of the allegations made in the SOC by letter dated 28 March 2014 (at [2]). A response was received on or about 1 April 2014. The submissions make reference to the affidavit of Ronald Pak Ho Mak, a lawyer, apparently employed by the respondent’s solicitor, and to the annexed copies of these two letters between respective solicitors (“redchip lawyers” for the respondents and “Bruce Graham Lawyers” for the applicants).
The submissions confirm that the AIC was necessitated by the respondents’ view of the inadequacy of the applicants’ response to the request and “…more generally the state of the pleadings as currently particularised…” (at [3]).
This was plainly relevant to “order 2” sought by the respondents in the AIC. The relief sought through “order 1” appeared to have been abandoned, or at least is expressed as being “not pressed” (at [3]).
On 5 June 2014 the applicants filed their written submissions in reply. [Subsequently marked as “R1” before the Court on 25 July 2014.] In various parts the submissions made reference to two affidavits filed on behalf of the applicants. These were the affidavits of Bruce Graham, solicitor, both made on 27 May 2014.
On 24 June 2014 redchip lawyers wrote to Bruce Graham lawyers (see applicant’s chronology marked as “A1” before the Court on 25 July 2014). A number of matters were raised. While critical of the applicants’ failure to allegedly plead their case clearly, the respondents acknowledged that the applicants’ response to their request for further and better particulars and written submissions on 5 June 2014 meant the respondents had “sufficient information to plead their Defence”.
They sought that the AIC be dismissed with no order as to costs and proposed orders for the further progress of the case before the Court.
By letter dated 4 July 2014, the applicants disagreed with the respondents on the matter of the respondents’ view of the context of the material filed in these proceedings (see “A1”). They agreed that the AIC be dismissed, but sought costs “of and incidental to” the AIC. By letter dated 7 July 2014, the respondents did not agree to the payment of costs for the AIC. They pressed that there be no order as to costs.
The applicants affirmed their position on 8 July 2014 and proposed certain orders for the progress of the case (see “A1”).
Submissions
The respondents’ position was to seek an order that the AIC be dismissed (as agreed between the parties). Their initial position was that such an order should be accompanied by an order that there be no order as to costs. The respondents’ argued that there was no basis for the order sought by the applicants that the respondents should pay their costs of the AIC. The reason advanced for this was that the respondents were obliged to initiate the AIC and that the satisfactory particulars which the respondents sought were only provided after the filing of the AIC. In short, the argument was that in that light the respondents obtained a measure of success on the AIC.
The respondents’ position on costs, however, changed once the applicants pressed an order for costs in their favour. The change in the respondents’ position was to seek an order for costs in their favour. The argument was that the respondents were put into the position of having to argue against the making of a costs order against them, this in turn incurred costs, which would not have been incurred had the applicants agreed to the respondents’ initial position.
The applicants drew attention to the orders sought by the respondents in the AIC. In essence, two of the orders were relevant to the current issue.
As stated above, order one sought that parts of the SOC be struck out. The AIC was set down for hearing on 25 July 2014. On 1 May 2014 the respondents wrote to the applicants expressly abandoning proposed order one of the orders sought. The applicants said that it was abandoned by the respondents prior to any response to the AIC (in the form of evidence or submissions) being filed by the applicants or, indeed, any relevant correspondence between the parties up to that point.
Proposed order two was however pressed by the respondents until 24 June 2014. The applicants drew attention to the respondents’ relevant correspondence to them proposing that the AIC be dismissed. In particular, that is what prompted the making of the AIC was said by the respondents to be “…the further elaboration of [the applicants’] case as now set out in their submissions…” (letter of 24 June 2014, see “A1”).
The applicants’ position before the Court was to stress that the respondents referred to what was said to be the “elaboration” of the applicants’ case in their submissions. The applicants’ argument was that these submissions were not any attempt to provide further and better particulars, but rather the applicants’ argument as to why it was not necessary to provide further particulars to enable the respondents to understand the applicants’ case. In this light, it was submitted that the applicants should be able to recover costs as no further particulars were provided, yet the respondents’ sought the dismissal of the AIC.
The question for the Court centres on the nature and character of the applicants’ pleadings and whether they were adequate such that the respondents could reasonably understand the case against them, and to be able to reasonably respond.
