Peterson v Chubb Security Australia Pty Ltd - [2003] FMCA 172

FEDERAL MAGISTRATES COURT OF AUSTRALIA

PETERSON v CHUBB SECURITY AUSTRALIA PTY LTD & ANOR

[2003] FMCA 172

PRACTICE AND PROCEDURE – Trade Practices claim – pleadings – summary dismissal – whether sufficient pleadings to establish real question to be determined.

Trade Practices Act 1974, ss.52, 56, 98(2)

Federal Magistrates Court Rules 2001, Rule 13

Dey v Victorian Railways Commission (1948) 78 CLR 62
General Steel Industries v Commissioner of Railways (1964) 112 CLR 125

Applicant:

JOHN PETERSON

First Respondent:

CHUBB SECURITY AUSTRALIA PTY LTD

Second Respondent:

ROBIN HODGSON

File No:

WZ 36 of 2003

Delivered on:

2 May 2003

Delivered at:

Perth

Hearing date:

2 May 2003

Judgment of:

McInnis FM

REPRESENTATION

Counsel for the Applicant:

Mr A.P. Rumsley

Solicitors for the Applicant:

McKie & Associates

Counsel for the First and Second Respondent

Mr P.K. Walton

Solicitors for the First and Second Respondent:

Jackson McDonald

ORDERS

The Application for summary dismissal in the response filed 17 April 2003 be dismissed, with the Respondents, however, being granted leave to make further oral Application for summary dismissal upon giving seven days notice in writing to the Applicant's solicitors.
The Applicant shall file and serve a substituted statement of claim substantially in the form of the amended statement of claim filed
1 May 2003 on or before 16 May 2003.
The Applicant shall file and serve a further affidavit in support of the amended statement of claim, including reference to loss and damage on or before 23 May 2003.
The Respondents shall file and serve any requests for particulars of the amended statement of claim on or before 30 May 2003.
The particulars, if requested, shall be filed and served by the Applicant on or before 13 June 2003.
The Application be otherwise listed for further directions by audio-link at 2.30 p.m. WST on 19 June 2003.
The Applicant shall pay the Respondents costs of and associated with the application for summary dismissal.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
PERTH

WZ 36 of 2003

JOHN PETERSON

Applicant

And

CHUBB SECURITY AUSTRALIA PTY LTD

First Respondent

And

ROBIN HODGSON

Second Respondent

REASONS FOR JUDGMENT

(Revised from Transcript)

In this Application, John Peterson (the Applicant) has purported to make a claim against Chubb Security Australia Pty Ltd (the First Respondent), and Robin Hodgson (the Second Respondent). The claim is for loss and damage said to arise from circumstances where the Applicant had been employed as an employee of the First Respondent and had at a particular point in time decided to relinquish that role and in lieu thereof establish a corporate entity in order to obtain a licence to essentially perform duties of a similar kind with the First Respondent to those duties which the Applicant had performed as an individual employee.
This Application has had a somewhat chequered history in the sense that when it first commenced by Application filed 28 February 2003, the claim then made was for relief as a result of what was said to be breaches of s.52 of the Trade Practices Act 1974. In the original Application reliance was placed upon the accompanying statement of claim.
When the matter came before the court on the first hearing date on 4 April 2003, I made an order that the Application continue on pleadings. I made further orders that the Applicant should file and serve an affidavit in support and granted leave to the Applicant to file and serve an amended statement of claim. The Respondent was granted leave to file and serve any Application for summary dismissal with the Application to be heard on 24 April 2003.
When the matter came before the court on 24 April 2003 a response had been filed by the Respondents on 17 April 2003 seeking an order that the proceedings be dismissed on the grounds that no reasonable cause of action is disclosed and that the Applicant pay the Respondents' costs of the proceedings, including any reserved costs to be taxed. The matter was argued on 24 April 2003 and significant criticism was made of the statement of claim.
It is sufficient for the present purposes to indicate that at that hearing

