Wildtrek Ltd v Australian World Expeditions Pty Ltd

. r

FOR

L I X I T E D

D I S T R I B U ' r I ~ N

JUDGMENT No. 53!./=

IN THE FEDERAL COURT OF AUSTRALIA

)

VICTORIA DISTRICT REGISTRY

)	VG No. 184 of 1987

)

GENERAL DIVISION

)

Between :

(Applicants)

AUSTRALIAN WORLD EXPEDITIONS PTY.

LIMITED. AUSTRALIAN HIMALAYAN

=EDITIONS PTY. LIMITED and

GORONWY PRICE

(Respondents)

MINUTES OF ORDEB

JUDGE MAKING ORDER:	RYAN J.
DATE OF ORDER:	6 OCTOBER 1987
THE COURT ORDERS THAT:

1. The statement of claim herein be struck out.

The applicant have leave to file and

serve a further

statement of claim within 21 days.

3. "he respondents' motion on notice dated 20 August 1987 (as amended) and the directions hearing herein be adjourned to

6 November 1987.

---_.

1 l -:,j

4. The applicants pay the respondents' costs of the heari@%

21 August 1987 and of this day.

- 2 -

NOTE: Settlement and entry of orders is dealt with in Order 36 of

the Federal Court Rules.

. .

IN THE FEDERAL COURT OF AUSTRALIA	)
)
VICTORIA DISTRICT REGISTRY	) . VG No. 184 of 1987 )
GENERAL DIVISION	)

Between: WILDTREK LIMITED. ANDREW

MARSHALL. CORMARSHALL m.

LIMITED and ROBERT

NICHOLAS THURLOW ASHFORD

(Applicants)

(Respondents)

Coram: Ryan J.

m: 6 October 1987

REASONS FOR JUDGMENT

statement of claim, the applicants have

pleaded that in January 1987 they concluded an agreement with

the respondents,

By their

' I... whereby in substance the businesses of the

firstnamed Applicant and the second and thirdnamed Respondents would be amalgamated so that a major adventure travel company would be formed assimilating both their businesses and wherein the second, third and fourthnamed

Applicants and

the thirdnamed Respondent would

have interests.

It is next alleged that it was a term of the agreement that,

' I . . .

it would be settled and

the various share

transfers and other matters that had to be done to complete the agreement would be done by 28th

March,

1987. "

In paragraph 9 of the statement of claim there are listed eight distinct acts which the applicants did or refrained from doing "in reliance on the agreement and in the furtherance of the object of amalgamation at the request of the respondents". It is then alleged that the respondents repudiated the agreement and the applicants accepted that repudiation. The concluding paragraphs of the statement of claim (omitting particulars of loss and damage subjoined to paragraph 20) are in the following terms:

"15.	At no time did the Respondents intend to settle and complete the agreement, or alternatively to settle and complete the agreement within the time or on the figures or on the terms of the agreement.

16. The Respondents by their conduct both in leading up to the entry into of the

agreement prior to the 21st January,

1987

and subsequent to the 28th March, 1987 led the Applicants to believe that they

regarded the agreement as a good

and

subsisting one which they would

honour and

perform.

17. The Applicants in reliance thereon did the things referred to in paragraph 9 hereof.

18. The said conduct of the Respondents was carried out by them in trade and commerce.

19. The said conduct of the Respondents was misleading and deceptive conduct contrary to the provisions of section 52 of the

Trade Practices Act.

20. By reason of the matters aforesaid the

Applicants are entitled to damages from the Respondents.

...

21. Alternatively, the Applicants and each of them claim against the respondents and each of them the costs and expenses and other losses referred to in paragraph 9 thereof as restitution for such losses."

By motion on notice dated

20 August 1987 the

respondents have sought an order

that the applicants'

proceedings be dismissed on the grounds that:

"(a) the proceedings are vexatious and

oppressive;

(b)	the pleadings do not disclose a cause of action;
(c)	the proceedings do not come within the meaning of section 52 of the Trade Practices Act. "

Before me Mr. John Kaufman of Counsel who appeared for the respondents did not press paragraph (a) of those grounds but confined himself to a two-pronged attack on the statement of claim.

