| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : MULLINS -v- HUSSEY [2004] WADC 195 CORAM : CHANEY DCJ HEARD : 13 SEPTEMBER 2004 DELIVERED : 27 SEPTEMBER 2004 FILE NO/S : CIV 1331 of 2002 BETWEEN : ROSAL TANIA MULLINS Plaintiff
CHRISTOPHER JOHN HUSSEY
Defendant
Catchwords: Pleadings - Strike out - Misleading and deceptive conduct - Failure to disclose information - Turns on own facts - No new principles
Legislation: Fair Trading Act 1987
Result: Appeal allowed
New order striking out paragraph 19 of proposed statement of claim
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Representation:
Counsel:
Plaintiff : Mr S K Shepherd
Defendant : Mr J Eastoe
Solicitors:
Plaintiff : Bennett & Co
Defendant : Jonathan Eastoe
Case(s) referred to in judgment(s):
Nil
Case(s) also cited:
Adelaide Petroleum NL v Poseidon Ltd (1988) ATPR 40 901
Alvito Pty Ltd & Ors v Bank of Western Australia Ltd [2003]WASC 64
Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WASCA 27
Bell v Australasian Recyclers (WA) Pty Ltd (1986) ATPR 40-644
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Heaton Cleaning Pty Ltd v Haddington Pty Ltd & Anor [2002] WASC 244
Jospin Pty Ltd v Copulos Venture Capital Pty Ltd (1994) ATPR 41295
Kimberley Downs Pty Ltd & Ors v State of Western Australia & Anor; unreported; SCt of WA; Library No 6414; 25 August 1986
Paper Sales (Aust) WA Pty Ltd v P S A Pty Ltd (1991) ATPR 41-142
Phoenix Court Pty Ltd v Melbourne Central Pty Ltd, unreported; FCA; BC9705420; 22 October 1997
Wan v McDonald (1992) 33 FCR 491
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1 CHANEY DCJ: This is an appeal from a decision of a deputy registrar striking out a number of paragraphs of the plaintiff's statement of claim and ordering that the plaintiff pay the defendant's costs of the strike out application. The appeal is in the nature of a hearing de novo.
2 The summons dealt with by the Master sought particulars of certain paragraphs of the statement of claim, and sought to strike out pars 17.4, 17.6, 17.7, 17.8, 17.9, 17.10 and 17.12, 19, 20 and 22. The grounds for seeking to strike out those paragraphs were that, in all cases, it was said that the identified paragraphs would prejudice, embarrass or delay the fair trial of the action, and in all but par 19, it was said that the identified paragraphs disclose no reasonable cause of action. 3 The learned deputy registrar made orders striking out the references to pars 7.2, 7.7, 7.11, 7.12, 7.13 and 7.15 contained in par 18, and the whole of pars 19 and 21. Of those only par 19 was the subject of the summons to strike out. 4 There was some confusion at the hearing of the appeal as to which paragraphs were the subject of complaint for the purposes of the proceedings before me. The written submissions filed by the defendant contained an attack on pars 12, 14, 17.2, 17.3, 17.4, 17.6, 17.7, 17.8, 17.9, 17.11, 17.12, 19 and 22. No submissions were made by the defendant concerning par 21 which the deputy registrar had ordered to be struck out. In relation to the striking out of the reference in par 18 to various subparagraphs of par 17 the defendant conceded that the argument which led to that result, namely that there was a need to plead an absence of reasonable grounds for future representations, should not be pursued. Accordingly, the defendant did not seek to support the registrar's decision striking out those references. 5 The plaintiff confined its submissions, quite appropriately, to those paragraphs which the original summons sought to strike out, although the plaintiff also dealt with par 21 which the learned deputy registrar had struck out, but which had not been the subject of any application to strike out. 6 I mention the foregoing to illustrate that identification of the issues before me on the appeal is not straight forward. It is clear, however, that the plaintiff approached the appeal on the basis of a need to demonstrate that those paragraphs of the statement of claim attacked in the summons to strike out needed to be justified. The plaintiff did not come to the hearing facing attacks on any other paragraphs of the pleading. I propose,
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therefore, to deal only with those paragraphs which the summons to strike out identifies as the subject of complaint. As mentioned above, also included in the chamber summons was a request for further and better particulars. As I understand it, certain orders were made in relation to that paragraph of the summons, and the appeal is not concerned with that aspect of the application.
