Zipside P/L & Ors v Anscor P/L - [1999] QSC 236

IN THE SUPREME COURT
OF QUEENSLAND

No. 4997 of 1999
Brisbane

Before Mr Justice Muir
[Zipside P/L & Ors v Anscor P/L & Ors]

BETWEEN:   ZIPSIDE PTY LTD (ACN 010 845 093)
  First Plaintiff
AND:             AUSTRALIA-PACIFIC HOLDINGS PTY LTD
(ACN 011 065 133)
Second Plaintiff

AND: MANBURY PTY LTD (ACN 010 925 274)
AS TRUSTEE FOR THE WILSON PENSION FUND
Third Plaintiff

AND:             ANSCOR PTY LTD (ACN 065 255 505)
  First Defendant
AND:             ROBERT EDWARD CORBETT
Second Defendant

AND: ANNE SHIRLEY CORBETT
Third Defendant

REASONS FOR JUDGMENT - MUIR J
Judgment delivered 1 October 1999

CATCHWORDS: PRACTICE - statement of claim - application to strike out certain paragraphs - whether confusion and imprecision enough to warrant re-pleading - requirement to plead necessary facts and elements of ss 51A and 75B of the Trade Practices Act not met - pleadings prejudicial to defendants - insufficient particularity - inability to cure deficiency in pleadings by particulars - respondents given leave to re‑plead.

Counsel:Mr R G Bain QC for the plaintiffs
Mr D R Cooper for the respondents

Solicitors:Tucker & Associates for the plaintiffs
Shand Taylor for the respondents

Hearing Date: 28 September 1999
IN THE SUPREME COURT
OF QUEENSLAND

No. 4997 of 1999
Brisbane

Before Mr Justice Muir
[Zipside P/L & Ors v Anscor P/L & Ors]

BETWEEN:   ZIPSIDE PTY LTD (ACN 010 845 093)
  First Plaintiff
AND:             AUSTRALIA-PACIFIC HOLDINGS PTY LTD
(ACN 011 065 133)
Second Plaintiff

AND: MANBURY PTY LTD (ACN 010 925 274)
AS TRUSTEE FOR THE WILSON PENSION FUND
Third Plaintiff

AND:             ANSCOR PTY LTD (ACN 065 255 505)
  First Defendant
AND:             ROBERT EDWARD CORBETT
Second Defendant

