Trade Practices Commission v David Jones (Australia) Pty Ltd and ors

[1985] FCA 373

Re: TRADE PRACTICES COMMISSION
And: DAVID JONES (AUSTRALIA) PTY. LIMITED; RUSSWAT NOMINEES PTY. LIMITED; MYER
S.A. STORES LIMITED; ZELLEN PTY. LIMITED; BRUCE HANDEL WATT; JOHN STANLEY
WATSON; CHRISTOPHER RUSSELL; ROBERT JOHN WOOD and JAMES ANTHONY CORCORAN
7 FCR 109
No. G29 of 1985
Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIAN DISTRICT REGISTRY
GENERAL DIVISION
Fisher J.

CATCHWORDS

Practice and Procedure - Trade Practices - Price Fixing arrangement - statement of claim - motion to strike out statement of claim - no reasonable cause of action, prejudice, embarrassment or delay, - distinction between "material facts" and "particulars".

Trade Practices Act 1974. s.45

Federal Court Rules.

Practice and Procedure - Trade practices - Price fixing allegations - Statement of claim - Motion to strike out for want of reasonable cause of action - Distinction between material facts and particulars - Federal Court Rules 1979 (Cth).

HEADNOTE

A statement of claim which alleged that the respondents had "made an arrangement . . . the material provisions of which had the purpose . . . or effect . . . of fixing controlling or maintaining . . . prices", although accompanied by particulars which condescended to the actual facts alleged was not a pleading which contained, in accordance with 0 11, a statement "of the material facts".

HEARING

Adelaide, 1985, July 18; August 2. #DATE 2:8:1985
NOTICE OF MOTION

Notice of motion seeking orders that the statement of claim filed by the applicant be struck out.

R Macaw, for the fourth and ninth respondents. (Applicants on the motion.)

J R Mansfield, for the applicant. (Respondent to the motion.)

J I Ireland, for the first and fifth respondents in the action.

Cur adv vult

Solicitors for the fourth and ninth respondents (Applicants on the motion): Mallesons.

Solicitors for the applicant (Respondent to the motion): Australian Government Solicitor.

Solicitors for the first and fifth respondents: Gadens.

GFV

ORDER

1. The whole of the Trade Practices Commission statement of claim be struck out.

2. The Trade Practices Commission pay the costs of and incidental to the motion.
   
   Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

Orders accordingly

JUDGE1

This is an application by notice of motion filed by the fourth respondent Zellen Pty. Limited and the ninth respondent James Anthony Corcoran ("the applicants") seeking orders that the statement of claim of the Trade Practices Commission ("the Commission") be or certain paragraphs of it be struck out. The notice of motion together with an affidavit in support setting out the basis upon which relief was sought was served on all other respondents. However of those served only the first respondent David Jones (Australia) Pty. Limited and the fifth respondent Bruce Handel Watt attended on the hearing of the notice of motion and supported the making of the orders sought by the applicants.

These proceedings were commenced by the Commission by application accompanied by a statement of claim on 28 May 1985 claiming that in March 1984 those respondents which are corporations contravened sub.para.45(2)(a)(ii) of the Trade Practices Act 1974 ("the Act"). The essential contention was that these corporations made an arrangement or arrived at an understanding which had the effect or was likely to have the effect of fixing prices for Sheridan Manchester products in the Adelaide Metropolitan area. It was further alleged that as from 1 April 1984 the corporate respondents gave effect to this arrangement or understanding contrary to the provisions of sub.para.45(2)(b)(ii) of the Act. Those respondents who are natural persons were said to have been knowingly concerned in or a party to the contraventions and thus engaged in conduct such as was referred to in para.76(1)(e) of the Act.

The Commission filed and served with the application a statement of claim which under Order 4 rule 6(2) of the Rules of this Court is required to show:

"(a) the nature of the applicant's claim; and

(b) the material facts on which it is based."

The applicants to this notice of motion seek orders as follows:

"1. An order that the applicant's statement of claim dated 12th June 1985 (sic) be struck out.

2. Alternatively an order that paragraphs 15,16,17,18,19,21,22,23,28,29,31 and 32 of the applicants' statement of claim dated 12th June 1985 (sic) be struck out."

It is pertinent to note that the particular paragraphs of the statement of claim which the applicants desire to have struck out are those which are applicable to one or other or both of them. Counsel for the first and fifth respondents sought at the hearing to have struck out additional paragraphs exclusively referable to his clients. However if the applicants are correct, the statement of claim as a whole will require extensive amendment which amendments will be applicable to paragraphs referable to all respondents including those not before the Court.