I was persuaded that in all the circumstances the criticisms essentially raised by Counsel for the Respondent, Mr Walton, were valid as there were a number of inaccuracies and indeed difficulties which were evident in the statement of claim, none the least of which was a great deal of confusion in relation to whether or not the Applicant had traded under a certain corporate name - indeed even confusion over the identity of the Applicant who had, it was agreed, used another name.
It became evident to me during the course of that hearing that in fact what had occurred was that a company, Sandthorpe Pty Ltd (Sandthorpe), no longer trading, had been established in order to become the licensee under a licence agreement with the First Respondent, and that a great deal of what was said at that stage and relied upon in the then statement of claim appeared to me at least to be matters confused with the corporate structure and the obligations of Sandthorpe under the licence agreement. It was also evident that in fact the pleading as it then stood contained numerous inaccuracies as to the status of the Applicant in bringing the proceeding and the extent to which the Applicant indeed had traded at that stage, either in his own name or under another business name.
What became clear during the course of the submissions was that the reality of this claim is in general terms one where it is the Applicant as an individual who has claimed a breach of provisions of the Trade Practices Act in circumstances where he alleges that representations were made by the First Respondent, with the knowledge of the Second Respondent, which induced the Applicant to relinquish his role as employee with the First Respondent and to set up a corporate structure which would be capable of entering into a licence agreement to perform services of a similar kind performed by the Applicant in his personal capacity.
Since the hearing on 24 April 2003 I gave the Applicant a further chance to provide an amended statement of claim. It seems to me that it is a valid conclusion that the filing of an amended statement of claim on 1 May 2003, which clearly provides substantial alterations to the first statement of claim, is tantamount to a concession that that first statement of claim as it then stood was inadequate and the Application faced the real risk of being summarily dismissed on a summary basis.
I had indicated on 24 April 2003 that regardless of the extent to which the amended statement of claim may or may not be said to constitute a cause of action, at least of a kind which would not be the subject of a summary dismissal Application, it would not otherwise necessarily relieve the Applicant of paying the costs of the Respondents which have been incurred in pursuing the Application for summary dismissal. At the very least the summary dismissal Application resulted in what I can only describe as an almost complete rewrite of the statement of claim.
It is obvious from an analysis of the amended statement of claim filed 1 May 2003 that it does contain numerous vague assertions which at present are not supported by appropriate affidavit material. The essential nature of the claim however, in my view, does at least appear from the material to the extent that I am able to glean from that material the allegations that the Applicant had been induced to alter his position as a result of certain representations made by the First and/or Second Respondents.
Essentially relying upon paragraphs 10 and 11 of the amended statement of claim, I am at least able to determine that there would appear to be a claim that representations were made that the Applicant was induced to alter his position, to which I have previously referred, and that in the circumstances he had suffered at least a loss to the extent that income derived by him in the capacity as an employee of the First Respondent had substantially altered in relation to the income he then earned in the activities which were then undertaken under the licence agreement by Sandthorpe.
One essential element that is pleaded is that the Applicant claims that he did not know that shortly after the commencement of the licence agreement an office which had hitherto been conducted by the First Respondent would be closed. It is evident that the new corporate structure would involve, on the material before me, acceptance by that corporation of the responsibility of meeting the expenses in operating and discharging its duties under the licence agreement. There is some degree of confusion as to the obligations of that company, namely, Sandthorpe, under the licence agreement, and I accept for the present purposes that requests for additional work under that licence agreement are only requests of that company. If meeting the requests resulted in loss and damage, it would be difficult, though I do not finally conclude the matter - for the Applicant to then personally claim damages arising from that request.
Ultimately though the essence of this Application seems to me to be that the Applicant seeks to assert a claim for loss and damage arising out of being the subject of representations which induced him to alter his status and thereby resulted in him receiving an income of considerably less than the income he would have derived as an employee of the First Respondent. That much appears clear from paragraph 26 of the now amended statement of claim. I ought to add that the assertion that the representations were incorrect is only the subject of what I would describe as a somewhat vague assertion of the Applicant set out in paragraph 35.2 of the amended statement of claim:
“the Applicant was in a position that was less beneficial to the Applicant than his employment with the First Respondent.”
In considering an Application for summary dismissal, the principles to be applied by this court in the exercise of its discretion under rule 13 of the Federal Magistrates Court Rules are principles which have been applied in other courts for a significant period of time. In particular, the High Court in the matter of Dey v Victorian Railways Commissioners (1948) 78 CLR 62 provides the following relevant extract from the decision of Dixon J at page 91:
“A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.”
That statement was adopted and referred to by Barwick CJ in the matter of General Steel Industries v Commissioner of Railways (1964) 112 CLR 125. At page 129 of the Chief Justice's judgment he quotes with approval the passage to which I have referred from Dixon J. He refers prior to that passage to the following at page 129:
“It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action - if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated.”
Referring to pleadings His Honour goes on to say:
“The test to be applied has been variously expressed; “so obviously untenable that it cannot possibly succeed”; “manifestly groundless”; “so manifestly faulty that it does not admit of argument”; “discloses a case which the Court is satisfied cannot succeed”; “under no possibility can there be a good cause of action”; “be manifest that to allow them” (the pleadings) “to stand would involve useless expense”.
At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or “so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument”; “so to speak apparent at a glance.”
In my view, in applying those principles to which I have referred from the High Court to proceedings in the Federal Magistrates Court of Australia in a claim under the Trade Practices Act where the court has permitted pleadings, it is also important to add that this court does have the opportunity, if it chooses to so, to not require pleadings at all.
As the Federal Magistrates Court is not a court of pleadings, it becomes perhaps less significant for this court to analyse an Application of this kind in quite the same minute detail that might be the case if the Application had been brought in a court of pleadings. Nevertheless, it is my own view that pleadings in Trade Practices matters are of assistance to the court in at least identifying the cause of action which the party seeking to bring the claim raises against another party so that all parties know the issues to be determined.
Mr Walton who appears for the Respondent has thoroughly and carefully analysed the amended statement of claim and I accept that a great deal of what he says would establish a legitimate concern on the part of the Respondent and may otherwise lead to a conclusion that there is no reasonable cause of action disclosed in a great deal of the matters raised in this Application as amended by the Applicant.
He has criticised both the amended statement of claim and what are now said to be the Applicant's supplementary outline of submissions on a number of grounds. He submits that there are difficulties in terms of inconsistencies between dates when the Applicant ceased employment with the First Respondent and commenced as a director of the new corporate entity, dates and issues relating to responsibilities of the Applicant under his former contract of employment and under the new licensed agreement plus issues concerning loss and damage and whether or not those issues are in truth in fact said to be properly connected to the alleged claim for breach under the Trade Practices Act.
Mr Walton has further, and in my view quite properly, invited the court to disregard those parts of the Applicant's supplementary outline of submissions which suggests that other pleadings might be relied upon in this matter involving at least other provisions of the Trade Practices Act including s.56, bait advertising, and s.98(2), loss leading. Further criticism is made of any suggestion that this court ought to at this stage entertain a suggestion of unconscionable conduct. Indeed further criticism on the pleadings is made in relation to alleged duties owed by the Respondents and breaches of duties owed.
I have had regard to those submissions and have not of course detailed each and every one of them in this ex tempore decision. It is submitted, however, on behalf of the Applicant that at the very least there is sufficient in the pleading to establish that there has been, as alleged, representations made by the First Respondent and/or Second Respondent of a kind which induced the Applicant to change his status from employee to a subcontractor in a corporate entity and to undertake a licence agreement which as a result of what is alleged to be either withholding information or failure to disclose information concerning the closure of an office of the First Respondent and representations, albeit vague, as to what may or may not be the expected income, the Applicant entered into that changed arrangement and did so based upon the representations, was induced to do so and the representations were not correct.
As a consequence some loss and damage is suffered. Whether it be the loss or damage now claimed is ultimately a matter for trial but it is submitted that in the circumstances at the very least the court can rely upon the current amended statement of claim as providing the basis upon which there is a cause of action of a kind which would not attract the principles that I have referred to for summary dismissal.
In my view in the current Application, albeit with some reservations,

