Johnson Tiles Pty Ltd V Esso Australia Ltd [1999] FCA 569 (4 May 1999)

Last Updated: 18 May 1999

FEDERAL COURT OF AUSTRALIA

Johnson Tiles Pty Ltd V Esso Australia Ltd [1999] FCA 569

PRACTICE AND PROCEDURE - application to strike out statement of claim - allegation of misleading conduct of which silence is alleged to be the element that makes the conduct misleading - whether pleading of causation must rely on misleading conduct or silence - consideration of Court's discretion to strike out a pleading where particulars might be ordered at a later stage of the proceeding

Bond Corporation Pty Ltd v Thiess Contactors Pty Ltd (1987) 14 FCR 215 - considered

Gould and Birbeck and Bacon v Mount Oxide Mines Ltd [1916] HCA 81; 22 CLR 490 - cited

Brambles Holdings Ltd v Trade Practices Commission [1979] FCA 80; (1979) 28 ALR 191 - cited

JOHNSON TILES PTY LTD v ESSO AUSTRALIA LTD

VG 519 OF 1998 AND VG 524 OF 1998

JUDGE: MERKEL J

DATE: 4 MAY 1999

PLACE: MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 519 OF 1998 AND 524 OF 1998

BETWEEN:	JOHNSON TILES PTY LTD (ACN 004 576 103) First Applicant DOUGLAS CHALMERS Second Applicant GREGORY ALAN DEAN Third Applicant
AND:	ESSO AUSTRALIA LTD (ACN 000 018 566) First Respondent ESSO AUSTRALIA RESOURCES LTD (ARBN 000 444 860) Second Respondent
JUDGE:	MERKEL J
DATE OF ORDER:	4 MAY 1999
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The respondent's motion dated 3 May 1999 be dismissed.

2. The applicants' and the respondents' costs of and incidental to the Motion be costs in the cause.

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

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 519 OF 1998 and VG 524 OF 1998

BETWEEN:	JOHNSON TILES PTY LTD (ACN 004 576 103) First Applicant DOUGLAS CHALMERS Second Applicant GREGORY ALAN DEAN Third Applicant
AND:	ESSO AUSTRALIA LTD (ACN 000 018 566) First Respondent ESSO AUSTRALIA RESOURCES LTD (ARBN 000 444 860) Second Respondent

JUDGE:	MERKEL J
DATE:	4 MAY 1999
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1 By a notice of motion dated 3 May 1999 the respondents ("Esso") have again sought to strike out the applicants' statement of claim or part thereof. I deal with the matters raised in the order in which they were argued.

The s 52 cause of action

2 Complaint was made as to the manner in which the material facts establishing the necessary causal link between misleading conduct and loss and damage have been pleaded. In Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 215 at 222 French J observed that, in pleading the necessary material facts establishing the causal relationship between contravention of s 52 and the loss which is a necessary element of the cause of action pleaded, the facts and circumstance should be set out which lead

"to a reasonable inference that the conduct and the damage stood to each other in the relation of cause and effect."

3 The substantive allegation made by the applicants is that Esso's conduct in operating its plant and being the monopoly supplier of gas used by consumers in Victoria and its failure to correct or contradict assumptions made by the public as to the reliability and continuity of that supply constituted misleading and deceptive conduct. It is then pleaded that in reliance upon that "conduct" the applicants, business users, domestic users and stood down workers ordered their affairs on the basis of the assumptions and, in the case of business users and stood down workers, did not take certain steps to protect themselves against cessation of supply. It is then alleged that, as a consequence of those matters, the applicants and the various group members suffered economic loss and damage by reason of the explosion at the Longford plant that led to a cessation of gas supply. In my view the pleading, as it has been amended in the course of the present application, satisfies the criteria stated by French J in Bond Corporation at 222.

4 An alternative argument was put on behalf of Esso that even if that difficulty was overcome the s 52 cause of action has still not been properly pleaded as the pleading of loss and damage must be alleged to have been caused by the silence of Esso as the conduct in question rather than the operation of the plant, supply and silence as the conduct in question. In my view the submission misconceives the basis upon which the applicants are putting their claim. The applicants have not pleaded that silence alone constituted the misleading conduct giving rise to their loss. Rather, they have pleaded that the operation of the Longford plant and the supply of gas as a monopoly supplier together with the "silence" is the misleading conduct upon which they relied to order their affairs which led to their reliance on continuity of supply of gas and to the loss they allege they have suffered. The fact that it is the silence that is the element that resulted in the conduct being misleading does not alter the claim that it is the totality of the conduct, rather than the silence alone, that is being relied upon as constituting the breach of s 52. Whether the causal link sought to be pleaded between conduct and loss can be successfully established at trial is not the question presently before me. In my view the amendments made to para 27 sufficiently deal with the complaint made by Esso.

