Sipa Resources Limited v Zinc & Copper Corporation of Australia Ltd

[2001] FCA 454

FEDERAL COURT OF AUSTRALIA

Sipa Resources Limited v Zinc & Copper Corporation of Australia Ltd
[2001] FCA 454

PRACTICE AND PROCEDURE - application to strike out paragraphs of cross-claim as pleading evidence and not material facts – particularity required for pleading based on s 51A Trade Practices Act 1974 (Cth)

Trade Practices Act 1974 (Cth) Pt V, ss 51A, 52
Federal Court Rules O 11, rr 2, 3

Lord Hanner v Flight (1876) 24 WR 346 referred to
Williams v Wilcox (1838) 8 Ad. & E 314 referred to
Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (1998) ATPR 41-633 considered
Dare v Pulham (1982) 148 CLR 658 considered
Hunt Contracting Co Pty Ltd v Roebuck Resources NL (1992) 110 ALR 183 considered

SIPA RESOURCES LIMITED (ACN 009 053 687) & ANOR v ZINC & COPPER CORPORATION OF AUSTRALIA LTD (ACN 009 254 362) & ORS
W 191 OF 2000

LEE J
PERTH
24 APRIL 2001

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W 191 OF 2000

BETWEEN:

SIPA RESOURCES LIMITED
(ACN 009 053 687)
FIRST APPLICANT

ASHLING RESOURCES NL
(ACN 009 282 320)
SECOND APPLICANT

AND:

ZINC & COPPER CORPORATION OF AUSTRALIA LTD
(ACN 009 254 362)
FIRST RESPONDENT

OUTOKUMPU ZINC AUSTRALIA PTY LTD
(ACN 061 251 223)
SECOND RESPONDENT

AND BY CROSS-CLAIM:

ZINC & COPPER CORPORATION OF AUSTRALIA LTD
(ACN 009 254 362)
CROSS-CLAIMANT

OUTOKUMPU ZINC AUSTRALIA PTY LTD
(ACN 061 251 223)
FIRST CROSS-RESPONDENT

OUTOKUMPU ZINC COMMERCIAL BV
SECOND CROSS-RESPONDENT

OUTOKUMPU ZINC OY
THIRD CROSS-RESPONDENT

OUTOKUMPU ZINC AUSTRALIA BV
FOURTH CROSS-RESPONDENT

JUDGE:	LEE J
DATE OF ORDER:	24 APRIL 2001
WHERE MADE:	PERTH

THE COURT ORDERS THAT:

By 27 April 2001, the cross-claimant and cross-respondents are to file a minute of orders giving effect to these reasons and of further directions in respect of the amendment of the cross-claim and matters consequential thereto.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W 191 OF 2000

BETWEEN:

SIPA RESOURCES LIMITED
(ACN 009 053 687)
FIRST APPLICANT

ASHLING RESOURCES NL
(ACN 009 282 320)
SECOND APPLICANT

AND:

ZINC & COPPER CORPORATION OF AUSTRALIA LTD
(ACN 009 254 362)
FIRST RESPONDENT

OUTOKUMPU ZINC AUSTRALIA PTY LTD
(ACN 061 251 223)
SECOND RESPONDENT

AND BY CROSS-CLAIM:

ZINC & COPPER CORPORATION OF AUSTRALIA LTD
(ACN 009 254 362)
CROSS-CLAIMANT

OUTOKUMPU ZINC AUSTRALIA PTY LTD
(ACN 061 251 223)
FIRST CROSS-RESPONDENT

OUTOKUMPU ZINC COMMERCIAL BV
SECOND CROSS-RESPONDENT

OUTOKUMPU ZINC OY
THIRD CROSS-RESPONDENT

OUTOKUMPU ZINC AUSTRALIA BV
FOURTH CROSS-RESPONDENT

JUDGE:	LEE J
DATE:	24 APRIL 2001
PLACE:	PERTH

REASONS FOR JUDGMENT

1. In this matter the first respondent, Zinc and Copper Corporation of Australia Limited (“ZCCA”), has filed a cross-claim against the second respondent, Outokumpu Zinc Australia Pty Ltd (“OZA”), and other cross-respondents said to be in the “Outokumpu Group of companies”.

2. The cross-claim alleges that the cross-respondents engaged in conduct that contravened s 52 of the Trade Practices Act 1974 (“the Act”).  In short, it is claimed that the cross-respondents, by their agents, made a series of representations, oral and written, to ZCCA concerning ZCCA’s proposed purchase of OZA’s interest in a joint venture agreement made between OZA and the applicant, Sipa Resources Limited.  It is contended that the alleged representations amounted to conduct that was misleading or deceptive, or likely to mislead or deceive.

3. The cross-respondents, by motion, seek an order that particular paragraphs of the cross-claim be struck out on the bases that they plead evidence, not material facts; will embarrass, prejudice or cause delay in the proceedings; or that they do not disclose any reasonable cause of action against one of the cross-respondents. 

4. With respect to those paragraphs purportedly pleading evidence, the paragraphs plead oral communications between the agents of the cross-claimant and the cross-respondents.  The communications appear to have arisen during the course of particular telephone calls and personal meetings.

