: Laie Wakao ken Daginecy PRACTICE AND PROCEDURE - pleading - trade practices - misleading and deceptive conduct ~- representation of general ability to provide services - pleading that representation falsified by failure to perform particular contract - no logical connection - paragraph struck out - tendency to prejudice embarrass or delay fazr trial of action. Federal Court Rules 0.11 Trade Practices Act 1974 s.52 H_ 1976 Nominees Pty Ltd v Galli (1979) 40 FLR 242 Bruce v Odhams Press Limited (1936) 1 KB 697 TVW ENTERPRISES LIMITED V CREWE AND SON PTY LIMITED WAG No. 96 of 1986 — FRENCH J. 16 MARCH 1987 PERTH {SAPRES »——_-- IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION BETWEE N: JUDGE MAKING ORDER: DATE OF ORDER: NO. WAG 96 OF 1986 TVW ENTERPRISES LIMITED Applicant and CREWE AND SON PTY LIMITED Respondents MINUTE OF ORDER FRENCH J. 16 March 1987 WHERE MADE: Perth THE COURT ORDERS THAT: l. As to paragraph 15 the motion is dismissed. 2. Paragraph 16 out. of the statement of claim is struck Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules ee Se ee ee a IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION ee ee NO. WAG 96 OF 1986 BETWEEN: TVW ENTERPRISES LIMITED Applicant and CREWE AND SON PTY LIMITED Respondent CORAM: FRENCH J. 16 MARCH 1987 EX TEMPORE REASONS FOR JUDGMENT This is an application under 0.11 sub-rules 16(a) and (b) of the Federal Court Rules seeking to strike out paragraphs 15, 16, 23, 24 and 25 of the amended statement of claim filed by the applicant on 16 October 1986. The respondent on the return of the motion for hearing has indicated that it does not wish to pursue the application in respect of paragraphs 23, 24 and 25, but does maintain it 1n respect of paragraphs 15 and 16. The application arises out of the design, manufacture and installation of a paper reel tracking system to be constructed as part of an overall printing plant for the production of a newspaper known as "The Western Mail", published in the Perth metropolitan area by the applicant. The respondent, said to be a trading corporation, is alleged to carry on business as a structural and general engineer 2. and was invited pursuant to a specification, partly in writing and partly oral, between December 1982 and February 1983, to submit quotations for the manufacture and installation of the tracking system. The statement of claim identifies the specifications by reference to certain documents and oral conversations between a Mr Bicknell and a Mr Holden for the applicant on the one hand, and Mr Crewe for the respondent on the other. It 1s pleaded in paragraph 5 of the amended statement of claim that the respondent by its written quotation dated 10 January 1983 represented to TVW that:- "(a) 1t had the ability to manufacture and install the Reel System to meet TVW's specification, and (b) the Reel System would be an amalgamation of design alternatives contained within the TVW specification being systems D and F shown on the pamphlet entitled "The Only Reel Solution"." and which, I interpolate, was one of the documents said to comprise part of the written specification. It is also said in paragraph 6, that by that quotation, Crewe impliedly represented to TVW that:- (a) a design for the Reel System comprising an amalgam of design alternatives contained in the TVW specification was suitable and effective and was capable of meeting TVW's design specifications; and 3. (b) Crewe had the expertise and ability sufficient to carry out the design, manufacture and installation of the Reel System. The statement of claim goes on to allege that Crewe submitted a revised quotation to TVW on 19 September 1983 and that certain further representations were made by that revised quotation, namely:- "(a) that it would design the Reel System; and (b) that 1t would manufacture, install and commission the Reel System...." Paragraph 9 of the amended statement of claim pleads the renewal on the part of Crewe of the implied representations referred to in paragraph 6 arising out of the submission of the revised quotation. Particulars of the basis upon which the representations are to be implied are set out in paragraph 9 as follows:- "(a) the fact that Crewe submitted the Revised Quotation; (b) the fact that Crewe held themselves out by such submission as being capable of designing a system appropriate to meet the specifications for TVW; {c) general law from the circumstances surrounding the making of the revised quotation." Subsequently, according to paragraph 10 TVW accepted the revised quotation and thus was formed a contract for the design, manufacture and installation of the reel system. Various rc ST Te —-- 4. expressed written terms of the contract are pleaded in paragraph ll, and certain implied terms are pleaded in paragraph 12. paragraph 13 the following pleading 1s made:- "TVW will say at trial that the representations referred to in paragraphs 5(a), 6 and 9 hereof were at law continuing representations and that by reason of the fact that the Revised Quotation was not withdrawn by Crewe between 19 September 1983 and the acceptance of the revised quotation by TVW on 23 September 1983 referred to in paragraph 10 hereof, the representations continued, for the period 19 September 1983 to 23 September 1983." In It 1s alleged in paragraph 14 that the representations and each of them was made by Crewe in the course of trade or commerce within the Commonwealth of Australia and that each of them was conduct in the meaning of that expression in s.52 of the Trade Practices Act 1974. The following paragraph, paragraph 15, which 1s the subject of Crewe's motion, is pleaded as follows:- "As at the date hereof the Reel System installed by Crewe at TVW's printing presses is and was not in compliance with the Contract in that it fails to meet TVW's specification and is unable to be commissioned to the satisfaction of TVW." Particulars of the allegation are then set out by reference to various deficiencies in the design and operation of the system and evidenced by repetitive failures of conveyor trolleys for a number of reasons which are also particularised. 