Trade Practices - consumer protection - sale of computer hardware and software - whether misleading and deceptive conduct - alternatively whether representations made fraudulently or negligently Practice and Procedure - application to strike out parts of statement of claim - whether reasonable cause of action disclosed - meaning attached to statements pleaded a matter for trial judge to determine - whether representations pleaded are statements as to future conduct - tendency to cause prejudice or embarrassment - whether lack of clarity may be cured by further and better particulars Trade Practices Act 1974 Part V ss. 52, 53(c) ISLINGTON NOMINEES PTY. LTD. v. N.C.R. AUSTRALIA PTY. LIMITED No. WA G17 of 1983 fs ~S\\ chi ov, REC" I9DEC I9ey FEQERAL . JF AUST LIA ee Toohey d. Perth 15 December 1983 IN THE FEDERAL COURT OF AUSTRALIA ) ) WESTEPN AUSTRALIA ) No. WA G17 of 1983 DISTRICT REGISTRY } . ) GENERAL DIVISION BETWEEN: ISLINGTON NOMINEES PLY. LTD. Applicant and N.C.R. AUSTRALIA PTY. LIMITED Respondent Oo R D E R JUDGE MAKING ORDER : Toohey J. DATE OF ORDER : 15 December 1983 WHERE MADE : Perth THE COURT ORDERS THAT: 1. The respondent's motion filed on 2 November 1983 be dismissed. 2. The respondent pay the applicant's costs of the motion in any event. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION No. WA G17 of 1983 BETWEEN: ISLINGTON NOMINEES PTY. LTD. Applicant and N.C.R. AUSTRALIA PTY. LIMITED Respondent CORAM: TOOHEY J. 15 December 1983 REASONS FOR JUDGMENT This is a motion to strike out large segments of a statement of claim. The substantive application seeks rescission of a number of contracts made between the applicant and the respondent and further, or in the alternative, damages under the Trade Practices Act 1974 and at common law. The motion primarily relies upon the contention that the paragraphs of the statement of claim under attack disclose no reasonable cause of action. Some of those paragraphs are said to have a tendency to cause prejudice or embarrassment to the respondent. In so far as the motion asserts that paragraphs of the statement of claim disclose no reasonable cause of action, "the question 15 whether 1t would be open to the Lapplicant1] upon the pleadings to prove facts at the trial which would constitute a cause of action" (Mutual Life and Citizens Assurance Co. Ltd. v. Evatt (1970) 122 CLR 628 at p.631). The applicant is a motor vehicie dealer and the respondent is a supplier of computer hardware and software products. Following negotiations between the parties, the applicant entered into several contracts for the purchase of hardware and software. It pleads that it did so in reliance upon representations made by the respondent regarding the quality of its products and the services it was able to offer. The applicant alleges that a number of representations were false and it relies upon those representations and their falsity as constituting misleading or deceptive conduct within s.52 and s.53(c) of the Trade Practices Act, alternatively as constituting misrepresentations made fraudulently or negligently. The applicant pleads further causes of action based upon sections of Part V of the Trade Practices Act. In my view the motion should be dismissed. In giving my reasons for reaching that conclusion it is unnecessary to refer to each paragraph of the statement of claim under attack or to refer in any detail to the arguments of counsel. For the most part the matter can be dealt with by reference to considerations of a general nature. The statement of claim pleads that in the course of negotiations the applicant made known to the respondent its particular needs in processing its business transactions. It alleges that the respondent made a number of representations as to the quality of ats computer system ("the NCR system"), its superiority over the system then being used by the applicant and the advantages to the applicant of the NCR system in terms of availability of parts and of trained staff to service the system. In many respects the respondent's real complaint is lack of precision in the pleading of the statement of claim. I do not say that the complaint is justified but, to the extent that it is, the remedy is in the respondent's hands. It may seek further and better particulars. The representations pleaded by the applicant include statements that "each component of the computer hardware and software system offered for sale to the applicant by the respondent ('the NCR system') would do everything that the applicant's present computer system could do but better and quicker" (para. 5(b)) and that "the NCR system was perfect for a motor vehicle franchise such as that conducted by the applicant ." (para. 5({c)). The respondent submits that these statements are self evidently no more than exaggerations or mere puffing and that the first of them is pleaded in ambiguous language. As to ambiguity, the statement of claim purports to Plead the representation that was made. If the statement is ambiguous, that is not the fault of the pleader; it is matter for the trial judge to determine the meaning (if any) to attach to it. Nor do I regard the statements as self evidently no more than exaggerations or mere puffing, particularly when taken in context. Again the meaning to be attached to them is for the trial judge but they are certainly capable of being understood as representations that the NCR system was more efficient than that owned by the applicant and that the respondent's system was admirably suited to the applicant''s business. The respondent submitted that representations pleaded by the applicant relating to the provision of parts and of services for the NCR system were statements of future conduct. I do not accept this. As pleaded, they may fairly be taken to he assertions of the respondent's capacity to provide all that the applicant might require to operate the NCR systen. The respondent attacked the pleading that the representations were false, on the ground that it did not allege that the falsity was known to the respondent or that the representation was made recklessly. Paragraph 9 of the statement of claim pleads that "Subsequent to the installation of the computer hardware and some of the software 1t became apparent to the applicant that the representations were false in that ... ". The pieading is perhaps ambiguous since it does not expressly assert that the representations were false when made or whether they were false to the knowledge of the respondent. In so far as a cause of action based upon s.52 of the Trade Practices Act is concerned, liability depends upon conduct that misleads or deceives or is likely to mislead or deceive and does not demand knowledge or other relevant state of mind on the part of the respondent. Parkdale Custom Built Furniture Pty. Ltd. v. Puxu_ Pty. Ltd. (1982) 42 ALR 1 per Gibbs C.J. at p.5. Where representations are made as to future conduct, the position may well be different. See the discussion by Fitzgerald J. in Stack v. Coast Securities No. 9 Pty. Ltd. (1983) ATPR 40-342 at p.44,119 and by Lockhart J. in Bill Acceptance Corporation Ltd. v. GWA Ltd. (1983) ATPR 40-408 at p.44,759. But these questions do not arise for determination at this stage of the proceeding. As I have said already, the representations pleaded by the applicant are representations as to present facts including the capacity of the respondent to provide future parts and services to maintain the NCR system in efficient working order. In so far as the state of mind of the respondent becomes relevant, there is a pleading in para. 12 of the statement of claim that the representations were made fraudulently or with reckless indifference to their truth or without belief in their truth. As to the pleading in para. 9 that "it became apparent to the applicant that the representations were false", I take that to mean that it became apparent that the representations were false when made. However that can be put beyond doubt by a simple amendment to the paragraph. An attack 1s made upon paras 20 and 21 of the statement of claim which are concerned with alleged breaches of implied conditions and warranties. It 1s said that the pleading does not identify the particular "purpose" for which the goods were required. These paragraphs are expressed to be read together with paras 3, 5 and 3 from which 1t emerges clearly enough that the applicant asserts the goods to have been required for the particular purposes of its business as a motor vehicle dealer. In any event, if the respondent requires clarification it can request further and better particulars. I reject the argument that certain segments of the statement of claim have a tendency to cause prejudice or embarrassment to the respondent in pleading thereto. At worst, from the respondent's point of view, there may be some lack of clarity but that 1s readily capable of being cured by particulars. The respondent has failed to demonstrate that any of the statement of claim should be struck out as disclosing no reasonable cause of action or as having a tendency to cause prejudice or embarrassment. The motion will be dismissed with costs. I certify that this and the five preceding pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Toohey oh ven Associate Dated: 15 December 1983