JUDGMENT No, "Oy 3] IN THE FEDERAL COURT NOT INTENDED FOR GENERAL DISTRIBUTION ) OF AUSTRALIA ) WESTERN AUSTRALIA ) DISTRICT REGISTRY ) ) GENERAL DIVISION NO. WAG 68 Of 1987 BETWEEN: CITIWEST MANAGEMENT SERVICES PTY LTD Applicant and PHILIP HOLZMANN, A.G. and WILLIAM PETERSEN Respondents MINUTE OF ORDER ow Noe " ry bi we ; A 2 ", JUDGE MAKING ORDER: FRENCH J. YY ", ad i Sad > - ery DATE OF ORDER: 30 November 1987 7 . . re os WHERE MADE: PERTH c\ oa ~ G5 a THE COURT ORDERS THAT: 7 On the Respondents' motion filed 22 October 1987:- l. Paragraphs 5, 6A, 7.6, 10.2, 11 and 12 of the Amended Statement of Claim are struck out. 2. The Applicant is to pay the Respondents' costs of the motion. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTPALIA DISTPICT REGISTRY GENERAL DIVISION NOT INTENDED FOR GENFRAL DISTRIBUTION NO. WAG 68 Of 1987 BETWFEN: CITIWEST MANAGDMFNT SERVICES PTY LTD Applicant and PHILIP HOLZMANN, A.G. and WILLIAM PETERSEN Respondents CORAM; FRENCH J. 30 November 1987 EX _TEMPORE REASONS FOR JUDGMENT This 1S a motion under 0.11 r.16 to strike out an amended statement of claim to the extent and on the grounds that it 1S vague, embarrassing and discloses no reasonable cause of action. Order 11 r.16 provides that:- "Where a pleading - (a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading; (b) has a tendency to cause prejudice, embarrassment or delay in the proceeding; or (c) is otherwise an abuse of the process of the Court, the Court may at any stage of the proceeding order that the whole or any part of the pleading be struck out." The tests for the exercise of the power conferred upon the Court are well established and require that 1t should be 2. exercised sparingly and only where the statement of claim or the part of 1t that 1s attacked 1s so clearly untenable that it cannot stand. The amended statement of claim, filed on 14 October 1987, raises causes of action under ss. 52 and 82 of the Trade Practices Act 1974, in contract and in negligence, as well as claims for quantum meruilt and a claim for interest. The pleading 1s, I think 1t fair to say, an unsatisfying document in its lack of clarity, and logical connection between some of its parts. There are areas where 1t iS vague or ambiguous in expression and others where 1t leaves room for particulars which will be necessary before a Court could be properly appraised of the real 1ssues in the case. Mere lack of detail or, indeed, a degree of vagueness, are not of themselves reasons for striking out a statement of claim or parts of it. Details of allegations may be secured hy the collateral process of a request for particulars and the provision thereof. And that may, 1n some cases, be a cure for width of expression which does not fully define the issues. Something more than mere width of expression or lack of particularity is needed to justify striking out the whole or part of a pleading. On the other hand, there is need for a minimum level of particularity which may exceed that level attained by a mere 3. recitation of the bare elements of a cause of action. The defendant should know what case 1t has to meet. - Charlie Carters Pty Ltd v The Shop Distributors and Allied Employees' Association of Western Australia (1987) 13 FCR 413. Broadly speaking, the statement of claim is concerned with the relationship between Citiwest Management Services Pty Ltd ("Citiwest") as a prospective purchaser of a property known as the Hotel Peninsula, Mandurah, and Philip Holzmann A.G. as 1ts agent in negotiations with the West Australian Development Corporation, the owner of the relevant land and various authorities, for the acquisition of the land and for development associated with that acquisition. Citiwest complains that it was induced to provide various services to Holzmann as the result of a number of representations made to it. These, it 1S said, were false and constituted misleading and deceptive conduct in trade and commerce and thereby a contravention of s.52 of the Trade Practices Act causing 1t to suffer loss and damage. In the alternative, the company pleads an agreement under which it was to perform the services in question and to be paid certain consideration for doing so. It alleges a failure to pay and thereby a breach of the agreement. 