FEDERAL COURT OF AUSTRALIA Mobileworld Operating Pty Ltd (ACN 090 451 433) v Telstra Corporation Limited (ACN 051 775 556) & Ors [2005] FCA 292 PRACTICE AND PROCEDURE – Pleading – Application to strike out certain paragraphs of Statement of Claim – Cross-application for leave to further amend – Whether reasonable cause of action disclosed – Whether parts of pleading embarrassing. FEDERAL COURT OF AUSTRALIA – Jurisdiction to strike out discretionary - Ordering further particulars and allowing proposed amendments an alternative to striking out. COLLATERAL CONTRACT – Whether an inconsistency between terms of collateral contract and main contract rendered a claim untenable. TRADE PRACTICES – Causation – Whether allegations pleaded properly. Federal Court Rules, O 11 r 16, O12 r 5, O 13 r 2(1) and O 20 r 2(1) Trade Practices Act 1974 (Cth), ss 51A, 52, 82 and 87 Australian Competition and Consumer Commission v Golden West Network Pty Ltd and Ors [1997] FCA 792 referred to Beach Petroleum N.L. and Another v Johnson and Others (1991) 105 ALR 456 referred to Bond Corporation Pty Ltd v Thiess (1987) 14 FCR 215 referred to B.P. Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 referred to March v Stramare (E. & M. H.) Pty Ltd (1991) 171 CLR 506 referred to Dare v Pulham (1982) 148 CLR 658 referred to De Lassalle v Guildford [1901] 2 KB 215 referred to Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 considered Dey v Victorian Railways Commissioners (1949) 78 CLR 62 followed Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 211 ALR 101 referred to Ford Motor Company of Australia Ltd v Arrowcrest Group Pty Ltd (2003) 134 FCR 522 referred to General Steel Industries Inc v Commissioner for Railways (N.S.W.) and Ors (1964) 112 CLR 125 followed Henville v Walker (2001) 206 CLR 459 referred to Heilbut, Symons & Co v Buckleton [1913] AC 30 referred to Hodges and Anor v State of New South Wales and Anor (1987-88) 77 ALR 1 referred to Hoyt's Proprietary Ltd v Spencer (1919) 27 CLR 133 considered J.J. Savage& Sons v Blakney (1970) 119 CLR 435 referred to Kirela Pty Ltd v Westfield Holdings Ltd [2002] FCA 1223 referred to McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409 referred to Marks v GIO Australia Holdings (1998) 196 CLR 494 referred to Marks v Hunt Bros (Sydney) Pty Ltd [1958] SR (NSW) 380 referred to Maybury v Atlantic Union Oil Co. Ltd (1953) 89 CLR 507 referred to Mitanis v Pioneer Concrete (Vic) Pty Ltd [1997] ATPR 44, 147 (41-591) referred to Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd [1996] ATPR 42, 677 (41-522) referred to Murphy v Overton Investments Pty Ltd [2004] HCA 3 referred to Pioneer Electronics Australia Pty Ltd v Edge Technology Pty Ltd [1999] FCA 142 referred to L'Estrange v F. Graucob Ltd[1934] 2 KB 394 referred to Telstra Corporation Ltd v Bos (unreported) 18 June 1996 (Sup. Ct. Vic) referred to Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 211 ALR 342 considered Trade Practices Commission v Pioneer Concrete (QLD) Pty Ltd and Others (1994) 52 FCR 164 followed Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 referred to Yorke v Lucas (1985) 158 CLR 661 referred to MOBILEWORLD OPERATING PTY LTD (ACN 090 451 433) v TELSTRA CORPORATION LIMITED (ACN 041 775 556) & ORS CRENNAN J 23 MARCH 2005 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V620 OF 2004 BETWEEN: MOBILEWORLD OPERATING PTY LTD (ACN 090 451 433) APPLICANT AND: TELSTRA CORPORATION LIMITED (ACN 051 775 556) FIRST RESPONDENT DAVID KENNETH HUNTER MOFFATT SECOND RESPONDENT EDWARD NOEL PRETTY THIRD RESPONDENT JUDGE: CRENNAN J. DATE OF ORDER: 23 MARCH 2005 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. Leave be granted to the applicant to file and serve, on or before 20 April 2005, a further amended statement of claim in accordance with the proposed statement of claim filed on 8 December 2004 and in accordance with these reasons, including further and better particulars of paragraphs 20(D), 22, 33 and 70. 2. The applicant is to file and serve further and better particulars of paragraph 29 of the further amended statement of claim in accordance with these reasons within twenty-eight days of completion of inspection by the applicant of documents discovered by the respondents. 3. The respondents' motion dated 15 September 2004 be adjourned with leave to reinstitute the motion on three days notice. 4. The costs of the respondents' motion be reserved. 5. The respondents' costs occasioned by and thrown away by the amendments be paid by the applicant and the costs of the applicant's motion dated 22 September 2004 be reserved. 