It was first argued that the statement of claim did not

disclose a cause

of action under s.52 of the Trade Practices

&J because it failed to identify any allegedly misleading

and deceptive conduct, except by indicating that it consisted partly in "leading up to the entry into the agreement prior to the 21st January 1987" and was partly "subsequent to the 28th March 1987". Usually representations of intention to enter into a contract containing certain terms cease to

operate to sustain a cause of action after a contract containing those terms has been concluded. That is because

the representee has got what he was promised and

any cause of

action on the representation merges in the cause of action on the concluded contract. Hwever, in Ranslev v. Medical

Benefits Fund of Australia Ltd (1980) 3

ATPR 40-160 at 42,256

Smithers J. adverted to circumstances in which

pre-contractual representation may remain available to support a cause of action other than on the contract. His Honour there said:

"It is always possible that a contract may be made in circumstances in which not only is the contract concluded, but a party also represents to the other that he intends to carry out his obligations thereunder. As was pointed out in L v. Sunair Holdinss Ltd. by MacKenna J. (1973) 2

All E.R. 1233 at p.1236, 'A promise ... may

contain by implication a statement of present

fact. The person who makes the promise may be implying that his present intention is to keep it or that he has at present the power to perform

contained in a document advising the obligations

it. ... ' And in this case where an offer is

a party is willing to assume and is introduced by

phrases such as 'the MEF will pay to

all

contributors' various benefits, and 'benefits are

provided up to'

specified amounts, there may be

some ground for the contention that an implied representation of intention to observe the provisions of the contract, if made, does arise. But I am far from satisfied that in this case there is any such representation. Basically, the brochure does no more than describe the benefits which the defendant will undertake to supply and offer to undertake to supply if a person becomes a contributor. It was notifying the legal obligations which it was willing to undertake in the contract between itself and a contributor. The transaction offered and ultimately concluded between Mr. Duffy and the defendant was one containing promises on the part of the defendant to make payments in specified circumstances in

consideration of contributions being made.

would have been something quite different and superfluous to introduce the notion that the defendant was saying that in addition to promising to provide the benefits it was also representing that it intended to provide them. Contractual promises not representations of intent were the subject of interest. That there

is an intention on the part of the parties

entering into a contract to observe the

obligations undertaken is no doubt normally assumed by all parties to the contract. But that a party making an offer to enter into a contract containing specified promises not only intends to accept legal responsibility ih respect of his promises but also represents that he intends to perform them is not to be inferred in the absence of evidence significantly pointing to the making of such a representation and in this case the evidence would have to be strong enough to raise the inference beyond reasonable doubt. Merely to offer to conclude a bargain in legal form or to enter into a contract offered is not enough.

Compare L. Grollo Darwin Manasement Ptv. Ltd. v. Victor Plaster Products Ptv. Ltd. (1978) 2 ATPR 40-072 at p.17,737."

In L. Crollo Darwin Manasement Ptv. Ltd. v. Victor Plaster Products Ptv. Ltd. to which his Honour referred, the relevant paragraphs in the statement of claim were in these terms :

"11.	The defendants alternatively one of them did, in trade and commerce, engage in conduct which was misleading and deceptive within the meaning of sec. 52 of Pt. 5 of the said Act in that it entered into the said arrangement with the plaintiffs or one of them when at all times they or alternatively one of them had no intention whatsoever of observing or keeping the said arrangement so made.
12.	As a result of the matters alleged in para. 11 hereof the plaintiffs alternatively one of them have suffered loss and damage by an act of the defendants alternatively one of them which was done in contravention of the said sec. 52 of the said Act."