Second, the nature and character of the applicants’ response (by way of submissions) to the request for further and better particulars. Did those submissions address “deficiencies” in the pleadings, or were they of some other character and apparent purpose?
It is necessary to note, and nor is there any dispute between the parties on this point, that in essence the applicants initiated the substantive proceedings arising out of the circumstances of their being franchisees of a Go Sushi business in Tweed Heads, NSW. The first respondent was the franchisor. The second respondent, Ms Mills, was a director of the franchisor at relevant times. The third respondent, Go Sushi Orange, was an entity associated with the first respondent.
The respondents acknowledged before the Court that the applicants were suing the respondents for what was said to be the wrongful repudiation of the franchise agreement and allegations of misleading and deceptive conduct in relation to the franchise disclosure document. Further, various allegations of “unconscionable conduct” on the part of the respondents was also a part of the applicants’ case.
The matters of dispute relevant to the request for particulars and which form the focus for the matters set out at [27] – [28] above, relate generally to the claims of unconscionable conduct. In particular, the respondents point to [33], [80] – [94], especially [80], [85], [86], and [92] of the SOC. The respondent’s position before the Court was that proposed order two in the AIC referred in particular, and in essence, to those paragraphs. That is what the request for further particulars sought to address.
In summary, these paragraphs were said to be relevantly problematic for the respondents in relation to the alleged communication by Mr Scott Muir of PFD Food Services Pty Ltd (“PFD”) to the first applicant. PFD was one of two “authorised” suppliers of goods to the applicants’ business and relevant to allegations of a failure of good faith and unfair tactics relevant to the unconscionable conduct complaint.
The respondents’ initial request for further particulars is annexed to the affidavit of Mr Mok at “RPM 1”. One example of the respondent’s difficulty was said to derive from the SOC at [33] states:
“During the period 5 May, 2010 and 31 December, 2011, both Jun Pacific and PFD charged the applicants for goods for the Business at prices above their usual wholesale prices to other customers.
Particulars
(i) As to Jun Pacific, the applicants are in possession of two price lists for the supply of the same items. The price list of Jun Pacific provided to the applicants sets out prices charged to them which are higher than their standard price list for other wholesale customers.
(ii) Scott Muir of PFD informed the first applicant in 2011 that:
(1) PFD advises Go Pacific of the prices it proposes to charge for supply of goods for Go Pacific’s franchisees (‘First Price’);
(2) Go Pacific inform PFD of the prices that PFD can charge the franchisees (‘Second Price’), which in all cases was a higher price than the First Price;
(3) Go Pacific receives from PFD the difference between the First Price and the Second Price.”
The response from the applicants solicitors on 1 April 2014 (see “RPM2”) was:
“Paragraph 11
[16] The email speaks for itself.”
In short, the respondents’ complaint is that the applicants’ response was, in the circumstances, inadequate because the SOC made no reference to any email. The SOC, as set out above, makes reference to Mr Muir having “informed” the first applicant. Further, that ultimately, it was the case that that information was said to have been given orally not by email.
A further example was given as deriving from [81] of the SOC:
“The conduct of Go Pacific in making:
(a) Any one or more of the First Representation and the Implied Representation;
(b) Engaging in unfair tactics in making each of the First Representation and the Implied Representation;
(c) Failing to act in good faith in making each of the First Representation and the Implied Representation;
(d) Engaging, or causing to be undertaken, the conduct referred to at paragraphs 11-16 above;
(e) Failing to comply with the Franchising Code of Conduct by preparing and distributing a Disclosure Document which did not disclose the matters in paragraphs 5, 7-9,
and/or 13-14 above and/or 51; and/or
(f) The First Contravention;
jointly and severally constituted conduct in trade or commerce in connection with:
(g) the supply or possible supply of services to a person; or
(h) the acquisition or possible acquisition, of services from a person;
which was in all the circumstances unconscionable and a contravention by Go Pacific of section 51AC TPA (‘Second Contravention’).”
The request for particulars was (“RPM1” at [18] annexed to the affidavit of Mr Mok):
“Please specify the facts, matters and circumstances relied upon [to] support the allegation that in making the alleged First Representation and the Implied Representation, Go Pacific:
(a) engaged in ‘unfair tactics’ (sub-paragraph 81(b)); and
(b) failed to act ‘in good faith’ (sub-paragraph 81(c)).”
