Arms v WSA Online Ltd (ACN 081 121 495) [2003] FCA 835

FEDERAL COURT OF AUSTRALIA

Arms v WSA Online Ltd (ACN 081 121 495) [2003] FCA 835 SIMON ARMS v WSA ONLINE LIMITED (ACN 081 121 495), JAMES HOUGHTON and JAMES STUDENT V 228 of 2001 RYAN J 8 AUGUST 2003 MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY V 228 of 2001

BETWEEN: SIMON ARMS

Applicant

AND: WSA ONLINE LIMITED (ACN 081 121 495)

First Respondent

JAMES HOUGHTON

Second Respondent

JAMES STUDENT

Third Respondent

JUDGE: RYAN J

DATE OF ORDER: 8 AUGUST 2003

WHERE MADE: MELBOURNE

THE COURT ORDERS THAT: 1. The applicant have leave to file and serve by 29 August 2003 an amended statement of claim. 2. The second respondent's motion on notice dated 11 April 2003 stand over to 24 September 2003 at 9.30 am. 3. The directions hearing herein be adjourned to 24 September 2003 at 9.30 am. 4. The respondents' costs thrown away as a result of the amendment made pursuant to paragraph 1 of this Order and the costs of the applicant and the second respondent of the hearing on 16 May 2003 be reserved.

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 228 of 2001

BETWEEN: SIMON ARMS

Applicant

AND: WSA ONLINE LIMITED (ACN 081 121 495)

First Respondent

JAMES HOUGHTON

Second Respondent

JAMES STUDENT

Third Respondent

JUDGE: RYAN J

DATE: 8 AUGUST 2003

PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 This case concerns the applicant's attempt to establish an internet business which was to allow individuals to purchase wines, directly over the internet, from various producers. Crucial to its success was the operation of a credit card payment system for purchases made on the applicant's website. The first respondent ("WSA") was engaged to create the website and the second and third respondents were employees of WSA who are alleged to have met with the applicant and to have made various representations in the course of WSA's retainer. In essence, the applicant claims that he was induced to enter into an agreement for the creation of the website by various false or misleading representation made by the respondents, particularly representations as to both the suitability for his purposes of an ANZ Bank internet credit card payment facility and the manner in which that ANZ product would operate. The applicant alleges that the respondents told him that the ANZ internet credit card payment facility would allow purchasers to make credit card payments via the internet site, whereby funds would be credited directly to the bank accounts of each winery supplying the wine which would only have to fill out a form to be included in this system. The applicant contends that, in the result, the system could not remit funds to a winery unless the winery had been individually approved by each credit card provider and, as a consequence, funds had to be remitted to the applicant, thereby incurring delay and higher transactional costs which adversely affected his internet business. 2 The second respondent has moved for summary dismissal of the action against him, or orders that various parts of the statement of claim charging him be struck out. On a motion of this kind several principles have to be borne in mind. As Weinberg J said in McKellar v Container Terminal Management Services Ltd (No 2) [2000] FCA 1608 at [67]; 'The principles which govern the operation of O 20 r 2 of the Rules are explained in Dey v Victorian Railways Commissioners (1949) 78 CLR 62 and in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125. A summary order which prevents a party from pursuing a claim according to the ordinary course of procedure should be made only in a very clear case. The power should be exercised with great caution, and only when it is clear that there is no real question to be tried. The case must be clearly untenable, and not merely a claim that will very probably fail.' Mansfield J in BWK Elders (Australia) Pty Ltd v Westgate Wool Company Pty Ltd[2002] FCA 87 at [3], made this useful observation about the function of pleadings; 'The purpose of pleadings is to define the issues so that the parties may know in advance of the hearing the case they have to meet. That enables them to prepare fairly and efficiently for the trial. It also enables the trial to be conducted sensibly and efficiently and to be properly controlled: see generally Dare v Pulham (1982) 148 CLR 658 at 664; Council for the City of the Gold Coast v Pioneer Concrete (Qld) Pty Ltd (1998) 157 ALR 135. The pleadings must disclose a reasonable cause of action by alleging material facts which, if established at the trial, will enable the applicant to make out all elements of the cause or causes of action. They must also contain sufficient particularity to inform the opposing party of the case which is to be met.' The second respondent has not identified the provisions of the Rules of this Court under which it contends that the present motion should be considered. However, I presume that he invokes O 20 r 2 or O 11 r 16 on the ground that the statement of claim discloses no reasonable cause of action. In any event, on a motion to strike out, the case should be considered solely on the basis of the pleadings: Dey v Victorian Railways Commission (1949) 78 CLR 62 at 109. Although the second respondent has argued that the affidavits filed on behalf of the applicant do not support elements of the statement of claim, that is irrelevant to whether the statement of claim should be struck out as failing to disclose a cause of action. No order has been made requiring the applicant to file affidavits substantiating any cause of action said to be disclosed by the statement of claim. I shall therefore confine my consideration to the pleading.