4. The first attack under the motion 1s on para.5 of the amended statement of claim which alleges that 1n or about February 1985 Citiwest was acting on behalf of Hotel Peninsula (Mandurah) Pty Ltd and in that capacity invited submissions from persons interested 1n redeveloping the Hotel Peninsula property. This pleading has no logical connection with any of the elements of the causes of action which Citiwest seeks to set up against Holzmann. It 18 explained by Citiwest's counsel as setting out the background or context of the relationship betwcen the parties. Such a pleading 1S not always bad. There may be steps in a sequence of events pleaded which are not strictly necessary to found or support the cause of action relied upon, but which complete the picture for those who have to read the pleading and find out what the case 1S about. But there its a line to be drawn between that and the kind of pleading which raises false issues and may be embarrassing or otherwise prejudice or delay proceedings. It 1s a question of judgment as to whether a paragraph that 1s strictly unnecessary, falls into that category. The paragraph is' sufficiently disconnected from the events central to the cause of action, to be properly characterised as unnecessary and does raise false issues. They are the issues of the relationship between Citiwest and the Hotel Peninsula (Mandurah) Pty Ltd, and of the prior advertising of the proposed redevelopment of the property. 5. It 1S properly characterised as embarrassing because of the false issues 1t raises. T am satisfied that on a proper application of the principles governing the exercise of the power under 0.11 r.16, this paragraph should be struck out. The same, I think, 1S true of para.6A, which has to do with representations made by officers of the Western Australian Development Corporation to officers of Citiwest and the general manager of Holzmann. It may be that these representations or the meeting at which they were made, will have some role to play in the evidence given at trial, but there 15 no necessity for them in the pleading where they raise another distracting false issue. Counsel for Citiwest did not suggest that para.6A was necessary to establish a cause of action, but said 1t provided a context for properly understanding what occurred later. [I do not consider 1t necessary to an understanding of the causes of action which are raised, and, applying the same principles as in respect to para.5, will strike 1t out. The attack then turned to para.7. That paragraph sets out a number of representations said to have been made at various times in 1985 by William Petersen, the second named respondent, on behalf of Holzmann to representatives of Citiwest. These representations are central to the allegation of misleading and deceptive conduct. 6. The first complaint 1s that para. 7 does not make clear whether it 1s alleged that Citiwest was acting on its own behalf or on behalf of another. I have no difficulty in reading it as an allegation that Citiwest was acting 1n 1ts own right. There 1s no suggestion, apart from the unnecessary reference in para.5 which has already been struck out, that it was acting as an agent. The first complaint fails. Secondly, it said of sub-para.7.1.2 that this alleges a representation which does not relate to existing facts and 1s not capable of founding an actionable misrepresentation. Many of the representations alleged in para.7 take the form of promissory statements. I would not strike them out on that basis at this stage. It may well be that the allegation in respect of the promissory statements 1s that Holzmann did not have the requisite present intention that they imply. Counsel indicated that this was indeed the basis upon which they were made. Whatever might be the case in respect of the other representations, para.7.1.2 relates to existing fact. It alleges a representation that Holzmann was interested in considering the possibility of acquiring the hotel and the project land. That 1S a representation as to a state of mind. It concerns an existing fact. It is said of that representation, as appears from para.8.1, that Holzmann was not interested in investing substantial capital in leisure related development _ 7. projects in Western Australia. Nor was 1t interested in acquiring either the hotel or the project land. That 1s Logically a falsification of the representations pleaded in paras. 7.1.1 and 7.1.2. [It 1s a rather odd allegation and proof may well be difficult. However, I am not concerned with that aspect at this stage, but rather with determining whether the statement of claim as pleaded, 1s sustainable. Paragraph 7.3 sets up the representation that Holzmann would pay to Citiwest a fair and reasonable amount for services past and prospective in respect of the acquisition of the hotel and project land and connected negotiations. The complaint made of paras. 7.3.1 and 7.3.2 1s that the services are defined inclusively and are insufficiently particularised. Mr Odes suggested that the statement of claim should allege the contract pursuant to which past services had been provided. While not wishing to put a seal of approval on the Grafting of 7.3, I do not think it necessary for its survival that any such contract must be pleaded. That is not to say that it may not be a proper subject for a request for particulars or interrogatories. The pleading in paras. 7.3.1 and 7.3.2 1s not a model of its kind but it is not so vague and so wide as to be embarrassing. It raises matters in respect of which particulars may be sought. I am not prepared to strike out 7.3. 