FEDERAL COURT OF AUSTRALIA Pipe Couplings Australasia Pty Ltd v Nissho Iwai Australia Ltd [1999] FCA 910 PRACTICE & PROCEDURE – defective pleading – whether statement of claim fails to disclose cause of action – failure to provide further and better particulars. Trade Practices Act 1974 (Cth) s 52 Federal Court Rules O 10 r 7, O 11 r 16 Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Ltd (1998) ATPR ¶41-633 referred to Mitanis v Pioneer Concrete (Vic) Pty Ltd (1997) ATPR ¶41-591 at 44,151-3 applied PIPE COUPLINGS AUSTRALASIA PTY LTD (ACN 001 298 906) v NISSHO IWAI AUSTRALIA LTD (ACN 000 213 132) V 147 of 1999 WEINBERG J 17 JUNE 1999 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 147 of 1999 BETWEEN: PIPE COUPLINGS AUSTRALASIA PTY LTD (ACN 001 298 906) Applicant AND: NISSHO IWAI AUSTRALIA LTD (ACN 000 213 132) Respondent JUDGE: WEINBERG J DATE OF ORDER: 17 JUNE 1999 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The applicant's statement of claim dated 31 March 1999 be struck out. 2. The applicant be granted liberty to file and serve a fresh statement of claim on or before 8 July 1999 failing which the application will stand dismissed. 3. The applicant pay the respondent's costs of and incidental to the notice of motion dated 11 June 1999. 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 V 147 of 1999 BETWEEN: PIPE COUPLINGS AUSTRALASIA PTY LTD (ACN 001 298 906) Applicant AND: NISSHO IWAI AUSTRALIA LTD (ACN 000 213 132) Respondent JUDGE: WEINBERG J DATE: 17 JUNE 1999 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 There is before the court a motion, notice of which was given on 11 June 1999, by which the respondent seeks orders that the applicant's application and statement of claim be struck out. In the alternative, the respondent seeks orders that pars 13 to 30 of that statement of claim be struck out, and that unless by 1 July 1999 the applicant provides answers to the further and better particulars previously requested by the respondent, judgment be entered in favour of the respondent. 2 The applicant commenced proceedings in this Court by application filed on 31 March 1999. In the statement of claim which accompanied that application, the applicant sought to plead several of causes of action against the respondent. Paragraphs 3 to 12 of the statement of claim set out a series of representations said to have been made to the applicant by the respondent prior to their having entered into a deed of release and settlement ("the settlement deed") dated 20 November 1996. 3 In substance, it is contended that the respondent represented to the applicant, prior to entering into the settlement deed, that it had entered into an agreement with Leighton Contractors Pty Ltd to pursue against VicRoads "a claim for latent conditions" with respect to the contract between Leighton Contractors Pty Ltd and the respondent, for what was described as "the Gardeners Creek Project". The representations were said to be oral, and to be contained in discussions between certain named individuals. The settlement deed provided for the respondent to pay to the applicant 25 per cent of any monies received by it from Leighton Contractors Pty Ltd arising out of the claim to be made against VicRoads, apart from the first $120,000 so recovered. 4 There was said to be an implied term under the settlement deed that the respondent would pursue the claim against VicRoads with due diligence and that it would account fully and properly to the applicant in respect of that claim. It was then pleaded that the respondent was under a fiduciary duty to the applicant in connection with its pursuit of the claim. 5 It was pleaded that Leighton Contractors Pty Ltd had, indeed, made a claim on VicRoads relating to the latent conditions of the Gardeners Creek project, but that the claim had been rejected, with the result, so the respondent said, that no amount was payable by the respondent to the applicant under the settlement deed. 6 It was alleged that a general settlement deed encompassing all claims made by Leighton Contractors Pty Ltd, including the latent conditions claim, was entered into between Leighton Contractors Pty Ltd and VicRoads. That settlement did not, however, apportion payment by VicRoads against specific heads of claim made by Leighton Contractors Pty Ltd. Finally, in relation to this aspect of the claim, the applicant pleaded that the respondent wrongfully, and in breach of its fiduciary duty, failed to pursue, or properly to pursue, the latent conditions claim with all due diligence, that it preferred its own interests to the interests of the applicant in the pursuit of this claim, and that it failed to account to the applicant in respect of the settlement of the claim. 7 It was said that full particulars of the claim for breach of fiduciary duty would be provided after discovery and inspection. In relation to the loss and damage which the applicant claims to have suffered, it was said that full particulars would be provided 'after discovery and interrogation'. 8 The statement of claim then pleaded in pars 13 and 14 what must be the barest claim imaginable of breach of s 52 of the Trade Practices Act 1974 (Cth) ("the Act"). It was said that "by reason of the matters referred to in paragraphs 4, 8, 9 and 10 above", none of which set out facts which give rise to a claim under s 52 of the Act, the respondent, through its servants or agents, had been engaged in conduct in trade and commerce that was (a) misleading and/or deceptive, (b) likely to mislead and/or deceive, and that the applicant had suffered loss and damage. That is the entire pleading relating to this cause of action. 