Re Wendy Mcmahon (Mw) v Warren Edmond Crawford and Paul Dunbar [1987] FCA 498 (24 December 1987)

FEDERAL COURT OF AUSTRALIA

Re: WENDY MCMAHON (MW)
And: WARREN EDMOND CRAWFORD and PAUL DUNBAR
No. WAG 115 of 1987
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIAN DISTRICT REGISTRY
GENERAL DIVISION
French J.(1)

CATCHWORDS

Trade Practices - misleading and deceptive conduct - invitation to participate in raffle competition - free entry - $10,000 product prize advertised - $4,000 product prize offered to winner - no $10,000 product in existence - no loss demonstrated - no damages recoverable under s. 82 - application dismissed O.20 r.2 - query application of s. 55

Trade Practices Act 1974 s. 52, s. 54, s. 55, s. 82

HEARING

PERTH
24:12:1987

Counsel for the Applicant: Mr M. Bateman

Solicitors for the Applicant: Malcolm J. Bateman & Co.

Counsel for the Respondents: Mr L. Durand

Solicitors for the Respondents: Durand & Co.

ORDER

The application is dismissed.

The applicant to pay the respondents' costs of the application.

Each party is to bear its own costs of the respondents' motion.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

This is a motion to strike out proceedings, for failure to disclose a reasonable cause of action, or on the basis that they are an abuse of process.

2. The statement of claim discloses that the applicant is a married woman who resides in the state of Western Australia and that the respondents, who are natural persons, trade under the business name of "Trojan Domes" at Lesmurdie in Western Australia. It alleges that, for the purpose of inducing purchases of their products, the respondents were exhibitors at an exhibition known as the "West Australian Home Show" conducted annually at the Claremont Showgrounds from about 28 February to 8 March in each year.

3. The purpose of the exhibition was to allow manufacturers and traders in the building industry to exhibit and advertise their products in the furtherance of their business. The respondents were said to have erected a structure known as a "Trojan Dome" in the proximity of the McFarlane pavilion at the Claremont Showgrounds for the purposes of the exhibition. This structure included a bathing facility described as a "$4500 RBC Executive Spa".

4. The respondents are alleged to have advertised their products and, in particular, the Trojan Dome in the West Australian newspaper. Its price was not referred to in these advertisements. However, on 28 February 1987, according to the statement of claim, the respondents or their agents, published an offer in the same newspaper inviting members of the public to win a $10,000 Trojan Dome and a $4,500 RBC Executive Spa by filling in a coupon and placing it in a barrel at the Trojan Dome display at the exhibition during specified times.

5. The applicant says that, relying upon this representation and offer, she paid her entrance fee to the exhibition and filled in a coupon which was presented to her by the respondents for the purposes of their competition. On 8 March she was advised that she had won the competition and on 11 March her name was published in the newspaper as having won a $10,000 Trojan Dome and a $4,500 RBC Executive Spa.

6. When it came to collecting the prize however, she was advised that the Trojan Dome erected at the McFarlane pavilion was not a $10,000 Trojan Dome but valued only at $4,000 and that the respondents did not manufacture or erect a $10,000 Trojan Dome. That allegation is admitted on the defence which has been filed. It is further alleged in the statement of claim, that the respondents told the applicant that they were at all times willing to supply her with a $4,000 Trojan Dome and a $4,500 Executive Spa which could be erected either at her home or any other residence of her choice.

7. However, she refused this offer and saw her solicitors. The statement of claim then goes on in paras. 15 and 16 to say:-

"15. The Respondents' conduct in advertising for and
representing that a Trojan Dome valued at
$10,000.00 was the said specimen at the McFarlane
pavillion (sic) or indeed that they could have
erected one at such a value at any time amounts to
conduct within the meaning of Section 54 and
Section 55 of the Trade Practices Act, 1974.

16. The conduct referred to in paragraph 15 aforesaid
was misleading or deceptive conduct or
alternatively was likely to mislead or deceive or
alternatively had a tendency to mislead or
deceive."

8. The applicant claims that as a result of this conduct she has suffered loss and damage. That loss and damage is particularised in para. 17 of the statement of claim:-

"(i) Loss of the opportunity to have erected at her
residence or any other residence of her choice a
$10,000.00 Trojan dome with a $4,500.00 R.B.C.
Executive spa erected and built thereunder or
alternatively:

(ii) The value thereof."

9. The motion which seeks to strike out the application expressly relies upon O.11 r.16. It does not appear, however, to be apposite to that order as that provides for the striking out of pleadings. Order 20 r.2 on the other hand, provides, as follows, for the dismissal of a proceeding:-

"(1) Where in any proceeding it appears to the Court
that in relation to the proceeding generally or in
relation to any claim for relief in the proceeding -

(a) no reasonable cause of action is disclosed;

(b) the proceeding is frivolous or vexatious; or

(c) the proceeding is an abuse of the process of the
Court,

the Court may order that the proceeding be stayed or
dismissed generally or in relation to any claim for
relief in the proceeding."

