FEDERAL COURT OF AUSTRALIA TRADE PRACTICES - limitation of actions - running of time. PRACTICE AND PROCEDURE - strike out application - relevant test. Trade Practices Act 1974 (Cth), ss 52(1), 82 Fair Trading Act 1985 (Vict), s 11 Wrongs Act 1958 (Vict), s 24(4)(A) JamesvAustralia & New Zealand Banking Group Ltd (1986) 64 ALR 347, applied Karedis Enterprises Pty Ltdv Antoniou(1995) 59 FCR 35, applied Wardley Australia Ltdv Western Australia(1992) 175 CLR 515 at 533, applied Wickstead v Braun (1992) 30 NSWLR 1, referred to ivan alfred bennett and gaylee maree Bennett v Grandwise pty ltd (ACN 051 789 443) and phillip james Abbott grandwise pty ltd (ACN 051 789 443) and phillip james ABBOTT v WESTFIELD SHOPPING CENTRE MANAGEMENT CO (VIC) PTY LTD VG 635 OF 1996 MARSHALL J MELBOURNE 22 MAY 1998 IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VG 635 of 1996 Between ivan alfred bennett and gaylee maree Bennett applicants and: Grandwise pty ltd (ACN 051 789 443) and phillip james Abbott respondents BETWEEN: GRANDWISE PTY LTD AND PHILLIP JAMES ABBOTT CROSS CLAIMANTS AND: WESTFIELD SHOPPING CENTRE MANAGEMENT CO (VIC) PTY LTD CROSS RESpondent JUDGE: MARSHALL J DATE OF ORDER: 22 MAY 1998 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The cross respondent's notice of motion dated 29 April 1998 be dismissed. 2. The cross respondent pay the cross claimants' costs of the notice of motion. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VG 635 of 1996 Between ivan alfred bennett and gaylee maree Bennett applicants and: Grandwise pty ltd (ACN 051 789 443) and phillip james Abbott respondents BETWEEN: GRANDWISE PTY LTD AND PHILLIP JAMES ABBOTT CROSS CLAIMANT AND: WESTFIELD SHOPPING CENTRE MANAGEMENT CO (VIC) PTY LTD CROSS Respondent JUDGE: MARSHALL J DATE: 22 MAY 1998 PLACE: MELBOURNE REASONS FOR JUDGMENT The matter before the Court this morning is a notice of motion filed by the cross-respondent, Westfield Shopping Centre Management Co (Vic) Pty Ltd ("Westfield") in which an order is sought that certain paragraphs of a cross claim against Westfield made by Grandwise Pty Ltd ("Grandwise") and Phillip James Abbott be struck out on the basis that: · no reasonable cause of action is disclosed in these paragraphs of the cross claim · the claim contained in these paragraphs is "frivolous, vexatious, an abuse of process of the Court and/or has a tendency to cause prejudice, embarrassment or delay in the proceeding". The essential question for determination in the motion is whether the claims made at paragraphs 11, 12 and 13 of the cross claim are statute barred. The terms of those paragraphs of the cross claim are recited later in these reasons for judgment. BACKGROUND On 16 October 1996 the applicants, Ivan Alfred Bennett and Gayle Maree Bennett made application to this Court alleging, inter alia, contravention of s 52(1) Trade Practices Act 1974 ("TP Act") and s 11 Fair Trading Act 1985 (Vict) ("FT Act") by Grandwise and Mr Abbott and a further respondent, BB's Coffee and Croissants Australia Pty Ltd ("BB's"). The claim against BB's was subsequently discontinued. In their statement of claim the Bennetts alleged that they entered into a cafe business at Westfield Shoppingtown Airport West in reliance on certain representations ("the representations") made to them by Grandwise and Mr Abbott. The Bennetts alleged that they entered into a franchise agreement with Grandwise on 5 January 1994 by which they became entitled to operate their business. It is further alleged that Grandwise and Mr Abbott knew the Bennetts would rely on the representations and intended that they so rely. The Bennetts contend that the representations were untrue and that Grandwise and Mr Abbott did not take care in making the representations. As a consequence it is said that the Bennetts have suffered and continue to suffer loss and damage. By their defence dated 7 March 1997 Grandwise and Mr Abbott have put in issue the major aspects of the Bennetts' claims. On 27 February 1998 the respondents filed their cross-claim. In the cross claim they allege that if the Bennetts' contentions are correct then Westfield made the relevant representations. The relevant paragraphs of the cross claim sought to be struck out are set out below. Westfield is therein referred to as "the cross-respondent" and Grandwise and Mr Abbott as the first and second cross claimants respectively: "11. Further or alternatively, insofar as the representations were with respect to future matters, the Cross-Respondent had no reasonable basis for making them and the First and Second Cross-Claimants rely on Section 51A of the Trade Practices Act 1974 and/or Section 10 of the Fair Trading Act 1985. 