The applicants’ response was (“RPM2” at [18] annexed to the affidavit of Mr Mok):
“A reasonable franchisor in the same position as the first respondent would:
(a) Know the purpose of the provision of a disclosure document;
(b) Be aware of the importance of ensuring the accuracy of the disclosure document;…”
In short, the respondents’ complaint is that what they sought of the applicant was the factual substratum on which the applicants relied to make their claim, and that this was not provided.
A third example related to [85] of the SOC where the applicants made a large number of allegations of unfair tactics and a failure by the respondents to act in good faith.
At “RPM1” (at [20]), annexed to the affidavit of Mr Mok, the respondents sought further particulars in relation to each of the matters alleged. The applicants’ response was as follows (“RPM2” at [20] and [28], annexed to the affidavit of Mr Mok):
“[20] In Hurley v McDonalds Australia Ltd [1999] FCA 1728; (2000) ATPR 41-741), the Full Court said in respect of ss 51AB and 51AC of the Trade Practices Act:
‘[20] For conduct to be regarded as unconscionable, serious misconduct or something clearly unfair or unreasonable, must be demonstrated - Cameron v Qantas Airways Ltd [1995] FCA 1304; (1994) 55 FCR 147 at 179. Whatever "unconscionable" means in sections 51AB and 51AC, the term carries the meaning given by the Shorter Oxford English Dictionary, namely, actions showing no regard for conscience, or that are irreconcilable with what is right or reasonable - Qantas Airways Ltd v Cameron [1996] FCA 1483; (1996) 66 FCR 246 at 262. The various synonyms used in relation to the term "unconscionable" import a pejorative moral judgment - Qantas Airways Ltd v Cameron [1996] FCA 1483; (1996) 66 FCR 246 at 283-4 and 298.’
…
Paragraph 20
[28] If each of the matters in sub-paragraphs (a)-(j) are established, it is will be contended at hearing that such conducted constituted unfair tactics, a failure to act in good faith and unconscionable conduct and such a finding is open by reason of the Authorities. It is not asserted that there are any other matters in sub-paragraphs (a)-(j) that have not been pleaded. The question is whether those matters taken separately, together or in any combination are capable of constituting unfair tactics, a failure to act in good faith and unconscionable conduct as defined by the Authorities.”
I understood the respondents’ complaint now to be that it was unclear whether the matters asserted at [85] of the SOC were capable of constituting unfair tactics, failure to act in good faith and unconscionable conduct separately as to each item, cumulatively or in any combination.
It is important to note the sequence of the following relevant events. These are relevantly, and in order, the SOC, the request for particulars (as annexed at “RPM1” of Mr Mok’s affidavit), the applicants’ response dated 1 April 2014 (as annexed at “RPM2” of Mr Mok’s affidavit) and the respondents’ solicitors’ letter to the applicants’ solicitor’s letter dated 10 April 2014. Before the Court, the respondents’ made reference to this letter and submitted that it was a complaint about the lack of provision of particulars by the applicant and foreshadowed the interlocutory proceedings subsequently initiated by the respondents.
The terms of the letter of 10 April 2014 are as follows (“RPM3” annexed to the affidavit of Mr Mok):
“We are closely reviewing your letter dated 1 April 2014 and your clients’ particulars provided within (‘Particulars’).
It appears to us that some of our requests for particulars have gone unanswered without explanation.
Specifically, we refer to our earlier request for particulars of:
1. The ‘information’ referred to in particular (ii) to paragraph 33 of the Statement of Claim; and
2. Ms Mills’ actual knowledge of the matters referred to in paragraphs 72 & 74 of the Statement of Claim.
Please supply these particulars as soon as possible. If your clients object to providing these particulars, we will factor that into our consideration to whether to proceed with an interlocutory application.
For completeness, we also note paragraph 34(c) of the Particulars states that Ms Mills’ actual knowledge is based on ‘…on matters in paragraph 7(c)(i)-(iv) of the Statement of Claim’. We presume this was a typographical error and your intention was to refer to paragraph 8(c)(i)-(iv). If this is not the case, please advise by return.”
