Williams v Grainger - [2000] WASC 167

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: WILLIAMS & ANOR -v- GRAINGER & ORS [2000] WASC 167

CORAM: MASTER BREDMEYER

HEARD: 9, 11 & 12 MAY 2000

DELIVERED : 20 JUNE 2000

FILE NO/S: CIV 1171 of 2000

BETWEEN: MARK CURTIS WILLIAMS
First Plaintiff
RUTH EILEEN 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:

Pleading - Misleading and deceptive conduct - Fraud

Legislation:

Fair Trading Act 1987 (WA), s 10, s 82(4)

Soil and Land Conservation Act 1945
Soil and Land Conservation Regulations 1992

Trade Practices Act, s 84(2)

Result:

Some applications allowed in part
Some dismissed

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 T Lampropoulos

Solicitors:

First Plaintiff                :     Solomon Bros
Second Plaintiff            :     Solomon Bros
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
Argy & Anor v Blunts & Ors [1990] ATPR 41‑015
Armagas Ltd v Mundogas SA [1986] 2 All ER 385
Bevanere Pty Ltd v Lubidineuse (1985) 7 FCR 325
East v Maurer (1991) 2 All ER 733 (C/A)
Janssen‑Gilag Pty Ltd v Pfizer Pty Ltd [1992] ATPR 41‑186
Lloyd v Grace Smith & Co [1912] AC 716
O'Brien v Smolonogov [1983] ATPR 40‑418
Sunbird Plaza Pty Ltd v Maloney (1980) 9 CLR 245
Yorke v Lucas Pty Ltd (1982) 69 FLR 116

Case(s) also cited:

Accounting Systems 2000 (Developments) Pty Ltd & Anor v CCH Australia Ltd & Anor (1993) 114 ALR 355
Australian Guarantee Corporation Ltd v Gregsons Auctioneers Pty Ltd & Anor, unreported; SCt of WA; Library No 940652; 29 November 1994
Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 71 ALR 615
Devir v Western Australian Planning Commission [1999] WASC 130
Eastern Metropolitan Regional Council v Four Seasons Construction Pty Ltd, unreported; SCt of WA; Library No 990052; 10 February 1999
Espanol Holdings Pty Ltd v Banning [1999] WASC 49
Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82
Gould v Vaggelas [1984] 56 ALR 31
Henderson v Amadio Pty Ltd (No 1) (1995) 62 FCR 1
Indoor Marketing of Australia Pty Ltd v Kerry, unreported; SCt of WA; Library No 8575; 6 November 1990
Lloyd v Grace, Smith & Co Ltd [1912] AC 716
Marsden Byers & Associates v Casselan Pty Ltd, unreported; SCt of WA; Library No 8897; 31 May 1991
Ricochet Pty Ltd v Equity Trustees Executor & Agency Co Ltd (1993) ATPR 41-236
Ritter v North Side Enterprises Pty Ltd (1975) 132 CLR 301
Sutton v A J Thompson Pty Ltd [1987] 73 ALR 233
Temwood Holdings Pty Ltd v Oliver, unreported; SCt of WA; Library No 980034; 4 February 1998
Topic Pty Ltd v Rosecroft Holdings Pty Ltd, unreported; SCt of WA; Library No 9186; 12 December 1991
Trustek Australia Pty Ltd v Burke, unreported; SCt of WA; Library No 980121; 16 March 1998
Vulcan Metals v Simmons Manufacturing Co (1918) 248 F 853