5. 'lhe particulars of paragraph 15 do not relate any of the deficiencies to any particular elements in or terms of the TVW specification. Crewe complains that although paragraph 15 may on its face disclose a cause of action in the sense that it alleges non-compliance with the contract by failure to meet TVW's specification, the pleading nevertheless has a tendency to cause prejudice, embarrassment or delay in the proceeding in that it does not indicate with any adequate particularity the way in which the failure alleged has occurred - that is to say, it does not relate the particular deficiencies alleged to the terms of the TVW specification. The requirements of 0.11 of the Federal Court Rules as set out in r.2 provide:- "Subject to these rules, (a) a pleading of a party shall contain, and contain only, a statement in a summary form of the material facts on which he relies, but not the evidence by which those facts are to be proved." It is important to maintain a proper distinction between material facts and particulars. The distinction was addressed by Northrop J. in his decision in H_ 1976 Nominees Pty Ltd v Galli (1979) 40 FLR 242, when at 246 he said:- 6. % "In order to disclose a reasonable cause of action, a statement of claim must contain statements of material facts which support the claims made. Particulars are not statements of material facts; particulars perform a different purpose." Referring to the judgment of Lord Justice Scott in Bruce v Odhams Press Limited (1936) 1 KB 697, his Honour went on to make the point:- ",..e.-(particulars) are not to be used to fill gaps ina demurrable statement of claim - gaps which ought to have been filled by appropriate statements of the various material facts which together constitute the plaintiff's cause of action". If the statement of material facts in the pleading is deficient, that 1s a deficiency which cannot be remedied by the provision of particulars which include those material facts. Questions of degree are involved in determining whether or not, in a pleading that sets up the relevant material facts, the statement of those material facts is nevertheless' so inadequate or so bare that the party who has to file a defence to it does not know in truth the case it has to meet, and in determining whether or not in such a case the pleading has a tendency to embarrass, prejudice or delay the fair trial of the action. Making the judgment as best I can, in my opinion paragraph 15 as pleaded does not fall into the category of a Ad 7. pleading that would have a tendency to prejudice, embarrass or delay the fair trial of the action. It, on the other hand, would certainly be a pleading which standing by itself, would justify the delivery of further and better particulars of the material facts alleged in it insofar as they relate to the fact of non-compliance with TVW's specification, and indeed in this case, the paucity of the pleading would justify the delivery of such particulars before the respondent is required to file a defence. I do not regard the particulars that are at present incorporated in the statement of claim as adequately disclosing the way in which the alleged faulty installation of the printing presses has failed to meet or comply with TVW's specification. In the result, so far as the respondent's motion is concerned, I will not accede to a motion to strike out paragraph 15. I will, however, make, after hearing further- from the parties, an appropriate order as to the delivery of further and better particulars of the allegations contained in that paragraph. Turning now to paragraph 16 of the statement of claim, that pleads as follows:- "By reason of the matters referred to in paragraph 15 hereof, the representations referred to in paragraphs 5(a), 6 and 9 hereof were and each of them was false and misleading or likely to mislead and deceive TVW in considering whether or not to enter into a contract or agreement with Crewe." 8. It 1S important in considering that paragraph, which 1s also the subject of the respondent's attack, to return to the nature of the representations alleged first in paragraph 5(a), and that was an allegation of a representation on the part of Crewe of a general ability to manufacture and install the reel system to meet TVW's specification. In my opinion, insofar as paragraph 16 relies upon the failure of performance in paragraph 15 to falsify the representation made in paragraph 5(a) of the statement of claim, it does not plead a material fact with a sufficient logical connection between the allegation of the falsity of the representation and the particular event that is referred to - that is, non-compliance with the specification. I suggested in the course of argument to Mr Bennett, that by way of simple example, if a person offers to paint my house and says he has the ability to do so, the fact that on the day he does a bad job does not mean I can infer that as a general matter, he lacks the ability to paint. Perhaps it is analogous to the proposition from the law of defamation that a statement that a person is a liar is not justified by showing that the person has told a lie on one occasion. On that basis, in my opinion, so far as the reference to paragraph 5(a) is concerned, paragraph 16 is faulty. 