Williams v Grainger - [2001] WASC 10

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: WILLIAMS & ANOR -v- GRAINGER & ORS [2001] WASC 10

CORAM: MASTER BREDMEYER

HEARD: 25 SEPTEMBER, 8 & 11 NOVEMBER 2000

DELIVERED : 19 JANUARY 2001

FILE NO/S: CIV 1171 of 2000

BETWEEN: RUTH EILEEN WILLIAMS
First Plaintiff
MARK CURTIS WILLIAMS
Second Plaintiff
AND
GEOFFREY ORMOND GRAINGER
First Defendant
JOAN HARRINGTON GRAINGER
Second Defendant
WESFARMERS DALGETY REAL ESTATE (WA) PTY LTD (ACN 009 238 993)
WESFARMERS DALGETY LTD (ACN 008 743 217)
Third Defendants

Catchwords:

Summary judgment applications under Rules of the Supreme Court O 16 - Strike out applications

Legislation:

Rules of the Supreme Court, O 16

Trade Practices Act, s 52

Result:

Summary judgment applications refused
Strike out applications allowed in part

Representation:

Counsel:

First Plaintiff                :     Mr M A Blundell
Second Plaintiff            :     Mr M A Blundell
First Defendant             :     Mr M G Clay
Second Defendant         :     Mr M G Clay
Third Defendants          :     Mr A S Stavrianou

Solicitors:

First Plaintiff                :     Solomon Brothers
Second Plaintiff            :     Solomon Brothers
First Defendant             :     Martin De Haas
Second Defendant         :     Martin De Haas
Third Defendants          :     Julian Lentzner

Case(s) referred to in judgment(s):

Aidinis v Hotchin [1971] SASR 446
Buyquick.com Ltd v Foxgold Pty Ltd [2000] WASC 216
Corbidge v The Bakery Fun Factory Shop Pty Ltd [1984] ATPR 40‑493
Day v William Hill (Parklane) Ltd [1949] 1 KB 632
Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158
Gould v Vaggelas (1984) 157 CLR 215
Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281
Lill v Merchant Capital (WA) Ltd (1996) 15 WAR 536
Marks & Ors v GIO Australia Holdings Ltd & Ors (1998) 158 ALR 333
Sellars v Adelaide Petroleum NL & Ors (1994) 179 CLR 332
Williams & Anor v Grainger & Ors [2000] WASC 167
Williams & Anor v Grainger & Ors [2000] WASC 96

Case(s) also cited:

Auyeung v Chan [1999] NSWCA 417
Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 71 ALR 615
Bride v The Australian Bank Ltd, unreported; SCt of WA; Library No 950632; 21 November 1995
Dey v Victorian Railways Commissioners (1949) 78 CLR 62
Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785
Frith v Gold Coast Mineral Springs Pty Ltd (1983) 65 FLR 213
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125
Global Sportsman Pty Ltd v Mirror Newspaper Ltd (1984) 2 FCR 82
Inform Formwork v McInnes Concrete Service Pty Ltd, unreported; FCt SCt of WA; Library No 950611; 15 November 1995
Janssen-Cilag Pty Ltd v Pfizer Pty Ltd [1992] 37 FCR 526
March v E & M H Stramare Pty Ltd (1991) 171 CLR 506
Marsden Byers & Associates v Casselan Pty Ltd, unreported; SCt of WA (Nicholson J); Library No 8897; 31 May 1991
Michael v Nicholson, unreported; FCt SCt of WA; Library No 950660; 1 December 1995
Rubenstein v Truth & Sportsman Ltd [1960] VR 473
Smolonogov v O'Brien (1982) 67 FLR 311
Stone James v Pioneer Concrete (WA) Pty Ltd [1985] WAR 233
Sunbird Plaza Pty Ltd v Maloney (1989) 166 CLR 245
Topic Pty Ltd v Rosecroft Holdings Pty Ltd, unreported; SCt of WA (Master Adams); Library No 9186; 12 December 1991
Trustek Australia Pty Ltd v Burke, unreported; SCt of WA (Wheeler J); Library No 980121; 16 March 1998
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514