MASTER BREDMEYER: I have before me six chamber summons by the defendants, three by the first and second defendants who are represented by the same solicitor, and three by the third defendant.
I will consider first the application by the first and second defendants for a stay of the action unless Gale Curtis Williams ("Gale") is joined as a plaintiff or defendant and a similar application by the third defendant. The grounds for each application are:
1.Gale Williams is a signatory to the contract for sale of land, the extension of time and the two leases and in each case he signed the relevant document as or though he was a contracting party.
2.What Gale Williams alleges features prominently as part of the plaintiff's pleaded case.
3.If Gale Williams is not joined, the defendants would be at risk of further litigation on the same contracts brought subsequently by Gale Williams.
It is true that Gale signed the contract of sale but he is not a named party in it. The contract was between Mr and Mrs Grainger as vendors and the Mallee Trust or the trustee of the Mallee Trust, as purchaser. Mark Curtis Williams ("Mark"), the trustee of that trust, signed the contract. Gale's signature is also on the contract but appears to be unnecessary.
Gale features in the plaintiffs' case as pleaded. He was the one to whom the representations by the defendant, said to be misleading and deceptive and fraudulent, were made. He is said to be the agent of both Mark and Ruth Eileen Williams ("Ruth"). Gale will be a key witness for the plaintiffs. The bank required him to be a guarantor of the loan, the Seasonal Carry On facility of $361,500 obtained by Ruth as trustee for the Brown Trust. Whether Gale gave a guarantee or not I do not know. No case has been pleaded for him in the statement of claim. It is not pleaded, for example, that as a result of the defendants' misrepresentations, he gave the guarantee and thereby suffered a loss. Until the guarantee was called upon he would not have suffered a loss and would not therefore have a cause of action.
I do not consider that it is necessary or proper that Gale be joined in this action. He was not a co‑purchaser with Mark, so he does not have Mark's causes of action. Whether he has a right of action because, as a result of the misrepresentations he gave a guarantee of his wife Ruth's indebtedness, that guarantee was called upon, and he thereby suffered loss, I do not know. I am not persuaded that he is a necessary and proper party to this action. I do not consider that his joinder is necessary to effectually and completely determine all matters in dispute in this case (O 18 r 6) and I will dismiss these two applications.
I next consider the application by the first and second defendants to strike out various parts of the statement of claim. The first and second defendants gave notice on 30 March 2000 that they wanted to amend their strike‑out application in the terms of a minute of that date. Paragraph 1A of that minute says:
"The writ and statement of claim be struck out on the grounds that the writ does not comply with Order 6 rules 1 and 5 and they disclose no reasonable cause of action and the statement of claim exceeds the indorsement."
The application to amend is opposed as out of time. It should have been brought within 21 days of service of the writ. I do not known the date of service on these defendants. The appearance of these two defendants is dated 3 March 2000 but Mr Clay for these defendants sent a fax to the plaintiffs' solicitors complaining as to the adequacy of the statement of claim, but not the writ, on 23 February 2000. I have heard extensive argument on the statement of claim. Some of the attacks on it have succeeded - as I outline later in these reasons. These will require a repleading. This will affect the endorsement on the writ.
Although late, the attack on the writ was raised reasonably early after service, the defects are easily cured and in the interests of speeding up the interlocutory processes, I propose to grant leave to amend the application in the terms of the minute. I will strike out the endorsement on the writ and give leave to amend. The defects are two‑fold. The representative capacities of the two plaintiffs should be stated - such as trustee for a trust: see O 6 r 5 and Form 5. Secondly, the claims of both plaintiffs arise out of representations made prior to signing the contract of sale, rather than "arising out of" the agreement.
Paragraph 1 of the statement of claim pleads:
"1.The first plaintiff (Ruth Williams) sues in her capacity as trustee of the Brown Trust".
This is said to be inadequate because it does not say (1) that she was the sole trustee of the Brown Trust and (2) it does not plead the details of the trust deed or deeds. On (1), I consider the plea is adequate. It is implied that she is the trustee, meaning the sole trustee, of the Brown Trust. I note that par 3.1 speaks of "Ruth Williams in her capacity as trustee of the Brown Trust". On (2), it is not necessary to plead the trust deed or deeds. They should be discovered and can then be inspected to see if they support the plea.
Likewise with par 2, it is not necessary to plead the trust deeds which support the statement that Mark is the trustee of the Mallee Trust.
Paragraph 4.2 should be amended by the deletion of the reference to s 82(4) of the Fair Trading Act 1987 (WA), as the second and third defendants are companies and that Act does not apply to companies.