The contentions of the applicants and those supporting them can be considered in the first instance in relation to paragraph 15 of the statement of claim. It together with its particulars is in the following terms:

"15. In or about mid March 1984 the corporate respondents and each of them or some two or more of them made an arrangement or arrived at an understanding the material provisions of which had the purpose, or had or were likely to have the effect, of fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of, the prices at which the First, Second and Third Respondents, and certain other retails of manchester products in the Adelaide metropolitan area, would sell Sheridan manchester.

PARTICULARS

(i) The said arrangement was made, or the said understanding arrived at, at or as a result of a meeting held on or about 19 March 1984 at 'Kappy's Coffee Lounge', 5 Stephen Place, Adelaide. Those present at the meeting were the Fifth, Sixth, Seventh, Eighth and Ninth Respondents.

(ii) The said arrangement or understanding was to the effect that as from 1 April 1984 or thereabouts the retail process for certain items of Sheridan manchester products, supplied by either the Fourth Respondent or by Dunlop Olympic Limited and sold by the First, Second and Third Repondents, would be at certain stipulated prices, set out in a price list distributed at or after the said meeting by the Ninth Respondent and calculated by reference to a margin of 70 per cent or thereabouts on the then wholesale price, that the retail prices for the said items, and other items of Sheridan manchester products specified from time to time, would be at certain stipulated prices set out in further price lists to be distributed by the Ninth Respondent from time to time and calculated by reference to a margin of 70 per cent of thereabouts on the wholesale price prevailing at the time the further lists were published, and that other retails of manchester products in the Adelaide metropolitan area not represented at the said meeting would be exhorted by the Ninth Respondent to adhere to the prices so stipulated."

Particulars (iii) then follows and it specifies the terms of a price list allegedly distributed by the ninth respondent setting out prices for various products. It is unnecessary to set it out in full.

The applicants attacked this paragraph of the statement of claim on the ground that it did not contain a statement of the material facts as required by Order 4 rule 6(2)(b) which the Commission alleged would constitute, or could constitute the contravention of s.45. There were no facts at all, it was said, alleged in this paragraph but only a conclusion drawn from facts which were set out in particulars (i) and (ii) thereof.

To consider this submission it is necessary to refer to the provisions of the Rules of this Court in relating to statements of claim and to particulars thereof. Certain authorities also indicate the part each should play in respect of pleadings.

Brief reference has already been made to Order 4 rule 6 but it is desirable to set it out in the form in which it appears in the Rules. It states -

"6(1). The applicant shall file and serve with the application either an affidavit or a statement of claim, whichever is appropriate.

(2). The affidavit or statement of claim shall show -

(a) the nature of the applicants' claim; and (b) the material facts upon which it is based."

Order 11 deals generally with pleadings and rules 1 to 3 thereof are to the extent relevant as follows:

"1. Where a pleading alleges or otherwise deals with separate matters -

(a) the pleading shall be divided into paragraphs;

(b) each matter shall, so far as convenient, be put in a separate paragraph; and

(c) the paragraphs shall be numbered consecutively.

2. Subject to these Rules -

(a) a pleading of a party shall contain, and contain only, a statement in a summary form of the material facts on which he relies, but not the evidence by which those facts are to be proved; and (b) paragraph (a) has effect subject to this Order and to Order 4 (which relates to commencement of proceedings) and to Order 12 (which relates to particulars).

3. A pleading shall be as brief as the nature of the case admits."

I have added emphasis to portion of rule 2(a) and draw attention to the fact that the Rules differentiate between "pleadings" which are dealt with under Order 11 and "particulars" which are dealt with under Order 12.

Order 11 rule 13 imposes an obligation on a party to traverse any allegation of fact made by the other party in his pleading. Otherwise it is deemed to be admitted. Such an obligation and such a consequence are not imposed under Order 12 on a party who is served with particulars.

Order 11 rule 13 is in the following terms:

"13.(1) Subject to sub-rule (3) and to Order 43, rule 7 (which deals with persons under disability), an allegation of fact made by a party in his pleading is deemed to be admitted by the opposite party unless it is traversed by that party in his pleading or a joinder of issue under rule 14 operates as a denial of it.

(2) A traverse may be made either by a specific denial or by a statement of specific non-admission.

(3) Subject to sub-rule (4), every allegation of fact made in a statement of claim or counterclaim which the party on whom it is served does not intend to admit must be specifically traversed by him in his defence or defence to counterclaim, as the case may be; and a general denial or such allegations, or a general statement of non-admission of them is not a sufficient traverse of them.

