( ' ( NOT INTENDED FOR GENERAL DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY No. WAG 33 of 1986 BETWEEN: GALLIENNE PTY LTD as Trustee for the J.D. Milne Family Trust Applicant and S.W. HART & CO. PTY LTD First Respondent and ANTHONY MARWICK Second Respondent CORAM: FRENCH J. 19 June 1987 REASONS FOR JUDGMENT Gallienne Pty Ltd ("Gallienne") is a dealer in Solahart products manufactured by S.W. Hart & Co. Pty Ltd. ("Hart"). The pxoducts comprise items of equipment that utilise solar energy and include hot water systems, pool heating systems and space heating systems. Gallienne distributes them in the Rockingham area in a territory defined by a Dealership Agreement between itself and Hart. - ace te - ee i en - come ee ope rr me arr see ee oem cere ce cre ns tere mote ee - eee ene ete trate ee ee " A nego ete ee ~f poe —— w o 2. The Dealership Agreement arose pursuant to an assignment to and undertaking by Gallienne of rights and obligations under an agreement between Hart and the previous distributor in the area. Gallienne contends, and 1t 1s admitted, that under the terms of the agreement it was appointed for 3 years and 1 month as exclusive agent for Hart in the Rockingham territory. Hart, it alleges, has breached the agreement by competing with Gallienne in the supply of Solahart equipment in that territory. It did this, at least in part, pursuant to a policy under which 1t supplied Solahaxrt products direct to builders and other "trade" purchasers. The policy 1s said to have pre-dated the assignment of the Dealership Agreement and to be inconsistent with oral pre-contractual representations of exclusive access to all purchasers of Solahart products in the territory. Gallienne has commenced proceedings in this Court in which it seeks damages and declaratory and other relief against Hart. The causes of action upon which reliance is placed in its re-amended statement of claim are as follows:- 1. Fraud by reason of the pre-contractual representations (para 3E). a - : id ao "- ooo 3. 2. Misleading or deceptive conduct in contravention of " s.52 of the Trade Practices Act 1974 constituted by ' the pre-contractual representations and failure to i furnish relevant information. (paras. 3F and 3G). : 3. Breach of the Dealership Agreement or a contract collateral to 1t embodying the representations as to exclusivity. (paxra.7) 4. Abuse of market power in contravention of s.46 of the Trade Practices Act 1974 (para.8). 5. Breach of the Dealership Agreement for failure to provide Gallienne with information and leads to possible Solahart product purchasers in the Rockingham territory (para.9). 6. Price discrimination in contravention of s.49 of the Trade Practices Act 1974 (para.10). 7. Breach of a fiduciary duty by misuse of confidential information relating to prices and discounts. (para.12) Gallienne also alleges that Hart has repudiated the Dealership Agreement and that it has accepted the repudiation and . terminated the agreement. : Anthony Marwick, the second respondent, who is the t. general manager of Hart, is brought into the action as one who was said to have been knowingly involved in the pleaded contraventions * to the Trade Practices Act within the meaning of s.75B. an Hart moves the Court to strike out paragraphs 3G, 4A, : 4B, 8, 9, 10, 11, 12 and 16 of the re-amended statement of claim pursuant to 0.11 r.16 on the grounds that these paragraphs:- 1. Do not disclose a reasonable cause of action; and/or s - + pm OE ee Pg we eee ss eee = - . poe - ee ee es 4. 2. May prejudice, embarrass or delay the fair trial of fe this action; and/or - 3. Are otherwise an abuse of the process of the Court. To appreciate the attack on para.3G it is necessary to refer back to para.3D in which pre-contractual representations and failure to tender certain information are pleaded as follows:- "3D. During the months of February and March 1984 April : and May 1985, the Applicant and the First i Respondent had discussions whereby the First > Respondent:- (a) represented that in the event that' the Applicant entered into a Dealership Agreement with the First Respondent, the First ' Respondent would be conferred the exclusive right to supply Solahart Products in the : course of retail sale to all purchasers; (b) failed to inform the Applicant that the First Respondent was contemplating, or had implemented, ox was about to implement the policy upon the execution of any Dealership Agreement to be entered into; {c) failed to inform the Applicant that the policy i would be implemented in respect of the supply