9 Once again, the statement of claim then pleaded that full particulars would be provided after discovery, and on this occasion, "interrogation". 10 Finally the applicant pleaded what appears to be a series of claims based upon certain designated contracts. These claims typically take the following form: "15. By Contract No 9622 between the applicant and the respondent, the applicant agreed to supply [particular services]. 16. Wrongfully, the respondent has failed to release retention monies totalling $35,934.50 in respect to Contract No 9622." 11 There then follow two paragraphs in which it was pleaded that on 22 April 1997 a letter of demand relating to this sum was sent by the applicant to the respondent but that the respondent had failed, refused or neglected to pay it or any part thereof, by reason of which the applicant suffered loss and damage. The applicant claimed damages pursuant to these paragraphs. 12 On 8 April 1999 the applicant filed an amended application which corrected an error made in the description of its own name as originally set out in the application of 31 March 1999. Nothing turns upon that amended application. 13 The respondent filed an appearance on 21 April 1999. On that same date I made orders by consent at a directions hearing to the effect that the respondent was to request any further and better particulars of the statement of claim on or before 5 May 1999, and the applicant was to provide answers to any such request for further and better particulars on or before 19 May 1999. The directions hearing was adjourned to 9 am on 17 June 1999. 14 On 5 May 1999, in accordance with my orders of 21 April 1999, a letter requesting further and better particulars was sent by the respondent's solicitors to the solicitors for the applicant. The particulars requested related specifically to pars 3 to 12 of the statement of claim. 15 The respondent's solicitors sought copies of documents to which reference was made in the statement of claim. These included documents which were obviously of central importance such as the settlement deed of 20 November 1996. They also sought particulars of discussions and telephone conversations which were referred to at large in the pleading, and particulars of the facts giving rise to the alleged breach of fiduciary duty, and to the loss and damage said to have been sustained. 16 It was not disputed before me that the request for further and better particulars made on behalf of the respondents was a perfectly proper request, and was entirely justified. 17 In the same letter which contained the request, the respondent's solicitors indicated that in their view pars 13 to 30 of the statement of claim did not disclose any cause of action. Detailed justifications were advanced in support of that contention. The applicant was invited to amend its statement of claim to rectify what were said to be the deficiencies in its pleading. It was informed that a failure to do so would lead to an application being made to the Court to have these paragraphs struck out. 18 The applicant's solicitors chose to ignore this request for further and better particulars. No such particulars were provided by 19 May 1999, in direct contravention of my orders of 21 April 1999. They ignored also the intimation that the statement of claim was pleaded in a defective manner. On 20 May 1999 the solicitors for the respondent wrote a second time to the solicitors for the applicant. They again requested further and better particulars of the statement of claim. They also asked to be informed as to what course the applicant proposed to adopt in relation to pars 13 to 30 of the statement of claim. 19 That letter produced the following response dated 24 May 1999 from the solicitors for the applicants: "We acknowledge receipt of your letter of 20 May 1999. We are currently consulting with counsel who will be advising us shortly with regard thereto." 20 Nothing further of any consequence has been heard from the applicant's solicitors since that date in relation to these matters. That prompted the respondents to bring on their notice of motion dated 11 June 1999. 21 When the matter was called on this morning for directions, and for the hearing of the respondent's notice of motion, the applicant was represented by Mr McCaffrey of counsel. He informed me that he had been retained in this matter about five minutes earlier, having been telephoned by Mr Watts of counsel, from what appeared to be a mobile or car phone, who asked him to attend on behalf of the applicant. Mr McCaffrey did not seek an adjournment of the hearing. He simply acknowledged what was obvious, namely that the applicant had been delinquent in failing to provide the further and better particulars sought by the respondent. He indicated that the applicant would rectify that matter by the end of next week. 22 Mr McCaffrey indicated further that he had not had an opportunity to prepare any submissions in relation to the alleged defects in the statement of claim which he had not, to that point, read. 23 Mr Long, who appeared on behalf of the respondent, provided me with a helpful and comprehensive written submission, and references to various authorities. He submitted that the motion should be allowed, and that I should strike out the statement of claim in its entirety. Alternatively, I should at least strike out pars 13 to 30. 