Joshua Brook Pty Ltd v Outdoor Centre Holdings Pty Ltd & Anor [2009] FMCA 1288 (24 December 2009)

Last Updated: 13 January 2010

FEDERAL MAGISTRATES COURT OF AUSTRALIA

JOSHUA BROOK PTY LTD v OUTDOOR CENTRE HOLDINGS PTY LTD & ANOR

[2009] FMCA 1288

PRACTICE AND PROCEDURE – Application to substitute statement of claim – where no affidavit filed in support – whether affidavit necessary where statement of claim filed. PRACTICE AND PROCEDURE – Application to strike out substituted statement of claim – purpose and requirements of pleadings in Federal Magistrates Court – rules and principles governing strike out application. PRACTICE AND PROCEDURE – Where parts of substituted statement of claim struck out – whether leave to re-plead ought be granted. TRADE PRACTICES – Misleading and deceptive conduct.

Fair Trading Act 1987 (WA) Federal Court Rules 1976 (Cth), O.1. r.4, O.11. r.16. Federal Magistrates Act 1999 (Cth), ss.3, 34(1), 42, 45(1), 79(2) Federal Magistrates Court Rules 2001 (Cth), rr.1.03, 1.05, 4.05, 4.08, 7.01 Trade Practices Act 1974 (Cth), ss.51A, 52, 75B, 76, 82, 87

Accounting Systems 2000 (Developments) Pty Ltd & Anor v CCH Australia & Anor (1993) 114 ALR 355 Barclay Mowlem Construction Ltd v Dampier Port Authority (2006) 33 WAR 82; [2006] WASC 281 BHP Billiton Ltd v Schultz (2004) 221 CLR 400; [2004] HCA 61 Buckingham v KSN Engineering Pty Ltd (2008) 177 IR 427; [2008] FMCA 546 Cummings v Lewis (1993) ATPR 46-103 Davy v Garrett [1877] 7 ChD 473 Doukidis v Williamson (2008) 6 ABC (NS) 717; [2008] FMCA 1352 Elitegold Pty Ltd v BPTC Ltd (unreported, Federal Court of Australia, 24 November 1992) Favell v Queensland Newspapers Pty Ltd [2005] 79 ALJR 1716; [2005] HCA 52 Fubilan Catering Services Ltd v Compass Group (Aust) Pty Ltd [2007] FCA 1205 Hatt and Ors v Magro (2007) 34 WAR 256; [2007] WASCA 124 Jacques v Cut Price Deli Pty Ltd (1993) ATPR 46-102 Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494; [1998] HCA 69 Miba Pty Ltd & Ors v Nescor Industries Group Pty Ltd & Anor (1996) 141 ALR 525 Oldfield Knott Architects Pty Ltd v Ortiz Investments Pty Ltd [2000] WASCA 255 Olsen v Wellard Feeds Pty Ltd [2007] FMCA 1885 O’Neill v Medical Benefits Fund of Australia Ltd (2002) 122 FCR 455; [2002] FCAFC 188 Quinlivan v Australian Competition and Consumer Commission (2004) 160 FCR 1; [2004] FCAFC 175 Rana v University of South Australia (2004) 136 FCR 344; [2004] FCA 559 Sali v SPC Ltd [1993] HCA 47; (1993) 67 ALJR 841; (1993) 116 ALR 625 Sterling Commerce (Australia) Pty Ltd v Iliff (2008) 173 IR 378; [2008] FCA 702 Sutton v AJ Thompson Pty Ltd (in liq) & Ors (1987) 73 ALR 233 Swevenings Pty Ltd v Ferguson Consolidated Holdings Pty Ltd & Anor (No 3) [2009] FMCA 255 Ting v Blanche [1993] FCA 524; (1993) 118 ALR 543 Tony Sadler Pty Ltd v McLeod Nominees (1994) 13 WAR 323 Verge & Anor v Devere Holdings Pty Ltd & Ors [2008] FMCA 591 WA Pines Ltd v Bannerman [1980] FCA 79; (1980) 30 ALR 559 Westraint Resources Pty Ltd v BHP Iron Ore Pty Ltd [2001] WASC 111 Whitaker v Paxad Pty Ltd [2009] WASC 47 Yorke & Anor v Lucas [1985] HCA 65; (1985) 158 CLR 661

The Shorter Oxford English Dictionary on Historical Principles, Volume 1 (Oxford: Clarendon Press, 1973)

Applicant:

JOSHUA BROOK PTY LTD

First Respondent:

OUTDOOR CENTRE HOLDINGS PTY LTD

Second Respondent:

PAUL NICHOLLS

File Number:

PEG 198 of 2008

Judgment of:

Lucev FM

Hearing date:

27 March 2009

Date of Last Submission:

27 March 2009

Delivered at:

Perth

Delivered on:

24 December 2009

REPRESENTATION

Counsel for the Applicant:

Mr A R MacKinlay

Solicitors for the Applicant:

MacKinlays Solicitors

Counsel for the Respondents:

Mr T. Darbyshire

Solicitors for the Respondents:

Kott Gunning

ORDERS

(1) The applicant’s minute of Substituted Statement of Claim stand as its Amended Statement of Claim in these proceedings.
(2) That:

• (a) the punctuation and words “, being the market value of the Steven Nicholls Labour” in paragraph 15;
• (b) the word “market” in paragraph 17;
• (c) the word “Market” in paragraphs 22 and 32(a);
• (d) paragraph 23.2;
• (e) paragraph 25; and
• (f) sub-paragraph (b) of the Table in paragraph 33;

of the Amended Statement of Claim be struck out.

(3) The applicant be granted leave to file and serve a Second Amended Statement of Claim on or before 12 February 2010.
(4) The applicant file and serve any affidavits it intends to rely on to support the application on or before 12 February 2010.
(5) The proceedings be adjourned to a further directions hearing at 11.00am on 22 February 2010.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH

PEG 198 of 2008

JOSHUA BROOK PTY LTD

Applicant

And

OUTDOOR CENTRE HOLDINGS PTY LTD

First Respondent

PAUL NICHOLLS

Second Respondent

REASONS FOR JUDGMENT

Introduction

Substantive application

1. The substantive application alleges misleading and deceptive conduct under the TP Act 1974 (Cth)[1] and claims under ss.52, 76, 82 and 87 for damages, and for breach of contract, relating to the purchase by the applicant, Joshua Brook Pty Ltd,[2] from the first respondent, Outdoor Centre Holdings Pty Ltd,[3] of a patio and room addition manufacture business[4] in Joondalup for which Joshua Brook paid $2,400,000.
2. Various misrepresentations are said to constitute misleading and deceptive conduct by Outdoor Centre Holdings under s.52 of the TP Act resulting in loss and damage to the applicant being the difference in purchase price for the Business under the contract and the market value of the Business at the time the contract was entered into, plus a sum to be assessed in respect of the expected lost profit of the Business.
3. Joshua Brook alleges that the second respondent, Mr Nicholls, had actual knowledge of various representations and non-disclosures resulting in him being a person knowingly involved in the alleged contraventions of the TP Act.[5]
4. These reasons for judgment relate to two applications in a case, one made by Joshua Brook, the other by Outdoor Centre Holdings and Mr Nicholls. These applications in a case are outlined below.