The next attack is on par 7 of the statement of claim which pleads the contract of sale of May 1998 between the first and second defendant, as vendors, and Mark as trustee of the Mallee Trust, as purchaser, of Kent Location 1658 for $320,000. I consider the plea is not bad for referring to the date of the contract as "May 1998" instead of 20 May 1998. There was no other contract signed at that time.
Paragraph 7.2.2 refers to an agreement to lease Kent Location 1658 dated 18 May 1998 and par 7.2.3 refers to an agreement to lease Kent Location 1659 dated 18 May 1998. I consider these paragraphs should be struck out with leave to re‑plead. The contract of sale which I have described above and which is referred to in par 7.1 as "the Contract", is not "contained" as stated in par 7.2, inter alia in the two lease agreements just mentioned. The contract at cl 17(b) refers to the lease of the two locations. It was a condition of the contract that the purchasers were able to lease Kent Location 1658 prior to settlement of the purchase, and to lease Kent Location 1659 until 28 February 2000 with an option to purchase it for the price of $680,000. That can be pleaded. The lease of the two locations is arguably relevant to two of the misrepresentations pleaded in par 8.2 and par 8.4, and to the plea of loss and damage in par 35, but the present pleading is bad in saying that the contract, meaning the contract for sale of Kent Location 1658, "contains" the two lease agreements of 18 May already mentioned.
It is said that par 9, par 10, par 11 and par 12 of the pleading fail to plead material facts, are frivolous and vexatious etc. These paragraphs plead the falsity of the representations pleaded in par 8. I consider par 9 and par 10 and pleaded adequately. I consider par 11 is inadequate. It needs particulars. It should state that "the first and second defendant had not complied with the terms of a deed relating to … in that … (here give particulars)." Paragraph 11 should be struck out and re‑pleaded.
Paragraph 12 is in order subject to a deletion of the number 12.3 (not the clause) so that the last three lines come over to the left hand side of the margin. The last three lines are a conclusion. That is an inference which the plaintiffs will ask the court to draw and I consider its pleading is permitted
Paragraph 13 reads:
"13.At all material times Ruth Williams, Mark Williams and Gale Williams believed that the representations pleaded in paragraph 8 were true."
That is said to be inconsistent with par 15 which reads:
"15.By notice of rescission dated 17 August 1998 (the notice of rescission) Mark Williams terminated the Contract and demanded immediate refund of the deposit paid pursuant to the Formal Document."
"At all material times" is said to mean from when the representations were made until 17 August 1998 when the notice of rescission was served. That notice was based on the falsity of a representation that the purchasers could clear a further 400 hectares of the purchased land. The ambit of "at all material times" is a matter of interpretation on the facts of a particular case. In this case I would interpret it as meaning from the time the representations were made until shortly after the happening of the events described in par 14.1 - the signing of the contract, the payment of the deposit of $5000, and the entering into the financial arrangements. Interpreted in that way it is not embarrassing.
In par 14.1, the reference to "and Gale Williams" will be struck out. His signature on the contract is irrelevant and hence should not be pleaded. Only material facts should be pleaded.
Paragraph 14.3 and par 14.4 refer to Ruth doing various things. Her capacity should be stated. I know from par 1 she is suing as trustee of the Brown Trust, but was she acting in that capacity when she paid the deposit and entered into the financial arrangements described in par 14.3 and par 14.4? Her capacity needs to be stated either there or in par 1. It could, for example, be stated that she, at all material times, acted in her capacity as trustee of the Brown Trust.
I have already quoted par 15, the plea of rescission. This plea is said to be defective because a promisee must justify termination by reference to a legal right to do so but no justification for termination has been pleaded. As a consequence it is said that par 15 discloses no reasonable cause of action: Sunbird Plaza Pty Ltd v Maloney (1980) 9 CLR 245 at 261 ‑ 264 and Carter and Harland, Contract Law in Australia, 2nd ed at [1969].
The objection is a good one. The plaintiffs seek a declaration that the contract has been rescinded and seek payment of the $5000 which was the amount of the deposit paid. In other words the plaintiffs seek a declaration that the rescission was lawful. There is no plea of breach of contract in this case. As I understand it the rescission is said to be lawful because of the misrepresentations. The misrepresentations said to justify the rescission could be pleaded in detail, or could be referred to briefly, in par 18. I consider the latter is satisfactory in this case. In Bullen and Leake and Jacobs, Precedents of Pleadings, 13th ed, Form 517, is a statement of claim for rescission based on misrepresentation. I quote from par 7 of it:
"As soon as he discovered the said representations were untrue, the plaintiff, as he was entitled to do, by letter from his solicitors dated … rescinded and repudiated the said agreement". (Emphasis mine)
Atkins Court Forms, Vol 12(2) 1990, 6th issue, Form 17 has a similar plea:
"On discovering the true author of the drawing, the plaintiff at once rescinded the agreement, as he was entitled to do, and refused to take delivery of the drawing." (Emphasis mine)