6. General liberty to apply, on three days notice, is 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 V620 OF 2004 BETWEEN: MOBILEWORLD OPERATING PTY LTD (ACN 090 451 433) APPLICANT AND: TELSTRA CORPORATION LIMITED (ACN 051 775 556) FIRST RESPONDENT DAVID KENNETH HUNTER MOFFATT SECOND RESPONDENT EDWARD NOEL PRETTY THIRD RESPONDENT JUDGE: CRENNAN J. DATE: 23 MARCH 2005 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 The respondents to the original application applied by notice of motion dated 15 September 2004 for an order pursuant to O 11 r 16 of the Federal Court Rules that paras 19, 20, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 36(b)-(d), 39, 40, 41,42, 45, 46, 47, 48, 49, 50, 51, 52, 53, 65, 66, 67, 68, 69, 70, 71 and 72 of the originating statement of claim be struck out. The statement of claim was filed on 13 May 2004, a defence and cross-claim was filed on 30 July 2004 and the applicant's reply and defence to the cross-claim was filed on 9 August 2004. The applicant applied for leave to file and serve an amended statement of claim by notice of motion dated 22 September 2004. 2 Both notices of motion were set down for hearing on 7 December 2004. At the hearing the applicant produced a proposed further amended statement of claim which formed the basis of submissions at the hearing. The respondents no longer pressed to strike out paras 19, 23, 36(b)-(d), 39, 40, 41, 46, 65 and 66. Following the hearing and pursuant to directions given by the Court the applicant filed a further proposed amended statement of claim on 8 December 2004. This latest version is the version for the purposes of the determination of the two notices of motion. The respondents pressed their opposition to the grant of leave to amend paras 20, 22, 24(a) and (b), 25, 29, 31, 32, 33, 34, 43, 44, 48(a), 49, 60, 61, 67, 68, 69, 70 and 72. These paragraphs covered claims of collateral contract, implied terms and conduct said to be misleading and deceptive or likely to be under the provision of the Trade Practices Act 1974 (Cth) ('the TPA'). The pleadings 3 The statement of claim in its present form contains 84 paragraphs and is 39 pages long. It has eleven (11) confidential annexures. The applicant claims damages primarily based on ss 52 and 53(g) and seeks relief under ss 82 and 87 of the TPA and also under accrued jurisdiction for breach of contract. The application contains some 21 claims for relief seeking various declaratory and injunctive orders and another 14 claims for relief seeking various, and sometimes alternative, orders for repayment, damages and compensation. The complaints arise from dealings where the applicant carried on business as the owner and operator of a mobile phone dealership selling mobile phone connections to the first respondent's mobile telecommunications service and related telephony services. A dealership agreement between them was executed on 10 January 2003 and varied in writing signed by both parties on 31 January 2003 ('2003 Agreement'). There were several prior dealership agreements, including one executed in February 2002 ('2002 Agreement'). It seems a dispute arose between the applicant and the first respondent in relation to the operation of both the 2002 and the 2003 Agreements. The second and third respondents are admitted to be employees of the first respondent. 4 There are eight main claims contained in the statement of claim. It is sufficient for present purposes to summarise the applicant's claims as follows: (i) it is claimed as against the first respondent that it represented and warranted that it would not enforce certain terms relating to the applicant's remuneration contained in the 2003 Agreement ('the First Representation'). The applicant claims that in making the First Representation the first respondent engaged in conduct that was misleading and deceptive or likely to mislead or deceive in contravention of s 52 of the TPA. The applicant claims that it suffered loss and damage as a consequence of the first respondent's representation and warranty. Further, and/or in the alternative the applicant claims that the first respondent breached a collateral contract and warranty to the 2003 Agreement constituted by the First Representation; (ii) it is claimed that the second respondent was a person involved in each of the contraventions of ss 52 and 53 of the TPA by the first respondent; (iii) further, or in the alternative, it is claimed that the first respondent by its conduct or failure to act breached certain express and implied terms of the 2003 Agreement; (iv) it is alleged that the first respondent made a further representation (the 'Second Representation') to induce the applicant to spend additional sums on advertising in the belief that