Joshua Brook’s application in a case

5. Joshua Brook’s application in a case is for a minute of Substituted Statement of Claim to stand as Joshua Brook’s Statement of Claim, and for a consequential order for filing and serving of any response to the Statement of Claim by Outdoor Centre Holdings and Mr Nicholls.

Outdoor Centre Holdings’ and Mr Nicholls’ application in a case

6. Outdoor Centre Holdings’ and Mr Nicholls’ application in a case is for:
   1. the Statement of Claim to be struck out, for judgment to be entered for Outdoor Centre Holdings and Mr Nicholls and for Joshua Brook to pay Outdoor Centre Holdings’ and Mr Nicholls’ costs of the action; or
   2. alternatively, for paragraphs 30 and 31 of the Statement of Claim to be struck out and for judgment to be entered and for Mr Nicholls’ costs to be paid by Joshua Brook.

Joshua Brook’s application to substitute Statement of Claim

Joshua Brook’s submissions

7. Joshua Brook says that the application is brought pursuant to r.7.01 of the Federal Magistrates Court Rules 2001 (Cth)[6] and in accordance with r.4.08 of the FMCA Rules. Rule 7.01 of the FMC Rules empowers the Court to allow or direct a party to amend a document in the way and on the conditions that the Court thinks fit. Rule 4.08 of the FMC Rules provides that any application in a case must conform to the requirements of r.4.05 of the FMC Rules. Joshua Brook’s application in a case included points of claim annexed by way of a minute of Substituted Statement of Claim.[7]
8. In considering the application to grant leave to substitute the Statement of Claim Joshua Brook says that the Court ought to have regard to:
   1. Tony Sadler Pty Ltd v McLeod Nominees[8] which sets out certain case management rules. Joshua Brook says that Tony Sadler can be distinguished because:
      1. the application to amend was made three years after the proceedings commenced and after the matter had been entered for trial, with the trial imminent;
      2. the application sought amendments which withdrew admissions; and
      3. leave would have caused substantial prejudice to the other party but also affected the public interest because the trial would have had to have been adjourned;
   2. Westraint Resources Pty Ltd v BHP Iron Ore Pty Ltd[9] where leave to amend was granted because:
      1. amendments, albeit substantial, were not being sought at the commencement of the trial;
      2. the amendments were sought to be made some months before the matter was due to be listed for trial and many months before it was likely to be heard; and
      3. the amendments did not involve the withdrawal of admissions previously made.
9. Joshua Brook says that the Court should grant leave to substitute the Statement of Claim taking into account the following considerations:
   1. this is the only way in which the true issues and real merits, factual and legal, can be litigated;
   2. the defects with the Statement of Claim filed on 18 December 2008 were wholly accidental, in circumstances where the alleged conduct of Outdoor Centre Holdings and Mr Nicholls is complex, and the Statement of Claim attempted to simplify and clarify points, but in so doing certain essential elements of the claim were omitted when the Statement of Claim was settled;
   100. the application to the case of fresh legal minds perceived an important new point;
   4. a costs order or the imposition of other conditions could adequately rebalance the competing claims to justice;
   5. a hearing date sufficiently in the future to permit a party to meet the amendments, taking into account the gathering of evidence and the conduct of discovery would also rebalance the competing claims to justice; and
   6. ultimately, the aim of the Court is the attainment of justice, not the supplanting of justice by principles of case management.[10]

Outdoor Centre Holdings’ and Mr Nicholls’ submissions

10. Outdoor Centre Holdings and Mr Nicholls submit that no affidavit has been filed by Joshua Brook as required in support of its application to substitute the Statement of Claim.[11] Outdoor Centre Holdings and Mr Nicholls say that Joshua Brook must satisfy the Court that it should grant leave to amend in the light of case management rules.[12]
11. Outdoor Centre Holdings and Mr Nicholls therefore say that Joshua Brook’s application to substitute the Statement of Claim should be dismissed as being in breach of r.4.05(1) of the FMC Rules.

Consideration of Joshua Brook’s application in a case

12. Subject to what is said below concerning the failure of Joshua Brook to file an affidavit in support of the application, the Court observes that:
    1. there has been no delay in making the application, and it has been made:
       1. three months after the application was filed initially; and
       2. before any defence has been required to be filed;
    2. the application does not seek to withdraw any admissions;
    100. allowing the substitution of the statement of claim will allow Joshua Brook to argue the matter on the basis of what it alleges to be the true factual and legal footing; and
    4. at this early stage of proceedings an award of costs can cure any prejudice suffered by Outdoor Centre Holdings and Mr Nicholls.
13. The Court has not taken into account the matters asserted in paragraphs 9(b) and (c) above. In the absence of any affidavit in support of the application they are matters about which there is no evidence.
14. Subject to the observations which follow, the Court considers that the above matters favour the granting of Joshua Brook’s application for leave to substitute the Statement of Claim.
15. Outdoor Centre Holdings and Mr Nicholls argue that in support of the application in a case to substitute the statement of claim, Joshua Brook ought to have filed an affidavit under r.4.05(1) of the FMC Rules.
16. Rule 4.05 of the FMC Rules provides as follows:
    • (1) A person filing an application or response, whether seeking final, interim or procedural orders, must also file an affidavit stating the facts relied on.
    • (2) However, an affidavit is not required:
    • ...
    • (b) in a proceeding that is not a child support proceeding or family law proceeding — if the person filing an application files a statement of claim or points of claim;
    • ...
    • (3) If a statement of claim or points of claim are filed under paragraph (2) (b), a respondent:
    • (a) must file a defence or points of defence instead of an affidavit; and
    • (b) may file a cross-claim.
17. It can be seen that an affidavit is not required in a general federal law proceeding if the person filing the application is filing a statement of claim. In that respect, r.4.05(2)(b) qualifies r.4.05(1) of the FMC Rules. What is sought to be filed in this case by Joshua Brook is a statement of claim, albeit a substituted statement of claim. In those circumstances, the Court is of the view that no affidavit is necessarily required to be filed with the application in a case where the person filing is, as here, filing the statement of claim. There may be circumstances where a party may need to file an affidavit to explain a particular circumstance or issue, but this is not such a case.
18. Even if the view just expressed is wrong, in this case, the Court would be prepared to dispense with the requirements of r.4.05(1) of the FMC Rules in the interests of justice.[13] The interests of justice do not require an affidavit to be filed in this case where:
    1. no defence has yet been filed;
    2. the observations in paragraph 12 above apply; and
    100. only additional costs will be incurred, and no good purpose is otherwise served, by requiring Joshua Brook to make the application supported by affidavit.
19. In the circumstances there will be an order that the Minute of Substituted Statement of Claim stand as Joshua Brooke’s Amended Statement of Claim.[14]

Outdoor Centre Holdings’ and Mr Nicholls’ application to strike out the statement of claim