In a pleading recently before me it was put in this form:
"24.By reason of the facts referred to in paras 14 and/or 21, the plaintiffs were entitled to rescind the contract.
25.By a letter dated ………. to the defendant the plaintiffs rescinded the contract."
I will strike out par 15. It should be amended by adding the words "as he was entitled to do". No further detail is needed. The notice of rescission itself sets out the falsity of one of the representations - that a further 400 hectares could be cleared - but, in any event, Mark is not limited to that ground: see Aidinis v Hotchin [1971] SASR 446. The plaintiffs have pleaded at length the misrepresentations and their falsity and if they succeed in any one of those four pleas they will succeed in showing that the rescission was justified.
Paragraphs 16 to 28 are said to be bad for pleading law and not material facts. I do not consider that criticism is justified. Paragraph 16 is an example of the style of plea:
"16.By reason of the matters pleaded in paragraphs 8.1 and 9, the first defendant engaged in conduct in trade or commerce, which was misleading or deceptive or likely to mislead or deceive in contravention of s 10 of the Fair Trading Act."
The material facts are incorporated by the reference to the matters pleaded in par 8.1 and par 9. The plea is also said to be bad because it does not plead what damage that each plaintiff is said to have suffered because of the misrepresentation. I consider the plea is not bad for that reason but I will say something later about the pleading of loss and damage in par 35, which I consider is inadequate for other reasons.
Paragraph 29 and following plead fraud or deceit as a cause of action. Paragraph 29.1 particular D is said to be bad because it pleads issues of salinity and refers to the "Soil Conservations Regulations 1986" "yet the latter is non‑existent and the former does not particularise the plea". I consider the plea is adequate. Particular D refers to the Soil Conservations Regulations (made pursuant to the Soil Conservation Act) from the commencement of the regulations in 1986 onwards". I do not consider the plea bad in an embarrassing sense but may need re‑examination by the pleader. D is one of five particulars of knowledge in par 29.1. If the pleader has got the facts of particular D wrong, he will not prove that point. He may or may not be allowed by the trial Judge to amend the particular. But if he fails at trial to prove D, it does not mean he has no cause of action under par 29.1. The other particulars may be good. The misdescription of a regulation in one of five particulars is a very minor point. As far as I can tell the relevant Act is the Soil and Land Conservation Act 1945 and the relevant regulations are the Soil and Land Conservation Regulations 1992.
Particulars B to E in par 29.1 are said to be bad because they are not particulars of knowledge but merely of receipt of information and are vague and embarrassing in that they do not plead whether the information was oral or in writing and the relevant dates. I consider the plea is adequate. There is a reasonable amount of detail there, sufficient I think for the defendants to plead to it. If the plea is denied or not admitted, then particulars of whether the information was oral or written can be requested and supplied.
Paragraphs 29 to 32 are said to be bad because they do not provide particulars of the alleged fraud. Knowledge is an essential element of fraud and particulars of it need to be pleaded by O 20 r 13(1)(a). I consider the criticism is accurate in relation to par 30 and 31. I will strike out those paragraphs with leave to re‑plead. If it is the plaintiffs' case that the court will be asked to infer that the first defendant had that knowledge from various matters, then that needs to be pleaded. I consider the plea of knowledge is fuller and hence adequate in par 29 and par 32.
Paragraph 32 contains a heading "PARTICULARS" and there follows particulars A, B and C. It is said to be bad because it is not apparent what they are particulars of, and par B is said to be meaningless as drafted and does not plead whether the information was oral or in writing or the dates or other details of particular written documents referred to. I consider it is fairly clear, and hence not embarrassing, that these are particulars of knowledge. Again, I do not think B is bad for not pleading whether the soil conservation information received by Mr Grainger was in oral or written form. It is sufficient for Mr Grainger to plead to, and it is only if he denies or does not admit the plea, that it is necessary to state whether the information received by him was in written or oral form. That can be done in later particulars.
Paragraph 33 and par 34 are said to be bad because they are part of the plea of fraud and not pleas under the Fair Trading Act or Trade Practices Act and yet they rely on the agency provisions as defined in those Acts. I consider that is a good point. In par 33 the references to par 4.4 and par 4.5 should be deleted. If the plaintiffs' case is that the second defendant is liable for the first defendant's conduct because he was her agent acting within the scope of his actual or apparent authority, then this should be pleaded.
The plea is also bad in relation to par 34. It is a plea of fraud so the pleader cannot rely on the agency provisions of the Trade Practices Act. I will strike out the reference to par 4.2 and par 4.5. If it is desired to add that Mr Grainger was acting within the scope of his employment or authority then that could be inserted in par 34.