the first respondent would contribute to the cost of that additional advertising. The applicant claims in relation to the Second Representation that as it relates to future events the applicant will invoke s 51A of the TPA and that the first respondent engaged in conduct in contravention of ss 52 and 53(g) of the TPA; (v) it is claimed that the first respondent breached the terms of a further agreement referred to as the January 2003 Co-Op Agreement by failing to pay certain sums to the applicant; (vi) it is alleged that the first respondent wrongfully demanded that the applicant repay certain sums, which it alleged had been overpaid under the 2003 Agreement and an agreement made in 2002. Further to that claim, the applicant also claimed that by sending a letter of demand for repayment of those monies the first respondent was in breach of s 52 and, or in the alternative, of s 53(g) of the TPA; (vii) it is claimed that the third respondent was a person involved in each of the contraventions of the TPA by the first respondent; and (viii) finally, it is claimed that the first respondent breached an agreement referred to as the Business Systems Agreement. Further, or in the alternative to that claim, the applicant claims that the first respondent made certain representations and warranties to induce the applicant to enter into a Business Systems Agreement. The applicant claims that, insofar as the making of those representations and warranties relates to future conduct it will rely on s 51A of the TPA, and further, in making those representations and warranties the first respondent breached s 52 of the TPA. Established principles 5 The standards of persuasion, which the respondents would ordinarily need to meet in order to succeed in striking out parts of a statement of claim are well established and are not in contention. The jurisdiction of the court to dismiss a claim upon the basis that it discloses no reasonable cause of action is to be sparingly invoked: Dey v Victorian Railways Commissioners (1949) 78 CLR 62 ('Dey'); General Steel Industries Inc v Commissioner for Railways (N.S.W.) and Ors (1964) 112 CLR 125 ('General Steel'). 6 In Dey, Dixon J (as he then was) stated at 91: 'A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.' 7 In General Steel, Barwick CJ at 129 summarised various expressions of the test to be applied: '"so obviously untenable that it(the claim) cannot possibly succeed"; "manifestly groundless"; "so manifestly faulty that (the claim)does not admit of argument"; "discloses a case which the Court is satisfied cannot succeed"; "under no possibility can there be a good cause of action"; "be manifest that to allow them" (the pleadings) "to stand would involve useless expense".' 8 There are numerous reported cases of the Federal Court relying on those principles which have been applied both when applications to strike out have been refused and when they have succeeded: see for example, McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409 (Weinberg J). Applicable rules in the Federal Court 9 Pleadings in the Federal Court are governed by O 11 of the Federal Court Rules ('Rules') which provides relevantly: '1. . . . 2. Subject to these Rules- (a) a pleading of a party shall contain, and contain only, a statement in a summary form of the material facts on which the party relies, but not the evidence by which those facts are to be proved; and (b) paragraph (a) has effect subject to this Order and to Order 4 (which relates to commencement of proceedings) and to Order 12 (which relates to particulars). 3. . . . 4. . . . 5. . . . 6. . . . 7. . . . 8(1) A party shall not in any pleading make an allegation of fact, or raise any ground or claim, inconsistent with a previous current pleading of his. 8(2) Sub‑rule (1) does not affect the right of a party to make allegations of fact, or raise grounds or claims, in the alternative. 9. A party may by his pleadings raise any point of law. 10. . . . 11. . . . 12. . . . 13. . . . 14. . . . 15. . . . 16. 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 (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.' 