JUDGMENT Mr. SRT om IN THE FEDERAL COURT Perea Aent TT) LIMITED DISTRIBUTION OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION No. WAG 89 of 1987 BETWEEN: LORENZO CASSISI and FELICE CASSISI Applicants and C.F.C. HOLDINGS PTY LTD Respondent and C.F.C. HOLDINGS PTY Cross—Claimant and CENTURION TRANSPORT Cross—Respondent MINUTE OF ORDER JUDGE MAKING ORDER: FRENCH J. DATE OF ORDER: 29 APRIL 1988 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The motion will be dismissed. LTD co. PTY LTD 2. The respondent is to pay the applicants' costs of motion save for those incurred at the appearance on April 1988. Note: Settlement and entry of orders Order 36 of the Federal Court Rules. is dealt with the in IN THE FEDERAL COURT LIMITED DISTRIBUTION OF AUSTRALIA ) ) WESTERN AUSTRALIA ) ) ) DISTRICT REGISTRY GENERAL DIVISION No. WAG 89 of 1987 BETWEEN: LORENZO CASSISI and FELICE CASSISI Applicants and C.F.C. HOLDINGS PTY LTD Respondent and C.F.C. HOLDINGS PTY LTD Cross—Claimant and CENTURION TRANSPORT CO. PTY LTD Cross—Respondent CORAM: FRENCH J. 29 April 1988 EX TEMPORE REASONS FOR JUDGMENT This is a motion brought by the respondent for an order that the amended statement of claim in these proceedings be struck out. The motion, it would appear, is brought under 0.11 1.16, which 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 2. (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 general principles which govern the discretion conferred on the Court by r.16 are well established. And, pursuant to those principles, the power to strike out a pleading is to be exercised sparingly and only in those cases where the case of the pleader is shown to be so clearly untenable that 1t could not possibly succeed. The statement of claim, in substance, asserts that the applicants were induced to enter into a lease agreement with Esanda in respect of a 1984 Mack R612 prime mover which was' to be sold to Esanda by the respondent. The position is the familiar one of the prospective "purchaser" of the truck arranging with the dealer or vendor that the truck will be sold to a finance company who will then lease it back to him. His position at the end of such transaction is that of lessee of the truck. Complaints are made in the statement of claim that the respondent induced the applicants to enter into their lease agreement with Esanda by "representations and warranties", namely, that the truck had a 1984 Mack R612 prime mover engine, had been rebuilt with brand new parts, had a brand new motor, gearbox, bogie drive differential and sleeper box. It is said that these repesentations were not true. Further, it is alleged that' the truck broke down and required repair from time to time and that, 3. as a result, the applicants lost earnings, incurred repair costs and were unable to keep up their payments with Esanda in respect of the lease and two associated agreements. The respondent attacks the statement of claim, firstly, because it does not expressly plead that it actually supplied the truck to Esanda. That, as counsel for the respondent concedes, is a minor point and it is clear enough from the pleadings that' the important elements of the transaction are the sale to Esanda and the lease back to the applicants. Supply to Esanda is not a necessary part of any cause of action relied upon in this case and so the point made in respect of para.5 of the amended statement of claim fails. The respondent goes on to attack para.7 of the amended statement of claim which alleges the pre-contractual statements said to have induced the applicants to enter into the arrangement. These are pleaded as representations and warranties. Looking to the language of para. 7, it begins:- "In order to induce the Applicants to enter into a lease agreement with Esanda the Respondent by its officer or employee represented to the first-named Applicant expressly or by necessary implication and in consideration of the Applicants entering into the lease agreement warranted that the truck to be supplied to Esanda was: (a) a 1984 Mack R612 Prime Mover Engine Number ETAZV6735P0285 Registration No. 7BY 020; 4. (b) fully rebuilt using brand new parts, with a_ brand new motor, gear box, bogie drive differential and new sleeper box." Particulars of the representations follow. The respondent complains that here is a plea of a warranty. But it cannot be a warranty which is imported as a condition of the contract between the respondent and Esanda, for no breach of that contract 1s alleged and the applicants are not privy to it. The respondent says that if what is alleged is a collateral contract, that ought to be stated clearly. It may well be that a more explicit pleading would have made clear that the applicants rely, inter alia, upon a collateral contract between themselves and the respondent; that is to say, a contract collateral to the lease agreement between the applicants and Esanda. But I think, upon an examination of the language of para.7, that the assertion that the warranty was given in consideration of the applicants entering into the lease agreement is probably sufficient as a pleading of fact to support' the argument that there was a collateral contract formed. For that reason I would not regard para. 7 as embarrassing. It could have been pleaded with greater clarity and, at the end of the day, the applicants will have to sort out just what elements of the damages they plead are claimed in respect of the breach of the collateral 5. contract arising out of the falsification of the representations or warranties. Paragraphs 8 and 9 are consequential upon 7. Paragraph 13, which was initially attacked in written submissions tendered by the respondents, is no longer pursued, nor is 14. However, in respect of para.15 the statement of claim says:- "Further, at all material times the Respondent was under a duty of care to the Applicants to ensure that the truck was of merchantable quality and fit for the purpose for which it was intended to be used." Particulars then follow of the factual matters from which the duty of care is said to arise. Mr Goldfinch, for the respondent, submits that the existence of a duty of care in these circumstances is foreclosed by authority. He was unable to cite any authority directly binding on me to that effect and I am not satisfied that the point is so clearly untenable that it should be struck out. That is not to say that it has received at this stage any judicial imprimatur but only that it does not fall within' the general criteria to be met for striking out part of a pleading. So the attack on para.15 must fail. Paragraph 19 was assailed for failing to make _ the appropriate causal connection between the misleading and deceptive conduct pleaded and said to be constituted by the representation 6. alleged in para.7 and the subsequent loss and damage. Again, although I do not consider the pleading is a model in that respect, there is sufficient, by way of the factual material asserted in the amended statement of claim, to enable the respondent to see the way in which the applicants claim that they have suffered loss and damage as a result of the representations and having been induced to enter into the lease agreement. Whether that will, at the end of the day, be recoverable under s.82 is a matter which is not foreclosed by any decision I now make. I simply say that the amended statement of claim in that respect is not so untenable as to warrant striking out. And the same is true of the pleading of consequential damage. That does seem, on the face of it, somewhat remote from the causes of action under the Trade Practices Act and at common law but, again, I cannot say that, after all the evidence is in, the applicants will be unable to make the relevant connection if liability be established between those alleged losses and one or other of the causes of action which are pleaded. For those reasons, in my opinion, the motion fails and must be dismissed. The motion will be dismissed. The respondent is to pay the applicants' costs of the motion save for those incurred at the appearance on 27 April. I have already made an order that those costs were to be paid by the applicants in any event. 7. I certify that the preceding six (6) pages are a true copy of the Ex tempore Reasons for Judgment of his Honour Justice French. Associate: QDelsal. Ui Date: 24 rend \ASd Counsel for the Applicants: Ms. T. Sweeney Solicitors for the Applicants: Messrs. Robinson Cox Counsel for the Respondent, Cross—-Claimant Cross—Respondent: Mr A.J. Goldfinch Solicitors for the Respondent, Cross-Claimant Cross-Respondent: Messrs. Warren Harrison Date of Hearing: 29 April 1988 Date of Judgment: 29 April 1988 and and