JUDGMENT No. M157 BT. >a CATCHWORDS Practice and procedure - action for breaches of provisions contained in Part V of the Trade Practices Act 1974 against personal respondents - failure to plead that such respondents were "involved in a contravention" of the Part - whether leave to amend application and statement of claim should be granted in the light of the fact that the causes of action were statute-barred. Trade Practices Act 1974, ss. 52, 53, 75B and 82 AKMOLINE PTY LI v. H.R.C. SERVIT PTY LIMITED and ORS. No. G81 of 1987 Coram: Sheppard J. Place: Sydney Date : 27 November 1987 IN THE FRDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. G66 of 1987 — ewe we GENERAL DIVISION BETWEEN: AKMOLINE PTY LIMITED Applicant AND: H.R.C. SERVIT PTY LIMITED and ORS, Respondents CORAM: SHEPPARD J. DATE : 27 NOVEMBER 1987 REASONS FOR JUDGMENT HIS HONOUR: This is a notice of motion seeking an order that the whole of the amended statement of claim as against the fourth respondent, Mr. Kenny, be struck out. The principal application is one in which the applicant sues three companies and four natural persons, including Mr. Kenny. The amended application filed on 13 August 1985 claims the following, amongst other velief:- "L. A declaration that the respondents and each of them have contravened Sections 52, 53(a), (aa), (c) and (f) of the Trade Practices Act 1974 as amended. 2. Damages for breach or breaches of the aforesaid provisions of the Trade Practices Act 1974 as amended and/or damages for breach of contract and/or damages for misrepresentation". The causes of action with which I am concerned in this motion are those arising under the Trade Practices Act 1974. The amended statement of claim is somewhat lengthy, and toa degree complex, but for present purposes it is enough to refer to paragraphs 5, 7, 7A and 8. Paragraph 5 alleges that by contract made on or about 8 June 1983 between the applicant on the one part and the first and/or second and/or sixth and/or seventh respondents on the other part, the said respondents agreed, inter alia, to sell and/or supply to the applicant a computer accounting and management system described as the "H.R.C. Hospitality Management Package" comprising computer software and hardware management and accounting expertise and point of sale terminals for the highly efficient operation and management of the restaurants known as the Argyle Tavern, Lowenbrau Keller, The Garrison Restaurant and Bunratty Castle situated at 18 Argyle Street, the Rocks, Sydney and known as the Argyle Tavern complex. Particulars of the contract are qiven. Paragraph 7 of the amended statement of claim alleges that the applicant entered into the agreement and made arrangements for the financing of the package being induced by certain statements and representations made by the third and/or fourth and/or fifth and/or seventh respondents as servants or agents of the first and/or second and/or sixth respondents and in their own behalf at the first respondent's premises at Camperdown and at the Argyle Tavern complex. Detailed particulars of the 3. representations which were alleqed to have been made are given at the end of the paragraph. It is unnecessary to refer to the substance of these. Paragraph 7A of the amended statement of claim alleges that the respondents and each of them. by their servants or agents, in trade or commerce or otherwise, in connection with the supply or possible supply of the computer system referred to in paragraph 5 or in connection with the promotion of the supply or use of the system or goods or services related thereto made the representations and engaged in the conduct referred to in paragraph 7. Paragraph 8 alleges that, by reason of the facts and matters referred to in paragraphs 7 and 7A, the respondents and each of them, in trade or commerce, have engaged in conduct that was misleading or deceptive or otherwise likely to mislead or deceive in contravention of s. 52 of the Trade Practices Act in particular in that the representations referred to in paragraph 7 were false or misleading or likely to mislead or deceive at the time they were made and were intended by the said respondents to be acted upon. There then follow a number of paragraphs setting out particulars of the breaches which are alleged. There are other similar allegations contained in later paragraphs of the amended statement of claim alleging breaches of other provisions of the Trade Practices Act as mentioned in the amended application to which I have referred. These are all pleaded in substantially the same way as the alleaations in the paragraphs which I have set out. 4. In the submission of counsel for Mr. Kenny, the case may not be pleaded against his client in this way. Section 52 and the other sections which are relied upon will only be infringed if the offending conduct is engaged in by a corporation. The