Paragraphs 17.4, 17.6, 17.7, 17.8, 17.9, 17.10 and 17.12 7 Each of these subparagraphs is designed to establish that earlier pleaded representations were misleading and deceptive. The defendant observes that each of the matters alleged is pleaded to have occurred "post contract or post settlement", that is, after the point of reliance by the plaintiff. The defendant's objection is put in the written outline of submission in the following terms: "In the absence of a plea that, at the time the alleged representations were made, the defendant knew that the events would not occur or had no intention to honour the representations, these post contracts/post settlement events cannot support a plea that the representations were misleading and deceptive. Put another way, one would expect the matters referred to in these subparagraphs to have been pleaded as representations with respect to a future matter (s 9 FTA)." 8 The subparagraphs concerned are pleas of things which occurred after settlement. If one identifies the particular representation which is in effect "falsified" by each subparagraph of par 17, it is clear that the subparagraphs are referring to representations identified in par 18 of the statement of claim as representations as to future matters. What is pleaded in par 17 are not representations, but facts which, if established, the plaintiff says will demonstrate that earlier pleaded representations, relevantly as to future matters, did not come to pass. The defendant's objection has no substance. 9 Having said that, I might observe that it would have been far better if the particular representation to which each separate subparagraph of par 17 relates was clearly identified in the pleading. With some effort, however, it is possible to identify the relationship between the matter pleaded in each subparagraph of par 17, and an earlier representation pleaded, and that criticism of the pleading does not give rise to a basis to strike it out.
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Paragraph 19
10 Paragraph 19 of the statement of claim pleads : "19. Had the Defendant informed the Plaintiff of: 11 Paragraph 20 then provides: "20. Further and alternatively to paragraph 19 hereof by reason of the matters referred to in paragraphs 16 to 18 hereof, the Plaintiff has suffered loss and damage." 12 There then follows particulars of the loss and damage claimed. 13 The prayer for relief seeks, inter alia, an order pursuant to s 77 of the Fair Trading Act declaring the sale of business agreement void ab initio. 14 There are several objections which the defendant takes to par 19. The first is that the "true position" of the business is not adequately identified, and the pleading is embarrassing from that perspective. Second, the defendant says that the paragraph does not sufficiently identify how it is that the plaintiff "would not have proceeded with the purchase of the business". The defendant also observes that par 19 sits on its own, unrelated to any claim for damages. 15 In my view, the objection to par 19 has substance. The plaintiff sought to justify par 19 on the basis that it implicitly asserts an obligation on the part of the defendant to reveal the matters pleaded in par 14. Paragraph 14 pleads that on 8 March 2002, some two days after the agreement for the sale of the business was made, the defendant became aware of certain information adverse to the future of the business. As I understand the plaintiff's submission, it is that the implicit assertion in par 19 amounts to misleading and deceptive conduct which forms a basis for the claim for a declaration under s 77 of the FTA. In my view, par 19 is not capable of doing the work which the plaintiff suggests it does. To plead a case of misrepresentation by silence, which seems to me to be what the plaintiff is suggesting, requires far more than is pleaded in
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par 19. The paragraph does not disclose any cause of action in its present terms, and should be struck out. 16 The defendant's objection in relation to the vagueness of the expression "the true position" is also well made. The separate reference to "the true position" and "the matters referred to in paragraph 14" suggest that the "true position" is something different from the position of the business learnt by the defendant on 8 March 2002 (ie what is pleaded in par 14). It is impossible to discern from the pleading what the reference to "the true position" means, and the plea is embarrassing for that reason.
Paragraph 20 17 Paragraph 20 simply pleads that by reason of the misleading and deceptive conduct of the defendant, the plaintiff has suffered loss and damage. At the hearing of the appeal, no submissions were made in relation to par 20 by the defendant, and I see no basis upon which the paragraph should be struck out.
Paragraph 22 18 Paragraph 22 is a plea of loss and damage by reason of certain breaches of contract pleaded in par 21. The defendant's objection is really to the particulars of that paragraph which quantify the loss for breach of contract as being the purchase price of the business, namely $140,000, when the business had no, or alternatively little, value. The defendant says that the proposition that the business lost the whole of its value by reason of breaches of the nature pleaded in par 21 cannot possibly be sustained. On the face of the breaches pleaded, it is a little difficult to see that a loss of the nature and amount claimed would result. That is not a basis, however, to strike out the pleading. 19 The particulars foreshadow further particulars after expert evidence is obtained. As the defendant observes, much time has passed since the events the subject of this action, and the institution of these proceedings, and one would have expected the plaintiff to be in a position now to fully particularise the loss. I was told from the bar table that expert evidence has not yet been obtained. It is to no one's credit that over 12 months have passed since this application was first brought, and the action has not progressed over that time. There can be no good reason that the plaintiff appears to have done nothing to verify and fully particularise her damages claim. It is likely that the particulars to par 22 will require amendment at some point, and steps should be taken quickly to deal with that issue.
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That comment does not, however, provide a basis upon which the paragraph pleading loss and damage should be struck out.
Conclusion 20 For the foregoing reasons, I am of the view that the appeal should be allowed, and in lieu of the orders made by the learned deputy registrar, there should be an order that, on the defendant's summons dated 19 September 2003, par 19 of the statement of claim be struck out. It will be necessary for there to be orders made to regularise the status of the pleadings, since all parties have proceeded on the argument in relation to a minute of proposed amended statement of claim, rather than the document which currently stands as the statement of claim. I will hear the parties as to the appropriate orders to be made in that respect, and also on the question of costs.
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