Midgley v Weeks - [2015] TASSC 43

[2015] TASSC 43

COURT: SUPREME COURT OF TASMANIA

CITATION: Midgley v Weeks [2015] TASSC 43

PARTIES:  MIDGLEY, Damian James
  RADFORD, Lanika Lee
  v
  WEEKS, Baden John
  WEEKS, Sharon Narelle

J COLLINS & SON PTY LTD trading as Collins Realty
BROTHERS, David William trading as Doolan & Brothers (a firm)

FILE NO: 886/2014

DELIVERED ON:  8 September 2015
DELIVERED AT:  Hobart
HEARING DATE:  31 August 2015
JUDGMENT OF:  Holt AsJ

CATCHWORDS:

Procedure – Supreme Court procedure – Tasmania – Practice under Rules of Court – Pleadings – Generally – Striking out – Failure to disclose a reasonable cause of action.
Supreme Court Rules 2000 (Tas), r259.
Aust Dig Procedure [272]

REPRESENTATION:

Counsel:
           Plaintiffs:  T Cox
           Third defendant:                B McTaggart SC
Solicitors:
           Plaintiffs:  Fairley + Associates
           Third defendant:                Wotton + Kearney

Judgment Number: [2015] TASSC 43
Number of paragraphs: 22

Serial No 43/2015
File No 886/2014

DAMIAN JAMES MIDGLEY and LANIKA LEE RADFORD v
BADEN JOHN WEEKS, SHARON NARELLE WEEKS,
J COLLINS & SON REALTY PTY LTD trading as COLLINS REALTY and
DAVID WILLIAM BROTHERS trading as DOOLAN & BROTHERS (A FIRM)