AND: ANNE SHIRLEY CORBETT
Third Defendant

REASONS FOR JUDGMENT - MUIR J
Judgment delivered 1 October 1999

The first, second and third defendants apply to strike out paragraphs 14, 19 and 20A of the further amended statement of claim delivered 1 March 1999. It is submitted that paragraph 14 “is inadequate and embarrassing for a number of reasons” -
·It is unclear insofar as it alleges that “most of the moneys raised by the Wattle Group were not advanced by way of short term bridging finance, but rather:” (the paragraph then lists a variety of ways in which moneys were alleged to have been lent).
·The allegations are “internally contradictory and vague” in that paragraph 14(a) refers to moneys being lent “without security” in some circumstances and “with security to some of the same companies” in other circumstances.
·The allegations lack temporal definition. This problem is highlighted as there is uncontradicted evidence that some of the companies the subject of the allegations were not in existence at the time of the representations.
In order to understand the nature of the allegations it is necessary to go to paragraph 4A which contains the following alleged representations:
“(a)that the Wattle Group lent money for short periods of no more than sixty (60) days;
(b)that the Wattle Group took satisfactory security or surety to ensure repayment of the moneys lent by it;
(c)that moneys invested with the Wattle Group would be invested by the Wattle Group by way of loans in the nature of bridging loans;
(d)that each loan made by the Wattle Group was for a term of no more than sixty (60) days, unless the investor otherwise agreed in writing;
(e)that, of moneys invested with the Wattle Group, only small amounts of the money invested would be put into each individual bridging loan, so as to minimise the risk of loss.”
Paragraph 14 commences with the words - “The aforesaid representations were false, misleading and/or deceptive in that:”. It then sets out in sub-paragraphs (a) to (g) the ways in which the representations are alleged to be false, misleading or deceptive. Sub-paragraphs (a) to (c) of paragraph 14 refer to their equivalently numbered sub-paragraphs in paragraph 4A. A degree of confusion then arises because sub-paragraph (d) of paragraph 14 does not address the representation in sub-paragraph (d) of paragraph 4A but is referable to sub-paragraph (e). Sub-paragraph (e) of paragraph 14 alleges - “(e) Loans were made by the Wattle Group for terms greater than sixty (60) days.” It thus addresses representations in paragraph 4A(a) as does paragraph 14(a). Paragraph 14(f) does not appear referable to any of the allegations in paragraph 4A and paragraph 14(g) appears referable to paragraph 4A(e).
In my view, paragraph 14(a) is unnecessarily confusing. It would be clearer and more appropriate, if, instead of commencing to deal with the lending of money for a short period and then going on to concern itself with whether moneys were lent without security or proper security and also with the identity of the borrowers, paragraph 14(a) dealt only with the allegation in paragraph 4A(a). That concerns itself only with the period of the loan. Paragraph 4A(c) contains the representation about “bridging loans” and that is dealt with in paragraph 14(c), but again in a way which is slightly confusing. Instead of simply alleging that the loans were not by way of bridging loan, it asserts that they “were not only lent for short term bridging finance”.
Part of the confusion may arise as a result of the separate set of alleged misrepresentations in paragraph 5A.
This general pattern of confusion may not be enough, in itself, to warrant requiring the respondent to re-plead but paragraph 14 has other problems. The representations in paragraphs 4A(a), (b) and (d) are as to the past, present or a combination of the present and the past, whereas sub-paragraphs (c) and (d) are as to future matters. The allegations in paragraph 14 are all concerned with circumstances existing prior to the representations or circumstances existing prior to and at the time of the representations. The pleading is thus defective in that it seeks to assert that a representation about a future matter is false, misleading and deceptive merely because something alleged to happen in the future had not happened in the past and/or was not taking place at the time of the representation.
I think it likely also that there is a more fundamental problem with the pleading. I assume that the point the respondent is attempting to make is not so much that the respondent was told various things about past and present practices of the Wattle Group that turned out to be false, but that it was told, expressly or impliedly, that past and/or present practices the subject of the representations would be adhered to in the future and that they were not adhered to. The pleading, in its present form, does not address that point.
Paragraph 14 will need some amendment also in order to accommodate the fact that some of the companies said to be the recipients of loans were not in existence at relevant times. I do not know what form that amendment is likely to take but it is probable that the restructuring will need to be rather more significant than the mere taking out of company names which are inappropriate.
I do not accept the contention that paragraph 14 is necessarily bad because sub‑paragraph (a) refers to “most of the moneys” and because paragraphs (b), (c) and (d) are qualified and implicitly acknowledge that there may have been no misrepresentation in respect of some moneys. If the thrust of the representations is that all moneys have been dealt with in a particular way in the past, if some of the moneys have not been so dealt with, there is an obvious misrepresentation. There is also an obvious misrepresentation if it is represented that moneys will be dealt with in a particular way in the future and the representor either has no intention of acting in the way represented or, being a corporation, does not have reasonable grounds for making the representation.
It is desirable though that where allegations are made to the effect that a representation results from a part truth that the allegation be particularised with some care. For example, paragraph 14(d) alleges -
“(d)of the moneys invested, it was not the case that only small amounts of the money invested was put into individual loans.”
For all the defendants are to know, the plaintiffs’ case might be that in one case out of 10,000 a large sum was put into an individual loan or that, perhaps, in one case in 100 the represented position was inaccurate. The obligation to be particularised may be limited where a plaintiff expressly pleads reliance on s 51A in respect of representations as to future matters. In such a case it may be relieved of the obligation to plead, and establish, that the representor had no reasonable grounds for making the representation: see State of Western Australia v Bond Corporation Holdings Limited (1991) 13 ATPR 41-081 at 52,279 and Truth about Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (1988) ATPR 41-633. The necessary elements of the section though, will need to be pleaded.
The allegations in paragraphs 19 and 20A are as follows:
“19.Further, in the premises aforesaid, each of the Second Defendant and the Third Defendant was a person who was, directly or indirectly, knowingly involved in such contraventions of section 52 of the Act.
20A.Further or alternatively:
(a)the First Defendant made the representations referred to in paragraphs 4A and 5A well knowing same to be false;
(b)the Second and Third Defendants made the representations referred to in paragraphs 4A and 5A well knowing same to be false.”
Paragraph 19 is alleged to be defective because the essential elements of knowing involvement in a breach of s 52 have not been pleaded. It is pointed out that before a person can be held to be “knowingly concerned in ... (a) contravention” for the purposes of 75B(1)(c) of the Trade Practices Act, that person must have knowledge of the essential matters that make up the contravention and intentionally participate in it: Yorke v Lucas (1983-1984) 158 CLR 661 at 667 and Compaq Computer Australia Pty Ltd v Merry (1998) 157 ALR 1 at 4-5.
If paragraph 19 referred to the allegations in paragraph 20A, it would have gone much closer to pleading necessary material facts. But it does not rely for its efficacy on the allegations in paragraph 20A as it commences with the words “Further, in the premises aforesaid ...”. What is alleged in the earlier part of the pleading is that -
(a)the first defendant made representations in writing which were false;
(b)the first defendant by the third defendant made oral representations which were false;
(c)the first defendant by the second and third defendants made other oral representations which were false.
If, for the purposes of s 75B, the second and third defendants are to incur liability for the written misrepresentations and if the second defendant is to incur liability for the third defendant’s oral misrepresentations, the pleading will need to be amended to plead the matters which need to be established to make out a case under s 75B.
Paragraph 20A suffers from the obvious defect in that it alleges that the second defendant made the representations referred to in paragraph 4A. Those representations are alleged in paragraphs 3 and 4A to have been made orally and in writing at a meeting between Mrs Wilson on behalf of the first plaintiff and the third defendant. The oral representations are alleged to have been made by the third defendant. Presumably, paragraph 20A is seeking to incorporate, by inference, s 75B. In my view though it falls far short of pleading necessary material facts for the reasons I have outlined generally above.
As the allegations are ones of fraud and misconduct “the facts must be stated with special particularity”: Castlemaine Perkins Limited v Queen Street Hotels Pty Ltd [1968] Qd R 501 at 511. Voluminous particulars have been provided but particulars cannot remedy the deficiency of material allegations in the pleadings: H 1976 Nominees Pty Ltd v Galli and Apex Quarries Limited (1979) 30 ALR 181, Bond Corporation v Thiess Contractors Pty Ltd (1987) 71 ALR 615 and Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Ltd (1998) ATPR 41-663. The reason for this, in part, is that a defendant/respondent does not plead to particulars: TPC v David Jones (Australia) Pty Limited (1985) 7 FCR 109.
For the above reasons, I conclude that paragraphs 14, 19 and 20A should be struck out. The pleadings in their present form are prejudicial to the defendants. They are imprecise, confusing, overly general and lack material allegations. They do not fulfil their proper role of clearly identifying the case which the defendants must meet and of defining the question or questions for decision.
The application is also opposed on the basis that there was an earlier application heard in February 1999 to strike out the statement of claim. That application did not succeed but the respondent obtained leave to amend three paragraphs of the statement of claim, not including paragraphs 14, 19 or 20A.
The applicants’ challenge to the pleadings though incorporated allegations of deficiencies in paragraphs 14, 19 and 20A. The applicants seek to justify this application on the basis that it has been provoked by the failure of the plaintiffs to properly particularise the existing allegations.
I accept that there is insufficient particularity in the particularisation of the paragraphs under consideration. In some ways the relevant particulars serve to confuse or complicate rather than to clarify allegations in the statement of claim. However, the defects in the pleadings which lead me to conclude that the subject paragraphs should be struck out are ones which, for the most part, are not curable by particulars. They are defects which could have been advanced on the earlier application and were in fact addressed to some extent, albeit with a different focus.
It is obviously undesirable that litigants be encouraged to bring repetitious applications involving the same subject matter. Strict control needs to be exercised over interlocutory applications to avoid waste and oppression. There is thus some merit in the respondents’ argument. However, I am strongly of the view that to let the matter go forward with the pleadings in their present form would be prejudicial to the interests of the applicants, unnecessarily increase the costs of the action and materially reduce the prospects of a fair trial.
I propose to order that the subject paragraphs be struck out and that the respondents have leave to replead.
I will hear submissions as to the contents of the order and on costs.