Approach to strike out application

20. In considering the approach to follow in relation to the strike out application it is necessary to deal with the relevant procedural rules.[15]
21. This Court was not originally a court of pleadings. In Rana v University of South Australia[16] the Federal Court observed that:
    1. the FMC Rules do not require pleadings;
    2. parties are not obliged to tender all their evidence when the application and a response are filed; and
    100. the Court should be cautious about summarily dismissing a proceeding.[17]
22. The role of this Court has changed somewhat since the judgment in Rana. It is still possible to commence an action without pleadings, but in 2007 the FMC Rules were amended so applications can now be filed with a Statement of Claim or Points of Claim to which a Defence or Points of Defence might be filed in response, and in neither case is there a requirement for the filing of an affidavit.[18]
23. The FMC Rules are silent in respect of striking out pleadings. Therefore, the Federal Court Rules 1976 (Cth)[19] can apply so far as is necessary, because of the insufficiency of the FMC Rules.[20] Under the FC Rules[21] a pleading which discloses no reasonable cause of action or which has a tendency to cause prejudice, embarrassment or delay, may be struck out at any stage of the proceedings, either in whole or in part.[22]
24. The Court recognises that in determining to strike out all or part of a pleading it must exercise a discretion, and that that discretion is one to be exercised with caution having regard to the objects of the Federal Magistrates Act 1999 (Cth) and FMC Rules, and modern case management techniques.[23]
25. The Federal Court further dealt with the issue and nature of pleadings required in this Court in Sterling Commerce (Australia) Pty Ltd v Iliff.[24]
26. In Iliff it was alleged that an issue determined by this Court was not raised by the pleadings, evidence or submissions.[25] The Federal Court (on an appeal heard by a single Judge) said as follows:
    • 21. In considering this ground of appeal, “the philosophy of the Federal Magistrates Act and the intention of the Attorney-General at the time of the introduction of the Federal Magistrates Bill” in establishing the Federal Magistrates Court cannot be ignored (per Lander J in Rana v University of South Australia [2004] FCA 559; (2004) 136 FCR 344 at [34]): see also Granada Tavern v Smith [2008] FCA 646; (2008) 173 IR 328 at [106]. As Lander J stated in Rana at [37]:
      • The Federal Magistrates Court has abandoned pleadings in favour of affidavits. In doing so, it has recognised that the Court has been created to offer relatively inexpensive and expeditious justice. It is a court which should proceed without undue formality and should ensure that the proceedings are not protracted: s 42. It has abandoned the formal procedures of superior courts. That course is consistent with the Act and the FMC Rules.
    • See also O’Neill v Medical Benefits Fund of Australia Ltd [2002] FCAFC 188; (2002) 122 FCR 455 where the Full Court of the Federal Court (Carr, Moore and Marshall JJ) said at [16]:
      • We are prepared to accept that in a case such as the present MBF was entitled to know, as a matter of procedural fairness, that s 51A was relied on either expressly or by clear implication. It is unnecessary to address the question of whether it needed to be pleaded in this case particularly having regard to the comparative informality created by the legislative scheme governing the Federal Magistrates Court including its Rules.
    • 22. What then did the Federal Magistrate do? His Honour made the following finding at [147]:
      • On one view [Sterling Commerce] might be thought to have been likely to have sought a release from any employee with an enforceable entitlement to return to work who had ended up in dispute about that return. Nonetheless, it seems to me that the return to work provisions in the WR Act, involving civil penalties as they clearly do, is more probably than not the reason why the Respondent required a release from Ms Iliff. Even if it was not the only reason, it was clearly part of the reason, and this is enough (s 8 - SDA)
    • 23. Sterling Commerce submitted that the finding of Burchardt FM that Sterling Commerce contravened the SDA in the manner outlined above (see [17]) involved a breach of procedural fairness. It relied on what was said in Kioa v West [1985] HCA 81; (1985) 159 CLR 550 (at 588 per Mason J, 628 per Brennan J and 634 per Deane J). It may be doubted that the analogy with an administrative decision maker is wholly apt. It is true that a party to proceedings in the Federal Magistrates Court must be put on notice of the case against it and have an opportunity to respond. That obligation is not of the same kind as the obligation of an administrative decision maker to accord procedural fairness. It is a fundamental principle of justice that a Court must not determine an issue that is not raised by the pleadings, or in the evidence or submissions before it.[26]
27. In determining the application to strike out, the Court will apply the principles in Iliff and KSN Engineering, modifying the former to allow for the introduction of pleadings in the FMC Rules.

Systems Representation

28. Outdoor Centre Holdings and Mr Nicholls say that paragraph 11 of the Amended Statement of Claim defines “Systems Representation”, as being, in essence, that the Business would “continue performing after settlement as it had done prior to settlement”. Outdoor Centre Holdings and Mr Nicholls say that there is no pleading as to the performance of the Business after Joshua Brook purchased it, therefore, the falsity of the Systems Representation is incapable of being proved on the pleadings. Outdoor Centre Holdings and Mr Nicholls say that it follows that paragraphs 11 and 12 ought to be struck out.
29. Joshua Brook says that paragraph 11 of the Substituted Statement of Claim is a future act representation, and that the evidentiary onus lies on Outdoor Centre Holdings to prove it had reasonable grounds for making the representation,[27] and that that changes the nature of the required pleading. In relation to paragraphs 11 and 12 Joshua Brook says that Outdoor Centre Holdings and Mr Nicholls have chosen the most limited available interpretation of the pleading, namely, that there is a complete absence of information about, or accounting for, a significant full time employee.
30. Joshua Brook submits that s.51A of the TP Act changes the nature of the required pleading. Although views differ as to what, if anything, precisely must be pleaded[28] it seems that there must be some indication, either expressly or by clear implication that s.51A of the TP Act is to be relied upon.[29]
31. In Fubilan Catering Services Ltd v Compass Group (Aust) Pty Ltd[30] the Federal Court said that a misleading and deceptive conduct plea which relies upon s.51A of the TP Act should make it clear that it involves the allegation that the representor did not have reasonable grounds, and that if want of reasonable grounds was not expressly pleaded it should be taken as implied, and if it was not able to be implied then the pleading should be regarded as deficient.[31] In Fubilan Catering the Federal Court went on to say:
    • The preceding analysis has consequences for dealing with the way in which the cause of action for misleading or deceptive conduct based upon statements of future fact is set up. The causal connection between the respondent’s conduct in such a case and the loss or damage claimed is not the breaking of the promise or the failure of the prediction. The causal connection which must be shown to exist is a causal connection between the loss or damage claimed and the making of the promise or prediction without reasonable grounds.[32]
32. Joshua Brook has pleaded that there is no reasonable basis (which equates with no reasonable ground)[33] for the Systems Representation.
33. Joshua Brook has not pleaded in relation to the overall financial performance of the Business, past, present or future, and only as to the Net Profit as at 30 June 2007. Joshua Brook has however pleaded as to the future performance of the Business as it relates to:
    1. the non-disclosure of the cost of the Steven Nicholls Labour, which (when read in conjunction with paragraph 15 and Annexure A of the Amended Statement of Claim) might support an argument that the future performance of the Business is affected by a cost impost that Joshua Brook was not made aware of at the time of the Systems Representation, namely the replacement cost of the Steven Nicholls Labour; and
    2. the contribution that the Steven Nicholls Labour made to the performance of the Business’ systems, and the cost of replacing that labour to maintain an equivalent level of systems performance before and after settlement.

It is a very limited plea as to the future performance of the Business. Nevertheless, it does go, in the limited way described, to the future (after settlement) performance of the Business.

