Novamaze Pty Ltd v Cut Price Deli Pty Ltd
[1995] FCA 117
•3 MARCH 1995
CATCHWORDS
PRACTICE AND PROCEDURE - application to strike out statement of claim - technical objections - misunderstanding of case pleaded - series of representations pleaded - reliance placed upon all representations - alleged contempt - objectivity of legal advisers.
INDEMNITY COSTS - no proper basis for bringing part of motion
Lazan Proprietary Limited v Seabridge Australia Pty Ltd and Anor (1992) 35 FCR 535-541) Refd
Jacques v Cut Price Deli Pty Ltd (1993) ATPR (Digest) ¶46-102 Refd
Novamaze Pty Ltd & Ors v Cut Price Deli Pty Limited & Ors
No QG149 of 1994
Kiefel J Brisbane 3 March 1995
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION No. QG149 of 1994
BETWEEN:
NOVAMAZE PTY. LTD.
First Applicant
AND:
DARRYL PAUL WEEDMAN and ELAINE MARGARET WEEDMAN
Second Applicants
AND:
CUT PRICE DELI PTY. LIMITED
First Respondent
AND:
ENZO SGAMBELLONE
Second Respondent
AND:
LUZETTE McKENZIE
Third Respondent
AND:
BERNE NO.7 PTY. LTD.
Fourth Respondent
AND:
RUSSELL GORDON DONALD and VIVIAN ANNE DONALD
Fifth Respondents
JUDGE MAKING ORDER: Kiefel J.
DATE OF ORDER: 3 March 1995
WHERE MADE: Brisbane
MINUTES OF ORDERS
THE COURT ORDERS THAT:
The first to third respondents' motion be dismissed.
The first to third respondents pay the applicants' costs of and incidental to that motion, including reserved costs, to be taxed with respect to the issue contained in proposition 3 on an indemnity basis, but otherwise on a party and party basis.
The applicants be at leave to tax their costs despite the fact that the litigation has not concluded.
The matter be adjourned for directions on 24 March 1995 at 10.30 am.
NOTE:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION No. QG149 of 1994
BETWEEN:
NOVAMAZE PTY. LTD.
First Applicant
AND:
DARRYL PAUL WEEDMAN and ELAINE MARGARET WEEDMAN
Second Applicants
AND:
CUT PRICE DELI PTY. LIMITED
First Respondent
AND:
ENZO SGAMBELLONE
Second Respondent
AND:
LUZETTE McKENZIE
Third Respondent
AND:
BERNE NO.7 PTY. LTD.
Fourth Respondent
AND:
RUSSELL GORDON DONALD and VIVIAN ANNE DONALD
Fifth Respondents
CORAM:Kiefel J.
DATE:3 March 1995
PLACE:Brisbane
REASONS FOR JUDGMENT
The first to third respondents seek to strike out the applicants' statement of claim so far as it relates to them. The technical objections taken I consider to be without substance. Indeed, on the view I have taken of the structure of the statement of claim I have had difficulty in understanding why the application was brought.
The first proposition referred to in the respondents' outline is that a number of representations listed in the paragraphs preceding paragraph 20, and which deal with the history of negotiations, are clearly puffery, or alternatively are vague. Such a submission must be made with full knowledge of decisions which have stated, as one might expect, that particularly in cases where there are a series of representations, one needs to consider a particular statement in context (see eg. Lazan Proprietary Limited v Seabridge Australia Pty Ltd and Anor (1992) 35 FCR 535-541), a process which can rarely be undertaken at the interlocutory stage. Whilst it may well be, as in fact occurred in Jacques v Cut Price Deli Pty. Ltd. (1993) ATPR (Digest) ¶46-102, that some representations will be found, following a hearing, to add nothing and to amount to no more than puffery, it is not possible to conclude that now.
But at the heart of this application is what I consider, with respect, to be a misunderstanding of the case pleaded. It has been assumed that the representations in question are pleaded as individual representations, that they stand alone but insufficiently connected with the following reliance.
What the pleader has here done is to list chronologically each of the representations made. They concern, principally, statements as to current and future profits, and as to the benefits of being associated as a franchisee of the first respondent. Taking the latter area of representations as an example, various individual representations ranging from what might be thought to be a very general assertion in paragraph 13(a) that, "the Cut Price Deli story was one of success", to ones which might be intended to convey rather more about the first respondent's operations and some benefits which might flow to the applicants, to allegations such as that in 18(b) that the applicants could safely borrow money as they would derive sufficient profit to enable them to repay. In paragraph 31 these are drawn together with other representations. Taken together they are said to have been misleading, deceptive or likely to mislead because they created a particular impression of the prosperity of the first respondent and the franchises associated with it. Representations more specific to the first respondent's activities and the impression thereby conveyed are listed in paragraph 32.
As pleaded, the individual representations do not stand alone. Their relationship with other representations is made clear by paragraphs 30 and following. In relation to the question of reliance, it is the aggregate of, or the combination of all the predictions and impressions conveyed which are said to have induced the applicants. It is in that sense that it is pleaded that reliance was placed upon all the representations. The pleading does not point to the degree of importance or reliance placed on a particular representation, but this will almost never be able to be done in cases such as this for the very reason that conduct which may mislead does not always operate in this way.
The second proposition appears to proceed from the same basis, that is to say, on the assumption that each representation is itself relied upon as causing loss.
It was not further amplified in argument.
The third proposition was not a technical objection. It was alleged that paragraph 31, further particularised, ought to be struck out since it could only have been made and particularised by use of a document, that referred to as document 87, the "Register of Shop Closures", which had been discovered in previous proceedings between the first respondent and a Mr Tomlinson, but not produced in evidence. That course, although long persisted in and occupying much time on the application, is no longer pursued. The concession finally made was a proper one. I did not consider it would be satisfactory to accept as wholly reliable and accurate a version of events said to implicate Mr Tomlinson, but which the respondents' solicitor has only recently recalled. His recollection of what must have been an unremarkable passage in the course of a long trial six months ago, were it so clear, would likely have been earlier brought to mind.
As to paragraph 17(b), the representation is now explained as a conclusion drawn from other comments on the financial statements of the franchise, as distinct from what was actually stated. If, however, any clarification of this is now necessary the appropriate course would be by way of particulars.
The first to third respondents' application will be dismissed with costs. The remaining question is as to whether costs ought to be ordered on a solicitor/client basis.
The application, so far as it relates to the alleged contempt, was brought upon an assumption that the particulars provided of shop closures could only have been found in the document previously discovered to the applicants' solicitor as solicitor then for Mr Tomlinson. Even then it was founded, as the earlier affidavit of Mr Snelgrove the solicitor for the respondents shows, on the belief that the document was in his possession as it had been inspected by and copied by Mr Tomlinson's former solicitors and remained on the file. A more careful consideration of the matter would have resulted in a conclusion less certain. When Mr Lynch denied the allegation in correspondence, it should certainly have been considered. The impression I am unfortunately left with is that there is something less than objectivity driving such decision making, which may in part be explained by the number of disputes the respondents and their legal advisers are and will be involved in. The allegations against Mr Lynch were wholly disavowed yesterday but long after an affidavit by Mr Tomlinson, the source in fact of the information, had been provided. The attack then moved to Mr Tomlinson. The state of the evidence both before and after cross-examination of him and a number of other persons being such that no finding against him was possible. There was, I consider, no proper basis for bringing this part of the motion and it should not have been pursued later. It has resulted in a protracted hearing taking nearly twice the amount of time estimated.
It is, I consider, an appropriate circumstance here to order that that part of the motion based upon proposition 3 be taxed on an indemnity basis.
I was also asked by the applicants to consider awarding indemnity costs with respect to the balance of the application. I am mindful of numerous statements by members of this court that interlocutory skirmishes which considerably add to costs and produce delay in the progress of a matter, ought be discouraged. Whilst I consider the application was misconceived I am not able to conclude that the respondents' legal advisors had no belief in the strength of the objections taken. Any further delays in the progress of this matter to hearing will however be closely monitored.
The orders will then be that the motion brought by the first to third respondents be dismissed. I further order that the first to third respondents pay the applicants' costs of and incidental to that motion to be taxed with respect to the issue contained in proposition 3 on an indemnity basis but otherwise on a party and party basis.
I am also asked to certify for early taxation of costs. This matter is not close to trial; it has been delayed for some months because of this application and I have expressed my concerns about that throughout the course of the proceedings. The applicants have earlier sworn an affidavit in which it appears that they are not in what one would describe as comfortable financial circumstances, and it is not difficult to see that they may indeed have real difficulty in funding litigation of this scale. I therefore propose to order that the applicants be at leave to tax their costs despite the fact that the litigation has not concluded.
The Novamaze matter will otherwise be adjourned for directions on 24 March at 10.30.
I certify that this and the preceding six pages are a true copy of the reasons for judgment herein of the Honourable Justice Kiefel.
Associate
Date:3 March 1995
Counsel for the applicants: Mr C.E.K. Hampson QC and Mr. T.W. Quinn
Solicitors for the applicants: Messrs Lynch & Company
Counsel for the respondents: Mr J. Hamilton QC and Mr. P.W. Hackett
Solicitors for the respondents: Messrs Snelgrove & Partners
Date of Hearing: 2, 3 March 1995
Place of Hearing: Brisbane
Date of Judgment: 3 March 1995
3
0
0