Re Kingsley Frederick David James; Jill Maxine James; David Maxwell James; Peter Norman James; Angus Kingsley James and Yallambee Pty Ltd v Australia and New Zealand Banking Group Limited; Tamar Management Pty Ltd and John Wells [1985] FCA 17 (8 February 1985)

FEDERAL COURT OF AUSTRALIA

Re: KINGSLEY FREDERICK DAVID JAMES; JILL MAXINE JAMES; DAVID MAXWELL JAMES;
PETER NORMAN JAMES; ANGUS KINGSLEY JAMES and YALLAMBEE PTY. LTD.
And: AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED; TAMAR MANAGEMENT PTY.
LTD. and JOHN WELLS
No. WA G106 of 1984
Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Toohey J. PERTH
8:2:1985

ORDER

1. Paragraphs 24, 25 and 28 of the statement of claim be struck out.

2. The applicants have leave to file and serve an amended statement of claim on or before 22 February 1985.

3. The applicants pay the second and third respondents' costs of the motion.

4. There be liberty to the first respondent to apply as to its costs of the motion.

DECISION

This is a motion by the second and third respondents to strike out a number of paragraphs of the statement of claim in these proceedings. The basis of the motion is that the paragraphs disclose no reasonable cause of action against those respondents. There is an alternative ground viz. that the paragraphs have a tendency to cause prejudice, and embarrassment and delay in the proceedings and are otherwise an abuse of the process of the Court in that they are prolix and contain irrelevant material.

2. A similar application, though not relating to precisely the same paragraphs, was made by the first respondent and I gave judgment on that motion on 5 December 1984. Certain paragraphs of the statement of claim were ordered to be struck out, giving the applicants leave to amend. The present motion is in respect of the statement of claim as amended.

3. I shall not refer in any detail to the statement of claim which I said in the earlier judgment "is lengthy and the matters to which it relates are complex, both in fact and in law". In essence this is a claim under s.52 of the Trade Practice Act 1974, joined to which are claims in negligence, unconscionable conduct, duress and breach of fiduciary duty. The claim is based on advice alleged to have been given to the applicants by the first respondent ("the Bank") in connection with the raising of a loan to enable the applicants to purchase a farm for a price just in excess of $1,000,000. It is alleged that the loan was to be raised by the second respondent ("Tamar") of which the third respondent ("Mr. Wells") was the managing director.

4. Even in its amended form the statement of claim presents difficulty to anyone seeking to plead to it, though defences have been filed on behalf of all respondents. Part of the difficulty lies in identifying particular paragraphs with particular causes of action. There is a further difficulty in identifying which paragraphs relate to the case against the Bank and which relate to the case against Tamar and Mr. Wells. The second of these problems is illustrated by the motion itself which seeks inter alia to strike out paras 3, 9, 10, 11, 13, 16, 17 and 18 of the statement of claim. The attack on para. 3 was resolved by an amendment to the name of the second respondent. It was said by counsel for Tamar and Mr. Wells that the other paragraphs disclosed no cause of action against his clients. This is so but for a rather different reason than that advanced by counsel. Those paragraphs disclose no cause of action against the second and third respondents because they are not intended to do so. Although reference is made in some of the paragraphs to the second respondent, it is in the context of advice offered by the Bank and as part of the case against the Bank. Counsel for the applicants acknowledged this to be the position and it is therefore unnecessary to spend any more time on the motion so far as it relates to those paragraphs.

5. Before turning to the other paragraphs the subject of the motion, I make these general observations. The motion is brought in reliance upon O.11 r.16 of the Federal Court Rules and is to be determined in accordance with the principles applicable to that rule. Inelegancy of pleading is not of itself a ground for striking out. See Millington v. Loring (1880) 6 QBD 190. Furthermore, though counsel for the second and third respondents argued that the case against his clients was statute barred, the motion does not seek a summary disposal of the proceedings in accordance with O.20 of the Rules.

6. The balance of the motion relates to paras 24, 25, 27, 28, 29 and 30 of the statement of claim. It is convenient to deal with the first four of these paragraphs and the last two, which go to the damages suffered by the applicants, thereafter.

7. Paragraph 24 pleads that on or about 18 July 1980 Mr. Wells as managing director of and agent for Tamar represented to certain of the applicants that it was competent to carry on the business of finance broker and "that it would be able to obtain a 7 year loan in the sum of 1.6 million dollars at 12% to 14% interest". The paragraph continues by pleading that between June 1980 and early 1982 Mr. Wells, on behalf of Tamar, "continued to represent that the Second Respondent was in the business of finance broking and that it was confident it could procure a loan for the Applicants in the terms proposed".

8. The use of the term "continued" is curious since it is in the context of a time span which begins earlier than the specific date 18 July 1980. But the attack on the paragraph is made on other grounds. It is said first that since the application was not lodged until 13 November 1984, the applicants can, by reason of sub-s.82(2) of the Trade Practices Act, rely only on a cause of action that accrued after 13 November 1981. Then it is said that the representation alleged to have been made on 18 July 1980 was, in terms of the statement of claim, made two days after the applicants contracted to buy the property for which the loan was to be procured. See para. 11 of the statement of claim. Counsel then asked rhetorically - how could his clients be held responsible for a representation said to have been made in connection with a loan to effect a purchase of a property which had been purchased two days before the representation was made? The third objection to the paragraph lies in the submission that a representation that Tamar "would be able to obtain" a loan was a statement as to the future and could not constitute misleading or deceptive conduct or be relied upon for any of the common law causes of action joined in these proceedings.