34. Paragraphs 11 and 12 will not be struck out.

Additional annual cost

35. Outdoor Centre Holdings and Mr Nicholls refer to paragraph 15 of the Amended Statement of Claim and the assertion that “the Applicant has been required to expend an annual cost of $220,413, being the market value of the Steven Nicholls Labour.” Outdoor Centre Holdings and Mr Nicholls say that the pleading in relation to “market value” is meaningless because market value is an objective factor obtained by expert evidence, not the result of a subjective decision by Joshua Brook to employ certain people in certain circumstances. Furthermore, Outdoor Centre Holdings and Mr Nicholls argue that it is not clear what is meant by “additional annual cost” in the third column of Annexure A. It is said that it is not pleaded that Joshua Brook increased the wages of these individuals in the amounts there set out, and if that is what is meant, it ought to be clearly pleaded. Thus, Outdoor Centre Holdings and Mr Nicholls say that as it stands, the pleading is vague and confusing such that it would cause embarrassment in the proceeding, and therefore ought to be struck out.
36. Joshua Brook say that pleading was proper and one available on the material facts set out.
37. The plea that the cost of $220,413 is the “market value of the Steven Nicholls Labour” is not grounded in any material facts. The particulars in Appendix A appear to be particulars of the replacement cost of labour to carry out the Steven Nicholls Labour. Whether they constitute the “market value” of the Steven Nicholls Labour is not a matter which can be discerned from the pleading in the absence of facts material to the issue of the “market value” of the Steven Nicholls Labour. Whether the replacement cost is at “market value” therefore cannot be determined, and whether the “market value of the Steven Nicholls Labour” is relevant to any loss and damage actually suffered by Joshua Brook might be questionable.
38. In the circumstances the punctuation and words “, being the market value of the Steven Nicholls Labour” ought to be struck out of paragraph 15 of the Amended Statement of Claim. Otherwise, paragraph 15 of the Amended Statement of Claim is, in its terms, clear.
39. Outdoor Centre Holdings and Mr Nicholls also complain about the particulars of cost provided in Annexure A in support of paragraph 15 of the Amended Statement of Claim. Annexure A sets out an “additional annual cost” to replace certain responsibilities and activities previously allegedly performed as part of the Steven Nicholls Labour. Those particulars seem to align the cost, calculated annually, with various components of the Steven Nicholls Labour replaced. Particulars of the components of the cost of replacement (whether they are, for example, salaries, wages, bonuses, overtime, allowances, vehicle expenses, workers compensation, insurance or other labour on-costs) have not been provided, and may be necessary if Outdoor Centre Holdings and Mr Nicholls are to be able to properly prepare for hearing. However, the provision of further and better particulars, is a matter, at least initially, for the parties by way of informal, then formal, conferral and requests.[34] Only in the event that the parties cannot resolve the issue should the Court be troubled with respect to a request for particulars.[35] Therefore, it is presently unnecessary to make any orders concerning the particulars of cost in Annexure A to the Amended Statement of Claim.

Adjusted Net Profit Representation

40. Outdoor Centre Holdings and Mr Nicholls say that paragraph 23.2 of the Amended Statement of Claim pleads that the Adjusted Net Profit Representation was “a representation as to a future matter”. Outdoor Centre Holdings and Mr Nicholls argue that this is not the case because of the wording of paragraph 7 of the Amended Statement of Claim which says that the representation as to the Adjusted Net Profit generated by the Business “in the financial year ending 30 June 2007 was $840,265” (emphasis added). Outdoor Centre Holdings and Mr Nicholls say that the pleading is embarrassing and should be struck out.
41. Joshua Brook disputes that the use of the word “was” means that the representation was to an existing fact, and only an existing fact. Joshua Brook argues that the Net Profit at the material time, together with the representation (in the Agent Report) that the method of calculation of the Purchase Price of the Business should assume that the Net Profit be maintained for three years, makes it a representation as to a future matter.
42. With respect to Outdoor Centre Holdings’ and Mr Nicholls’ claim that the representation is a statement of opinion and not fact, Joshua Brook says that a representation with respect to a future matter does not cease to be such merely because it implies or embodies a statement of belief or opinion, citing Ting v Blanche.[36] Joshua Brook says that where a statement is made about an existing fact and it is false, it may be misleading and deceptive conduct and a representation as to a future matter where the statement is embodied in a provision of a contract (as a promise), and in this case points to clause 14 of the Business General Conditions which says that “all financial information provided...is true and correct now...and it will be true and correct on the Settlement Date.”[37]
43. The “applicability of s.51A is to be ascertained by a proper characterisation of the representation made in each case.”[38] The mere fact that the representation as to the profit generated by the business in the financial year ending 30 June 2007 “was” a particular sum would not preclude that representation from being a representation, or part of a representation, as to a future matter.[39] However, the difficulty for Joshua Brook in this case lies not in the argument that it has put before the Court in its submissions (which might be right if that were the way the case were pleaded), but with the manner in which the case is actually pleaded. The Adjusted Net Profit Representation is pleaded as a representation as to the Adjusted Net Profit actually made by the business during the year ending 30 June 2007, and no more.[40] It is no part of the Adjusted Net Profit Representation that there was a representation that the Net Profit “could” be made, rather, merely that it “had been” made in the past year. Thus, no material facts have been pleaded which would support the assertion in paragraph 23.2 of the Amended Statement of Claim that the Adjusted Net Profit Representation was a representation as to a future matter. There is no material fact pleaded, in connection with the Adjusted Net Profit Representation, which supports the claim that it was “a representation that the Business would continue to trade at the levels of profitability there shown”.[41]
44. A further matter arises as to whether the Adjusted Net Profit Representation is a future matter representation. It is the failure of Joshua Brook to plead that Outdoor Centre Holdings had no reasonable grounds for making the Adjusted Net Profit Representation.[42] Such a plea cannot be implied either. For reasons set out above,[43] the Adjusted Net Profit Representation is not a future matter representation, and there is no basis for so implying, given that it related to a particular matter (Net Profit) at a past fixed point in time (30 June 2007).
45. In the circumstances, paragraph 23.2 of the Amended Statement of Claim will be struck out.