24 In my view it is clear that pars 13 to 30 fail to disclose any cause of action. They should in accordance with O 11 r 16 of the Federal Court Rules be struck out. 25 Paragraphs 13 and 14 do not approach, even remotely, the requirements of pleading a cause of action under section 52 of the Act. Those requirements are set out by Foster J in Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Ltd (1998) ATPR ¶41-633. There is in pars 13 and 14 nothing like the precision or clarity which his Honour identified as being necessary to ground such a claim. It is not sufficient for an applicant who relies upon s 52 of the Act merely to seek to incorporate by reference a number of designated paragraphs in the statement of claim, when those paragraphs fail to plead properly, or at all, the facts necessary to give rise to a claim under that section. Paragraphs "4, 8, 9 and 10" were drawn with a view to pleading a different cause of action, namely breach of fiduciary duty. They cannot be made to do the work which was sought of them. 26 To identify a series of representations said to have been made, and to plead in a conclusory way the terms of section 52, is not calculated to serve any of the proper functions of pleading a cause of action. 27 The contract claims are, in my view, pleaded in an equally deficient manner. Nowhere are the terms of any of the agreements relied upon pleaded. Nowhere is it pleaded that the applicant performed its part of the bargain. I adopt, with respect, the statements of general principle enunciated by Goldberg J in Mitanis v Pioneer Concrete (Vic) Pty Ltd (1997) ATPR ¶41-591 at 44,151-3. I adopt in particular his Honour's reminder that pleadings occupy an important role in present day litigation, notwithstanding the flexibility of case management principles. They are not to be treated as pedantry, or mere formalism. 28 As regards pars 2 to 12 of the statement of claim, it is clear that the request for further and better particulars which the respondent made on 5 May 1999 was eminently reasonable. That request has been virtually ignored by the solicitors acting for the applicant, in direct contravention of an order of this Court. Even this morning no explanation was forthcoming as to why the further and better particulars had not been provided. It is obvious that the respondent cannot be expected to plead to the very general assertions made in pars 2 to 12 without those particulars being provided. 29 The applicant's failure to provide the particulars sought is to my mind quite inexcusable. The respondent has been prevented from pleading to a statement of claim which makes serious allegations against it. The entire application has been held up, and significant delay has been occasioned by reason of the applicant's failure to do what it was ordered to do. 30 Under O 10 r 7 of the Rules this Court has the power to strike out so much of the statement of claim as has not been particularised by reason of the applicant's failure to comply with the orders of the Court. The discourtesy with which the respondent's solicitors have been treated, by having their reasonable requests ignored, and the failure of the applicant's solicitors to comply with the clear and definite orders of this Court, make it appropriate that I exercise that power in relation to pars 2 to 12 of the statement of claim. I do so conscious of the fact that pars 13 to 30 are also to be struck out as disclosing no cause of action. 31 After some hesitation, I have come to the view that it is not appropriate, at this stage, to strike out or dismiss the application in its entirety. I will grant liberty to the applicant to file a fresh statement of claim within 21 days of this date. I propose to make a self-executing order to the effect that in the event that no such fresh statement of claim is filed within the 21 days specified for that purpose, the application will stand dismissed. 32 There is no doubt in my mind that the respondent should have the costs of its motion. I have given careful consideration to the various submissions which have been put before me as to the basis upon which those costs should be ordered, and whether any third party, by which I mean any of the applicant's legal representatives, should be required to pay those costs. 33 I have come to the conclusion, though again not without some hesitation, that there is no warrant in the particular circumstances of this case for departing from the general principle that costs are to be awarded on a party and party basis. They must be paid by the applicant, though I note Mr Watt's offer to pay those costs, or at least set them off against monies owing to him. I will order that the applicant pay the respondent's costs of this notice of motion on a party and party basis. I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg. Associate: Dated: 17 June 1999 Counsel for the Applicant: Mr LMF Watts and Mr P McCaffrey Solicitors for the Applicant: Issac Brott and Co Counsel for the Respondent: Mr NSG Long Solicitors for the Respondent: Anderson Legal Date of Hearing: 17 June 1999 Date of Judgment: 17 June 1999