[Emphasis added.]
The terms of the letter require closer attention than that given by the respondents now. It is important to note that the basis for any foreshadowed interlocutory application (and subsequently made in the respondents’ AIC) was not said to be in relation to all the matters raised in the original request for further particulars.
That request (the letter of 28 March 2014 – “RPM1” annexed to the affidavit of Mr Mok) asserted “substantial problems with the pleading…” and sought clarification generally, and specifically in relation to at least 13 paragraphs of the SOC, including various parts of sub-paragraphs, and with reference to a number of other paragraphs.
The letter of 10 April 2014 makes reference to “some of our requests” which they claimed had gone unanswered, and makes specific reference to three requests (see above at [44]).
This is the basis on which the AIC was said to be foreshadowed. The AIC (at [2]) referred to [33](ii) and [74] – [75] of the SOC, but also referred to [81](b)-(c), [85](a)-(c), [86](b) and [92](b) of the SOC. The “addition” of these four other sub-paragraphs remained unexplained before the Court with reference to the respondents’ letter of 10 April 2014.
In any event, the important point here is that, contrary to the respondent’s implicit, if not explicit, presentation to the Court that the applicants had failed to provide further and better particulars in relation to the large number of matters raised at RPM1 (the letter of 28 March 2014), the complaint was significantly “reduced” by the letter of 10 April 2014. While some paragraphs of the SOC were “added” to the complaint expressed in the AIC, the specifically impugned part of the SOC cannot be described as being a request for further particulars of the substantial part of the SOC.
In relation to the specific matters raised, I understood the respondents’ position to be as follows, with reference to the applicants’ written submissions of 5 June 2014 (“R1”). The respondents’ directed attention to [75] – [77] of those submissions. They submitted that in relation to [75], it was only after reading the submissions that it was clear that what was alleged at [81](a) of the SOC was that the basis of the applicants’ allegation of lack of good faith on the part of the respondents, was that the alleged misrepresentation in the disclosure document was not reasonable or honest.
Second, the respondents submitted that it was only after reading [76] of the applicants’ written submissions that they understood that [85] of the SOC was an allegation that the respondents had engaged in unfair tactics because they allegedly did not take into account the legitimate interests of the applicants.
Third, that [77] of the applicants’ written submissions, revealed for the first time that one of the matters relied on by the applicants for the allegation of bad faith was that the applicants’ interests were, allegedly, rendered nugatory or undermined.
Fourth, and in relation to [33] of the SOC, [83] and [84] of the applicants’ written submissions, made clear that the information said to have been conveyed by Mr Muir was done orally. [Noting that earlier the applicant had stated that it was in an email – see the letter of 1 April 2014 at [16] from Bruce Graham Solicitors (“RPM2” annexed to the affidavit of Mr Mok), see further below.]
The respondents’ position was that the costs order should only be made against the respondents in favour of the applicants if they had been entirely unsuccessful in their AIC. The “threat” of the AIC resulted in clarification and particularity being provided in the matters set out immediately above. On that basis it cannot be said the respondents were entirely unsuccessful. Therefore, no order for costs should be made against them.
Consideration
A number of matters are of immediate note. First, I refer to what is set out above concerning the respondents’ attack on the SOC. Ultimately, as outlined above, the AIC was not instigated because of the totality of what was said to be the “inadequacy” of the SOC, but a more limited number of matters.
Second, some attention must be given to the exact nature of the respondents’ complaints, in light of the explanation given to the AIC as set out in the respondents’ written submissions filed on 1 May 2014 in support of the AIC (“A2”). I note that this occurred before the approach to the Court for the dismissal of the AIC and prior to the filing of the applicants’ submissions in response on 5 June 2014.
The respondents said in their submissions that there were three “problems” with the SOC. First, the inadequacy of the pleading of statutory unconscionable conduct by mere assertion, without references to standards of behaviour. The respondents’ assertion is that the applicants only made reference to certain conduct without the requisite standards ([16] of the respondent’s submissions).
The second complaint proceeded from the proposition that even if it could be said that the mere reference was sufficient, the applicants have failed to particularise how the instances of the claimed conduct (see [22] – [67] of the SOC) manifest a failure to act in good faith or reveal the use of unfair tactics.