9. In relation to paragraph 6, sub-para. 6(b) alleges a representation of general expertise and ability on the part of Crewe to carry out the design, manufacture and installation of the reel system, and to the extent that that 1s incorporated in paragraph 16, the same deficiency arises. So far as paragraph 9 is concerned, that simply involves a renewal of the implied representations referred to in paragraph 6, and again picks up sub-para. 6(b). Sub-paragraph 6(a) may be a somewhat different category, for it alleges an implied representation that the design was suitable and effective. On the other hand, it does not appear immediately from the particulars of non-compliance that it was the design itself that was the cause of the difficulty, but I would not dispose of paragraph 16 on that basis. In conclusion, so far as paragraph 16 is concerned, I am of the opinion that having regard to the lack of any proper logical connection between the matters referred to therein and the representations pleaded in sub-paragraphs 5{(a) and 6(b) and paragraph 9 insofar as it picks up and repeats sub-paragraph 6(b), paragraph 16 does at least have a tendency to embarrass, prejudice or delay the fair trial of the action, and ought to be struck out. In saying that, of course, I do not' shut out the possibility that the failure, 1f it can be established, to iQ. perform the contract as alleged, would be evidence of a lack of the relevant and represented ability, but material facts and evidence are different things. The upshot of all of that is that the motion is dismissed so far as paragraph 15 is concerned, but I will allow it so far as paragraph 16 1s concerned. I hereby certify that this and the preceding nine (9) pages are a true copy of the Reasons for Judgment herein of his Honour Mr Justice French. Associate: Cligebeth He AALSZOT Date : 7] Ayr JE5 7. Counsel: . for the Applicant: Mr M. Bennett instructed by Messrs. Keall Brinsden . for the Respondent : Mr Templeman instructed by Mossenson Szklarz & Co. Date of Hearing: 16 March 1987 Date of Judgment: 16 March 1987 ° Lani \ek Wak on - 4h PRACTICE AND PROCEDURE - pleading - trade practices - misleading and deceptive conduct - representation of general ability to provide services - pleading that representation falsified by failure to perform particular contract - no logical connection - paragraph struck out - tendency to prejudice embarrass or delay fair trial of action. Federal Court Rules 0.11 Trade Practices Act 1974 s.52 H_ 1976 Nominees Pty Ltd v Galli (1979) 40 FLR 242 Bruce v Odhams Press Limited (1936) 1 KB 697 TVW ENTERPRISES LIMITED V CREWE AND SON PTY LIMITED WAG No. 96 of 1986 FRENCH J. 16 MARCH 1987 PERTH IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION BETWEE N: JUDGE MAKING ORDER: DATE OF ORDER: wwe www NO. WAG 96 OF 1986 TVW ENTERPRISES LIMITED Applicant and CREWE AND SON PTY LIMITED Respondents MINUTE OF ORDER FRENCH J. 16 March 1987 WHERE MADE: Perth THE COURT ORDERS THAT: 1. As to paragraph 15 the motion is dismissed. 2. Paragraph 16 of the statement of claim is struck out. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules IN THE FEDERAL COURT OF AUSTRALIA ) ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) ) GENERAL DIVISION NO. WAG 96 OF 1986 BETWEEN: TVW ENTERPRISES LIMITED Applicant and CREWE AND SON PTY LIMITED Respondent CORAM: FRENCH J. 16 MARCH 1987 EX TEMPORE REASONS FOR JUDGMENT This 1s an application under 0.11 sub-rules 16(a) and (b) of the Federal Court Rules seeking to strike out paragraphs 15, 16, 23, 24 and 25 of the amended statement of claim filed by the applicant on 16 October 1986. The respondent on the return of the motion for hearing has indicated that it does not wish to pursue the application in respect of paragraphs 23, 24 and 25, but does maintain it in respect of paragraphs 15 and 16. The application arises out of the design, manufacture and installation of a paper reel tracking system to be constructed as part of an overall printing plant for the production of a newspaper known as "The Western Mail", published in the Perth metropolitan area by the applicant. The respondent, said to be a trading corporation, is alleged to carry on business as a structural and general engineer 2. and was invited pursuant to a specification, partly in writing and partly oral, between December 1982 and February 1983, to submit quotations for the manufacture and installation of the tracking system. The statement of claim identifies the specifications by reference to certain documents and oral conversations between a Mr Bicknell and a Mr Holden for the applicant on the one hand, and Mr Crewe for the respondent on the other. It is pleaded in paragraph 5 of the amended statement of claim that the respondent by its written quotation