Negligence

5 Complaint was made of the width of the pleading of the content of the duty of care and its mirror imaging in the pleading of breach of that duty. In substance it was contended that not only was the pleading embarrassing but it also failed to allege or establish the necessary causal link between the duty of care, its breach and the loss claimed.

6 Necessarily, the present case is one in which the applicants have no access to knowledge or information concerning the cause of the explosion. Indeed, the matter is one of such complexity a Royal Commission has been sitting for an extensive period of time to itself determine the cause of the explosion. Thus, understandably, the pleading has sought to deal with the main areas in respect of which complaint of breach of duty is made in general terms, it being left to particulars at a later date, to narrow down the ambit of the general allegations.

7 In a sense the applicants are confronted with a chicken and egg situation. They wish to plead duty and breach in general terms leaving unto themselves the right and, if the Court imposes it, the obligation to provide particulars and therefore narrow down the ambit of the pleading in the course of the Court's interlocutory processes. Esso seeks to have that narrowing down occur at this stage.

8 In my view the Court's case management and individual docket system is such that it is well placed to ensure that there is no embarrassment or prejudice about the pleadings and proper particulars can be required to be provided at an appropriate time. At this point of time I am not satisfied by the evidence or the submissions on behalf of Esso that the pleadings are so wide that the resulting embarrassment or prejudice is such that Esso is unable to properly or adequately plead to the statement of claim or proceed with any other interlocutory steps. The pleading deals with technical matters, the nature of which are well understood by Esso and it would appear, to a significantly lesser extent, the applicants. In all the circumstances I am not persuaded that it is appropriate that I strike out the statement of claim on the ground relied upon by Esso.

9 Further, to the extent embarrassment might exist it is more properly dealt with by a requirement that particulars be provided rather than the pleading be struck out. In that regard I am cognisant of the fact that the applicants do not have access to information that would enable them to identify the cause of the explosion with the specificity that Esso seeks at this stage. Accordingly, there are obvious difficulties confronting the applicants in pleading at this stage, with the specificity sought by Esso, the duty of care owed, its breach and the loss suffered as a consequence of the breach. However, those difficulties can be resolved in the course of the Court's interlocutory processes.

10 I would add that in my view the embarrassment contended for by Esso is somewhat overstated. The substance of the pleading is a breach of a duty of care concerning the design, installation, operation and maintenance of the Longford plant. In that regard, numerous duties, albeit in a general form, are pleaded and those duties are pleaded as being breached. Whilst the causal link between the breach of duty and the explosion may, in part, be inferential it is plain that the matters pleaded are relied upon cumulatively as matters contributing to the explosion which led to the loss and damage claimed. Thus, in my view looking at the matter as one of substance rather than form, which is appropriate, the pleading is not one that ought to be struck out.

Other matters

11 Esso also relied upon a previous submission that the applicants' pleading is based upon a duty to supply rather than a tortious duty of care. For reasons I have already given in previous judgments I do not accept that submission.

Discretion

12 Finally, I would add that pleadings are only a means to an end and (see Gould and Birbeck and Bacon v Mount Oxide Mines Ltd [1916] HCA 81; 22 CLR 490 at 517). Further the relief to be granted on a pleadings motion is a matter of discretion (see Brambles Holdings Ltd v Trade Practices Commission [1979] FCA 80; (1979) 28 ALR 191 at 193). Even if I had acceded to the arguments of Esso to a greater extent than I have in my view the Court's individual docket system of case management and its ability to ensure that the proceeding is conducted in a manner which does not unfairly prejudice any of the parties is such that I would not strike out the pleading. Rather, if complaint is made about any particular aspect being embarrassing or prejudicial the Court has ample power to deal with that aspect so as to avoid prejudice or embarrassment in the course of its management of the case. I am satisfied that the causes of action relied upon have been pleaded in a manner that ensures that Esso understands those causes of action and the substance of the allegations made against Esso. Thus, the pleading is fulfilling its basic function at this stage. In all the circumstances I would decline to exercise my discretion to strike out the statement of claim or any part thereof.

Costs

13 In the circumstances of the present case, including the fact that amendments have been made by the applicants in the running, it seems to me that the parties' costs of the present application should be costs in the cause.

14 Accordingly, I order that Esso's motion of 3 May 1999 be dismissed and that each party's costs of the motion be costs in the cause.

I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Merkel.

Associate:

Dated: 4 May 1999

Counsel for the Applicant:	Mr J Burnside QC with Mr H Borenstein
Solicitor for the Applicant:	Maurice Blackburn & Co and Slater and Gordon
Counsel for the Respondent:	Mr J Middleton QC with Mr A Kelly and Mr G Harris
Solicitor for the Respondent:	Middletons Moore & Bevins
Date of Hearing:	4 May 1999
Date of Judgment:	4 May 1999