10 O 20, r 2(1) of the Rules provides that the Court may order that the whole of or any part of a proceeding be stayed or dismissed if no reasonable cause of action is disclosed or on the ground that the proceeding is an abuse of process. O 13, r 2(1) provides that the Court may, at any stage of the proceeding grant leave to amend any document in the proceeding, and a Court may order a party to file and serve further particulars under O 12, r 5. The various powers referred to in the Rules are discretionary. I turn now to deal with those paragraphs in respect of which the respondents continue to oppose the applicant's being granted leave to amend as characterised by them: 'Paragraph 22 – collateral contract claim; Paragraphs 20, 24(a) and (b), 25, 29, 31, 32, 33 and 34 – first Trade Practices Act ('TPA') claim; Paragraphs 43, 44, 84(c) and 49 – second Trade Practices Act ('TPA') claim; and Paragraphs 67 to 70 and 72 – third Trade Practices Act ('TPA') claim.' Collateral contract claim 11 The first paragraph the respondents seek to have struck out is the collateral contract claim in para 22 of the statement of claim. Paragraph 22 states: 'The First Representation and Warranty was collateral to the 2003 Agreement and constituted a collateral warranty.' 12 The 'First Representation and Warranty' is defined in the statement of claim as: '[The first respondent] represented and warranted … to [the applicant] that if [the applicant] agreed to reduce a percentage of its Trailing Commission on Net Billings from that provided for in the 2002 Agreement and increased the number of [the applicant's] retail outlets in New South Wales, and performed, [the first respondent] would not enforce the Limitation on [the applicant's] remuneration provided for in clause 1.1 of Schedule 5 to the 2003 Agreement.' The precise details of the 'Limitation' are confidential and it is unnecessary for present purposes to articulate them. According to the applicant's written submissions the alleged collateral contract is that: '[The first respondent] would not enforce the Limitation on the applicant's remuneration provided for in clause 1.1 of Schedule 5 to the 2003 Agreement.' 13 Counsel for the respondents contended that the collateral contract as pleaded should be struck out because it is inconsistent with the express terms of the 2003 Agreement. Counsel for the respondents relied on Hoyt's Proprietary Ltd v Spencer (1919) 27 CLR 133 ('Hoyt's v Spencer'), which was followed in Maybury v Atlantic Union Oil Co. Ltd (1953) 89 CLR 507 ('Maybury'),as authority for the proposition that where the parties have a written agreement, an alleged collateral contract is only valid and enforceable if the 'two may consistently stand together so that the provisions of the main agreement remain in full force and effect notwithstanding the collateral agreement': Hoyt's v Spencer at 139. Two alleged inconsistencies were relied upon; first, the inconsistency between express provisions in Schedule 5 to the 2003 Agreement, covering dealer remuneration and the alleged oral collateral contract containing a promise not to enforce those provisions, and secondly, the inconsistency between the existence of the alleged oral collateral contract and the terms of the main contract which expressed it to be 'the entire agreement' of the parties about the subject matter, variable only 'in writing executed by all the parties.' It was noted that Hoyt's v Spencer was treated recently in the High Court as current authority: Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 211 ALR 101 ('Equuscorp') and Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 211 ALR 342 ('Toll'). The collateral contract claim was described as 'hopeless' and it was submitted for the respondents that it would be a proper exercise of judicial discretion to strike out para 20 and refuse the applicant any leave to amend it. 14 Counsel for the applicant contended that the present case falls outside the rule in Hoyt's v Spencer. I was told it will be argued for the applicant that the first respondent's agreement not to enforce the main contract's limitation on the applicant's remuneration is different from alleging terms in a collateral contract which are inconsistent with express terms in a principal agreement. It was asserted on behalf of the applicant that the main agreement did not contain express provisions for the giving of notice. It was submitted the facts of this case more closely resemble those in De Lassalle v Guildford [1901] 2 KB 215, than those in Hoyt's v Spencer. 