Measure of damages

46. Outdoor Centre Holdings and Mr Nicholls say that on the face of the Amended Statement of Claim the correct method of calculating damages as described in Marks v GIO Holdings Australia Ltd[44] has been adopted in paragraphs 32 and 33 which claim loss and damage with respect to all the causes of action pleaded in the sum of $619,852, which is claimed to be “the difference in purchase price for the business under the contract and the market value of the Business at the time the contract was entered into” (emphasis added).
47. Outdoor Centre Holdings and Mr Nicholls refer to the definition of “market value” found at paragraph 17 of the Amended Statement of Claim by reference to paragraphs 8 and 16 of the Amended Statement of Claim. Outdoor Centre Holdings and Mr Nicholls say that these paragraphs make it clear that the pleaded “market value” is a figure obtained by Joshua Brook by utilizing the “Method of Calculation” referred to in paragraph 8 of the Amended Statement of Claim. In other words, it is an entirely subjective value, not an objective value obtained by expert evidence, and therefore cannot be described as the “market value”. Outdoor Centre Holdings and Mr Nicholls say that the pleading seeks to claim “expectation loss” in exactly the way that the majority of the High Court in Marks concluded was incorrect.[45] Outdoor Centre Holdings and Mr Nicholls therefore say that without pleading the actual market value of the Business at the time Joshua Brook purchased it, no claim for damages can arise under the TP Act and therefore all but paragraphs 27 to 31 and 33 of the Amended Statement of Claim must be struck out. Outdoor Centre Holdings and Mr Nicholls say that nowhere is it pleaded what Joshua Brook would have done had it known the true position as alleged, and therefore what loss Joshua Brook suffered cannot be ascertained, and consequently Joshua Brook cannot make any claim for loss or damage under the TP Act.
48. Joshua Brook says that the usual measure of damages in claims under ss.82 and 87 of the TP Act will be analogous to the measure of damages in tort, namely reliance, not expectation loss. However, the applicant for relief under ss.82 or 87 must establish their loss, or in the case of s.87 what is likely to be lost. The approach to assessment of damages in Marks is no more than a guide. Other methods of assessment can be applied.[46]
49. Paragraphs 8, 16 and 17 of the Amended Statement of Claim provide as follows:
    • 8. Acting in reliance of the Adjusted Net Profit Representation, on 20 December 2007 the Applicant entered into the Sale of Business Agreement for $2,400,000 on the basis that the Purchase Price was calculated such that the Adjusted Net Profit represented a return on the Purchase Price of no less than 35% (“Method of Calculation”).
    16. By reason of the matters pleaded in paragraphs 14 and 15 herein, the Adjusted Net Profit Representation was false as the actual Adjusted Net Profit was in fact only $619,852 and not $840,265 as represented
    17. By reason of the matters pleaded in paragraphs 8 and 16 herein, the market value the Business at the time the Contract was entered into was in fact only $1,771,005 (Market Value).
50. In paragraph 22 of the Amended Statement of Claim, Joshua Brook, having asserted that it entered into the Sale of Business Agreement in reliance on the various representations and non-disclosure, then asserts as follows:
    • but for which it would have purchased the Business for a lesser amount being the Market Value and as a result of which the Applicant has suffered or is likely to suffer loss or damage and is entitled, pursuant to sections 82 and 87 of the TPA, to recover loss or damage or both from the First Respondent.[47]

The capitalised phrase “Market Value” is not defined in the Amended Statement of Claim.

51. The gist of paragraphs 32 and 33 of the Amended Statement of Claim is set out above.[48]
52. In Marks the majority of the High Court observed that:
    • It is necessary, then, to determine whether the value of what was acquired is less than what was paid. How is value to be assessed? It is to be assessed objectively, not according to what either or both of the parties to the contract believed that it would obtain from the contract. That is, the value of what in fact was acquired is to be identified according to what price freely contracting, fully informed parties would have offered and accepted for it. It is only by comparison with the value assessed in this way that there can be an assessment of whether the party that is misled could have obtained some greater benefit or incurred less detriment. What is important is what that party could have done, not what it might have hoped for or expected.[49]
53. In Paxad the Supreme Court of Western Australia found:
    • 110 The plaintiffs are entitled to recover 'a sum representing the prejudice or disadvantage they have suffered in consequence of altering their position under the inducement' of the misleading conduct or 'the actual damage directly flowing from that conduct' (Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514, 526). In most cases where contravention of the Act induces a person into a course of conduct which results in loss or damage, an award of damages that compensates for the actual losses incurred in embarking on that course will best serve the purposes of the Act (Henville v Walker (2001) 206 CLR 454 [135]).
    • 111 When there is a claim for capital loss on an asset acquired as a result of misleading or deceptive conduct, the usual measure of damages will be the difference between the purchase price and the true value of the asset at the date of acquisition. However, that approach to assessment is no more than a guide and other methods of assessment may well be permissible (HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; (2004) 217 CLR 640 [34] - [35], [65] - [67]).
    • 112 In addition to capital loss, damages are recoverable for loss of opportunity (Sellars v Adelaide Petroleum NL [1994] HCA 4; (1994) 179 CLR 332, 355). There may also be an award for wasted expenditure such as stamp duties and other transaction costs paid in acquiring land under the inducement of misleading or deceptive conduct (Pine River Pty Ltd v Scorda [2001] WASC 105 [111] - [112]). In an appropriate case, damages can also be awarded for inconvenience, distress, vexation or anxiety (Zoneff v Elcom Credit Union Ltd (1990) 94 ALR 445, 467 - 469; ACCC v Top Snack Foods Pty Ltd [1999] FCA 752 [93] - [94]).
    • 113 When there is said to be an alternative or contributing cause for the loss and damage claimed, the critical question is whether the contravening conduct materially contributed to the same. If so, there will be a valid claim, even if the other act or event played a greater role in producing the loss or damage (Henville v Walker [14], [61], [106], [163]). In such circumstances the burden is on the person whose contravening conduct materially contributed to the loss to establish that some component of that loss is attributable to the other act or event (Henville v Walker [70]).
    • 114 In determining the issue of causation, there is no place for the doctrines of contributory negligence or apportionment of damages. However, if part of the loss would not have occurred but for unreasonable conduct by the claimant, it is appropriate under s 82 to apply notions of reasonableness in assessing how much of the loss was caused by the contravention of the Act (Henville v Walker [140]).[50]
54. The Amended Statement of Claim pleads that Joshua Brook paid a sum of money ($2,400,000) for the Business, and that had the misleading representations not been made it would have paid a lesser sum of $1,771,005. The manner and form in which those matters are pleaded, both generally and as to damages are unexceptionable, save for the description of the lesser sum as “market value” in paragraph 17 of the Amended Statement of Claim and “Market Value” in paragraphs 22 and 32(a) of the Amended Statement of Claim. There is nothing pleaded which establishes, or goes to establish, that the lesser sum was the market value.[51] In the circumstances, the references to market value in the Amended Statement of Claim are unsupported by any material facts. The facts alleged do however support Joshua Brook’s intention that the value of the Business was the lesser sum. Therefore, it is only necessary to strike out the word “market” in paragraph 17, and the word “Market” in paragraphs 22 and 32(a).

Expected lost profit of the Business

55. Outdoor Centre Holdings and Mr Nicholls say that the reference to “expected lost profit of the business” in paragraph 33 of the Amended Statement of Claim is entirely unsupported by any pleading and therefore should be struck out.
56. There is nothing to say with respect to this contention other than it appears obviously correct. Certainly the Court has been unable to identify any aspect of the pleading which sets out material facts going to the “expected lost profit of the business”. Indeed, there is no reference at all to what, if any, profit the Business has made since the time it was sold to Joshua Brook. In any event, the pleading is vague because it does not set out a sum claimed as loss and damage under this head, nor does it say that it will be provided prior to the hearing, merely, that it is “To be assessed”.
57. Sub-paragraph (b) of the Table in paragraph 33 of the Amended Statement of Claim ought therefore be struck out.