MASTER BREDMEYER: The first and second defendants, who are represented by the same solicitor, have applied to strike out parts of the plaintiffs' statement of claim of 25 July 2000. The third defendants have also applied to strike out parts of the same statement of claim. Since these applications were filed, the plaintiffs have produced a minute of re‑amended statement of claim of 18 August 2000 and of 6 November 2000 in an attempt to overcome some of the perceived problems. That attempt is commendable as it might narrow the issues in dispute, so I am prepared to consider the two strike out applications in relation to the minute of 6 November 2000 ("the minute").
I will consider the first and second defendants' strike‑out application first.
Paragraph 12A of the minute reads:
"12AThe representations pleaded in paragraphs 8.1‑8.4 inclusive were made by the first defendant with knowledge that Gale Williams was acting as agent for Ruth Williams and Mark Williams.
PARTICULARS
A.Ruth Williams was present in the same room as the first and second defendants and Gale Williams when the first defendant made the representations pleaded in paragraphs 8.1 and 8.3, and saw the map pleaded in paragraph 8.2.
B.The first defendant wrote in the 20 May 1998 extension document that the purchasers were: 'Gale Williams Ruth Williams (Trust to be Nominated)'.
C.Prior to execution of the Formal Document, the first defendant caused the relevant details to be typed in the document including identifying the purchaser as 'The Mallee Trust The Trustee Mark Curtis Williams'."
Particular A tells me that Ruth and Gale heard two of the representations and saw the map which is part of the third representation. It does not tell me that the first defendant knew that Gale was at that time acting for Ruth. I consider this particular should be amended. It is meant to be a particular of the first defendant's knowledge that Gale was acting for Ruth. Gale may have told the first defendant (Mr Grainger) that he was acting for his wife, Ruth, who through her trust proposed to take a lease of the two properties. I note that Gale signed the two leases on her behalf on 18 May 1998. I will strike out this particular with leave to replead.
I consider pars 13 and 14 are in order. The plea that Ruth entered into the lease of Kent Location 1658 and Kent Location 1659 is said to be an idle plea because she has not claimed damages for entering into the leases, or for rescission of those leases. It is not an idle plea. It is a stepping stone to the pleas of loss in par 35 A and C to the effect that, because of the misrepresentations, she farmed the leased properties at a loss or at a reduced profit.
Further objection is taken to par 14.4 to par 14.6 that they exceed the endorsement on the writ. The writ did not refer to the leases. This is a good point. The plaintiff would like to amend the writ in terms of a Minute of Reamended Writ of Summons of 6 November 2000 and I propose to allow that amendment.
Paragraph 14.6 of the minute pleads:
"14.6Ruth Williams entered into finance arrangements with Wesfarmers Dalgety, Dalgety Limited ACN 008 996 218 ('Dalgety') and Primary Industry Bank of Australia Limited ACN 001 621 129 ('PIBA') including a seasonal facility of $361,500.00."
The plaintiffs' counsel wants to add the words "in connection with the leases" after the words "finance arrangements" in line one. I am willing to make that amendment. It is helpful but I consider the plea is still inadequate. "Finance arrangements" could be just an agreement to lend. Likewise, the "seasonal facility of $361,500" is an agreement to lend up to that limit. The plaintiffs should plead what sums were lent to Ruth in reliance on the representations. The matter is important. Ruth had borrowed from the third defendants prior to the representations. She borrowed again from them after the representations and she borrowed different sums at different times. Some of her borrowings were after Mark's notice of rescission of the contract of sale and so could not be in reliance on the representations. What is important to know is what sums did she borrow in connection with the leases in reliance on the representations, because, later in par 35D, she pleads that Wesfarmers made demand under various securities because of the increased indebtedness pleaded in par 14.6. Wesfarmers could not be liable in this action for any wrongful calling up of loans, except in relation to the increased loans to permit her to farm the two locations, granted in reliance on the representations.
Paragraph 15 pleads:
"15.By notice of rescission dated 17 August 1998 ('the Notice of Rescission') Mark Williams terminated the Contract, as he was entitled to do, and demanded immediate refund of the deposit paid pursuant to the Formal Document."
I consider that plea is adequate. The plaintiff, Mark, is entitled to justify the rescission on any basis he can: see Aidinis v Hotchin [1971] SASR 446. The plea does not give the basis for the rescission. The plaintiff is entitled to rely on all or any of the four misrepresentations pleaded in par 8 to justify the plea. I consider the defendants will not be embarrassed by this plea.
The damages plea for all the causes of action is found in par 35. It is pleaded in broad terms that Ruth, Mark and Gale all suffered loss and damage. I propose to consider this without any particular differentiation between the different plaintiffs. Particular A reads:
"A.Ruth Williams was forced to sell about 2,700 head of the Brown Trust's livestock located on Kent Location 1658 and Kent Location 1659 before 29 February 2000, rather than at any later time or times of her own choosing in order to maximise financial gain, because:
(i)the livestock had been located on Kent Location 1658 and Kent Location 1659 during the currency of Ruth Williams' leases from the first defendant and the second defendant of Kent Location 1658 and Kent Location 1659 to 28 February 2000;
(ii)Ruth Williams had nowhere else she could feasibly relocate all of the livestock after 28 February 2000;