5. The cross-respondents rely on O 11, r 2 of the Federal Court Rules, that a pleading of a party shall contain, and contain only, a statement in a summary form of the material facts on which that party relies, but not the evidence by which those facts are to be proved, and on O 11 r 3, that pleadings be concise.

6. The cross-respondents submit that the facts pleaded in these paragraphs are not material in that they are subordinate and relevant only at trial.  The cross-respondents refer to long-established English authorities in support of their argument.  (See:  Lord Hanner v Flight (1876) 24 WR 346 at 347; Williams v Wilcox (1838) 8 Ad. & E 314 at 331.)

   It is accepted that a pleading must formulate a reasonable, if not complete, cause of action. A claim brought under s 52 of the Act involves a concept of conduct that is broad, and pleadings will be drawn accordingly. As Foster J stated in Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (1998) ATPR 41-633, after referring to the comprehensive nature of s 52:

   “It necessarily follows that when the section is sought to be used in litigation as the foundation of a cause of action or claim for some specific form of relief, it is imperative that the factual basis upon which the section is alleged to be brought into play must be stated with appropriate clarity in a statement of claim.”

7. Counsel for the cross-claimant submits that each of the paragraphs objected to is a plea of fact constituting conduct within the meaning of these sections. I agree that, in the circumstances, the paragraphs plead material facts. The paragraphs assert constitutive facts, and not, as would appear to be argued by the cross-respondents, part of the evidence by which the conduct is to be proven misleading or deceptive. In a pleading under Part V of the Act, and particularly s 52, it is often necessary for part of oral communications to be pleaded in order to make out the conduct in contravention of the Act that is said to be misleading or deceptive.

8. For the cross-claimant not to plead the oral communications as part of the cross-respondents’ conduct alleged to be misleading or deceptive, and to leave that detail to the evidence, would be less than desirable.  The overriding function of pleadings and particulars has been stated on a number of occasions, and was summarised by a unanimous judgment of the High Court in Dare v Pulham (1982) 148 CLR 658 at 664:

   “Pleadings and particulars have a number of functions:  they furnish a statement of the case sufficiently clear to allow the other party a fair opportunity to meet it (Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (In Liq.) (1916) 22 CLR 490 at 517; they define the issues for decision in the litigation and thereby enable the relevance and admissibility of evidence to be determined at the trial (Miller v Cameron (1936) 54 CLR 572 at 576-577); and they give a defendant an understanding of a plaintiff’s claim in aid of the defendant’s right to make a payment into court.”

   I do not accept the cross-respondents’ contention that the said paragraphs, or those that rely on the said paragraphs, be struck out on the basis that they plead evidence.

9. The cross-respondents seek to strike out two paragraphs on the ground that they are embarrassing.  One of the paragraphs refers to alleged conduct of an agent of OZA “as set out in the preceding paragraph, and in the circumstances set out above”.  I agree with the cross-respondents that the reference “in the circumstances set out above” is obtuse.  The cross-claimant has agreed that the phrase be either particularised or deleted.

10. The second paragraph objected to states:

    “Further, or in the alternative, insofar as the representations set out in this cross-claim and each of them was a representation with respect to a future matter, ZCCA relies upon section 51A of the Trade Practices Act and section 9 of the Fair Trading Act.”

    The cross-respondents submit that a pleading in those terms was rejected by French J in Hunt Contracting Co Pty Ltd v Roebuck Resources NL (1992) 110 ALR 183. I agree with his Honour’s conclusion that such a plea amounts to “an ambit claim for the application of the section in respect of any representation which might turn out to be a representation as to future matter” (at 190). As the paragraph stands, the cross-respondents would bear the onus of identifying which representations the cross-claimant would claim were with respect to a future matter before it could plead thereto. It is not enough, as the cross-claimant submits, to simply put the other party on notice that s 51A is being relied upon to place a statutory onus on the cross-respondents to disprove the claims to which it relates. As it stands the paragraph is embarrassing and likely to cause prejudice. The cross-claimant must amend the pleading by identifying precisely which of the conduct pleaded in the cross-claim is conduct to which s 51A applies.

11. The cross-respondents argue that some of the paragraphs relating to alleged representations (part of the conduct in question) do not disclose any reasonable cause of action against the fourth cross-respondent.  This appears to have been an oversight in the drafting of the cross-claim.  The cross-claimant seeks to amend these paragraphs to include the fourth cross-respondent.  It also seeks to clarify the prayer for relief by differentiating between those representations claimed to have been made by all four cross-respondents, and those claimed to only have been made by the first, second and third cross-respondents.

12. In its submission in response to the cross-respondents’ motion, the cross-claimant has given notice that it will seek leave to amend the cross-claim to add a further cause of action in quantum meruit.

    Leave will be given to the cross-claimant to amend the cross-claim according to the foregoing reasons, and otherwise generally. 

13. Save for the foregoing, the motion will be dismissed, the costs of the motion to be costs in the cause of the cross-claim.

14. By 27 April 2001, the cross-claimant and cross-respondents are to file a minute of proposed directions in respect of the amendment of the cross-claim and orders consequential thereto.

I certify that the preceding sixteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lee.

Associate:

Dated:             24 April 2001

Solicitor for the Cross-Claimant:	Clayton Utz
Solicitor for the Cross-Respondents:	Tottle Christensen
Date Submissions Filed:	26 February 2001, 13 and 19 March 2001