Liability of second respondent

58. Mr Nicholls says that it is pleaded at paragraph 25 of the Amended Statement of Claim that he had actual knowledge of the Total Staff Representation, the Adjusted Net Profit Representation, the Steven Nicholls Non-Disclosure and the Systems Representation. Paragraph 25 is relied upon to plead that Mr Nicholls is liable under s.75B of the TP Act for the alleged misrepresentations of Outdoor Centre Holdings.
59. Mr Nicholls says that it is settled law that a person will only come within the ambit of s.75B of the TP Act if that person intentionally participated in the contravention. That is, in addition to involvement of the person, there must have been actual knowledge of the essential matters which go to make up the offence. That is, there must be actual knowledge by the accessorial respondent of the falsity of the alleged representation that was made and that it was misleading at the time at which it was made, and that that matter needs to be pleaded (and subsequently proved for the action to be successful).[52]
60. Mr Nicholls argues that alleged contravention of s.75B of the TP Act is sufficiently analogous to allegations of fraud to require the provision of specific particulars,[53] and that fraud (or an allegation akin to fraud) must be distinctly alleged, and that it is not allowable to leave fraud to be inferred from the facts.[54]
61. Mr Nicholls says that it is not pleaded that he knew of the falsity of the representations, and therefore paragraph 25 of the Amended Statement of Claim should be struck out because Mr Nicholls cannot be held liable under s.75B of the TP Act in the absence of a plea that he knew of the falsity of the representations.
62. Joshua Brook says that when pleading a claim for contravention of s.75B of the TP Act it is necessary to show that:
    1. the person intentionally participated in the contravention; and
    2. that person had knowledge of the essential matters constituting the contravention (which in this case includes knowledge of the falsity of the representations).[55]
63. Joshua Brook says that the Amended Statement of Claim pleads that Nicholls intentionally involved himself in the contravention and that he had knowledge of the essential matters, namely that the representation was false.[56]
64. In Quinlivan v Australian Competition and Consumer Commission[57] the Full Court of the Federal Court in hearing an appeal involving misleading and deceptive conduct, future representations and accessorial liability under ss.52, 51A and 75B of the TP Act observed as follows:
    • 8 The leading case on s 75B is Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661. The High Court held that the section imports the requirements of the criminal law. The person sought to be made liable must be shown to have had knowledge of the essential matters which go to make up the contravention. This contrasts with the rule as to primary liability under s 52 where liability may attach even though a corporation acts honestly and reasonably: Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd [1978] HCA 11; (1978) 140 CLR 216 at 228, Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191 at 197.
    • 9 In Yorke itself the alleged accessory, an employee of a corporate respondent, was held not to be liable because although he was aware of the representations made -- indeed they were made by him -- he had no knowledge of their falsity. Therefore he could not be said to have intentionally participated in the contravention: 158 CLR at 668. "Knowledge" means actual and not constructive knowledge: Compaq Computer Australia Pty Ltd v Merry [1998] FCA 968; (1998) 157 ALR 1 at 5. What is said in Yorke about s 75B is applicable to s 80(1)(c), (d), (e) and (f).
    • 10 From the interaction of these provisions three conclusions emerge. First, s 51A does not detract from the Yorke principle that actual knowledge of the essential elements of the contravention is required if s 75B or s 80 is to apply. Where the contravening conduct involves misrepresentation, whether as to a future matter or not, this principle requires actual knowledge by the accessorial respondent of the falsity of the representation. This is an essential matter which must be alleged and proved: Su v Direct Flights International Pty Ltd [1999] FCA 78 at [38], Fernandez v Glev Pty Ltd [2000] FCA 1859 at [18].
    • 11 Secondly, the reversal of onus in s 51A(2) does not apply where the accessorial liability of s 75B or s 80 is relied on.
    • ...
    • 14 Thirdly, it is implicit in s 51A(1) that where a corporation does have reasonable grounds for making a representation with respect to a future matter then there will be no contravention of s 52. This is a concession in favour of representors; in the case of a misleading representation where no future matter is involved it does not matter whether the corporation had reasonable grounds or not: Sykes v Reserve Bank of Australia (1998) 88 FCR 511 at 513-514.
    • 15 Accordingly, where s 75B or s 80 accessorial liability is in issue in relation to a representation with respect to a future matter, the existence or otherwise of reasonable grounds will be relevant. If reasonable grounds exist, there will have been no contravention and thus no question of accessorial liability will arise. However, as against the accessorial respondent, the onus will be on the applicant to show the respondent had actual knowledge that
    • § the representation was made and
    • § it was misleading or
    • § the corporation had no reasonable grounds for making it
    • (See Australian Competition and Consumer Commission v Michigan Group Pty Ltd [2002] FCA 1439 at [303].)[58]
65. Paragraphs 25 and 26 of the Amended Statement of Claim read as follows:
    • 25. The Second Respondent had actual knowledge of:
      • 25.1 the Total Staff Representation and the Adjusted Net Profit Representation by reason of the fact that he provided the instructions for the preparation of the 4 December 2007 Report;
      • 25.2 the Steven Nicholls Non-Disclosure by reason of the fact that he was aware of and/or gave directions that reference financial consideration made available to Steve Nicholls be withheld from the Applicant; and
      • 25.3 the Systems Representation by reason of the matters pleaded in paragraph 11.1 herein.
    • 26. By reason of the matters pleaded in paragraph 25 above:
      • 26.1 the Second Respondent is, pursuant to section 75B of the TPA, a person involved in a contravention of section 52 thereof, in that he was directly, knowingly concerned in, or a party to the contravention and the Applicant is entitled, pursuant to sections 82 and 87 thereof, to recover loss or damage or both from the Second Respondent;
      • 26.2 Further or alternatively, the Second Respondent has engaged in misleading or deceptive conduct in breach of section 10 of the FTA and the Applicant is entitled, pursuant to sections 79(1) and 77 thereof, to recover loss or damage or both from the Second Respondent.
66. On their face, paragraphs 25 and 26 of the Amended Statement of Claim contain no express plea of Mr Nicholls having knowledge of the falsity of the representations.
67. The problems with paragraph 25 however run deeper. In paragraph 25.1 the “Total Staff Representation” is pleaded as something that Mr Nicholls had knowledge of. No “Total Staff Representation” is otherwise referred to in the Amended Statement of Claim. It is not for the Court to assume that the “Total Staff Representation” referred to in paragraph 25.1 is in fact the “Total Labour Representation” referred to in paragraph 5 of the Amended Statement of Claim. That that should not be assumed is reinforced by the fact that paragraph 24 contains a reference to a “Future Trading Representation” which is also not otherwise referred to in the Amended Statement of Claim.
68. Paragraph 25.1 seems to imply that Mr Nicholls had knowledge of the alleged falsity of the Total Staff Representation and the Adjusted Net Profit Representation because “he provided the instructions for the preparation of the 4 December 2007 Report”. Apart from a reference to the “Owner” in the 4 December 2007 Report being a reference to Mr Nicholls, and there being a reference to the owner and the owner’s drawings in the Total Labour Representation, there is no other material fact pleaded with respect to the alleged instructions given for the preparation of the 4 December 2007 Report. There is no necessary causal nexus between the giving of instructions and the alleged falsity of the two representations. For the instructions to feed into the alleged falsity the instructions themselves would have to be knowingly false, or there would have to be some other basis upon which the falsity could be said to derive from the instructions. This is not pleaded. Nor, as indicated above, is there any plea of Mr Nicholls having express knowledge of the falsity of the two representations referred to in paragraph 25.1.
69. Paragraph 25.2 read literally does not appear to make sense. It might be that deletion of the word “reference” might make the pleading understandable, and provide a basis for asserting an express plea of knowledge by Mr Nicholls of the falsity of the Steven Nicholls Non-Disclosure. Alternatively, it might also be that the words “that the” ought to be inserted after “reference”. It is not however for the Court to assume what Joshua Brook intends. As presently pleaded paragraph 25.2 is vague and embarrassing.
70. Paragraph 25.3 refers to alleged knowledge of the Systems Representation by reason of the matters pleaded in paragraph 11.1 of the Amended Statement of Claim. Paragraph 11.1 sets out the particulars of who, other than Mr Nicholls, attended a meeting. It is not a plea of knowledge of falsity by Mr Nicholls.
71. In the circumstances, paragraph 25 does not contain a plea of Mr Nicholls having knowledge of falsity of the relevant representations.
72. The Court also notes that to the extent that it is alleged that Mr Nicholls engaged in misleading and deceptive conduct on the basis of the three representations and the non-disclosure, that each of them is said to constitute misleading and deceptive conduct in paragraphs 19-21 of the Amended Statement of Claim by reason of staffing costs being understated by $220,413 “being the market value of the Steven Nicholls Labour”. As indicated above,[59] no material facts are pleaded to prove the “market value of the Steven Nicholls Labour”. There are no facts which go to prove that the cost of the replacement labour for the Steven Nicholls Labour constituted the market value of the Steven Nicholls Labour. In the absence of those material facts, each of the representations and the non-disclosure relied upon might themselves fail to be proven thereby precluding any possible proof of knowledge of falsity by Mr Nicholls.
73. In the circumstances, paragraph 25 of the Amended Statement of Claim must be struck out.
74. The striking out of paragraph 25 of the Amended Statement of Claim causes a consequential problem with paragraph 23.3 because the assertion in that paragraph that the representations were misleading is dependent upon “the financial consideration defined in paragraph 25.2” of the Amended Statement of Claim. There has been no claim to strike out paragraph 23.3 of the Amended Statement of Claim, and it is not necessary for the Court to do so in circumstances where the conclusions arrived at by the Court as set out below envisage Joshua Brook filing a Second Amended Statement of Claim in which they can deal with such consequential issues.