t of Solahart equipment within the intended ' Dealership Area of the Applicant; (d) specifically represented that "sole selling rights" would accrue to the Applicant upon the execution of the Dealership Agreement; the Applicant says that "sole selling rights" meant, and were intended by the Respondents and each of them to refer to, the exclusive yxight to supply Solahart products in the ° course of retail sale to all purchasers, within the said Dealership Area. PARTICULARS OF DISCUSSIONS "ns Verbal, from time to time, between MR JOHN , MILNE (a director of the Applicant) and the ' Second Respondent and MR TONY ROBINSON, Sales t Manager of the First Respondent, on behalf of i the First Respondent." 5. Paragraph 3G then is in the following terms:~ "3G. Further or alternatively, the First Respondent engaged in conduct which was misleading or deceptive, or which was likely to mislead or deceive in contravention of Section 52 of the Trade Practices Act 1974, in that in as much as the representations xeferred to in paragraph 3D constituted statements of future intention or promises, at the time of their making the said statements of future intention or promises incorporated therein implied statements of existing facts that the First Respondent had the then present intention of fulfulling the statements of future intention or promises and the means of so doing, but at all material times, the First Respondent, but 1ts servants ox agents, never held the said intention, to give effect to the statements or promises." (sic) Counsel for Hart asserts that para. 3G does not identify which of the matters pleaded in para. 3D axe the "representations" xeferred to. The paragraph, it is said, also leaves open the question of the extent to which the representations relied upon "constituted statements of future intention or promises". Further, 1t is contended, that the paragraph fails to give particulars of the alleged absence of the relevant promissory intention, that alleged absence being a condition of mind of which particulars must be given under 0.12 r.3. I am satisfied that the reference to "representations" xeferred to in para. 3D sufficiently identifies the representations relied upon as those in sub-paras. (a) and (d) of 3D. ' 6. The plea in para. 3G relies upon a characterisation of L t . c ' the representations in 3D(a) and (d) as promissory. This characterisation 1s an alternative to their primary characterisation as express representations of existing facts and supports a plea of implied representation as to the intention of Hart at the time the promises were made. Given that the plea, in essence, raises an alternative characterisation, it 1S not inappropriate that it should refer to the representations "in as much as they constituted statements of future intention or promises". The attack upon para. 3G therefore fails. I am of the view however that the last part of the paragraph pleads a condition of mind and that Hart 1s entitled to particulars under 0.12 r.3. These particulars may be given by fuxther amendment or 1 by filing a separate document embodying them. Hart next attacked para. 4A which alleges:- "Further or alternatively the representations pleaded in - paragraph 3D were incorporated in the Dealership Agreement aS expresS waKrantiesS or, further or ~ alternatively, formed the subject of a collateral : contract made between the Applicant and the First Respondent in consideration of the Applicant entering into the Dealership Agreement." 7. {The complaints made of paragraph 4A are:- 1. The representations relied upon are not adequately identified. 2. The terms of the collateral contract pleaded conflict with those of the principal agreement. 3. The terms of the collateral contract are not pleaded with sufficient detail. I reject the first complaint on the same grounds as the like complaint about paragraph 3G. It is not apparent that the terms of the representation said to be embodied in the collateral contract conflict with anything in the principal agreement. They may or may not establish more stringent exclusive rights than those conferred by the agreement and pleaded in paragraph 5, but that does not necessarily give rise to an inconsistency. Even were an inconsistency identifiable at this stage, I would not on that basis strike out the paragraph. As to the allegation of insufficiency in the pleading of the terms of the collateral contract, I consider that it is necessary for the applicant to do no more than plead the terms on which it relies. The attack on paragraph 4A therefore also fails. were eee ree reso roe seoteree Sere ae ee ? 