The third complaint relied on certain rules of the Federal Court Rules 2011 (Cth) (rr.16.41-16.43) in regard to the provision of particulars involving such allegations as “bad faith” or “unfair tactics”. The respondents’ submissions said that the applicants should have, as a matter of fairness, clearly identified each and every instance of conduct that falls within those descriptors.
The respondents’ “summary” of their position, in written submissions was that the “upshot” was that the respondents’ did not know the applicants case that they were required to meet ([23] of the respondent’s written submissions of 1 May 2014).
What is immediately apparent is that the thrust of the written submissions, consistent with the references in the earlier letter of 10 April 2014 to the applicants’ solicitor, focus on some, not all, of the SOC. That focus is, in essence, on the matter of the assertion of “unconscionable conduct” (with minor exception).
The issue between the parties can now be summarised as arising from the following. The dispute of the adequacy or otherwise of the SOC and the role of the applicants’ submissions of 5 June 2014. As stated above, the respondents say that the SOC was inadequately pleaded, with emphasis on the matter of “unconscionable conduct”.
It was only after the provision of the further particularity provided by the applicants’ written submissions of 5 June 2014, that the respondents say they were in a position to properly understand the case against them. Hence, they were then in a position to not press the AIC, which had achieved the purpose of obtaining the further details and particularity required.
The applicants’ position is that the SOC was properly and adequately pleaded such that the respondents should have known the case raised against them. The written submissions of 5 June 2014 were not generally directed at providing the respondents with particularity or clarity of the case raised in the SOC. Rather, that the applicants’ arguments in the submissions were directed to the matter of why the SOC was adequately and reasonably pleaded and that the AIC was unnecessary.
This directs attention to the nature and character of these submissions. A number of matters are of note. First, the applicants’ “outline” of the submissions (at [1] – [5]) makes abundantly clear that the submissions are not focused on providing further particulars. The focus was on the very proposition that the applicants now consistently press before the Court. That is, that the essence of the AIC was ill-conceived, and should not have been made. Hence the applicants sought the dismissal of the AIC.
Second, what follows in the written submissions is certainly voluminous and relevantly comprehensive. However, these characteristics should not be taken, in light of what is actually said in the submissions, as some indicator of further particularity to the SOC, or clarity in terms of detail that should have been pleaded in the SOC.
In my view, these written submissions, in substance, although focussed on the dismissal of the AIC, read, or are of such character, as to be likened to final submissions on the substantive application. This needs some explanation. Plainly, no hearing of the substantive issues in this case has taken place. Evidence as to the substantive issues is still to be read, and possibly tested under cross-examination. So, these are not “final submissions”. In the context of where the proceedings are up to, they plainly cannot be final submissions.
However, the point is that, keeping in mind their focus and provenance, they traverse matters that ultimately will be repeated to varying extent, in final submissions.
This can be shown with reference to the applicants’ “arguments” as to the law relating to unconscionable conduct and the extracts from a number of authorities in support of that argument (see [53] – [58] of the applicants’ written submissions for the authorities).
The comprehensive reference to the authorities, in itself, argues that the submissions were more than just an attempt to provide particulars not given before. Nor that they should be read as such.
In this light, it can be seen that the argument made by the applicants in their submissions as derived from the authorities is directed to, for example, [81] of the SOC. This is a part of the SOC that deals with “unconscionable conduct”. It was part of the respondents’ concerns raised in the letter of 28 March 2014 (see generally at [13] – [17] and specifically [18] – [19] at “RPM1” annexed to the affidavit of Mr Mok) and was part of what is sought at order 2 of the AIC.
In this context, and in short, I agree with the applicants that the thrust of their submissions of 5 June 2014 at [59] – [63], under the heading of “Unconscionable Conduct Identified in the Statement of Claim”, is directed to explaining the applicant’s relevant view as to the adequacy of their initial expression of their case in the SOC. That is, in light of the authorities to which they refer, that what the applicants provided was adequate and sufficient in a legal sense for the purpose of understanding the case that was being put by the applicants.
As the applicants submitted before the Court, there is nothing in the submissions to say that there was any attempt to “add” further “conduct” to the list of impugned conduct on the part of the respondents.