personal respondents, including Mr. Kenny, are not corporations. The provisions of s. 6 of the Act. which in some circumstances extend the operation of the Act to natural persons, are not relied upon in this case. Section 82 of the Act provides for an action for damages for breach of a number of provisions of the Act, including the sections relied upon by the applicant in this case. Sub-section (1) provides as follows:- "A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV or V may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention". The sections relied upon here are, of course, in Part V of the Act. It is to be observed that provision is made for recoverv of damages against a person who has contravened a provision, inter alia of Part V or against any person "involved in the contravention". That expression is defined in s. 75B of the Act, which is as follows:- "A reference in this Part to a person involved in a contravention of a provision of Part IV or V shall be read as a reference to a person who- (a) has aided, abetted, counselled or procured the contravention: (b) has induced, whether by threats or promises or otherwise, the contravention: 5. (eo) has been in any wav. directly or indirectlv. knowingly concerned in, or party to, the contravention; or (a) has conspired with others to effect the contravention". Tt is only tf a natural person to whom s. 46 of the Act does not apply is shown to have been involved in a contravention of a provision of Part TV or Part V of the Act in the wav that is contemplated by s. 75B that he will be liable for damages under s. 82. This proposttion was underlined by the High Court in its decision in Yorke v. Lucas (1985) 158 C,L.R. 461. It was there held that. for para. (a) of $s. 75B to apply to a person, 1t must be shown that he intentionally aided, abetted, counselled or procured a contravention, "and to form the necessarv intent he must have had knowledge of the essential matters which make up the contravention whether or not he knew that those matters amounted to a contravention. It was also held that, before a person can be said to have been party toa contravention within para. (c) of s. 75B, he must be an intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention. There are a number of dicta in the judgments of the members of the High Court which support the correctness of the points 'upon which counsel for Mr. Kenny relies (pp. fA6 et seq.) but T do not set them out. The essence of the complaint made about the amended statement of claim by counsel for Mr. Kennv 1s that if alleges a contravention bv Mr. Kennv of 5s. 52 and the other sections relied upon. In his submission, the personal respondents, being natural persons, cannot be said to have 6. contravened s. 52 or the other sections. If they are liable for damages, it is because of the operation of s. 82 read in the light of s. 75B. It was therefore essential, in his submission, for the applicant to plead, and it will be essential for it ultimately to prove, that the conduct enaagqed in by Mr. Kennv falls within one or more of the four paragraphs of s. 75B. [n the way that the amended statement of claim is pleaded at the moment all that is alleqed is that Mr. Kenny has contravened s. 52 and the other sections. This is not a_ relevant allegation because in no direct sense can a natural person, subject to any operation which should be accorded to s. 6. which has no application here, commit a breach of any of the sections. I am in agreement with the submission which has been made. In my Opinion, it is unanswerable. The onlv matter put against it bv counsel for the applicant was that the matters relied upon did not qo to the wav in which the case needed to be pleaded. but rather to the wav the case would have to be approached at the trial. IT reiect this submission. To my mind it overlooks the purpose and object of pleadings. I refer generally to Chapter 1 of Bullen & Leake and Jacob's Precedents of Pleadings, 12th ed. (1975). I propose therefore to make the order sought in the motion. The question then arises whether [I should give the applicant a further opportunity to amend its statement of claim to overcome the problem which exists. This course was opposed by counsel for Mr. Kennv because more than three vears have elapsed since the causes of action relied upon arose in 1983. 