8. As to paragraph 4B, it 18 contended that one set of damages 1S pleaded flowing from three causes of action, two of which at least attract different measures of damage. In my opinion however, 1t 1S not apparent on the face of the pleading that the different measures may not coalesce in the particular case. If the damages particularised cannot be related to the measure appropriate to each of the pleaded causes of action, then Gallienne may have to seek leave to amend at some stage with attendant costs and the risk of having its motion refused or the hearing of the application adjourned. The problem, if there is one, is not so obvious that I would strike out the paragraph. Paragraph 8 has four substantive sub-paragraphs, each of which 1s followed by various allegations designated as "PARTICULARS". The four substantive sub-paragraphs are:- "(1) The Applicant and the First Respondent = are competitors in a market within the meaning of Section 46 of the Trade Practices Act 1974 as amended ("the Act"). (2) The First Respondent 1s in a position substantially to control a maxket for goods. (3) The Applicant has used his market power for the purpose of eliminating or substantially damaging a person being a competitor in that market. (4) In the premises, the First Respondent has contravened Section 46 of the Act and the Applicant has suffered loss and damage by reason of such contravention." ol dic teehee) x a wees pe eee > waar oy mace ec ceee we ee Cr aes Tas oy tT tens ayers {-. 08 magne nee RIC =3 if \ T : nie . 9. The first and principal objection to paragraph 8 was that it failed to plead material facts to establish a cause of action as required by 0.11 r.2. This is a deficiency, 1t is said, which cannot be made good by the provision of particulars. The relevant parts of s.46 of the Trade Practices Act 1974 as 1t stood prior to the 1986 amendments provides:- "46(1) A corporation that 1s in a_ position substantially to control a market for goods ox services shall not take advantage of the power in relation to that market that 1t has by virtue of being in that position for the purpose of - tO a (a) eliminating or substantially damaging a person, being a competitor in that market or in any other market of the corporation or of a body corporate related to the corporation; ore ye i eS mo {, .agere ' (3) A xeference in this section to a corporation or other body coxporate being in a position substantially to control a market for goods or sexvices includes a reference to a corporation or other body corporate, as the case may be, having, by xeason of its share of the market, or its share of the maxket combined with the availability to it of technical knowledge, raw materials or capital, the power to determine the prices, or control the production or distribution, of a substantial part of the goods or services in that market. TET TRE OP Spy toe) meme alae (4) A xeference in this section to substantially Be controlling a market for goods or services shall be ' construed as a veference to substantially controlling such a market either as a supplier ox as an acquirer of goods ox services in that market." va TT 7 wepane ec alemahy camber en HG todo dye ® on acs eer Ypemteb 5 epee ee eee meat ie ee p-] » t e oepees nee 10. Taken without reference to the particulars, the substantive sub-paragraphs of paragraph 8 do not in my opinion disclose any reasonable cause of action. The market in which Gallienne and Hart compete 1S not identified, nor is the market which it 1S said Hart 18 ina position substantially to control. Sub-paragraph (3) on the face of ut does not identify the pexson who is the subject of the abusive conduct. Sub-paragraph (4) discloses no causal relationship between the alleged contravention of s.46 and the damage suffered. Now of course it is appaxent that there are matters alleged in the particulars which might stand as allegations of material facts supporting the cause of action. Counsel for Gallienne says that to disregard these particulars in determining the sufficiency of the pleading 1s to prefer form over substance. It is appropriate in the light of that submission to bear in mind the distinction between the function of particulars and allegations of material facts as expounded by Northrop J. in H.1976 Nominees Pty Ltd v Galli (1979) 40 FLR 242. we rere ee Smee are . ll. At 246 his Honour reasserted the basic proposition that 1n oxder to disclose a reasonable cause of action, a statement of claim must contain statements of