8. Paraqraph 7.6 sets up a representation that Holzmann would pay $700,000 "plus further substantial consideration commensurate with the expertise time and expense of the applicant its servants and agents (to be paid either in cash or by way of an interest by way of equity in the first respondent's proposed development of the project land)". The reference to "further substantial consideration" 15 curlous and does not convey any settled basis upon which the reader might understand the content of the promise. Counsel for Citiwest seemed to treat 1t as referring to a kind of surcharge for additional services over and above those covered by the retainer of $700,000. This interpretation 1S inconsistent with the plainly parallel pleading in para.9.3.1. In that paragraph and in para.9 generally, there 1s set up an oral agreement made on the same date as the alleged representation. That 1s an agreement made on or about 17 September 1985 for the engagement of Citiwest and payment to that company for the provision of various services. In para. 9.3.1.1 1t pleaded as a term of the agreement that Citiwest would be paid a consultancy or retainer fee of $700,000. And in para. 9.3.1.2 it is said that the company would be paid its further reasonable disbursements and outgoings incurred in performing its obligations alleged in para. 9.1. I find it almost impossible to believe the "further substantial consideration" pleaded in para. 7.6 is not intended to refer to what is contained in 9.3.1.2. If£ that is the case, it 9. should say so. If 1t 18 something else, then it should spell 1t out in a way that will enable Holzmann to plead properly to ut. The respondents are also entitled to some particulars of the consultancy services referred to in 7.6.2. For these reasons I will strike out para.7.6. Paragraph 8 sets out the ways in which the various representations pleaded in para.7 are said to be untrue and to constitute misleading or deceptive conduct. There 1S a general complaint of lack of particularity. Por the greater part of the representations being promissory 1n character are said to be falsified by the absence at the time they were made of the requisite intention. On the face of 1t para.8 1s sufficient to enable Holzmann to plead. It 1S not such an obvious case for strike out as would justify my making of an order pursuant to Q.11 r.16. In saying that, I do not make any prediction about the outcome of these allegations. They take a string of promises which are said to form part of a contract and turn them into factual misstatements. But any judgment about them now would be unsupported by evidence and it 1s on evidence that a judgment as to the validity of the allegations must be made. Paragraph 9 sets up, in the alternative to the various representations and their falsification, an oral agreement said to have been made on or about 17 September. Under that agreement 1t 10. 1s said that Holzmann agreed that 1t would engage Citiwest as its consultant. According to Holzmann, the words "would engage" suggest that 1t was an agreement to enter into an agreement and that the plea 18S not of a concluded contract. Read as a whole it 1s clear enough that the pleading does allege a concluded agreement notwithstanding the use of the subjunctive in 9.1 and I would not strike out that paragraph or any part of it by reference to that element. Nor would I strike out 9.3 on the basis that it 1S inconsistent with para. 7.6. Paragraph 9.3 stands by itself. Paragraph 7.6 I have already indicated I will strike out for reasons internal to 1t. The mere fact of inconsistency where there is a pleading in the alternative will not of itself support a striking out or summary disposition. The complaint 1s made in respect of sub-para. 9.4 that the promise of commission for the successful negotiation of the sale of an interest in the project to Holzmann confuses the picture with respect to remuneration generally. Without saying that the promises as to remuneration are really crystal clear, it 1s logically open for the payment of a commission to have been negotiated as a separate element in an agreement which otherwise provides for payment of a retainer and further payment on a time basis. There is no intrinsic problem with para.9.4 that prevents it from standing. Holzmann may wish at some stage to seek particulars, but it 1S not so embarrassing as to prevent the filing of a defence in relation to it. ll. Turning to para. 10, the first respondent claims initially that the other services referred to in sSub-para. 10.1 are not particularised. The paragraph generally pleads that, acting on the basis of the representations and, in the alternative, pursuant to its obligations, Citiwest rendered to Holzmann consulting and "other services" as pleaded 1n paras. 