Of the cause of action sought to be pleaded in that way, the Full Court (Smithers, St. John and Fisher JJ) observed, at

17,736:

"It may well be within the range of misleading and deceptive conduct, in certain circumstances, to

enter into an arrangement having no intention to observe the obligations undertaken therein. Whether misleading or deceptive communication of

the relevant intention or the factor of

reliance upon some implied representation of such intention or some other factors would be essential elements in any cause of action based upon sec. S2 are questions to be determined. However, the general allegation in para. 11 is

that the conduct described was misleading and

deceptive and committed in trade and commerce, and that in para. 12 is that the plaintiff

suffered damage as

a result of that conduct.

Thus the statement of claim is in

terms wide

enough to comprehend every element reasonably

necessary to constitute an arguable cause of

action under sec. S2 (cf. the High Court decision

in Hornsbv Buildins Information Centre Ptv. Ltd.

& Anor. v. Svdnev Buildins Information Centre

Ltd. delivered on 19 April 1978) C(1978) ATPR

40-0673.

Accordingly we are of the same opinion as the learned Judge that it is not appropriate to dismiss or stay the action on the ground that the statement of claim discloses no reasonable cause of action. But that does not mean that the statement of claim is such that the respondents should have been required to plead to it. In this respect it is enough to say that it is not for the appellants to require the respondents to speculate as to what is comprehended within the general allegations made in the statement of claim or what are the circumstances alleged to give to the facts alleged the quality of being misleading or deceptive. Merely to enter into an arrangement which creates legal obligations, which it is seen from other parts of the statement of claim the arrangement sued on is alleged to do, whilst having no intention to carry out such obligations is not per se

misleading or deceptive conduct.

So far as

appears from those bare facts each or either party may have been satisfied to do business on the ground that the other undertook the legal obligations which were created without reference to the intention of the other in relation to the performance of those obligations. Moreover a party is not necessarily misled or deceived if legal obligations are undertaken by another in circumstances that that party does not intend to perform them. But this is all that the statement of claim does allege. It says merely that the conduct alleged was misleading or deceptive within the meaning of sec. S2 of the Act ‘in

that’ the defendants

entered into the arrangement

when they or one of them had no intention of observing or keeping it. There is no allegation

of facts essential to give to that conduct the alleged quality of being misleading or deceptive.

In the absence

thereof the statement of claim is

defective and the respondents

cannot reasonably

be required to deliver a defence."

In my view the attempt in the present case to plead a cause of action under s.52 of the Trade Practices Act suffers from the same vice as that identified in the passage just quoted from L. Grollo Darwin Manasement Ptv. Ltd. v. Victor Plaster Products Ptv. Ltd. All that is pleaded in paragraphs 15 and 16 is that the respondents entered into the agreement not intending to observe or keep it and that lack of intention persisted after 28 March 1987. In the words of the Full Court, "there is no allegation of facts essential to give to

that conduct the alleged quality of being misleading or

deceptive. I' I consider that the pleading of a cause of action of this kind requires first the identification of each act, the doing of which or refusing to do which is relied on as constituting "conduct" as defined in s.6(2). which allegedly contravened 3.52 of the Trade Practices Act. There must then be pleaded each fact which is material to the conduct thus identified, in the sense of giving it the alleged quality of being misleading or deceptive.

I was referred by Mr. Ginnane for the applicant to p-

J. Berrv Estates Ptv.

Ltd. v. Manaalore Homestead Ptv. Ltd.

(1984) 6 ATPR 40-489 where in paragraphs 10, 11, 12, 13 and 14 of a statement of claim it had been pleaded that the

respondents made certain

representations

and warranties to

the applicants in consideration of its entering into an

8 .

. .

agreement, that the representations were false to the knowledge of the respondents and the warranties were broken, and that the applicant entered into the agreement in reliance on the representations or in consideration of the warranties. It was then pleaded in paragraph 18 that:

"Further and alternatively, by

reason of the

matters referred to in paragraphs 10, 11, 12,

and 14 hereof, the Firstnamed Respondent in the

course of trade or commerce in Australia:-

(a)	has engaged In conduct	that is misleading
and/or deceptive;

(b)	has engaged in conduct that is likely	to
mislead and/or deceive;
...

in contravention of sections 52 ... of the Act."