material facts which support the claims made. As his Honour pointed out, particulars are not statements of material facts, they perform a different purpose. As Scott LJ said in Bruce v Odhams Press, Ltd (1936) 1 KB 697 at 712, in a passage relied upon by Northrop J.:- "The function of "particulars" .... They are not to be used in order to fill material gaps in a 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. The use of particulars 1s intended to meet a further and quite separate requirement of pleading, imposed in fairness and justice to the defendant. Their function is to fill in the picture of the plaintiff's cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for txial. Consequently in strictness particulars cannot cure a bad statement of claim. But in pxactice it is often difficult to distinguish between a "mater1al fact" and a "particular" piece of information which it is reasonable to give the defendant in oxder to tell him the case he has to meet; hence in the nature of things there is often overlapping. And the pxactice of sometimes putting particulars into the statement of claim and sometimes delivering them afterwards either voluntarily, Or upon request or order, without any reflection as to the txue legal ground upon which they are to be given has become so common that it has tended to obscure the very real distinction between them." Northrop J. having cited Scott LJ in Bruce v Odhams Press Ltd (supra), went on to agree with what had been said by Adam J. in Rubenstein v Truth Sportsman Ltd (1960) VR 473 at 476:- oy aes ve penny nee pose < meee eee ge Seco ep er ee ca 12. "Where, as in the present case, there has been a clear unfringement of the rule as to stating all material facts and not merely a failure to give sufficient particulars of facts which have been pleaded (a distinction made clear by Scott, L.J., 1n Bruce v Odhams Press Limited...) the preferable course, I consider, in the interests of proper pleading is to strike out the offending pleading, with liberty to amend, rather than to order particulars." The substantive portions of paragraph 8 should define the cause of action under s.46 by pleading the material facts. This they fail to do. It would, in my opinion, be contrary to principle and authority to rely upon the particulars to supply the deficiencies. This is especially so where the paxticulars, as in this case, seem to embody both material facts and particulars. In any event, their sufficiency 1n supplying the defects of the pleading is open to question. It might be inferred from the particulars to sub-paragraph (1) that the applicant alleges that the first xespondent is in competition with it in a market fox the supply of certain products and for theix installation, repair and service. The particulars allege that the products supplied, installed, Kepaired and sexviced by the first respondent are Solahart products. That does not amount to an allegation that the product market relied upon is a brand name market. The first respondent is said to have engaged in these activities in the Dealership Ce i ieee os St apc aes ren a ones a ee 13. Area. Again, that does not constitute a claim that the relevant geographical market invoked is so defined. On the material issue of market definition by reference to product and geography, the reader is left to guess what is alleged even after reading the particulars. Turning to sub-paragraph (2) of paragraph 8, it is alleged that the first respondent 1s in a position substantially to control "a market fox goods". Again maxket definition is not to be found from the substantive pleading. This time, however, there is an attempt in the particulars to define the market, including, in the alternative a brand name product market. Sub-paragraph (3) alleging abuse of market power, is supported by extensive and somewhat confusing particulars. The paragraph ought, in my opinion, to be struck out. I will, however, afford to the applicant the opportunity to further amend its statement of claim in this regard to properly plead the cause of action under s.46 1f£ it wishes to pursue that course. The next paragraph of the re-amended statement of claim to come under scrutiny was paragraph 9, but the attack was abandoned when it was discovered that the deficiency in the sense of the paragraph was attributable to a simple typographical error. we SL eee ot é , x FEC TITTE rete Ugt UA rani ee ee are Salle ee Co ne —= 4 - eee ee can 8 me ee oe ee a a - 2 See TES ALR IS USS Pte ste 5 14. Paragraph 10 alleges price discrimination contrary to s.49 