(4) Any allegation that a party has suffered damage and any allegation as to the amount of damages is deemed to be traversed unless specifically admitted.

Rule 15 is also pertinent in that it also differentiates between pleadings and particulars. It is as follows:

"15.(1) The pleadings on a statement of claim shall, unless the Court otherwise orders, be closed, as between any applicant and any respondent, on the date of expiry of the last of the times fixed by or under these Rules for filing a defence or reply or other pleading between those parties.

(2) Sub-rule (1) shall have effect notwithstanding that, on the date mentioned in that sub-rule, a request or order for particulars has been made but has not been complied with."

Order 12 deals generally with particulars and under rule 1 a party must state in the pleading or in a document filed and served with the pleading the necessary particulars of any claim pleaded by him.

Order 11 rule 16 is relied upon by the applicants in their notice of motion as providing the grounds upon which the statement of claim or portions thereof should be struck out. It is in the following terms:

"16. Where a pleading -

(a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading;

(b) has a tendency to cause prejudice, embarrassment or delay in the proceeding; or

(c) is otherwise an abuse of the process of the Court,

the Court may at any stage of the proceeding order that the whole or any part of the pleading be struck out."

Relevant authorities establish the difference between pleadings and particulars and especially establish that it is not the function of particulars to take the place of the necessary averments in a statement of claim. As Lord Justice Scott said in Pinson v Lloyds and National Provincial Foreign Bank Ltd. (1941) 2 K.B. 72 at p.75

"It is a well-recognized canon of pleading that the defendant need not, and, indeed, ought not to, plead to 'particulars,' whether contained in or delivered with the statement of claim. The reason for that canon is plain. All the material facts constituting the cause of action ought already to have been plainly stated in the pleading itself, as required by Order XIX., r.4, the plainest and most fundamental of all the rules of pleading. The proper function of particulars is not to state the material facts omitted from the statement of claim in order, by filling the gaps, to make good an inherently bad pleading, however common that pernicious practice may have become. On this topic I made some observations in Bruce v Odhams Press, Ltd. (and will not repeat them beyond saying that I still hold the opinion that it is not the function of particulars to take the place of necessary averments in the pleading. Their function is to put the opposite party on his guard and prevent him being taken by surprise at the trial of an action, the "material facts" of which should have been already averred. Nor have mere statements of evidence as such a place in particulars, any more than in the pleading, although the dividing line between statements which contain sufficient indication to prepare the opponent's mind for what he will have to meet at the trial and mere statements of evidence is sometimes hard to draw and should not invite meticulous criticism. The essential rules of modern pleading embody a common-sense view of litigation, and, if complied with substantially and in accordance with their real intention, are well calculated to keep the cost of litigation down."

Likewise in Chapple v Electrical Trades Union (1961) 3 All E.R. 612 Pennywick J. said at page 614 -

"As regards the first ground, it is a well recognized canon of pleading that the defendant need not and, indeed, ought not to plead to particulars, whether contained in or delivered with the statement of claim:. . . It seems to me that a defendant should not be required to plead to particulars merely because, on analysis, it turns out that the particulars could equally or more appropriately have been included in the body of the statement of claim."

An application to strike out a statement of claim in circumstances very similar to the present was made to Northrop J. in H 1976 Nominees Pty. Ltd. v Gali and Apex Quarries (1979) 30 A.L.R. 181. In that matter no material facts were pleaded in the relevant paragraph of the statement of claim which only contained conclusions of law. At page 186 he said:

"Paragraph 17 contains a conclusion drawn from facts which are not contained in the statement of claim. In order to disclose a reasonable cause of action, a statement of claim must contain statements of material facts which support the claims made. Particulars are not statements of material facts; particulars perform a different purpose. The distinction is made clear in Bruce v Odhams Press Ltd. (1936) 1 KB 697, per Scott LJ at 712-3:-

'The cardinal provision in r 4 is that the statement of claim must state the material facts. The word "material" means necessary for the purpose of formulating a complete cause of action; and if any one material" fact is omitted, the statement of claim is bad; it is "demurrable" in the old phraseology, and in the new is liable to be "struck out" under O XXV, r 4: see Philipps v Phillips (1878) 4 QBD 127; or "a further and better statement of claim" may be ordered under O XIX, r 7.

The function of "particulars" under r 6 is quite different. They are not to be used in order to fill material gaps in a demurrable statement of claim - gaps which ought to have been filled by appropriate statements of the various material facts which together constitute the plaintiff's cause of action. The use of particulars is intended to meet a further and quite separate requirement of pleading, imposed in fairness and justice to the defendant. Their function is to fill in the picture of the plaintiff's cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial. Consequently, in strictness, particulars cannot cure a bad statements of claim. But in practice it is often difficult to distinguish between a "material fact" and a "particular" piece of information which it is reasonable to give the defendant in order to tell him the case he has to meet; hence in the nature of the things there is often overlapping. And the practice of sometimes putting particulars into the statement of claim and sometimes delivering them afterwards either voluntarily, or upon request or order, without any reflection as to the true legal ground upon which they are to be given has become so common that it has tended to obscure the very real distinction between them.'

The particulars to para 17 of the statement of claim cannot cure the defects contained in the statement of claim. With respect, I would agree with what was said by Adam J. in Rubenstein v Truth and Sportsman Ltd. (1960) VR473 at 476."

The dicta of Adam J. in Rubenstein's case approved by Northrop J. was as follows:

"Where, as in the present case, there has been a clear infringement of the rule as to stating all material facts and not merely a failure to give sufficient particulars of facts which have been pleaded (a distinction made clear by Scott, L.J., in Bruce v Odhams Press Ltd., (1936) 1 K.B. 697, at pp.712-13; (1936) 1 All E.R. 287) the preferable course, I consider, in the interests of proper pleading is to strike out the offending pleading, with liberty to amend, rather than to order particulars. As Scott, L.J., said, at p.173 of the judgement, the whole of which will repay study in this age of lax pleadings, 'in strictness, particulars cannot cure a bad statement of claim'."

Northrop J. was of opinion that the particulars given in respect of paragraph 17 of the statement of claim could not, as a matter of law, and should not, for reasons inter alia of prolixity, be treated as statements of material facts. I take the same view of this present matter although the contrary approach was strongly pressed upon me by counsel for the Commission. Mr. Mansfield said everything that could be said in the circumstances in defence of the statement of claim.

Paragraph 15 of the statement of claim does not state any material facts. It is merely a statement of a conclusion drawn from facts which are not in the statement of claim. Standing alone, paragraph 15 does not disclose a reasonable cause of action against the respondents. Furthermore all of the authorities abovementioned very clearly indicate that material facts set out in the particulars can not be used to make good the deficiencies in the statement of claim.

Many other paragraphs in the statement of claim, to a greater or lessor extent, suffer from the same deficiency.

Paragraph 17 pleads that the corporate respondents attempted to make an arrangement or arrive at an understanding. No facts are pleaded in the paragraph and in its particulars thereto the Commission states "The applicant refers to and repeats the particulars to paragraph 15 hereof." Likewise paragraph 17 having failed to make any necessary averments, discloses no cause of action. But there is also nothing in the particulars to the paragraph to indicate what facts the Commission relies on to establish the attempts allegedly made.

Paragraph 18 suffers from the same vice. It pleads that from 1 April 1984 or thereabouts the corporate respondents and each of them gave effect to the arrangement or understanding referred to in paragraph 15. The particulars then state that the applicant "refers to and repeats the particulars to paragraph 15 and the particulars contained in paragraph 16 hereof" and in addition it sets out additional particulars. Again paragraph 18 does not disclose any cause of action as it fails to plead material facts. Furthermore there are no particulars at all supplied in paragraph 16 and it is far from clear which of the facts in the particulars to paragraph 15 are relied upon.

It is unnecessarily repetitive to refer specifically to the balance of the pleadings, other than to note that paragraphs 19, 24, 25, 26, 27, 28 and 29 are in form in pari materia with the pattern established by paragraph 15. With the exception of paragraph 16, all material facts upon which it would appear the Commission proposes to rely are provided in particulars and not in the pleadings. Not only therefore do the pleadings not comply with the rules but the respondents are under no obligation to plead, and in fact should not plead, to the statements of material facts contained in the particulars.

I must therefore find that the statement of claim discloses no reasonable cause of action against the respondents. To the extent that it omits not one but many material facts, it is bad. It seems pointless to go through it in detail to ascertain whether certain parts are unobjectionable and should not be struck out. In effect the whole of the statement of claim, or at least the material and essential parts thereof, will have to be redrawn. To enable this to be done it is more appropriate to strike out the whole of the statement of claim. In this regard I draw attention, as Northrop J. did, to the words of Jacobs J. in Turner v Bulletin Newspapers Pty. Ltd. (1973) 131 C.L.R. 69 at p.97

"Where the form of pleading is defective the Court can certainly strike it out entirely, and is not bound to reframe it for the plaintiffs' benefit."

I therefore order that the whole of the statement of claim be struck out to enable a further statement of claim to be filed against all respondents. The Commission must pay the costs of and incidental to the notice of motion.