15 Alternatively, the applicant's counsel submitted that if the case fell within the Hoyt's v Spencer rule, the applicant will rely on the fact that in this case it is alleged the first respondent promised to refrain from enforcing a term in the principal agreement: see Gibbs CJ in Gates v City Mutual Life Assurance Society Limited (1985) 160 CLR 1 at 5/6: 'The learned author of "A Plea for the Reform of the Rule in Hoyt's Pty Ltd v Spencer", Australian Law Journal, vol. 52 (1978), p 372 criticizes those decisions (Hoyt's v Spencer and Maybury) but I find no need to reconsider them here, since the present is not a case in which one party made a promise to modify or to refrain from enforcing a term of the principal agreement.' Counsel for the applicant also distinguished recent cases in which Hoyt's v Spencer was mentioned. In Equuscorpthe Court noted that the written agreement was not procured by misrepresentation [at 33] and the respondent had never made a case that an earlier oral consensus constituted a collateral contract [at 36]. In Toll, in following L'Estrange v F. Graucob[1934] 2 KB 394, the Court noted: 'The general rule, which applies in the present case, is that where there is no suggested vitiating element, and no claim for equitable or statutory relief, a person who signs a document which is known by that person to contain contractual terms, and to affect legal relations, is bound by those terms, and it is immaterial that the person has not read the document.' In this case, statutory relief is being sought in respect of the first representation and warranty alleged to have led to loss but the same facts are also pleaded as constituting a collateral contract. It was urged this case may be an appropriate vehicle for reconsideration of Hoyt's v Spencer and therefore the case is tenable for pleading purposes and should not be struck out. It was submitted the applicant should be entitled to preserve the position so as not to be precluded from arguing later that Hoyt's v Spencer should be overruled. 16 When, as here, it is alleged the main contract would not have been entered into without the representation said to constitute the collateral contract, it is impossible before evidence is taken to make any assessment about the extent to which the facts will resemble, or differ from, those in Hoyt's v Spencer. Whether or not a party was induced to enter the main contract as a result of a representation is a matter of evidence, as are also the questions of whether the representation was truly promissory and animus contrahendi is made out: cf J.J. Savage & Sons Pty Ltd v Blakney (1970)119 CLR 435 at 442; and see Heilbut, Symons & Co v Buckleton (1913) AC 30 at 476 (per Lord Moulton); see also Marks v Hunt Bros (Sydney) Pty Ltd [1958] SR (NSW) 380. Equally, the question of whether the written agreement was the sole repository of consensus between the parties will be a matter to be determined on the evidence: Telstra Corporation Ltd v Bos (unreported) 18 June 1996 (Sup. Ct. Vic.) (Mandie J) at 21. 17 In the circumstances, the authorities upon which the respondents' counsel relies do not render the applicant's claims frivolous or untenable as a matter of law, even if such authorities prove formidable at trial. There is a distinction to be made between a case where it can be said applicable legislation makes it plain that a cause of action is not maintainable (General Steel; Dey) and a case where a plaintiff seeks to maintain a difficult case by seeking to distinguish a particular authority or raise a debatable question of law or even argue a law is invalid: see, for example, Hodges and Anor v State of New South Wales and Anor (1987-88) 77 ALR 1; see also Beach Petroleum N.L. and Another v Johnson and Others (1991) 105 ALR 456 at 465 (von Doussa J). 18 The correct approach in difficult circumstances, has been identified by a Full Court of this court in Trade Practices Commission v Pioneer Concrete (QLD) Pty Ltd and Others (1994) 52 FCR 164 at 175B (per Sheppard J, with whom Jenkinson and Drummond JJ agreed): '. . . a court asked to strike out all or part of a pleading needs to be careful to ensure that giving effect to the application does not prevent a party from making a case which it is entitled to make. One has to err on the side of caution lest one deprive a party of a case which in justice it ought to be able to bring.' 19 I do not propose to strike out para 22 on the basis that Hoyt's v Spencer renders the case as pleaded untenable. I do, however, accept that there is force in the submission for the respondents that the collateral contract averment is conclusionary. This does not have the inevitable result it once might have had. As with any other contract, details of parties, consideration and terms are relevant. Proper particulars are necessary even if incorporated by reference to particulars to be found elsewhere in the pleading. A respondent should not be left in a position of trying to infer what the proper particulars might be. The primary function of a statement of claim is to put the other party on notice of the case to be met: Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd [1996] ATPR 42, 677 (41-522) (Burchett J and the authorities he there cites) ('Multigroup'). Further, it is a proper function of particulars to delineate the boundaries of