dated 10 January 1983 represented to TVW that:- "(a) it had the ability to manufacture and install the Reel System to meet TVW's specification, and (b) the Reel System would be an amalgamation of design alternatives contained within the TVW specification being systems D and F shown on the pamphlet entitled "The Only Reel Solution",." and which, I interpolate, was one of the documents said to comprise part of the written specification. It is also said in paragraph 6, that by that quotation, Crewe impliedly represented to TVW that:- (a) a design for the Reel System comprising an amalgam of design alternatives contained in the TVW specification was suitable and effective and was capable of meeting TVW's design specifications; and 3. (b) Crewe had the expertise and ability sufficient to carry out the design, manufacture and installation of the Reel System. The statement of claim goes on to allege that Crewe submitted a revised quotation to TVW on 19 September 1983 and that certain further representations were made by that revised quotation, namely:- "(a) that it would design the Reel System; and (b) that it would manufacture, install and commission the Reel System...." Paragraph 9 of the amended statement of claim pleads the renewal on the part of Crewe of the implied representations referred to in paragraph 6 arising out of the submission of the revised quotation. Particulars of the basis upon which the representations are to be implied are set out in paragraph 9 as follows:- "(a) the fact that Crewe submitted the Revised Quotation; (b) the fact that Crewe held themselves out by such submission as being capable of designing a system appropriate to meet the specifications for TVW; (c) general law from the circumstances surrounding the making of the revised quotation." Subsequently, according to paragraph 10 TVW accepted the revised quotation and thus was formed a contract for the design, manufacture and installation of the reel system. Various 4. expressed written terms of the contract are pleaded in paragraph ll, and certain implied terms are pleaded in paragraph 12. In paragraph 13 the following pleading is made:- "TVW will say at trial that the representations referred to in paragraphs 5(a), 6 and 9 hereof were at law continuing representations and that by reason of the fact that the Revised Quotation was not withdrawn by Crewe between 19 September 1983 and the acceptance of the revised quotation by TVW on 23 September 1983 referred to in paragraph 10 hereof, the representations continued for the period 19 September 1983 to 23 September 1983." It is alleged in paragraph 14 that the representations and each of them was made by Crewe in the course of trade or commerce within the Commonwealth of Australia and that each of them was conduct in the meaning of that expression in s.52 of the Trade Practices Act 1974. The following paragraph, paragraph 15, which is the subject of Crewe's motion, is pleaded as follows:- "As at the date hereof the Reel System installed by Crewe at TVW's printing presses is and was not in compliance with the Contract in that it fails to meet TVW's specification and is unable to be commissioned to the satisfaction of TVW." Particulars of the allegation are then set out by reference to various deficiencies 1n the design and operation of the system and evidenced by repetitive failures of conveyor trolleys for a number of reasons which are also particularised. 5. The particulars of paragraph 15 do not relate any of the deficiencies to any particular elements in or terms of the TVW specification. Crewe complains that although paragraph 15 may on its face disclose a cause of action in the sense that it alleges non-compliance with the contract by failure to meet TVW's specification, the pleading nevertheless has a tendency to cause prejudice, embarrassment or delay in the proceeding in that it does not indicate with any adequate particularity the way in which the failure alleged has occurred - that is to say, it does not relate the particular deficiencies alleged to the terms of the TVW specification. The requirements of 0.11 of the Federal Court Rules as set out in r.2 provide:- "Subject to these rules, (a) a pleading of a party shall contain, and contain only, a statement in a summary form of the material facts on which he relies, but not the evidence by which those facts are to be proved." It is important to maintain a proper distinction between material facts and particulars. The distinction was addressed by Northrop J. in his decision in H_ 1976 Nominees Pty Ltd v Galli (1979) 40 FLR 242, when at 246 he said:- 6. "In order to disclose a reasonable cause of action, a statement of claim must contain statements of material facts which support the claims made. Particulars are not statements of material facts; particulars perform a different purpose." Referring to the judgment of Lord Justice Scott in Bruce v Odhams Press Limited (1936) 1 KB 697, his Honour went on to make the point:- ",....