Paragraph 35 is the plea of loss and damage for both misleading and deceptive conduct and fraud. The first criticism of it is that no representations are pleaded to have been made to Ruth or her agent, nor to Mark or his agent in connection with or for the purpose of inducing either of them to enter into any finance arrangements, nor to induce Ruth to pay a deposit. The plaintiffs say the representations were made to Ruth and Mark in each case through the agent Gale. That is pleaded in relation to Mark in the opening words of par 8: "the representations were made to Gale Williams who negotiated the purchase of Kent Location 1658 on behalf of Mark Williams". It is also said in par 3.2 that Gale was acting at all material times as agent for Mark. The plea of agency in relation to Ruth and the representations is less clear. It is not stated in par 8 that the representations were made to Gale as agent for both. I would expect that plea if she was in the same position as Mark. To rely on the general plea of Gale as agent for Ruth in par 3.1 is less clear when she is omitted from the opening words of par 8, and Mark is included in those words.
In the case of misleading and deceptive conduct, the misrepresentation is normally made to the plaintiff. But it need not be. It can be to an intermediary as shown, for example, in Janssen‑Gilag Pty Ltd v Pfizer Pty Ltd [1992] ATPR 41‑186. In that case the contravening conduct was newspaper advertisements which caused the public to buy more of the defendant's pharmaceutical product and less of the plaintiff's rival product. The plaintiff's loss and damage was caused, in the words of s 82, "by" the defendant's contravening conduct. In that case it was easy for the court to infer that the defendants' misleading advertisements caused the plaintiff's loss. Such an inference could not be drawn in the present case in relation to Ruth's and Mark's loss. It is therefore necessary to plead that the representations to Gale were passed on by him to Ruth and Mark. The defendant's intention in making the misrepresentations are not material to this cause of action.
In the case of fraudulent representations I quote from vol 31 Halsburys Laws of England, 4th ed reissue, at par 736:
"736. Person to whom representation made or his principal or partner. If a representation is made individually and exclusively to one particular person, with no other person in contemplation, the person to whom the representation is made is obviously the sole representee. It is equally plain that if the representation is made to one person with knowledge on the part of the representor that the person to whom it is made is merely the agent of a particular principal (or of someone who, although undisclosed at the time, turns out to be that principal) for the purpose of receiving and transmitting the representation to the principal, the only representee is the principal, the person to whom the representation is made being the mere messenger or medium through whom the representation is conveyed." (Footnotes omitted) (Emphasis mine)
I also quote from part of the same text at par 737:
"737. Person to whom representation is intended to be passed on. A second class of case arises where one person makes a representation to another person, either with an express direction or authority to repeat it to a third person, or with intent that it shall come to the third person's notice and be acted upon by him. Such an intent is presumed in law on proof of the fact that the representor contemplated at the time that the person to whom the representation was made would pass it on to the third person for him to act upon, or subsequently, but before the third person acted upon it, knew that the person to whom it was made had in fact so passed it on to the third person for that purpose. In any such case the third person is a representee. The person to whom the representation was made may also be a representee, depending on all the circumstances of the individual case." (Footnotes omitted) (Emphasis mine)
The plaintiffs do not come under either statement of the law. There is no plea that the first defendant (who is the key defendant here) knew that Gale was the agent for both Ruth and Mark (Halsbury par 736). Nor, in terms of Halsbury par 737, is there any plea that the representations were made to Gale with intent that they should be passed on to Mark and Ruth. It could be pleaded in relation to Mark - that Mr Grainger knew that Gale was representing his son Mark, the proposed purchaser. The facts may not support such a plea, however, in relation to Ruth. If it cannot be pleaded in one or other of these ways stated in Halsbury in relation to her, then I consider that she has no arguable cause for fraud.
Paragraph 35 is the plea of loss and damage of both causes of action. I do not consider the plea is defective for failing to specify which damage was caused to which plaintiff. That is a matter which can be considered at trial but in any event will be improved by re‑pleading.