I also agree with the applicants that what the submissions do here, and in general, is “explain” the SOC, rather than to expand its scope or to provide further particularity. Further, that that explanation is given in the context of seeking to support the proposition that the SOC was adequately pleaded and amenable to understanding such that a response could be reasonably drafted.
Further, I agree with the applicants’ submission that the respondents did not seek further particulars of the “first representation” or the “implied representation” (see [81](a) of the SOC) or the “underlying factual matters” that the applicants rely on. The applicants submitted that the unconscionable conduct claim was pleaded clearly
in [81] (a)-(f) of the SOC. I agree with the applicants’ submission that the written submissions of 5 June 2014 did not provide particulars, but explained how the conduct referred to the in SOC constituted the matters of complaint.
Finally, both parties made submissions concerning [33] of the SOC. This matter, for the reasons made clear below, stands apart from what is set out above. The SOC at [33] is in the following terms:
“During the period 5 May, 2010 and 31 December, 2011, both Jun Pacific and PFD charged the applicants for goods for the Business at prices above their usual wholesale prices to other customers.
Particulars
(i) As to Jun Pacific, the applicants are in possession of two price lists for the supply of the same items. The price list of Jun Pacific provided to the applicants sets out prices charged to them which are higher than their standard price list for other wholesale customers.
(ii) Scott Muir of PFD informed the first applicant in 2011 that:
(1) PFD advises Go Pacific of the prices it proposes to charge for supply of goods for Go Pacific’s franchisees (‘First Price’);
(2) Go Pacific inform PFD of the prices that PFD can charge the franchisees (‘Second Price’), which in all cases was a higher price than the First Price;
(3) Go Pacific receives from PFD the difference between the First Price and the Second Price.”
In the letter of 28 March 2014, the respondents, relevantly, stated (“RPM1” at [11] annexed to the affidavit of Mr Mok):
“As to paragraph 33 (particulars II))
11. Please supply the Usual Particulars of the ‘information’ referred to therein.”
The applicants submitted that what the respondents sought was a particular to a particular. It is of note that what is asked for is “the Usual Particulars”. This term is “defined” earlier in the letter of 28 March 2014 as being (“RPM1” annexed to the affidavit of Mr Mok):
“To the extent to which some of the difficulties can be cured by the provision of further particulars, and to avoid repetition, when using the expression ‘the Usual Particulars’ about an alleged matter, fact or circumstance, the request seeks information as to whether that matter fact or circumstance:
(a) is express or implied;
(b) if it is express, whether it is written or oral; and
(i) if it is written, please supply us with a copy of the document;
(ii) if it is oral, please supply Information the person(s) to the conversation and when it occurred;
(c) if it is implied, please state the matters relied upon to sustain the alleged implication.”
As stated above, the response from the applicants was (“RPM2” annexed to the affidavit of Mr Mok):
“Paragraph 11
16. The email speaks for itself.”
In the written submissions of 5 June 2014 the applicants say
(at [83] – [84]):
“[83] The respondents refer to the failure to answer particulars in respect of paragraph 33(ii) of the Statement of Claim. The particular requested was unintelligible.
[84] It is now said that the respondents want to know whether it was “oral in writing (or both)”. That should have been what was asked. The information was conveyed in a telephone conversation between Mr. Matthews and Mr. Muir – i.e., it was wholly oral.”
As set out above, the applicants pressed that the request in the respondents’ letter was unclear as to what was being asked and that what was being asked for was a particular about a particular. The applicants asserted at [33] of the SOC that during a particular period they were charged a certain amount for goods supplied to their business. Further, that these charges were at prices above usual wholesale prices available to other customers.
One of the particulars to that claim was at (ii) of [33] of the SOC. It related to what Mr Muir was said to have, relevantly, informed the first applicant. By their letter, the respondents can be understood to be asking whether the “information” was expressly or impliedly given and if it was express, whether it was written or oral.
In their written submission of 1 May 2014 (“A2”), the respondents say that what they were seeking was not the contents of the information, but whether it was oral, in writing, or both.
It is of note that what is at [33](ii) of the SOC is said to be a particular to what is asserted at [33] of the SOC. That is, as stated above, that the applicants assert that they were charged for goods to their business at a rate different to other customers and the particulars to explain this allegation were certain documents (“two price lists”) and what Mr Muir was said to have informed the first applicant.