7.3.1 and 7.3.2. Consistently with the attitude that I have already taken to those two paragraphs, I would not strike out para. 10.1 for failure to particularize the other services. The question of consulting services can be picked up in relation to the order that I propose to make in respect of para. 7.6.2. Otherwise this 1S a matter which can be dealt with by request for particulars. In para. 10.2 it is said that on or about 19 December 1985, at the specific request and with the consent of the second respondent, Citiwest paid to WADC on behalf of Holzmann, the sum of $100,000 pursuant to the terms of a written option agreement entered into between the WADC and Holzmann. This sub-paragraph has to be read, subject to the preamble to para. 10 and the allegation that Citiwest made the payment acting on the basis of the representations pleaded in para.7 and in the alternative, pursuant to its obligations under the terms of the agreement. However there does not appear to be any pleaded obligation that would explain the payment alleged. 12. Mr Bruns, for the applicant, suggested that the obligation could be implied from the oral agreement alleged in para. 9. But no such implication 1s pleaded and it 1s not for the Court to conjure one. In my opinion, this sub-paragraph 1s embarrassing as it does not connect logically with any obligation under the agreement pleaded in para.9. It 18 also not clear just what causal connection there is between the representations and that particular payment. In any event, aS it stands, I think para. 10.2 1S embarrassing and should be struck out. Paragraph 11 pleads that:- "Notwithstanding the representations pleaded in paragraph 7, and in the alternative, in breach of the terms of the Agreement, the first respondent has: 11.1 failed to pay to the applicant the sum of $700,000 or any monies; 11.2 failed to execute an agreement pursuant to the provisions of the REBA Act appointing the applicant as its agent for the purpose of negotiating the purchase of an option in relation to the project land; and 11.3 failed to indemnify the applicant in respect of the payment made by the applicant to the WADC." There is not alleged any obligation to pay the sum of $700,000 as set up under the agreement pleaded in para. 9.3. There seems to have been an option available to Holzmann to pay either the consultancy and substantial remuneration or reasonable disbursements and outgoings on the one hand and some kind of 13. equity interest in the proposed development on the other. In my opinion, the circumstances under which an obligation arose to pay the sum of $700,000 or any moneys, has not been sufficiently spelt out or indeed spelt out at all. For that reason I am of the view that para. 11 18 embarrassing and ought to be struck out. Sub-paragraph 11.3 refers to a failure on the part of Holzmann to indemnify Citiwest in respect of its payment to WADC. A logical connection between that failure and the _ pleaded representations and the agreement, does not appear. Paragraph 11 fails as a whole and should be struck out. In support of a cause of action in negligence based on negligent misstatement in the making of various representations, para. 12 sets up a duty of care and pleads various facts going to the relationship between the parties in support of the existence of that duty. On the face of it, the facts as pleaded post-date the alleged negligent misstatement and, 1n my opinion, cannot support the relevant duty of care. That paragraph as a whole ought to be struck out. Paragraph 13, which supports a quantum meruit claim, pleads that Citiwest at the request of Holzmann did much work and expended much money in carrying out the tasks pleaded in paras. 9.1 and 9.2 and claims a reasonable remuneration for such work and 14. reimbursement of such expenses, particulars of which will be rendered prior to trial. Holgmann''s request for the provision of the service 15 said to be contained in and inferred from the representations. This is not further explained by reference to particular representations. It seems to me, however, that that 1s a matter which can be the subject of a request for particulars. At the present time, the pleading puts all the representations together as the basis upon which the request can be inferred. While I have reservations about this paragraph, I do not consider that it is so clearly untenable as to warrant the making of an order under 0.11 r.16. So para. 13 will stand. In the result, I will strike out paras. 5, 6A, 7.6, 10.2, 11 and 12. I will give the applicant an opportunity to further amend its statement of claim. I certify that this and the preceding thirteen (13) pages are a true copy of the Reasons for Judgment of his Honour Justice French. Associate: Poel, LIQ AKL Date: 30 Nowe' 198 ?. 15. Counsel for the Applicant: Mr D. Bruns Solicitors for the Applicant: Birman & Ride Counsel for the Respondents: Mr M.W. Odes Solicitors for the Respondents: Parker & Parker Date of Hearing: 30 November 1987 Date of Judgment: 30 November 1987 we Pe itis. . Ti: