"Toews. 7649 /$6_. TPADE PRACTICHS - misleading and deceptive conduct - invitation to participate in raffle competition = free entry - $10,000 product prize advertised = $4,000 procuct prize offered to winner - no , $10,000 product in existence - no loss Jemonstrated - no damages rs recoverable under s.32 - application dismissed 9.20 r.2 - query application of s.55 "Trade Practices Act 1974 s.52, s.54, s. 55, s.82 WENDY MCMAHON (MW) v WARREN EDMOND CRAWFORD AND PAUL DUNBAR WAG 115 OF 1987 FRENCH J. PERTH 24 DECEMBER 1987 IN THO FPDERAL CCuPT Of ALISTRALTA WESTLURN AUS'TRALIAN DISTRICT REGISTRY GENERAL DIVISION No. WAG 115 of 1937 BETWFON: WENDY McMAHON (iW) Anplicant and WARPEN CDMOND CPAWFORD and PAUL DUNRAP Respondents MINUTE OF ORDER JUDGE MAKING ORDER: FRENCH J. DATE OF ORDEP: 24 DECEMBER 1987 WHERE MADE: PERTH THE COURT ORDERS THAT: l. The application 1s dismissed. 2. The applicant to pay the respondents' costs of the application. 3. Each party 1s to bear its own costs of the respondents' motion. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. WESTEPN AUSTPALIAN IN THE FEDERAL COURT OF AUSTRALIA DISTRICT REGISTRY GFNFRAL DIVISION NO. WAG 115 OF 1937 BETWEEN: WENDY McMAHION (MW) Applicant and WARREN fDMOND CRAWFORD and PAUL DUNBAR Respondents CORAM: FRENCH J. 24 December 1987 REASONS FOR JUDGMENT This 18 a motion to strike out proceedings, for failure to disclose a reasonable cause of action, or on the basis that they are an abuse of process. The statement of claim discloses that the applicant 1s a married woman who resides in the state of Western Australia and that the respondents, who are natural persons, trade under the business name of "Trojan Domes" at Lesmurdie in Western Australia. It alleges that, for the purpose of inducing purchases of their products, the respondents were exhibitors at an exhibition known as the "West Australian Home Show" conducted annually at the Claremont Showgrounds from about 28 February to 8 March in each year. 2. The purpose of the exhibition was to allow manufacturers and traders in the building industry to exhibit and advertise their products in the furtherance of their business. The respondents were said to have erected a structure known as a "Trojan Dome" in the proximity of the McFarlane pavilion at the Claremont Showgrounds for the purposes of the exhibition. This Structure included a bathing facility described as a "$4500 RBC Executive Spa". The respondents are alleged to have advertised their products and, in particular, the Trojan Dome in the West Australian newspaper. Its price was not referred to in these advertisements. However, on 28 February 1987, according to the statement of claim, the respondents or their agents, published an offer in the same newspaper inviting members of the public to win a $10,000 Trojan Dome and a $4,500 RBC Executive Spa by filling in a coupon and placing it in a barrel at the Trojan Dome display at the exhibition during specified times. The applicant says that, relying upon this representation and offer, she paid her entrance fee to the exhibition and filled in a coupon which was presented to her by the respondents for the purposes of thelr competition. On 8 March she was advised that she had won the competition and on 11 March her name was published in the newspaper as having won a $10,000 Trojan Dome and a $4,500 RBC Executive Spa. 3. When 1t came to collecting the prize however, she was advised that the Trojan Pome erecte! at the 'icFarlane pavilion was not a $10,000 Trojan Dome but valued only at $1,000 and that the respondents did not manufacture or erect a $10,900 Trojan Dome. That allegation 1s admitted on the defence which has been filed. It us further alleged in the statement of claim, that the respondents told the applicant that they were at all times willing to supply her with a $4,900 Trojan Nome and a $4,500 Fxecutive Spa which could be erected either at her home or any other residence of her choice. However, she refused this offer and saw her solicitors. The statement of claim then goes on in paras. 15 and 16 to say:- "15. The Respondents' conduct in advertising for and representing that a Trojan Dome valued at $10,000.00 was the said specimen at the McFarlane pavillion (sic) or tndeed that they could have erected one at such a value at any time amounts to conduct within the meaning of Section 54 and Section 55 of the Trade Practices Act, 1974. 16. The conduct referred to in paragraph 15 aforesaid was misleading or deceptive conduct or alternatively was likely to mislead or deceive or alternatively had a tendency to mislead or deceive." The applicant claims that as a result of this conduct she has suffered loss and damage. That loss and damage 15s particularised in para. 17 of the statement of claim:- "(i) Loss of the opportunity to have erected at her residence or any other residence of her choice a 4. $10,000.00 Trojan dome with a $4,500.90 P.R.C. Mxeecutive spa erected and built thereunder or alternatively: (11) The value thereof." The motion which seeks te strike out the application expressly relies upon 0.11 r.16. It does not appear, however, to be apposite to that order as that provides for the striking out of pleadings. Order 20 r.2 on the other hand, provides, as follows, for the dismissal cf a proceeding:- "(1) Where in any proceeding it appears to the Court that in relation to the proceeding generally or in relation to any claim for relief in the proceeding - (a) no reasonable cause of action is disclosed; (b) the proceeding 1s Frivolous or vexatious; or (c) the proceeding 1S an abuse of the process of the Court, the Court may order that the proceeding be stayed or dismissed generally or in relation to any claim for relief in the proceeding." The power to summarily strike out a pleading or dismiss a proceeding is to be exercised sparingly by the court, and only in a clear case. Where absence of a reasonable cause of action 1s raised there must be no reasonable prospect that even if all Matters of fact alleged in the statement of claim could be established, any basis for relief could be shown. 5. The statemert of claim appears to rely exclusively upon ab ceuses cf agetion avisin if of the Tra@e Practices Act, x appears From nara. 1% 1t expressly invokes ss.54 and 35 of the Act. It also, T think, by implication in para.16, invokes s.52 of the Trade Practices Act, although it does not say so. the rellance upon ss. 52 and 54 run into the same difficulty in each case. That 1S to say, each of those provisions 16 concerned only with the conduct of corporations in trade or commerce. The respondents in this case are natural persons. There is nothing in the statement of claim which gives rise to any basis for the suggestion that their alleged conduct might attract the extended operation of the Trade Practices Act under s.6. By that section the operation of the Act may be extended to cover the case of natural persons who are engaged in conduct in trade or commerce between the states or overseas or whose conduct involves the use of television or broadcasting facilities or telephonic or postal communications. None of those matters are raised in the pleading and on that basis alone, there 1S no way 1n which a cause of action based on ss. 52 or 54 could succeed. Section 55 provides:~ "A person shall not, in trade or commerce engage in conduct that is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose or the quantity of any goods." 6. It 1S immediately to he noted that that section is not laimiteu in 1tS application to cerporations but extends to persons. The reason for that 1S that it 16 a provision which relies upon the external affairs power of the Commonwealth Parliament. It was enacted to implement the Industrial Property Convention to which Australia 1S a party. For that reason, the obstacle which would prove overwhelming in relation to ss. 52 and 54 does not operate in respect of s.55. Notwithstanding that, I have grave reservations as to whether 1t would apply to the case which 15 made on the present statement of claim. The question one has to ask is whether the misrepresentations or misleading and deceptive conduct which are alleged go to the nature, the manufacturing process, the characteristics, the suitability for their purpose or the quantity of any goods. At most, there may be an argument that the question of the value or price attached to the goods may go to their characteristics but even that could face the difficulty that the price 1S not an inherent characteristic but something attached to the goods by their vendor and not part of their description. But that issue, which it is not necessary to resolve now, even 1f concluded in favour of the applicant, would not save this statement of claim. To support a claim for damages under the Trade Practices Act, the applicant must rely upon s.82 or s.87. Section 82 of the Act provides in sub-s.(1):- "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." And suh-s. (2):- "An action upder sub-secticn (1) "ay be commenced at any time within 3 years after the date on which the cause of action accrued," And (3):- "Sub-section (1) does not apply in relation to conduct done 1n contravention of section 524." It 1S apparent from that provision that the cause of action, that 1s to say, the entitlement to recover loss or damage conferred by s.82 depends upon loss or damage being suffered by conduct of another person. That 1s to say, there must be some loss or damage which 1s causally related to the conduct in question. Assuming for present purposes that the conduct of the respondents constitutes a contravention of s.55, the question is whether or not, on the face of the statement of claim, 1t could be said that any loss 1s alleged which would amount to a loss suffered by reason of that conduct. In my view, the statement of claim does not show such a loss. In fact, what 1t seems to allege is that the respondents have misrepresented the existence of a $10,000 Trojan Dome when 211 they could supply the applicant with was a $4,000 Trojan Dome. If that be the case, then the applicant has lost nothing. The particulars of loss and damage speak of the loss of an opportunity to have erected at the applicant's residence or any other 8. residence of her choice, a $10,000 Trojan None. Put 1t 316 not pleaded anywhere in the statement @f clair that there 15 suct a thing as a $10,000 Trojan Dome. The applicant therefore, cn the face of the pleading, does not show that there !s any loss which flows from the misrepresentation. Like arguments dispose of any claim for damages under s.87. It may be that there is some cause of action in contract which would give rise to a claim for damages of the kind that the applicant evidently contemplates. In saying that, I note that the entrance fee that she paid 1s not pleaded as an entrance fee which has any relationship to the offer made by the respondents. That appears to be an entrance fee that gave her access to the showgrounds. What she allegedly did in answer to the respondents' offer was to f11l out a coupon. Whether or not the filling out of the coupon and its tendering to the respondents constitutes a consideration which would support a contractual relationship in respect of the provision of a $10,000 Trojan Dome should her coupon be the winning ticket, is a question which I need not determine. It is certainly not a question which is raised on the pleadings. And 1f that be the true basis of the applicant's cause of action, then the appropriate place for 1t to be dealt with is in the District Court rather than in this Court. In my opinion, therefore, there is no cause of action shown under the Trade Practices Act by the statement of claim. ETE RIN Cre. — 9. The motion which sought to "strike cut" the application LS Migeoncelved t9 Lhe oaxatenf that 1b seeme fo confuse the roles of Q.]1 v.16 and 0.20 r.2. Nevertheless, I should, I think, treat the motion on the basis that 1t seeks in substance that the application be dismissed and was argued on that basis and I will make an order that the application be dismissed. I will hear counsel on the question of costs. I certify that this ance the preceding eight (8) pages are a true copy of the Reasons for Judgment of His Honour Justice French. Associate: Boban atyer Date: at BE MwwNU , Counsel for the Applicant: Mr M. Bateman Solicitors for the Applicant: Malcolm J. Bateman & Co. Counsel for the Respondents: Mr L. Durand Solicitors for the Respondents: Durand & Co. Date of Hearing: 23 December 1987 Date of Judgment: 24 December 1987