(particulars) are not to be used to fill gaps ina demurrable statement of claim - gaps which ought to have been filled by appropriate statements of the various material facts which together constitute the plaintiff's cause of action". If the statement of material facts in the pleading is deficient, that is a deficiency-which cannot be remedied by the provision of particulars which include those material facts. Questions of degree are involved in determining whether or not, in a pleading that sets up the relevant material facts, the statement of those material facts 1s nevertheless' so inadequate or so bare that the party who has to file a defence to 1t does not know in truth the case 1t has to meet, and in determining whether or not in such a case the pleading has a tendency to embarrass, prejudice or delay the fair trial of the action. Making the judgment as best I can, in my opinion paragraph 15 as pleaded does not fall into the category of a 7. pleading that would have a tendency to prejudice, embarrass or delay the fair trial of the action. It, on the other hand, would certainly be a pleading which standing by itself, would justify the delivery of further and better particulars of the material facts alleged in it insofar as they relate to the fact of non~compliance with TVW's specification, and indeed in this case, the paucity of the pleading would justify the delivery of such particulars before the respondent is required to file a defence. I do not regard the particulars that are at present incorporated in the statement of claim as adequately disclosing the way in which the alleged faulty installation of the printing presses has failed to meet or comply with TVW's specification. In the result, so far as the respondent's motion 1s concerned, I will not accede to a motion to strike out paragraph 15. I will, however, make, after hearing further from the parties, an appropriate order as to the delivery of further and better particulars of the allegations contained in that paragraph. Turning now to paragraph 16 of the statement of claim, that pleads as follows:- "By reason of the matters referred to in paragraph 15 hereof, the representations referred to in paragraphs 5(a), 6 and 9 hereof were and each of them was false and misleading or likely to mislead and deceive TVW in considering whether or not to enter into a contract or agreement with Crewe." 8. It is important in considering that paragraph, which is also the subject of the respondent's attack, to return to the nature of the representations alleged first in paragraph 5({a), and that was an allegation of a representation on the part of Crewe of a general ability to manufacture and install the reel system to meet TVW's specification. In my opinion, insofar as paragraph 16 relies upon the failure of performance in paragraph 15 to falsify the representation made in paragraph 5({a) of the statement of claim, 1t does not plead a material fact with a sufficient logical connection between the allegation of the falsity of the representation and the particular event that is referred to - that is, non-compliance with the specification. I suggested in the course of argument to Mr Bennett, that by way of simple example, if a person offers to paint my house and says he has the ability to do so, the fact that on the day he does a bad job does not mean I can infer that as a general matter, he lacks the ability to paint. Perhaps it is analogous to the proposition from the law of defamation that a statement that a person is a liar is not justified by showing that the person has told a lie on one occasion. On that basis, in my opinion, so far as the reference to paragraph 5(a) 1s concerned, paragraph 16 is faulty. 9. In relation to paragraph 6, sub-para. 6(b) alleges a representation of general expertise and ability on the part of Crewe to carry out the design, manufacture and installation of the reel system, and to the extent that that is incorporated in paragraph 16, the same deficiency arises. So far as paragraph 9 is concerned, that simply involves a renewal of the implied representations referred to in paragraph 6, and again picks up sub-para. 6(b). Sub-paragraph 6(a) may be a somewhat different category, for it alleges an implied representation that the design was suitable and effective, On the other hand, it does not appear immediately from the particulars of non-compliance that it was the design itself that was the cause of the difficulty, but I would not dispose of paragraph 16 on that basis. In conclusion, so far as paragraph 16 is concerned, I am of the opinion that having regard to the lack of any proper logical connection between the matters referred to therein and the representations pleaded in sub-paragraphs 5(a) and 6(b) and paragraph 9 insofar as it picks up and repeats sub-paragraph 6(b), paragraph 16 does at least have a tendency to embarrass, prejudice or delay the fair trial of the action, and ought to be struck out. In saying that, of course, I do not- shut out the possibility that the failure, if it can be established, to perform the contract as alleged, would be evidence of a lack of the relevant and represented ability, 10. evidence are different things. dismissed it so far Counsel: . for the The upshot of all of that is that the motion so far as paragraph 15 is concerned, but I will allow as paragraph 16 1S concerned. I hereby certify that this and the preceding nine (9) pages are a true copy of the Reasons for Judgment herein of his Honour Mr Justice French. a? £ Ki i, Associate: (l4za Leth Ke AALITECL Date : 7 Appt /9F 7. Applicant: Mr M. Bennett instructed by Messrs. Keall Brinsden . for the Respondent : Mr Templeman instructed by Mossenson Szklarz & Co. Date of Hearing: 16 March 1987 Date of Judgment: 16 March 1987 but material facts and