any case to be met: Dare v Pulham (1982) 148 CLR 658 at 664 ('Dare v Pulham'). Not every conclusionary statement in a pleading needs to be struck out if particulars can be ordered to cure a deficiency: Australian Competition and Consumer Commission v Golden West Network Pty Ltd and Ors (1997) FCA 792 (Lockhart J). I propose to order proper particulars be given of para 22. First trade practices claim 20 The next paragraph sought to be struck out is para 20 of the statement of claim which pleads a representation and warranty by the first respondent to the applicant that if it agreed to certain matters, a limitation (or cap) on remuneration in the 2003 Agreement would not be enforced ('the no-cap representation' also referred to in argument as the 'First Representation'). The First Representation was said to have been made in trade and commerce (para 21), to have been relied upon and to have induced the applicant (para 24), to have been misleading and deceptive (para 27) and to have caused loss and damage (para 29). This section of the pleading was subject to proposed amendments but the respondents continued to object to disconformity in the particulars relied upon and particularly a failure to identify what part of the representation is said to be implied or the basis of the implication. 21 Any disconformity between particulars and representations or between particulars and evidence actually led can in the usual course, be corrected by an applicant even after the evidence has closed: Dare v Pulham at 664. The applicant's counsel indicated during the course of the hearing that certain particulars would be deleted; this should be attended to when the proposed statement of claim is prepared for filing and serving. The paragraph should not be struck out in its entirety at this stage on the basis of any disconformity. There is, however, force in the argument that there has been a failure to identify what part of the representation is implied and the basis of the implication. Of the well‑known conditions needed to justify the implication of a term in a contract, two are relevant to this argument. First, the requirement that the term to be implied must be necessary to give business efficacy to the contract so that no term will be implied if the contract is effective without it and secondly, that the term must not contradict any express terms of the contract: B.P. Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283 (per Lord Simon of Glaisdale, Viscount Dilhorne and Lord Keith of Kinkel). 22 In my view, the facts as pleaded do not give rise to a necessary implication and, to the extent that there are no facts or circumstances pleaded which show the necessity to include such an implied term in the contract, or which show how the contract would be ineffective without the implied term, or how the term would be implied by operation of law, the proposed parts of para 20 in the statement of claim dealing with an implied term are defective. I propose to order that proper particulars be provided under (D) subjoined to para 20. Paragraphs 24(a) & (b) and 29 23 Counsel for the respondents continued to take issue with subparas 24 (a) and (b) and para 29 of the statement of claim. It is easiest to understand these objections in the context of proposed paras 24-27 (inclusive) and 29 which provide: '24. [The applicant] acting in reliance upon the truth of the First Representation and Warranty and induced to act thereby: (a) agreed to terminate the 2002 Agreement; (b) discontinued the 2002 Proceeding against [the first respondent] and agreed not to reinstate it and indemnified [the first respondent] against all claims made in the said proceeding; (c) agreed to the terms of the 2003 Agreement, including the terms which would reduce its Trailing Commission on Net Billings; and (d) executed on 10 January 2003 each of: (i) with Mobileworld Communications Pty Ltd (as Guarantor), the 2003 Agreement whereby [the applicant] was appointed to promote the sale of, and extend the demand for, [the first respondent's] GSM Mobile Service and the CDMA Mobile Service in Australia from 1 January 2003 for the term therein described; (ii) the 2003 Settlement Agreement; and (iii) the Varied Secret Agreement; and (e) otherwise acted to its detriment. Particulars Further particulars will be provided after discovery and inspection and prior to the trial of he (sic) proceeding herein. 