7. Three years is, of course, the period of limitation which applies to these causes of action: see sub-sec. 82(2) of the Act. The essence of the argument is that leave to amend should be refused because it would enable the applicant to rely upon causes of action against Mr. Kenny which have not as yet been propounded and which are now statute-barred. This submission involves me in looking, not at the statement of claim, but at the application by which the proceedings were commenced. T have earlier set out the essential paragraphs of it. The application has used language similar to that used in the statement of claim but the considerations applicable to it are different from those which apply to a pleading. Neither s. 82 nor s. 75B is referred to in the application, but it provides a clear indication to the respondents, including Mr. Kenny, that they are being sued for breaches of the various sections of the Trade Practices Act which are mentioned. The fact that there is no reference either to s. 82 or s. 75B nor an alleqation that the personal respondents were involved in breaches of the sections of the Act relied upon is not, in mv opinion, of any relevance. They are the sections which provide the foundation for the causes of action relied upon. The fact that it is s. 82 read together with s. 75B which provides for or confers the causes of action 1s not. 1n my opinion, to the point. It is a question of what is disclosed by a fair readina of the substance of the application. In those circumstances I think the correct course is to permit the applicant to re-amend its statement of claim, if it be so advised, to plead the matters which I have found it to omit. 8. The court has wide powers to arant amendments of all kinds. T refer to Order 13, rule 2. Nothing in any of the authorities which were referred to affects mv discretion in that regard because, so it seems tome, the causes of action which che applicant wished to rely upon against all respondents, including Mr. Kenny, were sufficiently stated in the amended application which was filed on 13 August 1985. The position may have been different if some other provision of the Act had been relied upon, for instance. a totally different provision of Part V or one of the provisions of Part IV or if a statute barred cause of action which was iusticiable in this Court as a result of its attached or accrued turisdiction were sought to be included in the statement of claim. But this 1s not a case of that kind and T think the proper exercise of mv discretion requires that I should arant the applicant leave yet further to amend the statement of claim. I should add that. if I had reached the conclusion that the causes of action aaainst Mr. Kenny were statute-barred, the matter may not have been decided in Mr. Kenny's favour. There would then have arisen questions concerning the Court's power to allow an amendment to permit the pleading of a statute-barred cause of action not previously relied upon. Tt is not necessary for me to address that question, but it might not be without difficulty; cf. McGee v. Yeomans €19777 1 N.S.W.L.R. 273 decided in the context of rules of Court differently expressed from those of the Federal Court. One matter that I noticed after IT reserved my decision last week was that. notwithstanding this application, Mr. Kennv had on 9. 16 October 1987 filed a defence to the amended statement of claim. This was not the subject of mention during the argument, at least so far as T recollect. It is a matter which qoes to my discretion, there being a view that once a party has pleaded to his opponent's pleading it is not usual to allow him to apply to strike out the pleading. That is a matter upon which Tf think I should hear counsel if thev wish to be heard but. subtect to that Matter, TI think that IT should make an order striking out the amended statement of claim as against the fourth respondent and qive the applicant leave further to amend it. I need to hear counsel on the question of costs. Discussion ensued after which his Honour made the following orders and directions:- 1. IT order that the statement of claim as aqainst the fourth respondent be struck out. 2. T give leave to the applicant to re-amend the statement of claim as against the fourth respondent as it mav be advised provided that any such amendment is made on or before 7 December 1987. 3. I direct the respondent to seek any particulars of the statement of claim as amended on or before 16 December 1987. 4. I direct the applicant to provide such particulars on or before 18 January 1988. 5. In view of the earlier directions concerning the fixina of the matter for hearing, I give the parties leave to approach the Reqistrar for a date for hearing, such date 10. not to be before 4 April 1988. I note an estimate of five to seven days. 6. The matter will be mentioned for directions on 4 February 1988 at 9.30 a.m. before me. 7. The costs of the motion to strike out the statement of claim are reserved. I Dertify that this and the 7 preceding pages are a true copy of the reasons for Judgment herein of The Honourable Mr Juatice Sheppard. f KoA oor Associale Dated: 27 NOVEMBER /987 Solicitors for the Applicant: Aubrey F. Crawley & Co. Counsel for the Applicant: Mr. P.E. King Solicitors for the Respondents: Vereker & Partners Counsel for the Respondents: Mr. P.M. Wood Date of hearing: 27 November 1987