(iii)but for the rescission of the Contract as pleaded herein, Ruth Williams could have relocated all the livestock to Kent Location 1658 for as long as she required.
The plaintiffs had not exercised the option to purchase Kent Location 1659 contained in the Formal Document because they learned the falsity of the representations pleaded herein prior to expiry of the option period."
Ruth was the lessee of Kent Location 1658 between 18 June and 18 December 1998 or possibly a little later and the lessee of Kent Location 1659 from 18 June 1998 to 28 February 2000. According to the minute, she entered into those leases in reliance on the representations and the plaintiffs did not exercise the option to purchase Kent Location 1659 prior to 28 February 2000 because of the falsity of the representations.
I consider this plea is arguable. It is a plea of particular trading losses or reduced profits from the forced sale of livestock by Ruth as a result of the misrepresentations. Trading losses are recoverable as damages in fraud and misleading and deceptive conduct. In Gould v Vaggelas (1984) 157 CLR 215, which concerned a fraudulent inducement to purchase property, Gibbs CJ, at 220 ‑ 222, said:
"[The] general principle is that the plaintiff is to be put, so far as is possible, in the position that he would have been in if he had not acted on the fraudulent inducement ... There may be cases in which the purchaser continues to trade, either because he has no real alternative or because he has not become aware of the nature of the fraud, and in those circumstances incurs losses which are not represented by the difference between the price and the value of the business. There is no reason in principle why the defrauded purchaser should not recover damages for all the loss that flowed directly from the fraudulent inducement (unless, possibly, the loss was not foreseeable). If the purchaser, besides paying more for the business than it was worth, has suffered additional losses which resulted directly from the fraud he ought to be compensated for them. Of course, the court must be satisfied that the loss did result directly from the fraud and not from some supervening cause such as the folly, error or misfortune of the purchaser himself, and must ensure that no additional compensation is given for losses when those losses, or the probability of their occurrence, has already been taken into account in determining the value of the business."
At 222 Gibbs CJ referred to the decision of the English Court of Appeal in Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158. In that case the fraud of the defendant had induced the plaintiff to purchase a business and the Court of Appeal allowed damages which included the loss incurred in running the business. Gibbs CJ said at 222:
"The court apparently assumed that the losses in trading resulted directly from the fraud and not from any supervening cause such as the action of the purchaser in carrying on the business for too long. In the Court of Appeal at 167 Lord Denning MR said:
'The defendant is bound to make reparation for all the actual damages directly flowing from the fraudulent inducement ... all such damages can be recovered; and it does not lie in the mouth of the fraudulent person to say that they could not reasonably have been foreseen.' "
In Gould v Vaggelas, above, at 243 Wilson J said:
"In Doyle's case the plaintiff was the purchaser of a business on the strength of representations as to the takings of the business which were afterwards shown to be fraudulent. He instituted proceedings four months after settlement but carried on the business for three years before selling it. The Court of Appeal awarded him roughly sufficient damages to restore him to his antecedent position, being satisfied that the losses flowed directly from the inducement."
I add that in Doyle's case the plaintiff had purchased a leasehold business. He discovered that the representations were fraudulent shortly after settlement. He tried to sell it but could not. One of the defendants was the landlord and he would not agree to an assignment of lease.
In Corbidge v The Bakery Fun Factory Shop Pty Ltd [1984] ATPR 40‑493, a decision of Woodward J, the plaintiff purchased a leasehold business, a toy shop, as a result of misrepresentations as to its profitability. He did not avoid the contract. The Judge considered, at 45,688, that the plaintiff was entitled, among other heads of damage, to any consequential losses on running an unprofitable business, provided damages were mitigated where possible. He allowed the plaintiff damages for losses in running the business for one year and for rent and interest paid for two years until the lease expired. The trial Judge said at 40‑493 that the matter which had caused him the most concern in determining damages was whether there was anything the plaintiff could have done to mitigate his damage. The Judge asked whether the plaintiff could have put more money and effort into the business and concluded that he could not have done so. The Judge also examined why the plaintiff had not quit the business in the first 12 months of the two year lease when he discovered the representations were not true. The Judge concluded that the plaintiff could not have done that as: (1) He would have broken the lease and be faced with an unanswerable action by the landlord. I add that it was a lease from a third party. (2) The plaintiff would have had difficulty selling the business given its unprofitability; and (3) he was advised to stay on pending the determination of the court case. On (3) the Judge said that he was unable to conclude that that advice was wrong.
In Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281 at 291 the High Court reiterated that the proper measure for damages in an action for damages for deceit is the difference between the real value of the thing acquired as at the date of acquisition and the price paid for it and that such an action is closely analogous to an action for damages for breach of s 52 of the Trade Practices Act. Their Honours continued:
"Nevertheless, although the value is assessed as at the date of the acquisition, subsequent events may be looked at insofar as they illuminate the value of the thing as at that date. A distinction is drawn, however, between subsequent events that arise from the nature or use of the thing itself and subsequent events that effect the value of the thing but arise from sources supervening upon or extraneous to the fraudulent inducement ... [If] it is established that the decline in takings has been caused by business ineptitude or unexpected competition, evidence of subsequent takings is not admissible to prove the value of the business at that date, events such as ineptitude and unexpected competition being regarded as supervening events. In some cases of deceit it may also be proper to compensate the defrauded party not only for the difference between the value of the thing acquired and the price paid for it but also for losses induced by the fraud and directly incurred in conducting the business. All of these principles are appropriate to the assessment of damages under s 82 where a breach of s 52 of the Act has induced a person to purchase a business."
On the basis of these authorities, this kind of trading loss, or reduced profits, is arguably recoverable.
Particular B of par 35 reads:
"B.The plaintiffs will be denied all financial gain they would otherwise have achieved through growing and harvesting of crops on, and growing of livestock on, Kent Location 1658 after 28 February 2000. But for the defendants' conduct, the plaintiffs would have completed the purchase of Kent Location 1658 and had the opportunity of profiting from farming the land. Such opportunity could potentially have resulted in greater returns for the plaintiffs, being farmers, than any other uses to which the purchase money could have been put."
Particular B seeks damages for loss of opportunity or projected loss of profits, from not being able to farm Kent Location 1658 after 28 February 2000. The second plaintiff (Mark) rescinded the contract to purchase this property on 17 August 1998. Ruth farmed it under a lease which expired on 18 December 1998 or possibly a few months later. Mark is entitled, on that plea, to a refund of the deposit paid and incidental losses such as valuation fees, legal fees, interest paid on the deposit if it was borrowed etc, but nothing else. Ruth is entitled to damages for losses incurred in running the farm on that property unprofitably (if that was the case) until December 1998 or a little later. But this plea is not referring to those kind of losses. It is referring to the loss of the opportunity to farm Kent location 1658 profitably after 28 February 2000. Had the misrepresentations not have been made, Mark would have purchased Kent Location 1658 in August 1998. That property would thus have become available for Ruth to farm after 28 February 2000 when her lease of Kent Location 1659 expired. She could have shifted her livestock to Location 1658 and could have planted new crops on that property on the quitting of Location 1659.
I consider this plea is not arguable because of the supervening event or cause of the loss, namely Mark's rescission of the contract to purchase Location 1658 in August 1998.
The plaintiffs rely, for this plea, on Sellars v Adelaide Petroleum NL & Ors (1994) 179 CLR 332. In that case the plaintiff, Adelaide Petroleum NL, was a seller rather than a purchaser and it was negotiating to sell shares for a certain price to Pagini Resources NL ("Pagini"). It broke off those negotiations with Pagini because a Mr Sellars came along representing Poseidon Ltd ("Poseidon") purporting to offer a better deal. He made a number of false representations and nothing came of that deal. The plaintiff then resumed negotiations with Pagini for the sale of the shares and negotiated a sale with Pagini but at a lesser price. The plaintiff was able to recover from Sellars and Poseidon the loss of the opportunity to sell the shares to Pagini at the higher price.
I find it hard to see any application of the principles of that case to this case. One of the plaintiffs agreed to purchase a property but, because of the vendor's misrepresentations, decided to rescind, so the plaintiffs retained the purchase price but farmed the property for awhile, under a lease, at a loss. I have already said in connection with particular A that the plaintiff has an arguable plea in relation to those trading losses. But the loss of the opportunity to make profits from farming the land post‑February 2000 was not caused by the misrepresentations; it was caused by the purchaser choosing to rescind. If I can turn Sellars around for the sake of an example, let me suppose that a certain plaintiff was a prospective purchaser of farm A from farmer A for $X. The plaintiff was negotiating with farmer A to purchase it for that price. Say they had agreed on the price but had not signed anything. The plaintiff broke off negotiations because of representations from farmer B who came along with a better deal to sell his farm. The plaintiff later discovered that those representations were false, so the plaintiff broke off those negotiations and resumed negotiations with farmer A. Meanwhile farmer A had increased his price to $X plus $Y, so the plaintiff bought farm A at the increased price. The plaintiff's loss, which would be recoverable is $Y, the difference between the original price offered by farmer A and the actual price paid; a loss of an opportunity because of farmer B's representations, to buy the farm A at the cheaper price. In the case before me the plaintiffs lost the opportunity to continue farming on the land, not because of the defendants' representations but because they chose to rescind. If they had chosen to continue with the purchase, they could recover: (1) the difference between the price paid and the true value of the property; (2) the difference between the rents paid and a fair rent for a certain period (because they rented prior to, and a little after, settlement); and (3), as discussed above by reference to the cases, trading losses or reduced profits for a period thought to be reasonable.

A further reason for the same view is this. The plaintiff in Sellars' case offered evidence of a specific projected loss: the loss of the chance to sell the shares at a higher price to Pagini. In this case the plaintiff is asking for damages for projected and unspecified loss of future profits. The plaintiffs cannot have their cake and eat it too. By rescinding prior to settlement, they retained all but $5,000 of the purchase price which was then available for investment in another venture. The plaintiffs had the money to re‑invest in another farming venture, or any other venture, and make the profits therefrom which are sought in particular B.
The plaintiffs also rely on Marks & Ors v GIO Australia Holdings Ltd & Ors (1998) 158 ALR 333. That case is useful for the following statement of principle. I quote from the joint judgment of McHugh, Hayne and Callinan JJ at [38] and [39]:
"[38] It can be seen, therefore, that both s 82 and s 87 require examination of whether a person has suffered (or, in the case of s 87, is likely to suffer) loss or damage 'by conduct of another person' that was engaged in the contravention of one of the identified provisions of the Act. That inquiry is one that seeks to identify a causal connection between the loss or damage that it is alleged has been or is likely to be suffered and the contravening conduct. But once that causal connection is established, there is nothing in s 82 or s 87 (or elsewhere in the Act) which suggests either that the amount that may be recovered under s 82(1), or that the orders that may be made under s 87, should be limited by drawing some analogy with the law of contract, tort or equitable remedies. Indeed, the very fact that s 82 and s 87 may be applied to widely differing contraventions of the Act, some of which can be seen as inviting analogies with torts such as deceit or with equity but others of which find no ready analogies in the common law or equity, shows that it is wrong to limit the apparently clear words of the Act by reference to one or other of these analogies."
I consider that it is not arguable to say in particular B that Ruth's loss of an opportunity to make profits from farming of Kent Location 1658 after 28 February 2000 was caused by the defendants' conduct. Particular B will be struck out as not arguable. I struck out an earlier version of the plea in my earlier judgment of 20 June 2000, Williams & Anor v Grainger & Ors [2000] WASC 167. No leave will be given to replead this particular.
Particular C reads:
"C.In or about October 1999 Wesfarmers (meaning the Brown Trust's financiers Wesfarmers Dalgety - the second‑named third defendant, Dalgety Limited, and Primary Industry Bank of Australia Ltd) required of Ruth Williams that she sell at that time the Brown Trust's wool clip and livestock as a result of which Ruth Williams then sold the wool clip and some of the livestock for less return than Ruth Williams would have achieved had she been able to sell at a later time of her own choice taking into account the market for such sales. At that time, as a result of the defendants' conduct, the Brown Trust's indebtedness to Wesfarmers had increased and Wesfarmers insisted that Ruth Williams take steps to reduce such indebtedness including selling livestock and wool clip."
In general concept, this plea is similar to particular A. As a result of the misrepresentations, the profit from the farm was less than anticipated, the plaintiffs could not service the loans taken to run these farms, and the lenders required Ruth to sell the wool clip and livestock in October 1999 for a lesser return than she would otherwise have got. In order to show a direct causal connection between the representations and this head of damage, I think it necessary to add that Ruth, or the Brown Trust, was unable to service the loans. The absence of that plea is a missing link at the present time. It is otherwise in order.
Particular D reads:
"D.Wesfarmers refused Ruth Williams' request for further financial assistance in the form of a trade account to enable Ruth Williams to buy additional livestock to fatten and re‑sell at profit and Ruth Williams were thereby denied the opportunity to make such profit. Further to the matters stated in particular C above, Wesfarmers refused the Brown Trust's request on the basis of the indebtedness which was caused by the defendants' conduct."
I consider this is not arguable for lack of a direct causal link between the representations and the loss alleged there. Even if the misrepresentations caused Ruth to be unable to service the loans, she has no right to a further loan. It is up to the lender whether a further loan would be granted or not. I consider this plea is not arguable. I will not give leave to replead.
Paragraph E reads:
"E.Further to the increased indebtedness of the Brown Trust particularised above, and the finance arrangements pleaded in paragraph 14.6, Wesfarmers has made demand of Ruth Williams and Gale Williams pursuant to the finance arrangements and securities being a mortgage executed by them dated 21 October 1998, a bill of sale over livestock and wool executed by Ruth Williams dated 26 June 1997, a guarantee executed by Gale Williams dated 21 October 1998, a bill of sale over crops executed by Ruth Williams dated 12 March 1999 and a guarantee executed by Gale Williams dated 10 May 1999, and instituted proceedings against Ruth Williams and Gale Williams in CIV 2156 of 2000 seeking relief against them pursuant to the finance arrangements and the securities."
I consider this plea is not arguable in its present form because of two matters. Firstly, it needs a plea, as I said in relation to particular C, that Ruth was unable to service the loans as a result of the misrepresentations. The causal link between the misconduct and the loss is not direct enough at present as the plea merely states that the misconduct caused the increased indebtedness to the lender which in turn caused the notices of demand to be issued. Secondly, there needs to be a plea that the security documents of 21 October 1998 (two), 12 March 1999, and 10 May 1999 were all collateral securities to the moneys loaned to the plaintiffs under cl 14.6, if that be the case. Because, if not, if those security documents of October 1998 and March and May 1999 secured new loans, then it cannot be argued that the representations induced the plaintiff to enter into those new loans as the plaintiffs knew those representations were false as at August 1998.
I am also puzzled by the reference to the bill of sale over livestock and wool executed by Ruth on 26 June 1997 which was before the misrepresentations were made. If, and only if, the loans to Ruth in mid 1998 as a result of the misrepresentations were collateralised to that guarantee of 26 June 1997, can it be argued that the misrepresentations led to the notices of demand. If Ruth, for some other reason, did not repay the money secured to the lender by that security, then the misrepresentations could have played no part in that failure.
I take it that particular E will result in extra costs to the plaintiffs which will be particularised in due course under par 35G. Particular E will be struck out with leave to replead.
I turn now to the first and second defendants' application for summary judgment under O 16 against the first plaintiff, Ruth. It is dated 23 March 2000. The appearance filed on behalf of the first and second defendants was filed on 3 March so the application is within the 21 day time limit. Order 16 r 1(2) requires that the application be supported by an affidavit verifying the facts on which it is based. That affidavit was that of Mr Grainger of 21 March 2000 filed on 30 March and a further affidavit from him of 6 April filed on 12 April. Those affidavits should normally accompany the application, but failure to do so is not necessarily fatal: Lill v Merchant Capital (WA) Ltd (1996) 15 WAR 536 at 543 per Franklyn J. There also was inadequate consultation by the first and second defendants with the plaintiff beforehand under O 59 r 9. I discussed that in my judgment of 7 April 2000: Williams & Anor v Grainger & Ors [2000] WASC 96.
I considered this summary judgment application in my judgment of 20 June 2000: Williams & Anor v Grainger & Ors [2000] WASC 167, (supra), which also dealt with the strike out applications. On 14 July 2000 I adjourned the application sine die and it was re‑argued before me on the dates stated at the outset of this judgment.
I consider the application should be dismissed. I consider that Ruth had pleaded a case against the first and second defendants in the first statement of claim of 15 February 2000. It was there pleaded that the representations were made to Gale, who was her agent, and in reliance of those representations she entered into two leases. The plea was inadequate in some details, for example, as to how the representations were passed on from Gale to Ruth and as to who entered the leases. However, on the latter point, the leases speak for themselves. She entered into the leases and that fact was known to Mr and Mrs Grainger who granted the leases. It was pleaded in par 35A that she suffered livestock losses farming on these two properties. The plea as to who suffered that loss was not specific but that could be cured, and was cured, by amendment. The essence of an arguable case by Ruth against these two defendants was pleaded.
The pleading of Ruth's case against these defendants has been strengthened by later amendments. The application for summary judgment against her should be dismissed and, subject to argument to the contrary, should probably be dismissed with costs. Costs should follow the event. Moreover, the court should discourage this kind of application which duplicates the application by the same defendants to strike out the pleading as not "essential to the fair and just determination of the issues" (O 1 r 4A). It also adds unnecessarily to the costs of the action. The application was not based on evidence that Ruth had no case at all against these defendants. It was essentially an attack on the adequacy of her pleaded claim. The evidence produced in support of the application was essentially the documents mentioned in the pleadings. They are the same documents which could have been produced on the strike out application: Day v William Hill (Parklane) Ltd [1949] 1 KB 632 at 639. A first strike out application is almost always likely to result in leave to replead which may result in an amendment curing the perceived defects.
The first and second defendants' second application under O 16 is dated 7 August 2000 and it is against the second plaintiff, Mark. It is also combined with a strike out application. The O 16 application is in relation to part only of his claim. It is conceded that he may have an arguable claim for a declaration that the contract of sale was validly rescinded and for a return of the $5,000 deposit. The summary judgment is sought in relation to the remainder of the prayers, namely damages under the Trade Practices Act, the Fair Trading Act and at common law, interest and costs.
The application was brought about four months late and needs leave. Mr Clay filed an affidavit of 7 August 2000 in explanation of the lateness, and I quote from par 4:
"The reason why the application for summary judgment against the second plaintiff was not filed within 21 days of entering an appearance stipulated in the Rules is because the defects in the original statement of claim concealed the lack of any cause of action of the second plaintiff in damages and under the statute."
In the original statement of claim Mark had an arguable case for a refund of the deposit and, as I have said, that is not disputed. He also appeared on the pleading to have an arguable claim for trading losses for the forced sale of livestock (par 35A) and for financial losses in connection with loans from Wesfarmers (par 35C). On the pleading these losses were suffered by "Ruth Williams further or alternatively [by] Mark Williams". However it may well have been apparent from the leases which were known to the Graingers that Ruth ran the farms and would have suffered any farming loss. The plaintiffs' loan arrangements with Wesfarmers were only revealed to the Graingers after discovery, which followed court orders, and that showed that Mark was not a borrower.
The second pleading of 25 July 2000 dropped the latter two claims. It said that Ruth entered into the two leases - a fact which, as I have said, was known to these two defendants as they signed the leases. The fact that Ruth entered into those leases implied I think that she farmed the properties, and an amendment to par 35A stated that Ruth suffered the trading losses on the forced sale of livestock, and not Mark. This pleading also deleted the statement in par 14.5 that Mark entered into financial arrangements with Wesfarmers. Thus, he was not able to claim financial losses in connection with loans from Wesfarmers and this was put beyond doubt in amendments to par 35C to the effect that it was Ruth and her trust which suffered those financial losses.
In summary, in the original statement of claim it was not clear what losses Mark had suffered, other than the loss of the deposit. The two claims for other damages, in par 35A and C, were suffered by Ruth and/or Mark. Those two claims by Mark were dropped in the second pleading of 25 July. There was thus no need to bring a summary judgment application on 7 August for judgment on those claims.
I ask what is the point of bringing this summary judgment application? The two claims of loss in par 35A and par 35C had been withdrawn in the statement of claim of 25 July 2000. The affidavit in support of Mr Grainger of 9 August 2000 said:
"Save for the claims of the Second Plaintiff for a declaration that the contract was validly rescinded and for an order for the refund of the $5,000 deposit, the Amended Statement of Claim does not plead any actions by the First or Second Plaintiff against me."
That is true and is acknowledged by the statement of claim of 25 July. The application adds to the costs of the action and is not necessary for the fair and just determination of the action. It should not have been brought, especially in this case where the applicant had a four month delay hurdle to overcome at the outset. Subject to any contrary argument on costs, this application will be dismissed with costs. Again, the evidence in support of this application consisted essentially of no more than the documents referred to in the pleadings, such as the leases and the financial documents with Wesfarmers. They speak for themselves. I propose to refuse leave to bring the summary judgment part of this application out of time and dismiss that part of the application. Subject to any contrary argument, costs of that application should be awarded to the plaintiffs in any event.
I turn, now, to the third defendants' application of 11 August 2000 to strike out parts of the plaintiffs' statement of claim. At the outset, Mr Blundell, counsel for the plaintiffs, has a technical objection to this application that there was no prior consultation as required by O 59 r 9. The aim of that rule is to ensure that the court's time is not wasted at a hearing. The prior consultation may result in a settlement of the issues or at least a narrowing of their scope. There was no consultation in this case. The third defendants rely, somewhat ingeniously, on consultation which took place between the plaintiffs and the first and second defendants. The note endorsed on the chamber summons is in this form:
"The solicitors for the first and second defendants have written to the plaintiffs' solicitors to confer on the matters giving rise to their application dated 7 August 2000 (which also includes para 35 of the amended statement of claim) but the matters raised by that application remain unresolved."
I am willing to waive the requirement in this case, but it may have some adverse consequence for the third defendants on the question of costs. The third defendants' strike out application is confined to par 35 of the pleading which is but a part of the first and second defendants' wider strike out application. The plaintiffs and the first and second defendants did confer in relation to that application. Secondly, and I think of more importance, this strike out application, whilst new, can be seen as stage two of a two‑stage application. The third defendant and the first and second defendants applied in March 2000 to strike out the plaintiffs' initial statement of claim. That succeeded in part and resulted in a published judgment in June ([2000] WASC 167). Various paragraphs of the statement of claim were struck out and the plaintiffs were given leave to replead. My reasons outlined what amendments were necessary and, to a large extent, how they should be framed. The plaintiffs repleaded to give effect to my reasons. The scope then of this second strike out application by the third defendants was much narrower than the first. It was to see if the plaintiffs had cured the defects outlined in my earlier judgment. Thus, even without consultation, the parties and the court were aware of the scope of the dispute. Thirdly, there was "consultation" in the form of the exchange of submissions prior to this special appointment which commenced on 25 September. I know that is not consultation prior to lodging of the chamber summons, as required by O 59 r 9, nevertheless it is "consultation" which informs the parties of the precise nature of the dispute so that unnecessary time is not wasted in the presentation of argument. Fourthly, since bringing the application the plaintiff has produced two further minutes of reamended statement of claim of 18 August and 6 November 2000, and they need leave of the court. There thus needed to be a court hearing on them anyway.
Fifthly, even if there had been pre‑summons consultation, I consider it would not have avoided this hearing or led to a narrowing of the issues. Contrast this application in this regard with that which was before Templeman J in Buyquick.com Ltd v Foxgold Pty Ltd [2000] WASC 216. In that case the writ and a chamber summons for an injunction was filed on Friday 11 August and was returnable in Judges chambers on Monday 14 August. It was then adjourned to Wednesday 16 August to enable the parties to confer. It was further adjourned to Thursday 17 August, by which time the parties had substantially resolved their differences. It was further adjourned to 21 August by which time the parties had finally resolved their differences, except as to costs. There had been no prior consultation prior to the bringing of the action and the chamber summons between the parties, apart from a discussion on 2 August and exchange of letters on 3 and 4 August. In that case the haste in which the application was brought between 11 and 14 August, and the lack of adequate discussion prior to bringing the application, was significant. The case was capable of settlement, and was settled, and had more time been allowed for pre‑trial consultation, the application and the action would have been avoided totally. That is not the situation here. The issues were well‑known to the parties because of the earlier strike out application and the amended pleading trying to conform to my reasons, and prior consultation would not have resulted in a settlement, or in any narrowing of the issues.
I turn now to consider the third defendants' application to strike out par 35 of the reamended statement of claim and here I refer to the document of 6 November 2000 which, in relation to par 35, does not differ materially from the amended statement of claim of 25 July 2000, other than a plea in par 35E, which is new, and which takes into account events which have happened since then, whereby Wesfarmers have made demand against Ruth and Gale under various security documents signed by them.