Whether the applicant should have leave to re-plead

75. Outdoor Centre Holdings and Mr Nicholls submit that leave to re-plead will not be given when the Court takes the view that the allegation in question cannot in the future be substantiated.[60]
76. Outdoor Centre Holdings and Mr Nicholls point out that the Amended Statement of Claim is the fifth attempt Joshua Brook has made to properly plead the claim, and that the existing defects are no mere technicalities, but substantive failures to satisfy the elements of the pleaded causes of action. Having regard to the history of the matter, including the explanation of objections to earlier drafts of the statement of claim made by Outdoor Centre Holdings’ and Mr Nicholls’ solicitors in correspondence with Joshua Brook’s solicitors, Outdoor Centre Holdings and Mr Nicholls say that Joshua Brook is not pleading certain elements of the causes of action because there is no evidence to support those elements, or that the evidence works against those elements, and that as a consequence the only amendments which can remedy the defects are amendments which are clearly inconsistent with previous proposed statements of claim, and thus embarrassing.
77. Outdoor Centre Holdings and Mr Nicholls therefore say that Joshua Brook ought not be given leave to re-plead if Outdoor Centre Holdings’ and Mr Nicholls’ application to strike out the Amended Statement of Claim is successful.
78. Joshua Brook contended that in the event that parts of the Amended Statement of Claim were struck out, it ought to have leave to re-plead.
79. The findings made by the Court require that much of the Amended Statement of Claim be struck out as to crucial matters. Orders will be made accordingly. This is the first occasion on which these pleadings have been subject to scrutiny by the Court. And, notwithstanding the already lengthy, and no doubt expensive, exchanges between the parties concerning earlier draft statements of claim,[61] because this is the first and only occasion on which the Court has had to deal with the question, and because the Court’s approach, both generally, and as to specific issues arising from the pleadings, is probably somewhat at variance with that of both parties, the Court considers that Joshua Brook ought to have an opportunity to amend the Amended Statement of Claim. It is also not immediately apparent to the Court that the substance of the allegations cannot be properly pleaded. It is therefore appropriate in the Court’s view that:
    1. Joshua Brook be granted leave to further amend the Amended Statement of Claim by filing a Second Amended Statement of Claim, that leave including leave to amend both specifically, in relation to matters addressed in these reasons for judgment, and generally; and
    2. to otherwise adjourn the proceedings to a future directions hearing.
80. It is unnecessary to deal with and determine whether Joshua Brook might, in the future, obtain leave to further amend the Second Amended Statement of Claim. Suffice to say that an argument that no further leave to amend ought to be granted is always open, and will need to be assessed against the relevant factual background and the provisions of the FMC Rules, if it is necessary for such leave to be sought. In an endeavour to obviate any future difficulties with Joshua Brook’s pleadings the Court will order that any affidavits to be relied upon by Joshua Brook in support of its application be filed and served at the same time as the Second Amended Statement of Claim.[62]

Miscellaneous matters

81. In the course of preparing these reasons for judgment the following matters, which were not the subject of any submissions, have come to the attention of the Court:
    1. in paragraph 8 of the Amended Statement of Claim there is reference to “Acting in reliance of” which obviously should be “Acting in reliance on”;
    2. the footer in the Amended Statement of Claim refers to the applicant as being “Swevenings Pty Ltd ATF The Roguszka Family Trust” and has an address for service which is different to the address for service on the application in a case by Joshua Brook; and
    100. the word “of” appears to be missing after “value” in paragraph 17 of the Amended Statement of Claim.
82. Given the orders to be made by the Court in relation to Outdoor Centre Holdings’ and Mr Nicholls’ application in a case these are matters that Joshua Brook ought be able to attend to in the course of preparing any Further Amended Statement of Claim, and, therefore, need not be the subject of any formal order by the Court.

Conclusions and orders

83. For the reasons set out above the Court has concluded that:
    1. Joshua Brook’s minute of Substituted Statement of Claim stand as Joshua Brook’s Amended Statement of Claim;
    2. various paragraphs and parts of the Amended Statement of Claim will be struck out, as indicated in the course of the reasons for judgment;
    100. Joshua Brook be granted leave to file and serve a Second Amended Statement of Claim on or before 12 February 2010;
    4. Joshua Brook be required to file and serve any affidavits it intends to rely on in support of the application, at the same time as the filing and serving of its Second Amended Statement of Claim; and
    5. otherwise the proceedings be adjourned to a further directions hearing.
84. There will be orders to reflect the above conclusions.
85. The Court will hear the parties as to costs.

I certify that the preceding 85Error! Style not defined.!Syntax Error, !Error! Style not defined.Error! Style not defined.!Syntax Error, !eighty-fiveeighty-five (85) paragraphs are a true copy of the reasons for judgment of Lucev FM