The request, therefore, for the “usual particulars” and in light of the “definition” given to it by the respondents in their letter is not clear. The request for the usual particulars would have been of greater clarity if it was directed to the allegation at [33] of the SOC, rather than the particular to it. To ask for “usual particulars” of a particular leads to uncertainty.
I agree with the applicants that if what the respondents wanted was to know whether the information said to have been given by Mr Muir was oral or in writing, then a request for further particulars to that effect would have been a clear way to have proceeded.
It is the case that the applicants’ reference to the “email speaks for itself” was confusing (see “RPM2” annexed to Mr Mok’s affidavit). As the applicants subsequently agree, there was no email. In this one regard, at least, the answer provided by the applicants’ letter was misleading.
However, in my view this must be seen in the totality of the entity of the applicants’ case in the SOC, the respondents request for the “usual particulars” and this one identified “error” in the applicants’ response.
In my view, this “error” when compared with the totality of the matters asserted in the SOC is not, in that context, of such character, importance or moment to justify, on its own, the AIC.
In their written submissions of 5 June 2014, the applicants refer to relevant authorities in relation to the provision of “Particulars”. It is of convenience, particularly as the references provide quotes from the authorities on which the applicants now rely, to set out those submissions (at [68]):
“In Power Infrastructure Pty Ltd v Downer EDI Engineering Power Pty Ltd (No. 3) [[2011] FCA 539] Katzmann J adopted the following principles as to the provision of particulars
[at [10] – [12]]:
[10] Young CJ in Eq provided a convenient summary of the relevant principles in Deemah Marble & Granite Pty Ltd (in liq) v Sutherland [2001] NSWSC 829 at [6] (“Deemah Marble & Granite”):
(1) The basal function of particulars is to reduce costs by alerting the opponent to the scope of the real case being made so the opponent is not caught by surprise, nor does the opponent waste time and money in preparing to meet issues that the other party does not intend to raise: see eg Sims v Wran [1984] 1 NSWLR 317, 321 and Banque Commerciale SA (In Liquidation) v Akhil Holdings Ltd (1990) 169 CLR 279 at 286.
(2) Particulars are supplied of the material facts pleaded as P E Joske J said in Trade Practices Commission v Total Australia (1975) 24 FLR 413, 417:
“While the defendant is entitled to know the case it is called upon to meet, it is not entitled to be told the evidence that will be called to prove the case. A defendant is entitled to ask for the material facts upon which the plaintiff will rely and he may make his request for the facts and matters relied on, which is taken to mean the same thing. When he asks for the facts and circumstances relied on he is going beyond the scope of particulars, and is probing for evidence.”
(3) However, every litigation lawyer knows it may be appropriate, in order to carry out the aim which I have stated in (1), that it will almost be inevitable to disclose some of the evidence, and that if this happens, it is no answer that evidence must be disclosed by the giving of the particulars. See Sims v Wran at 321 and Wilson v Wilson (1952) 69 WN 358.
(4) The party’s obligation is only to supply the best particulars he or she can supply, provided that after discovery those particulars are supplemented, if possible; see Marshall v Inter‑Oceanic Steam Yachting Co (1885) 1 TLR 394.
(5) When one party has the means of knowing the real facts, ordinarily the opponent will not be ordered to supply particulars until after discovery: Millar v Harper (1888) 38 Ch D 110; TPC v CC (NSW) Pty Ltd (1995) 131 ALR 581, 593.
(6) The degree of particularity depends upon the nature of the case: American Flange and Manufacturing Co Inc v Rheem Australia Pty Ltd [1963] NSWR 1121, 1126. (7) In equity, because other remedies may seem appropriate, and because evidence is filed by affidavit, the Court is less likely to order particulars and will not permit parties to slow down proceedings unjustifiably in their preparation for trial. This proposition is partly derived from the American Flange case and partly from the tactic used up to about 1980 by large firms acting for defendants, who created delays by constant requests for copious particulars, a worldwide phenomenon, as shown by the judgment of Wessels JA in the Appellate Division of the Supreme Court of South Africa in Moaki v Reckitt & Colman (Africa) Ltd (1968) 3 SA 98, 102.