As previously stated, on the strike‑out application of the first and second defendants, the trading loss or loss of profits on the forced sale of cattle pleaded in par 35A is arguable as consequential loss. The plea is not bad as expectation loss as the third defendant argued. The plea of similar loss in par 35C is also arguable as consequential loss. If Ruth acted reasonably in continuing the lease and operation of the farm for some time after she discovered the representations were false, she can claim these losses. If she was foolish in carrying on the business too long after the discovery, that becomes a supervening cause of the loss for which the defendants are not responsible: see Gould v Vaggelas (supra) at 220 per Gibbs CJ, quoted by me above.
But for reasons given above in connection with the first and second defendants' strike‑out application, the expectation loss claimed in par 35B and par 35D is not arguable. The loss of profits after February 2000, pleaded in par 35B results from the supervening cause of Mark's rescission. Policy reasons support that result too. The plaintiffs should not be able to retain their purchase money and recover loss of future profits too - beyond a limited period appropriate for consequential loss. On the facts in Doyle's case, which were particularly favourable to the plaintiff, that period of consequential loss was three years. In this case where the representations were made by the landlords and when rescission of the contract of sale occurred in October 1998, I consider it is not arguable, in this case, that consequential loss or expectation loss can continue beyond February 2000. At trial, the court might choose a much earlier date.
The third defendants' submissions on par 35 confirm my views as expressed on the first and second defendants' strike‑out application. They do not persuade me any further. In summary, I will strike out par B and par D with no leave to replead. I will also strike out par C and par E with leave to replead.
I am asked to give leave to amend the writ in terms of the minute of reamended writ of summons of 6 November 2000. I am willing to do so. This includes the adding of Gale Curtis Williams, the husband of Ruth and father of Mark, as third plaintiff. I am willing to do so, but it will need some further amendments to the statement of claim. It appears from the other action, CIV 2156 of 2000 against Ruth and Gale, ie Wesfarmers' action against them, that he agreed on 28 July 1998 to guarantee, relevantly for this case, the seasonal facility offered to Ruth of $361,500. That would require a plea in par 14 that he did so in reliance on the representations. That guarantee would also need a reference in par 35E, because the present reference in that paragraph to Gale's guarantee of 10 May 1999 could not be in reliance on the misrepresentations, then known to be false. Gale would probably seek a declaration under s 87(2)(a) of the Trade Practices Act that the guarantee be declared void. That relief may presently be claimed, albeit elliptically, under prayer for relief F: "Compensation pursuant to s 87(1A) ... ".
I will hear the parties on costs.