I accept the submissions by the Applicant that there is at least sufficient to establish a cause of action of the kind that has been described. The pleading, although unsatisfactory in nature, does at least raise a matter which I conclude is a real issue to be tried. That is not to say that it is a particularly strong case and indeed it is not appropriate for me to further comment other than to say that I am satisfied on the material particularly having regard to this court not being a court of pleadings, there is at least sufficient for me to understand the argument that might be advanced for and on behalf of the Applicant and for the Respondent likewise to at least understand the argument which is going to be raised.
I am further satisfied, however, that it is appropriate in this case that before the Respondents incur any further expenses the Applicant should now be required and directed to file and serve a further affidavit in support of the now amended statement of claim. I expect that further affidavit will clearly, concisely and as a matter of law properly connect loss and damage with any properly claimed breach of the Trade Practices Act with sufficient precision to enable the Respondents to then file and serve responding affidavits.
For those reasons the order of the court after hearing the parties shall be as follows:-
(1)The Application for summary dismissal in the response filed 17 April 2003 be dismissed, with the Respondents, however, being granted leave to make further oral Application for summary dismissal upon giving seven days notice in writing to the Applicant's solicitors.
(2)The Applicant shall file and serve a substituted statement of claim substantially in the form of the amended statement of claim filed 1 May 2003 on or before 16 May 2003.
(3)The Applicant shall file and serve a further affidavit in support of the amended statement of claim, including reference to loss and damage on or before 23 May 2003.
(4)The Respondents shall file and serve any requests for particulars of the amended statement of claim on or before 30 May 2003.
(5)The particulars, if requested, shall be filed and served by the Applicant on or before 13 June 2003.
(6)The Application be otherwise listed for further directions by audio-link at 2.30 p.m. WST on 19 June 2003.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate:

Date: 2 May 2003