10. The power to summarily strike out a pleading or dismiss a proceeding is to be exercised sparingly by the court, and only in a clear case. Where absence of a reasonable cause of action is raised there must be no reasonable prospect that even if all matters of fact alleged in the statement of claim could be established, any basis for relief could be shown.

11. The statement of claim appears to rely exclusively upon causes of action arising out of the Trade Practices Act. As appears from para. 15 it expressly invokes ss.54 and 55 of the Act. It also, I think, by implication in para.16, invokes s.52 of the Trade Practices Act, although it does not say so. The reliance upon ss. 52 and 54 run into the same difficulty in each case. That is to say, each of those provisions is concerned only with the conduct of corporations in trade or commerce.

12. The respondents in this case are natural persons. There is nothing in the statement of claim which gives rise to any basis for the suggestion that their alleged conduct might attract the extended operation of the Trade Practices Act under s.6. By that section the operation of the Act may be extended to cover the case of natural persons who are engaged in conduct in trade or commerce between the states or overseas or whose conduct involves the use of television or broadcasting facilities or telephonic or postal communications. None of those matters are raised in the pleading and on that basis alone, there is no way in which a cause of action based on ss. 52 or 54 could succeed.

13. Section 55 provides:-

"A person shall not, in trade or commerce engage in
conduct that is liable to mislead the public as to the
nature, the manufacturing process, the characteristics,
the suitability for their purpose or the quantity of any
goods."

14. It is immediately to be noted that that section is not limited in its application to corporations but extends to persons. The reason for that is that it is a provision which relies upon the external affairs power of the Commonwealth Parliament. It was enacted to implement the Industrial Property Convention to which Australia is a party. For that reason, the obstacle which would prove overwhelming in relation to ss. 52 and 54 does not operate in respect of s.55. Notwithstanding that, I have grave reservations as to whether it would apply to the case which is made on the present statement of claim. The question one has to ask is whether the misrepresentations or misleading and deceptive conduct which are alleged go to the nature, the manufacturing process, the characteristics, the suitability for their purpose or the quantity of any goods. At most, there may be an argument that the question of the value or price attached to the goods may go to their characteristics but even that could face the difficulty that the price is not an inherent characteristic but something attached to the goods by their vendor and not part of their description.

15. But that issue, which it is not necessary to resolve now, even if concluded in favour of the applicant, would not save this statement of claim. To support a claim for damages under the Trade Practices Act, the applicant must rely upon s.82 or s.87. Section 82 of the Act provides in sub-s.(1):-

"A person who suffers loss or damage by conduct of
another person that was done in contravention of a
provision of Part IV or V may recover the amount of the
loss or damage by action against that other person or
against any person involved in the contravention."

And sub-s. (2):-

"An action under sub-section (1) may be commenced at any
time within 3 years after the date on which the cause of
action accrued."

And (3):-

"Sub-section (1) does not apply in relation to conduct
done in contravention of section 52A."

16. It is apparent from that provision that the cause of action, that is to say, the entitlement to recover loss or damage conferred by s.82 depends upon loss or damage being suffered by conduct of another person. That is to say, there must be some loss or damage which is causally related to the conduct in question. Assuming for present purposes that the conduct of the respondents constitutes a contravention of s.55, the question is whether or not, on the face of the statement of claim, it could be said that any loss is alleged which would amount to a loss suffered by reason of that conduct.

17. In my view, the statement of claim does not show such a loss. In fact, what it seems to allege is that the respondents have misrepresented the existence of a $10,000 Trojan Dome when all they could supply the applicant with was a $4,000 Trojan Dome. If that be the case, then the applicant has lost nothing. The particulars of loss and damage speak of the loss of an opportunity to have erected at the applicant's residence or any other residence of her choice, a $10,000 Trojan Dome. But it is not pleaded anywhere in the statement of claim that there is such a thing as a $10,000 Trojan Dome.

18. The applicant therefore, on the face of the pleading, does not show that there is any loss which flows from the misrepresentation. Like arguments dispose of any claim for damages under s.87.

19. It may be that there is some cause of action in contract which would give rise to a claim for damages of the kind that the applicant evidently contemplates. In saying that, I note that the entrance fee that she paid is not pleaded as an entrance fee which has any relationship to the offer made by the respondents. That appears to be an entrance fee that gave her access to the showgrounds. What she allegedly did in answer to the respondents' offer was to fill out a coupon. Whether or not the filling out of the coupon and its tendering to the respondents constitutes a consideration which would support a contractual relationship in respect of the provision of a $10,000 Trojan Dome should her coupon be the winning ticket, is a question which I need not determine. It is certainly not a question which is raised on the pleadings. And if that be the true basis of the applicant's cause of action, then the appropriate place for it to be dealt with is in the District Court rather than in this Court. In my opinion, therefore, there is no cause of action shown under the Trade Practices Act by the statement of claim.

20. The motion which sought to "strike out" the application is misconceived to the extent that it seems to confuse the roles of O.11 r.16 and O.20 r.2.

21. Nevertheless, I should, I think, treat the motion on the basis that it seeks in substance that the application be dismissed and was argued on that basis and I will make an order that the application be dismissed. I will hear counsel on the question of costs.