Particular A pleads that the plaintiffs will be forced to sell all their livestock located on Kent Locations 1658 and 1659 before 29 February 2000 rather than at any later time or times of their own choosing, in order to maximise financial gains. I understand that that date is when their leases expire. How was that damage caused by the misrepresentations (meaning both the misleading and the deceptive conduct and the fraud)? Were the plaintiffs induced by the representations to lease those two locations? The plaintiffs had an option to purchase Location 1659 for $680,000. Why did they not do that? Was that also because of the misrepresentations? The causal connection between a representations and the loss and damage needs to be pleaded. This is not a straightforward plea of loss, for example, of a deposit or loss of interest.
Particular B is that the plaintiffs will be denied all financial gain they would otherwise have achieved through growing and harvesting crops and/or growing livestock on Kent Location 1658 after 28 February 2000. Again the causal connection between the loss of profits and the misrepresentation needs to be pleaded. A plaintiff purchaser can get loss of profits for misleading and deceptive conduct (eg Yorke v Lucas Pty Ltd (1982) 69 FLR 116) and for fraudulent misrepresentation (eg East v Maurer (1991) 2 All ER 733 (C/A)), but not where the purchaser has rescinded. In this case Mark rescinded the contract. He thus saved his money apart from the deposit. The purchase money is thereby available for investment in another venture.
Particulars A and B both refer, inter alia, to loss of profits on Kent Location 1658 after 28 February 2000. I was not hitherto aware from the pleading or the documents referred to in the pleading and tendered to me that Location 1658 was occupied by the plaintiffs up to 28 February 2000. I thought that only Location 1659 was leased up to that date.
On C the causal connection between Wesfarmers' direction to sell the plaintiff's wool clip and livestock in October 1999 and the misrepresentations needs to be pleaded. Were the plaintiffs in arrears of their seasonal facility of $361,500? If so, was that caused by the first defendant's misrepresentations? In particular was it caused by the failure to clear the extra 400 hectares, and, if so, whose fault was that? The plaintiffs chose to rescind the contract. Was it because the arable land, in particular the arable land on Kent Location 1658, was less than represented? Was it because they had to spend money on meeting the remnant vegetation obligations on Kent Location 1658? That seems unlikely as the contract of sale was rescinded in August 1998. Was it because the two locations were not good or excellent farming land, as represented, and hence the production from the land was less than expected?
Similar questions arise in relation to particular D. Wesfarmers refused the plaintiffs' request for further financial assistance to enable them to buy additional livestock to fatten and re‑sell. How does that relate causally to the misrepresentations? If that is a separate cause of action it cannot be found in a particular of loss and damage at the end of a long pleading. I will strike out all of par 35 with leave to re‑plead.
I consider next the third defendants' application to strike out parts of the statement of claim. That application in par 2 to par 6 is identical to the similar application of the first and second defendants. I have already ruled on those points. I will only consider additional objections raised by the third defendants.
Objection was raised to par 4, to the plea of the first defendant's agency for the third defendants. Was the first defendant acting as an owner of the land, a real estate agent, or an employee of the third defendants? I consider the plea in par 4.2 and par 4.3 is that the first defendant was acting as the agent for the third defendants. The reference to s 84(2) of the Trade Practices Act means that the first defendant was acting as agent for the third defendants within the scope of his actual or apparent authority.
I turn to par 19 where the plea, in essence, is that, because of the first defendant's representations, as agent for the third defendants, the third defendants engaged in misleading and deceptive conduct. I consider the plea in 19 is not embarrassing. The reference in par 4.5 should be understood as referring to the first defendant acting as agent for the third defendants under par 4.2 and par 4.3 in making the representation. It could have been better expressed - but it would be a silly interpretation of the reference to par 4.5 to say that because the first defendant was a joint registered proprietor of the land, his employer, the third defendants, are liable for his misrepresentations; or to say that because the first defendant was the agent for his wife, that the third defendants are also liable for his misrepresentations. The third defendants should not be too easily embarrassed.
The third defendants say that the first defendant cannot be both an agent and an employee of them. It should be one or the other. The pleas of the two kinds of agency are not expressed as alternatives in par 4. I do not consider there is much in that criticism. An employee is a special kind of agent by virtue of his employment. Whether Mr Grainger was an employee on salary or an agent on commission matters not. The third defendants could be liable vicariously in tort for his actions and similarly liable by analogy for his misleading and deceptive conduct under the Trade Practices Act. I note that the contract of sale is on the third defendants' written form and the vendors (Mr and Mrs Grainger) agreed to pay agent's commission to the third defendants.
The same criticism was levelled at par 22 which also refers to par 4.5. I give the same ruling. Correctly understood, the plea is that the first defendant as agent and/or employee of the third defendants made the representations and hence the third defendants engaged in misleading and deceptive conduct. However, the reference in par 22 to s 10 of the Fair Trading Act should be struck out as not applicable. The third defendants are companies. I make the same ruling in relation to par 25 and par 28. In each case the reference to s 10 of the Fair Trading Act should be struck out.
Paragraph 34 is part of the plea of fraud against the third defendants. I consider it should be re‑pleaded. The reference to par 4.2 is wrong. The pleader cannot rely on the statutory definition of agency in s 84(2) of the Trade Practices Act in a plea of fraud. The pleader should spell out common law agency. It is said to be the same. In any case it should be spelled out briefly. The reference to par 4.3 is good, that Mr Grainger was an employee of the third defendants. The reference to par 4.5 is confusing and should be deleted. If by referring to it it is desired to say that he was acting as agent for the third defendants, that should be stated.
Paragraph 34 is also said to be bad because it is said that the third defendant cannot be liable for the fraudulent representations of its agent, the first defendant, unless it can be shown that they knew of their falsity. I do not think that view is correct. The vicarious liability of a principal for the tortious act of his servant appears to be the same whether the tortious act is one of intent such as fraud or deceit, or one of negligence. I quote from Armagas Ltd v Mundogas SA [1986] 2 All ER 385 (per headnote 2):
"Where an employee made a fraudulent misrepresentation which caused loss to an innocent party contracting with him, his employer would be vicariously liable for that act if the employer had himself, by words or conduct, induced the injured party to believe that the agent was acting in the lawful course of the employer's business. However, an employer would not be liable if such belief was brought about through the injured party's own misguided reliance on the employee, if the employee was not authorised to do what he purported to do, if what he purported to do was not within the class of act that an employee in his position was usually authorised to do and if the employer did nothing to represent that he was authorised to do it."
In that case Lord Keith, who wrote the leading judgment, with whom four other law Lords concurred, quoted at 392 with approval the following passage from Lloyd v Grace Smith & Co [1912] AC 716 at 725 per Earl Loreburn:
"If the agent commits the fraud purporting to act in the course of business such as he was authorised, or held out as authorised, to transact on account of his principal, then the latter may be held liable for it."
He also quoted at 392 with approval from Lord Shaw in the same case at 739 ‑ 740:
"The case is in one respect the not infrequent one of a situation in which each of two parties has been betrayed or injured by the fraudulent conduct of a third. I look upon it as a familiar doctrine as well as a safe general rule, and one making for security instead of uncertainty and insecurity in mercantile dealings, that the loss occasioned by the fault of a third person in such circumstances ought to fall upon the one of the two parties who clothe that third person as agent with the authority by which he was enabled to commit the fraud."
I turn now to the application by the first and second defendants for summary judgment under O 16. The arguments in favour of the application are as follows:
"1.Although not properly pleaded the causes of action sought to be raised by the Statement of Claim are misleading and deceptive conduct and fraud arising out of certain alleged representation alleged to have been made by the first defendant to the second plaintiff.
2.The claim does not allege that the representations were made to the first plaintiff or her agent.
3.The claim alleges that the representations induced the second plaintiff to enter into a contract of sale to purchase the property of the first and second defendant.