12. Further or alternatively, Mr Kerlin of the Cross-Respondent was a servant or agent of the Cross-Respondent and the conduct referred to, namely, the making of the representations, was engaged in by him within the scope of his actual or apparent authority for the Cross-Respondent and, accordingly, his conduct is deemed, for the purposes of the Trade Practices Act 1974 and/or the Fair Trading Act 1985 to have been engaged in also by the Cross-Respondent by reason of Sections 84 and 39 respectively of those Acts. 13. Further or alternatively, in the premises, in making the representations the Cross-Respondent, in trade or commerce, has engaged in conduct that was misleading and deceptive or likely to mislead or deceive in contravention of Section 52 of the Trade Practices Act 1974 and/or Section 11 of the Fair Trading Act 1985." THE LIMITATION ISSUE In those paragraphs of the cross-claim quoted above reliance is made upon the provisions of the TP Act and the FT Act. In respect of this reliance relief is sought by way of contribution from Westfield on the basis that Westfield is liable to the Bennetts in respect of the same damage for which the Bennetts allege that Grandwise and Mr Abbott are liable. The right to claim contribution is based on Part IV of the Wrongs Act 1958 (Vict). The limitation issue for present purposes arises by virtue of section 24(4)(a) of the Wrongs Act. That provision requires a claim for contribution to be brought within the limitation period that the applicant would be subject to as if the applicant had brought the action. That period for relevant purposes is a period of the three years from when the Bennetts suffered loss and damage. See s 82(2) TP Act and s 37 FT Act. It is when loss and damage is suffered that the cause of action accrues and time relevantly begins to run: James v Australia & New Zealand Banking Group Ltd (1986) 64 ALR 347, 392, per Toohey J. Loss and damage will be found to have been suffered when the loss was reasonably "ascertainable": Karedis Enterprises Pty Ltd v Antoniou (1995) 59 FCR 35, 43, 48. That is a matter to be determined in all the circumstances of the case: Karedis at 43, 48. It is not in dispute that it is undesirable to finally determine limitation issues arising under s 82(2) of TP Act unless in the clearest of cases: Wardley Australia Ltd v Western Australia (1992) 175 CLR 514at 533. Westfield submitted that it is beyond doubt the loss suffered by the Bennetts was suffered prior to 27 March 1995, some 15 months after the franchise agreement was entered into. By 27 March 1995, it was contended by Westfield, that the disadvantageous character of the franchise agreement was reasonably ascertainable. In this regard it referred to a trading loss suffered by the Bennetts in the period to 30 June 1994. Grandwise and Mr Abbott referred the Court to paragraph 11(a) of the statement of claim which alleges that: "the Applicants' business generated sales of $5,300 per week in its first 18 months so that rental was in excess of 29 per cent of sales turnover." It is submitted that that pleading suggests that the loss may have been ascertainable no earlier than 18 months after the entry into the franchise agreement, that is, 18 months after 4 January 1994, being by 4 June 1995. The pleading, in my view, does not assist in determining when the loss was first reasonably ascertainable. Alternatively it is said by Grandwise and Mr Abbott that the Bennetts suffered loss when they realised that they had an unprofitable business. When the Bennetts first realised or should have first realised that they had an unprofitable business as a result of entering into a disadvantageous transaction is unclear to me at this stage of the proceeding. Westfield's reliance on the trading loss to 30 June 1994 and the income foregone by Mr Bennett is also not decisive of the issue. Early trading losses may be expected by any business as part and parcel of a start-up situation. As Grandwise and Mr Abbott contended, it is for Westfield to demonstrate when the Bennetts suffered loss or should be said to have reasonably been considered as suffering loss. I am not satisfied that it has done so with the certainty and confidence required to strike out the relevant pleadings based on the principles discussed in Webster v Lampard (1993) 177 CLR 598. In that regard see Foodco Group Pty Ltd v Northgan Pty Ltd (Marshall J, 21 May 1998, unreported) . I also find to be apposite the observations of Kirby P (as he then was) in Wickstead v Braun (1992) 30 NSWLR 1 at 5 where his Honour said: "Common experience teaches us that it is usually more efficient and just to consider the viability of a cause of action when the facts said to support it are adduced and the suggested cause of action can be judged with a full understanding of all relevant evidence. Testimony adds colour and content to the application and development of legal principle." I am not satisfied that this matter involves a clear case for the striking out of the relevant pleadings, especially having regard to the "heavy onus" on those seeking to summarily strike out a proceeding or part thereof. See Crayford Freight Services Ltd v Coral Seatel Navigation Co (Full Court, 26 March 1998, unreported). ORDERS In the circumstances the Court will make the following orders: 1. The cross respondent's notice of motion dated 29 April 1998 be dismissed. 2. The cross respondent pay the cross claimants' costs of the notice of motion. I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall Associate: Dated: 22 May 1998 Counsel for the Cross Claimants: Mr P G Cawthorn Solicitor for the Cross Claimants: Minter Ellison Counsel for the Cross Respondent Mr A A Monichino Solicitor for the Cross Respondent: Cornwall Stodart Date of Hearing: 22 May 1998 Date of Judgment: 22 May 1998 (Ex tempore)