Associate: S. Gough

Date: 24 December 2009

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[1] “TP Act”.
[2] “Joshua Brook”.
[3] “Outdoor Centre Holdings”.
[4] “Business”.
[5] In respect of all the foregoing matters claims are also made under equivalent provisions of the Fair Trading Act 1987 (WA).
[6] “FMC Rules”.
[7] “Substituted Statement of Claim”.
[8] (1994) 13 WAR 323 (“Tony Sadler”).
[9] [2001] WASC 111.
[10] Sali v SPC Ltd [1993] HCA 47; (1993) 67 ALJR 841; (1993) 116 ALR 625.
[11] FMC Rules, r.4.05(1).
[12] Tony Sadler at 336.
[13] FMC Rules, r.1.06(1). In BHP Billiton Ltd v Schultz it was observed that the interests of justice are “not disembodied or divorced from practical reality”: [2004] HCA 61; (2004) 221 CLR 400 at 421 per Gleeson CJ, McHugh and Heydon JJ; [2004] HCA 61 at para.15 per Gleeson CJ, McHugh and Heydon JJ.
[14] Hereinafter referred to as the “Amended Statement of Claim”.
[15] As to this Court’s approach to strike out applications, see generally Buckingham v KSN Engineering Pty Ltd [2008] FMCA 546; (2008) 177 IR 427 at 432-433 per Lucev FM; [2008] FMCA 546 at paras.15-21 per Lucev FM (“KSN Engineering”); applied in Swevenings Pty Ltd v Ferguson Consolidated Holdings Pty Ltd & Anor (No 3) [2009] FMCA 255 at para.14 per Lucev FM.
[16] (2004) 136 FCR 344; [2004] FCA 559 (“Rana”).
[17] Rana FCR at 355 per Lander J; FCA at para. 75 per Lander J.
[18] FMC Rules, r.4.05(2)(b) and (3); KSN Engineering IR at 432 per Lucev FM; FMCA at para.17 per Lucev FM.
[19] “FC Rules”.
[20] FMC Rules, r.1.05(1) and (2); KSN Engineering IR at 432 per Lucev FM; FMCA at para.18 per Lucev FM; Davidson v McCann Worldgroup Pty Ltd & Ors [2009] FMCA 957 at para.28 per Barnes FM.
[21] FC Rules, O.1 r.4 and O.11 r.16.
[22] FC Rules, O.11 r.16.
[23] KSN Engineering IR at 432-433 per Lucev FM; FMCA at para.20 per Lucev FM; Federal Magistrates Act 1999 (Cth), s.3; FMC Rules, r.1.03. See also Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; [2005] 79 ALJR 1716 at 1719 per Gleeson CJ, McHugh, Gummow and Heydon JJ; [2005] HCA 52 at para.6 per Gleeson CJ, McHugh, Gummow and Heydon JJ; Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 at 84 per Martin CJ; [2006] WASC 281 at paras.6-9 per Martin CJ (“Barclay Mowlem”).
[24] (2008) 173 IR 378; [2008] FCA 702 (“Iliff”).
[25] Iliff IR at 387 per Gordon J; FCA at paras.18-19 per Gordon J.
[26] Iliff FCR at 387-388 per Gordon J; FCA at paras.21-23 per Gordon J.
[27] TP Act, s.51A(2).
[28] O’Neill v Medical Benefits Fund of Australia Ltd [2002] FCAFC 188; (2002) 122 FCR 455 at 461-462 per Carr, Moore and Marshall JJ; [2002] FCAFC 188 at para.15 per Carr, Moore and Marshall JJ (“O’Neill”).
[29] O’Neill FCR at 462 per Carr, Moore and Marshall JJ; FCAFC at para.16 per Carr, Moore and Marshall JJ.
[30] [2007] FCA 1205 (“Fubilan Catering”).
[31] Fubilan Catering at para.547 per French J.
[32] Fubilan Catering at para.548 per French J.
[33] The Shorter Oxford English Dictionary on Historical Principles, Volume 1 (Oxford: Clarendon Press, 1973) page 895.
[34] See FMC Rules, r.1.03(4).
[35] With respect to the Court’s approach to the ordering of particulars see, for example, Olsen v Wellard Feeds Pty Ltd [2007] FMCA 1885 (particulars rarely ordered; not a complex case, no particulars ordered); Verge & Anor v Devere Holdings Pty Ltd & Ors [2008] FMCA 591 at para.24 per Lucev FM (particulars ordered in complex matter where it was of the essence of the relevant section of the Bankruptcy Act 1996 (Cth) that the Court be put in a position to assess the value of the transaction); Doukidis v Williamson (2008) 6 ABC (NS) 717 at 723-725 per Lucev FM; [2008] FMCA 1352 at paras.30-34 per Lucev FM (particulars ordered of a common intention constructive trust having regard to the complexity of the case, the quasi pleading nature of the application and that the particulars sought were confined and would assist in narrowing and clarifying the issues).
[36] [1993] FCA 524; (1993) 118 ALR 543 (“Ting”).
[37] Accounting Systems 2000 (Developments) Pty Ltd & Anor v CCH Australia & Anor (1993) 114 ALR 355 (“Accounting Systems 2000”).
[38] Miba Pty Ltd & Ors v Nescor Industries Group Pty Ltd & Anor (1996) 141 ALR 525 at 536 per Merkel J.
[39] Ting (a statement by agent about rental income likely to be achieved if property leased a statement both as to agent’s present state of mind (not within s.51A) and a representation as to a future matter (within s.51A)); Cummings v Lewis (1993) ATPR 46-103 (financial projections made by an accounting firm representations as to a future matter); Jacques v Cut Price Deli Pty Ltd (1993) ATPR 46-102 (“Cut Price Deli”) (representation as to gross profit could be a representation as to future matter whereas a statement of gross profit is a representation as to a present state of mind and not a future matter).
[40] See Amended Statement of Claim, para.7.
[41] Amended Statement of Claim, para.23.2.
[42] Fubilan Catering at para.547 per French J.
[43] See para.43 above.
[44] (1998) 196 CLR 494; [1998] HCA 69 (“Marks”).
[45] Marks CLR at 513-515 per McHugh, Hayne and Callinan JJ; HCA at paras.46-55 per McHugh, Hayne and Callinan JJ.
[46] Whitaker v Paxad Pty Ltd [2009] WASC 47 (“Paxad”).
[47] Amended Statement of Claim, para.22. The words “amount” and “being” have been run together in para.22.
[48] See para.46 above.
[49] Marks CLR at 514 per McHugh, Hayne and Callinan JJ; HCA at para.49 per McHugh, Hayne and Callinan JJ.
[50] Paxad at paras.110-114 per Blaxell J.
[51] Assuming market value to be relevant, having regard to what the High Court said in Marks about assessing value having regard to what two parties freely negotiating would agree upon (which may or may not be market value).
[52] Hatt and Ors v Magro [2007] WASCA 124; (2007) 34 WAR 256 at 271-272 per Steytler P; [2007] WASCA 124 at paras.39 and 42 per Steytler P.
[53] Sutton v AJ Thompson Pty Ltd (in liq) & Ors (1987) 73 ALR 233 at 242.
[54] Davy v Garrett [1877] 7 ChD 473 at 489; Oldfield Knott Architects Pty Ltd v Ortiz Investments Pty Ltd [2000] WASCA 255 at para.35 per Ipp J.
[55] Yorke & Anor v Lucas (1985) 158 CLR 661.
[56] Amended Statement of Claim, paras.11 and 25.2.
[57] (2004) 160 FCR 1; [2004] FCAFC 175 (“Quinlivan”).
[58] Quinlivan FCR 4-6 per Heerey, Sundberg and Dowsett JJ; FCAFC at paras.8-11 and 14-15 per Heerey, Sundberg and Dowsett JJ.
[59] See para.37 above.
[60] WA Pines Ltd v Bannerman [1980] FCA 79; (1980) 30 ALR 559; Elitegold Pty Ltd v BPTC Ltd (unreported, Federal Court of Australia, 24 November 1992, Hill J).
[61] See, generally, Mr Lethbridge’s Affidavit of 20 March 2009.
[62] See para.26 above.