(8) The order for particulars is discretionary, the object being to ensure the efficient process of the Court.
[11] The point his Honour made at (7) is of particular relevance here. In Police & Nurses Credit Society Ltd v Burgess Rawson (WA) Pty Ltd [2006] FCA 1395 at [17] French J (as his Honour then was) went further:
What are “necessary” particulars of any claim, defence or other matter pleaded is a matter of judgment. The underlying principle is that the case of each of the parties is adequately exposed to the other. It is important to maintain a sense of balance in the detail of particulars sought and ordered. The provision of particulars should not be allowed unduly to increase the cost and delay associated with litigation. In contemporary commercial litigation where, frequently, the court will direct the filing of witness statements or affidavits on either side subject to the right to cross examination, the necessity for elaborate particulars and lengthy debates about them is even more questionable.
[12] These remarks are reinforced by the terms of Part VB of the Federal Court of Australia Act 1976 (Cth) (“the Act”). Section 37M(1) declares that the overarching purpose of the civil procedure provisions of the Act and Rules is to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible (“the overarching purpose”). Section 37M(3) imposes an obligation on the Court to exercise any power conferred by the Act or the Rules in the way that best promotes the overarching purpose.
[13] The application of these principles to this case persuades me that the orders sought should not be made.”
What is also of note is, consistent with its status as inferior to the Federal Court, this Court operates under the statutory direction “to operate as informally as possible in the exercise of judicial power” and “to use streamlined procedures” (s.3(2)(a) and (b) of the Federal Circuit Court of Australia Act 1999 (Cth)). In light of this, it is also the practice of the Court for the purposes of adducing evidence, to proceed initially by way of affidavit.
As Judge Raphael put it in Meskenas v ACP Publishing Pty Ltd (No.2) [2006] FMCA 1461 (at [5]):
“One of the objects of the Federal Magistrates Court [as this Court was then known] legislation was to provide a forum where disputes of this kind could be decided more ‘cheaply, quickly and simply’.”
(See also Top Plus Pty Ltd & Ors v K Square Pty Ltd & Ors (No.4) [2010] FMCA 671).
In relation to the error regarding the email, such an error would have been exposed later in the conduct of this case. The proceedings had not reached the stage of the provision of evidence on which each side would seek to rely. The applicants’ case in relation to the detail of how Mr Muir’s information was communicated would have been exposed by the proper “supplementation” of the case, including in the provision of the evidence. Noting also as set out above the matter of the email needs to be seen in proportion to its relevance to the entirety of the applicants’ case as a whole. That is, the totality of the case.
As to the remainder of the case as set out in the SOC in relation to the further particulars sought in relation to further claims in the SOC at order two of the AIC (see [9] above), the SOC, was for the reasons set out above, of sufficient clarity to enable the respondents to formulate their initial response. That is, I agree with the applicants’ characterisation of their submissions of 5 June 2014 as not being focused on providing further particulars, rather than the respondents’ characterisation of those submissions as elaborative.
The respondents do not dispute that the AIC should be dismissed. As set out above, however, the dispute over costs for the AIC derives from the opposing views of the parties set out variously above.
I find that the SOC is of sufficient and reasonable clarity to enable the respondents to file any Response or Defence to it. The applicants are not required in the SOC to plead all or even any of the evidence on which they will rely. In this Court, the efficient conduct of cases of this type proceeds on the filing of evidence by way of affidavit. That is not required at the time of the provision of the SOC.
I am persuaded that the applicants should have their costs for the AIC. I agree that the respondents request for further particulars, as was said to necessitate the initiation of the AIC, proceeded on the mistaken view of the applicants’ pleadings with the respect to unconscionable conduct. For the sake of completeness, I find that, given what is set out above, the respondents’ subsequent call for a costs order in their favour should not be granted.
Conclusion
In all, the applicants should have their costs for the AIC pursuant to Part 1 of Schedule 1 to the Federal Circuit Court Rules 2001 (Cth). I will make an order accordingly.
I certify that the preceding ninety-eight (98) paragraphs are a true copy of the reasons for judgment of Judge Nicholls
Associate:
Date: 14 November 2014
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