4.The first plaintiff is not a party to the contract.
5.The claim alleges that the first plaintiff paid the deposit. However, the legal effect of the first plaintiff paying the deposit, is to give rise to a loan or some other agreement between the first plaintiff and the second plaintiff. It is incapable on the facts pleaded of giving rise to any agreement between the first plaintiff and any of the defendants.
6.By analogy, if the purchaser had borrowed the funds for the deposit from a bank and paid with a bank cheque, the banks claim for repayment would be against the purchaser and not the vendor. The first plaintiff can be in no better position than would be faced by a bank.
7.The claim also alleges that the first plaintiff borrowed money to finance the purchase. However, as the purchase never proceeded to settlement or payment of the purchase price, there is no basis for a claim by the first plaintiff based on this allegation.
8.Neither the first nor second defendants are agents of the second named third defendant and neither one had any involvement or interest in the alleged loan transactions that could give rise to any cause of action against them by the first plaintiff."
A further argument in favour of the application in relation to the second defendant is that the second defendant is only a vendor of a property. She was selling the farm which she owned jointly with her husband, the first defendant, and therefore the representations vicariously attributed to her do not come within the ambit of trade or commerce.
I consider it unfair to allow this application to succeed. It was brought about six weeks after the first and second defendant's application to strike out parts of the statement of claim and the two applications were heard together. The statement of claim is defective in some parts and I have given leave to re‑plead. It seems academic to consider, with a view to allowing, a summary judgment application by a defendant on the facts as asserted in the original statement of claim if it is to be re‑pleaded. I consider the only fair result is that this application be dismissed, possibly with no order as to costs, or be adjourned sine die pending the production of the amended pleading. I will hear the parties on this.
I consider now the argument that Mrs Grainger's sale of her interest in the property was a one‑off sale of a property and not an act done in trade or commerce. In O'Brien v Smolonogov [1983] ATPR 40‑418, the representations concerned the sale of two rural lots which were vacant. One of the representations made was that the vendors had a building permit to build on the land and that there would be no problem in building a house on it. The Full Court of the Federal Court decided that the private sale of property by an individual was not conduct in trade or commerce except if done in the course of a business activity or otherwise arising in a "business context". The fact that the vendors advertised the property for sale in the newspaper and spoke by telephone with the purchasers did not make it a transaction in trade or commerce. The Full Court of the Federal Court in that case discussed a number of American cases on "trade or commerce" under American consumer protection legislation. Those cases held that a sale of the vendor's residence is not normally a sale in trade or commerce, whereas the sale of a stationery store was.
That decision was followed in Argy & Anor v Blunts & Ors [1990] ATPR 41‑015. In that case the representations concerned a property with a house, boatshed and jetty on it. The owners were held not liable because it was a sale of their house and not an act done in a business context. On the other hand, a sale of a business is clearly a transaction within trade or commerce, see for example Bevanere Pty Ltd v Lubidineuse (1985) 7 FCR 325. The business in that case was the sale of a cosmetic clinic by a vendor not otherwise engaged in the business of selling capital assets. I consider it is arguable that in this case the sale was of a business asset, namely a farm. The area of Kent Location 1658 was 1594.9546 hectares. One of the special conditions was that all stock was to be removed by the vendors within 14 days of signing the contract. That suggests it had been a stocked property. Also the purchasers were given immediate access to both locations for spraying and cropping "practices" (sic) on the signing of the contract. The representations relate to the business viability or profitability of the farm - eg that a further 400 hectares could be cleared and that it was good or excellent farming land with a good superphosphate history. I consider it arguable that this was the sale of a business asset and hence in trade or commerce.

The final application is that of the third defendants for an extension of time to file a defence. I will consider that in conjunction with my orders on the other applications.
I will hear the parties on the orders which should be made and on costs.