of the Trade Practices Act. Its substantive sub-paragraphs are as follows:- "10. Further or alternatively: (1) The First Respondent has in trade or commerce discriminated between purchasers of goods of like grade and quality in relation to the prices charged for the goods, and to any discounts, allowances, rebates or credits given or allowed in relation to the supply of the goods. (2) The discrimination is of such magnitude or is of such a recurring or systematic character that it has or is likely to have the effect' of substantially lessening competition in the market for goods. (3) In the premises, the First Respondent has contravened Section 49 of the Act thereby causing loss and damage to the Applicant." - Particulars follow each of the substantive sub-paragraphs and incorporate cross references to specific parts of the particulars provided to paragraph 8. This technique, I may say, while it may be convenient in some: cases, 1S often an obstacle to a rapid and clear comprehension of the pleading. In my opinion the substantive pleading in paragraph 10 Splays the same lack of specificity and pleading of material fact as does paragraph 8. It too should be struck out. The second respondent seeks to strike out paragraph 11 which pleads:- wl ee —— wos ee Lene Se er ee er eee rn ee oe: a a ae ce ee "ll. facts are pleaded to support the allegations. 15. The Second Respondent, in his capacity as the general manager of the First Respondent has knowledge of all the matters hereinbefore pleaded and has aided, abetted, counselled ox¥ procured and has been directly or indirectly, knowingly concerned in, or party to all the pleaded contraventions of the Act and was thereby a person involved in the said contraventions within the meaning of Section 75B of the Act." The criticism made of this paragraph 1s that no material While the paragraph is very general it does not, in my opinion, warrant striking out. No doubt the second respondent is' entitled particulars. "12. (1) (2) Paragraph 12 1s a rather mysterious pleading. It 1s in the following texms:- Further, or alternatively: The Applicant repeats paragraphs 1, 2, 3, 4, 5, 7 and the Particulars "A" to paragraph 8(3) hereof. (a) By reason of the relationship between the parties of wholesaler/distributor and dealer a fiduciary xelationship existed between the Applicant and the First Respondent whereby the said prices and discounts in Clause 3(a) referred to in the Particulars "A" to paragraph 8(3) hereof constitute information which the Applicant says is confidential and which the Applicant says should not be used other than in the course of dealings between the Applicant and First Respondent. (b) In the premises the First Respondent was under a fiduciary duty not to use the said information in a manner detrimental to the Applicant nor to use the same to derive a profit for itself. to arene et Pott er we wean nere oe te esp ore wi pcre ee 16. (3) The Applicant is entitled to an account in respect of proceeds from the sale of Solahart equipment in bereach (sic) of the said fiduciary duty." It does not appear, even after reference to the other parts of the reamended statement of claim incorporated into the paragraph, how it 1s that confidential information was used by the first respondent. The mere fact that the first respondent has sold to customers within the Dealership Area does not amount to an allegation that it has misused confidential information as to prices and discounts. The relevant discounts in any event were those given by the first respondent to the applicant. In my opinion, the paragraph is well nigh unintelligible and should be struck out. As to paragraph 16 of the re-amended statement of claim, the first respondent complains that it does not make sense. While at is not without its difficulty, I do not consider that 1t is so obviously untenable that it ought to be struck out. 17. In summary, I will strike out paragraphs 8, 10 and 12 of the re-amended statement of claim. I will hear from the parties as to costs and any consequential orders. I certify that this and the preceding sixteen (16) pages are a true copy of the Reasons for Judgment of his Honoux Mr Justice French. Kok Associate: Deere. LS pate: IJ. 6.87 Counsel: - for the Applicant: Mr D.H.Solomon instructed by Phillips Fox . for the First and Second Respondents: Mr P.S. Fitzpatrick instructed by Robinson Cox Date of Hearing: 16 June 1987 Date of Judgement: 19 June 1987 AEM at yo ees tp rT er) Tye tk fc awake i] ! L i phan & x wea ee ee He ae see ere ee ee sage poe ree ee ewes t