At p.45,631 of the report Sweeney J. observed:-

"This amended Statement of Claim was based upon

common law precedents. In it the alleged

contraventions of the Act, which found the

jurisdiction of this Court, were pleaded as

alternatives to the common law claims, and the

conduct relied upon was described by reference

back to those claims. It would be of more

assistance to respondents and to the Court

causes of action said to arise under the Act were pleaded directly in the first instance, with particulars which did not relate back to common law claims. "

It was argued that although his Honour there deprecated the form of pleading, he implicity acknowledged that it was not defective in the sense of failing to disclose a cause of action.

9 .

However, it must

remembered

that

Sweeney

J‘s

observations occurred in the course of a judgment given after the trial of the application, and not on a motion to strike out the statement of claim. In the second place, the

pleading in P. J. Berrv Estates Ptv.

Ltd.

Manqalore

Homestead Ptv.

Ltd. did identify conduct

which

allegedly

contravened 3 - 5 2 of the Trade Practices Act and the matters which were said to give it the quality of being misleading or deceptive by incorporating by reference in the pleading of the cause of action under the Act, the paragraphs in which the common law claim in contract had been pleaded.

By contrast, in the present statement of claim there is

no plea of any misrepresentation or breach of warranty which

has been incorporated by reference in the attempt to plead

misleading or deceptive conduct.

It was also contended on behalf of the respondents that the transaction disclosed by the statement of claim was, on its face, not one which occurred in trade or commerce so as to bring the allegedly misleading or deceptive conduct,

assuming it to have been properly identified, within the

purview of the Trade Practices Act.

Reference was made to

O’Brien v. Srnolonouov (1983) 53 ALR 107 where a Full Court of this Court (Fox, Sheppard and Beaumont JJ) held that certain false and misleading statements made by the vendors of a

parcel of approximately

588 acres of rural land were not made

in trade or commerce. After referring to a number of authorities on the question of what constitutes “trade or

10.

commerce" including Re Ku-rins-sai

CO-Operative

Buildinq

Society (No. 12) Ltd. (1978) 36 FLR 134; 22 ALR 621, the

Court concluded, at 113:

"In the present case, it cannot be suggested that the lands acquired by the apvellants became trading stock (see FC of T v. Stl-Hubert's Island

Ptv. Ltd. (in liq) (1978) 19 ALR 1; 138 CLR 211). Nor is it a case where the taxpayer's activities amounted to more than the mere realization of a capital asset and constituted the carrvins on of land development (see FC of T v. Whitfbrds Beach

Ptv. Ltd. (1982) 39 ALR 521).

The land itself

was not used for any business activity:	it was
not used for farming or grazing.

It follows, in our opinion, that the only possible feature of the case which could conceivably be relied upon to suggest that the impugned conduct occurred in trade or commerce was the resort by the appellants to a newspaper as a medium of public advertisement of the land and the use made by the parties of the telephone for the purpose of conducting negotiations. It

is true, as the learned judge observed, that the

use of such facilities is common practice in the conduct of trade or commerce. It is also true, as Mason J. observed in Witfords Beach, supra (at 537) that there is ambiguity in the

adjectives 'business',

'commercial'

and

'trading' which 'have about them

a chameleon-

like hue, readily adapting themselves to their

surroundings'.

As his Honour said,

some

contexts, phrases such as 'business deal'

and

'operation of business' may signify

a transaction

entered

into

a person in the course of

carrying on a

business; in

other contexts they

'denote a transaction which is business or

commercial in character' (at 537). The same may

be said of 'commercial' or 'trading'. But, in

our view, the mere use, by a person not acting in

the course of carrying on a business, of

facilities commonly employed in commercial

transactions, cannot transform a dealing which

lacks any business character into something done

in trade or commerce. Of course, the facilities

mentioned have applications which are not

commercial

any

sense:

respondents join issue with paragraph 18	of the statement of
claim.

[1987] FCA 531

6 Oct 1987