9. To dispose of each of the objections taken by the second and third respondents to para. 24 of the statement of claim might well justify an excursus on several difficult areas of the law under the Trade Practices Act. A cause of action under s.82 accrues, not when there is a contravention of s.52, but when loss or damage is suffered in consequence. That might occur some time after contravention. Arcadi v. Colonial Mutual Assurance Society Ltd. (1984) ATPR 40-473. There is a claim for relief under s.87 of the Act, as to which see Fenech v. Sterling (1984) ATPR 40-496. But it is for relief against the Bank only. A representation that someone "would be able to obtain" a loan may be a statement as to the future but it is also capable of being a representation that the person has the capacity to obtain the loan. In ordinary circumstances a representation made on 18 July 1980 can hardly be said to have influenced a transaction entered into two days earlier but, given the last sentence of para. 24, it is possible to construe the applicants' case so that what was said on 18 July was a continuation of representations made earlier.

10. In the light of what has just been said, I am reluctant to strike out para. 24 as disclosing no reasonable cause of action. But, in my view, the paragraph ought not stand in its present form because it has a tendency to cause prejudice and embarrassment to the second and third respondents in the preparation and conduct of their case. In the context of an entire pleading, objectionable matter may be so interwoven with other matter that the pleading as a whole has a tendency to cause prejudice, embarrassment or delay. Turner v. Bulletin Newspaper Co. Pty. Ltd. [1974] HCA 25; (1974) 131 CLR 69 at 87-88; Coe v. Commonwealth of Australia [1979] HCA 68; (1979) 53 ALJR 403 at 409. Equally, within a paragraph of a pleading, objectionable and non-objectionable matter may be so interwoven that the entire paragraph has a tendency to cause prejudice, embarrassment or delay. In my view that may fairly be said of para. 24 and the paragraph should be struck out with the applicants having leave to file an amended paragraph.

11. Paragraph 25 pleads that Tamar knew or ought to have known that the applicants relied upon the representations made by it, adding "such representations being made to the several Applicants and to the Applicants financial Adviser the Bank".

12. It may be said, and the applicants' counsel did say, that any vagueness in this pleading is capable of being cured by a request for particulars. This may be an adequate answer were it not for the introduction, quite out of the blue, of a reference to representations being made by Tamar to the Bank. This reference is intended to be either by way of evidence only, in which case it should not be in the pleading, or it is intended to be a link in the chain of establishing liablility on the part of the second and third respondents, in which case the allegation should be pleaded as a matter of substance and with clarity.

13. I regard para. 25 as also tending to cause prejudice and embarrassment. It will be struck out, the applicants having leave to file an amended paragraph.

14. Paragraph 27 pleads that Tamar, negligently and in breach of its duty, did or failed to do certain things, in particular failed to procure the proposed loan.

15. Sub-paragraphs (a) and (b) of para. 27 plead that Tamar was not a registered licenced finance broker, thereby breaching the provisions of the Finance Brokers Control Act 1975 (WA) and that it was not competent to carry on the business of finance broker. These allegations are said by the second and third respondents to be irrelevant. I do not agree. Lack of registration may have affected Tamar's capacity to procure a loan for the applicants, so too may a lack of competency.

16. Sub-paragraphs (c), (d) and (e) of para. 27 plead representations by Tamar, its failure to procure the proposed loan and its failure to advise the applicants "that its representations that it could procure the proposed loan and that such loans were readily available were false". Whatever may be said about the inelegancy of the pleading of these particular sub-paragraphs, a request for further and better particulars should avoid any prejudice or embarrassment to the second and third respondents.

17. Paragraph 28 of the statement of claim pleads that the "said conduct" of Tamar and the "said conduct" of Mr. Wells "causing the Second Respondent so to act" was conduct in breach of s.52 of the Trade Practices Act. Mr. Wells' complaint is that his liability to the applicants, if Tamar is held liable, will be determined by reference to s.75B of the Trade Practices Act which, for the purposes of s.82, identifies those persons who may be said to have been involved in a contravention of s.52. The paragraph makes no attempt to identify any particular basis for the operation of s.75B.

18. In my view the complaint is well founded and the most satisfactory course is to strike out the paragraph, giving the applicants leave to to file an amended paragraph.

19. Paragraphs 29 and 30 of the statement of claim plead loss and damage suffered and to be suffered by the applicants. Counsel for the second and third respondents said nothing about these paragraphs in the course of his submissions. It may be that he refrained from doing so on the basis that if the earlier paragraphs survived, in their existing form or as amended, the Court was unlikely to strike out paragraphs relating only to damages. Whatever the reason, it is unnecessary for me to say more about these paragraphs.

20. In summary, paragraphs 24, 25 and 28 of the statement of claim will be struck out. The applicants will have leave to file and serve an amended statement of claim within 10 days. The applicants must pay the second and third respondents' costs of the motion. I shall give counsel for the first respondent, who was present during the hearing of the motion, an opportunity to be heard on the question of his client's costs.