REASONS FOR JUDGMENT Holt AsJ
8 September 2015

On 10 October 2014 the plaintiffs issued a writ against several defendants in respect of the purchase by them of real estate at Spreyton in Tasmania. The vendors were named as first and second defendants. The vendors' real estate agent was named as third defendant. The plaintiffs' firm of solicitors in the conveyancing transaction was named as fourth defendant. The Council for the municipal area in which the real estate is situated was named as fifth defendant. The writ is endorsed with a claim for damages against the first three defendants for negligence, breach of contract and breach of statutory duty. It is endorsed with a claim for damages against the fourth defendant for negligence and breach of contract. The proceedings have since been discontinued against the fifth defendant.
The plaintiffs filed their statement of claim on 15 May 2015 and the third defendant, being the real estate company, has applied for an order striking out those paragraphs in the statement of claim (pars 9 – 16) which are specific to the claim against the third defendant.
The statement of claim includes the following allegations:
·On 30 October 2008 the plaintiffs entered into a contract for the purchase of land containing a dwelling at Spreyton for a purchase price of $158,000. (Paragraph 4)
·The contract contained implied terms that the dwelling was "capable of lawful occupation by the plaintiffs" and that the dwelling was "fit for the purpose of occupation by the plaintiffs" and an express term that at the date of the contract "there are no restrictions on the use of the property that may hinder or prevent the plaintiffs from using the property for the purpose of a residential dwelling". (Paragraph 5)
·The contract settled with the transfer of the real estate to the plaintiffs. (Paragraph 6)
·The dwelling was a converted shed not suitable for occupation as a residence as no occupancy permit had issued in respect of it and because there was no approved septic tank with the result that raw sewage discharged across open ground. (Paragraph 7)
·The plaintiffs paid a purchase price for the land which was a price higher than the market value of the land taking into account that the dwelling did not have the appropriate Council permits. (Paragraph 8)
The statement of claim proceeds with the impugned paragraphs, being pars 9 – 16, which are as follows:
Claim against the Third Defendant
9        Before the Plaintiffs entered into the Contract with the First and Second Defendants, the third Defendant, as agent of the First and Second Defendants, advertised the Land in a brochure produced by the third Defendant as follows (the "Advertisement"):
A fantastic opportunity exists to purchase this great 2 and ¾ acre approx parcel of land and dwelling. With elevated rural views, this leafy property has the house site graded out, is private and the small dwelling has 3 bedrooms, open plan lounge and kitchen, new heat pump and town water $169,000.00.
Particulars
A copy of brochure is available for inspection at the offices of the Plaintiffs' solicitors on reasonable notice.
10       By reason of the publication of the Advertisement above, the Third Defendant represented to the Plaintiffs as follows:
aIf the Plaintiffs purchase the Land, the First and Second Defendants will convey to the Plaintiffs a dwelling.
bThe dwelling referred to in the Advertisement is capable of lawful occupation by the Plaintiffs.
cThe dwelling referred to in the Advertisement is fit for the purpose of occupation by the Plaintiffs.
(the "Representations")
Particulars
The Representations in subparagraphs (b) and (c) are implied by the Advertisement and the making of the Representation in paragraph (a).
11The Third Defendant made the Representations in trade or commence.
Particulars
The Third Defendant made the Representations in the course of the third Defendant's business as a real estate agent.
12Further and in the alternative, the Third Defendant owed to the Plaintiffs a duty of care to avoid causing them and any other potential purchasers of the Land economic loss by reason of misleading or incorrect information given by the Third Defendant (the "Agent's Duty of Care").
Particulars
The Agent's duty of Care arises by reason of:
athe reasonable foreseeability of a purchaser suffering economic loss as a result of the Third Defendant providing misleading or incorrect information to them;
bthe reliance by the Plaintiffs on the Advertisement produced by the Third Defendant in circumstances where the Third Defendant knew or ought to have known of such reliance;
cthe reasonableness of the reliance by the Plaintiffs on the Advertisement produced by the Third Defendant, who is a real estate agent in the business of selling land; and
dthe expertise of the Third Defendant in matters concerning land, including whether the Land contains buildings that are not approved and suitable for occupation.
13In reliance on, and induced by, the Representations, the Plaintiffs entered into the Contract with the First and Second Defendants.
14The Representations were misleading or deceptive and were made in contravention of:
asection 52 Trade Practices Act 1974 (Cth), which operated at the time the Representations were made;
bsection 53A(1)(b) Trade Practices Act 1974 (Cth), which operated at the time the Representations were made;
calternatively section 18 Australian Consumer Law (being schedule 2 to the Competition and Consumer Act 2010 (Cth), which operates now; and
dalternatively sections 30(1)(b), 30(1)(e), 30(1)(f) and 30(1)(g) Australian Consumer Law (being schedule 2 to the Competition and Consumer Act 2010 (Cth), which operates now.
Particulars
The Plaintiffs refer to and repeat the particulars subjoined to paragraph 7 above.
15Further and in the alternative, the Representations were misleading, deceptive and incorrect and were made in breach of the Agent's Duty of Care.
Particulars
The Plaintiffs refer and repeat the particulars subjoined in paragraph 7 above.
16The Plaintiffs have suffered and continue to suffer loss and damage by reason of:
athe contraventions of the Trade Practices Act 1974 (Cth) or the Australian Consumer Law by the Third Defendant; and
bthe breach of the Agent's Duty of Care.
Particulars
The Plaintiffs refer to and repeat the particulars subjoined to paragraph 8 above."
There are two claims pleaded against the third defendant. The first is a claim for damages for negligent misstatement causing financial loss and the second is a claim for damages pursuant to consumer protection legislation in respect of misleading or deceptive conduct.
Two observations are immediately apparent.