25. Contrary to the First Representation and Warranty, [the first respondent] now seeks to enforce Schedule 5 clause 1.1. in relation to the Limitation on [the applicant's] remuneration in a Contract Year notwithstanding that [the applicant] agreed to reduce the percentage of its Trailing Commission on Net Billings and increased the number of [the applicant's] retail outlets in New South Wales and performed. Particulars By sending the Letter of Demand referred to in paragraph 59 below, the preceding letters and emails described in the particulars appended to paragraph 44 below, and otherwise engaging in conduct described in paragraphs 59 to 64 both inclusive below, [the first respondent] wrongfully sought to demand repayment of monies paid by it in excess of the Limitation. 26. As the First Representation and Warranty relates to future events or acts, at the time [the first respondent] made the First Representation and Warranty there were no reasonable grounds upon which the First Representation and Warranty could have been made to [the applicant] and [the applicant] will rely at the trial of this proceeding upon the provisions of section 51A of the TPA Trade Practices Act 1974 (Cth) ("the TPA"). 27. In the premises, in making the First Representation and Warranty, [the first respondent] engaged in conduct that was: (a) misleading and deceptive; (b) likely to mislead or deceive, in contravention of section 52 of the TPA. … 29. By reason of the contraventions of s 52 of the TPA, described in paragraph 27 above, [the applicant] has suffered and will continue to suffer loss and damage. Particulars (a) [the applicant] has been subjected to the Demand, described in paragraph 59 below, to repay to [the first respondent] a sum said by [the first respondent] to constitute remuneration received by it from [the first respondent] in excess of the Limitation, and [the applicant] has paid, involuntarily, under protest, the sum wrongfully sought by [the first respondent]; (b) deleted (c) [the applicant] has not received payment of either the remuneration to which it is entitled or interest to compensate for its late payment; (d) [the applicant] has neither received accurate nor timely information from [the first respondent] enabling either [the first respondent] or it to ascertain accurately or at all the remuneration to which it is entitled pursuant to the terms of clause 7.1 and Schedule 5 the 2003 Agreement; (e) [the applicant] is unable to calculate such profits until after discovery and inspection but will provide further particulars prior to the trial of the proceedings herein; (f) Further particulars of [the applicant's] loss and damage will be provided after discovery and inspection and prior to the trial of the proceeding herein.' 24 Counsel for the respondents objected to subparas (a) and (b) of para 24 as irrelevant pleadings which ought to be struck out as surplusage. Counsel for the respondents explained his objection on the basis that in terms of a claim under s 52 of the TPA, para 24 could only stand if the applicant pleaded that they had suffered loss or damage by reason of being deprived of the benefits under the 2002 Agreement. In other words, in its current form para 24 appears to foreshadow a quantum claim arising out of the differences between the two agreements and if that is not the case the respondents have to meet then it ought to be deleted. It was further submitted on behalf of the respondents that there was a disconformity between para 24 and para 29 such that those claims were embarrassing. 25 As appears above, in para 29 the applicant identifies the loss and damage it has suffered. However, counsel for the respondents contended a disconformity in the pleadings arose because there was no link pleaded between the alleged loss or damages suffered as a result of the first respondent's alleged contraventions of s 52 of the TPA and the allegation in para 24 that the applicant was 'induced by the alleged representations to both, enter into the 2003 Agreement, and to terminate the 2002 Agreement.' Counsel for the respondents also submitted that the applicant has not complied with the requirement 'that [the applicant] plead and establish that course, which but for reliance on the contravening conduct, it could have otherwise adopted, and formulate its damages on that basis'. It was contended there was no adequately pleaded causal connection between the 'no cap' representation and the alleged damage. Observations made by Branson J in Kirela Pty Ltd v Westfield Holdings Ltd [2002] FCA 1223 at [7] to [16] were relied upon by the respondents. 