The first observation is in respect of the negligence claim. It is that there are no allegations of fact from which it might be concluded that the alleged misrepresentations were negligently made. In particular, the act or omission by which the content of a duty of care was breached is not stated. The third defendant is left to guess whether the content of the duty to be alleged at trial included a duty to make an enquiry of the Council about the suitability and lawfulness of occupancy of the dwelling and whether the breach to be alleged at trial is a failure to make such an enquiry, or whether the content of the duty and the breach to be alleged at trial will take some other form.
The second observation is in respect of both claims. It is that, despite resultant loss being an essential element for the existence of each cause of action, there is not alleged a coherent set of facts linking the alleged misrepresentations to the loss or damage claimed to be suffered by the plaintiffs. According to the pleading the misrepresentations led to a contract being entered into, which contract contained an express provision that as at the date of the contract there were no restrictions hindering or preventing residential use. However, there is no allegation that in reliance on the misrepresentations the plaintiffs proceeded to pay the purchase price and take the transfer of the land so as to result in the loss alleged.
Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 215, per French J at 222 - 223, is authority for the following propositions. Where loss or damage is an element of the cause of action the material facts establishing the necessary causal link should be pleaded. The facts pleaded must disclose the claimed probable connection between the breach of duty or the impugned conduct and the injurious consequences. Particulars cannot be used to make good such a deficiency in a pleading.
The cardinal rule of pleading is that all the material facts, being the facts necessary to formulate a complete cause of action, must be stated and if they are not the pleading is liable to be struck out. See Bruce v Odhams Press Ltd [1936] 1 KB 697 at 712.
The pleading against the third defendant does not disclose a cause of action in respect of either the claim for damages for negligent misstatement or the claim for damages for misleading or deceptive conduct contrary to consumer protection legislation.
In accordance with the terms of the application, there must be an order striking out the statement of claim pars 9 – 16. However, as there was no contention that the plaintiffs should be deprived of the chance to re-plead the claim, the strike out order will be conditional on the statement of claim not being amended following the filing of a timely application to do so.
The application of the third defendant also sought to have the pleading against it struck out on the grounds that the pleading is "scandalous, frivolous or vexatious, may prejudice, embarrass or delay the fair trial of the proceedings, are otherwise an abuse of the processes of the Court and/or go beyond the scope of the Endorsement of Claim".
The argument in respect of the first part of the additional grounds was encompassed in the argument concerning the failure to plead all the facts necessary to constitute a complete cause of action and so I do not need to separately address the matters raised.
The second part of the additional grounds is the contention that the pleading in the statement of claim goes beyond the scope of the endorsement of claim in the writ. The endorsement contains a claim for "damages for … breach of statutory duty". It was submitted that the claim under consumer protection legislation is not a claim for breach of statutory duty.
The relevant consumer protection legislative provisions dealing with conduct which is "misleading or deceptive" establishes a norm of conduct rather than imposing a liability. In Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470, Lockhart and Gummow JJ said at 506:
"In the present litigation, the significance of the contravention of s 52 was to enliven the powers of the court under ss 82 and 87. This emphasises that s 52 does not purport to create liability, nor to vest in any party any cause of action in the ordinary sense of that term; rather, it establishes a norm of conduct and failure by those to whom it is addressed, in its various operations, to observe that norm has the consequences provided for in the remedial provisions which found primarily in Pt VI: Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1988) 19 FCR 469 at 473–4."
The argument proceeds that, as the pleaded claim for damages for misleading or deceptive conduct is a claim under the remedial provision and not a claim for breach of statutory duty it falls outside the perimeter of the endorsement of claim in the writ and without amendment to the endorsement the statement of claim must be struck out. See Renowden v McMullen (1970) 123 CLR 584, where Barwick CJ and McTiernan J said at 595:
"Where it is sought to strike out a statement of claim on the ground that it asserts a claim not included in the writ or to amend a statement of claim the indorsement of the writ governs or determines whether the statement of claim should be struck out or amended as the case may be."
The Supreme Court Rules 2000 (Tas), r 108(1)(b) relevantly provides that the endorsement in the writ is to contain "a concise statement of the nature of the claim made and the relief or remedy sought". The rule contains no requirement that the cause of action in the technical sense is to be stated. The endorsement of claim in the writ includes the following. "The Plaintiffs' claim … is for damages … arising from a contract of sale of property situated at … Spreyton in Tasmania entered into by the Plaintiffs on or about 30^th October 2008, reliant upon the misleading representations of the defendants".
In my opinion, despite the reference to "breach of statutory duty" in the endorsement and the fine point that a claim for damages for misleading or deceptive conduct under consumer protection legislation is not a claim for damages for breach of statutory duty, the endorsement sufficiently discloses the nature of the claim and the remedy sought so as to permit the pleading of a claim for damages suffered as a result of misleading or deceptive conduct.
I would not strike out the statement of claim, so far as it is based on consumer protection legislation, for going beyond the perimeter of the endorsement in the writ.
Rule 227 provides that a pleading is to contain a statement of "all the material facts". That is to say, in the case of a statement of claim, that all of the facts necessary to constitute a complete cause of action must be alleged. Rule 259 provides that a pleading which does not disclose a reasonable cause of action is liable to be struck out. As stated earlier in these reasons, the pleading against the third defendant fails to disclose any complete cause of action. Unless amended, the offending pleading (pars 9 – 16) will be struck out.
It is ordered that, unless amended upon an application made within 21 days, pars 9 – 16 of the statement of claim are struck out.