26 In response to the challenge to subparas 24(a) and (b), counsel for the applicant rejected the characterisation of them as surplusage and submitted that they operated to alert the respondents to the factual matrix behind the claim as part of the narration of the pleading. Further, it was submitted that as subparas 24(a) and (b) are not relevant to the loss and damage claims there was no need for particulars in relation to a claim that was not being made. There is a good deal of narration in the pleading to explain the background to the 2003 Agreement, the subject matter of the proceeding. On the basis that subparas 24(a) and (b) are mere narration, I decline to strike them out as embarrassing to the respondents. 27 In response to the respondents' criticism of para 29, counsel for the applicant relied on the decision of the Full Court of this Court in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 ('Demagogue') per Black CJ at 32: 'The general law does not impose, as a requirement for effective rescission, that a party who has been induced to enter into a contract by a misrepresentation must have suffered loss and damage in the sense of a loss for which a pecuniary award may be made. In the Trade Practices Act itself, the right of rescission given to consumers by s 75A where there has been a breach of a condition implied by a provision of Div 2 of Pt V is not conditional upon the existence of loss or damage in that sense. Despite the use of the same words "loss or damage" that appear in s 82, it would be surprising if s 87, in providing a range of discretionary remedies, contained a limitation that is not imposed by the general law in cases that would fall within the scope of Pt V of the Trade Practices Act and that would, in any event, seriously limit the usefulness of that section.' Counsel for the applicant also referred to Gummow J in Demagogue at [43]: '… whilst s 82 is concerned with the recovery of an amount representing the loss or damage, s 87 is concerned with compensation, whether in whole or in part, for loss or damage and with the reduction of loss or damage, and with the prevention of loss or damage which is likely to be suffered.' Counsel for the applicant submitted that according to the authorities although trade practices cases like the present case may be analogous to actions in deceit, the relief available for such a claim is not confined to damages for monetary loss. 28 It is well‑established that any amount recoverable under s 82 or orders which might be made under s 87 of the TPA are not confined by analogy whether with tort, or contract or other remedies including those available in equity: Marks v GIO Australia Holdings (1998) 196 CLR 494 ('Marks v GIO'); Henville v Walker (2001) 206 CLR 459 and Murphy v Overton Investments Pty Ltd [2004] HCA 3. Counsel for the respondents did not contend otherwise. It is equally well‑established that s 82(2) should be understood as taking up the common law practical concept of causation: Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 525; Marks v GIO at [38], [39] and [4]. Causation is a question of fact to be determined by reference to commonsense and experience: March v Stramare (E. & M. H.) Pty Ltd (1991) 171 CLR 506 at 515. There are also a number of authorities supporting the necessity to identify in a pleading, the causal connection between the conduct complained of and loss and damage: see Bond Corporation Pty Ltd v Thiess (1987) 14 FCR 215 (French J); Multigroup; Mitanis v Pioneer Concrete (Vic) Pty Ltd [1997] ATPR 44, 147 (41-591) (Goldberg J). It is not sufficient to simply plead a conclusion: Pioneer Electronics Australia Pty Ltd v Edge Technology Pty Ltd [1999] FCA 142 at [7] (Kenny J). 29 On the issue of causation, the applicant pleaded the representation (para 20), reliance and inducement (para 24), the misleading and deceptive character of the representation (para 27) and loss and damage (para 29). Counsel for the applicant described the loss and damage sought in subpara 29(a) as 'the difference between the deal that was done and what has flowed from the breach' and made reference to the possible availability of the contract measure of damage under the TPA. So it seems that the applicant is claiming damages for 'loss of a bargain' or what is sometimes called 'expectation loss' as distinct from loss flowing from reliance on the representation so as to be worse off as a result of entering the transaction by inducement. It is clear from submissions made at the hearing of these motions there will be a strong contest about whether there is a sufficient connection between the alleged representation said to have been relied upon and the loss and damage claimed. 30 Whatever difficulties the applicant's approach may or may not pose for the applicant in terms of proving that loss and damage was caused by the conduct complained of, for the purposes of obtaining remedies under ss 82 and 87 of the TPA, it would not be a proper exercise of the discretion to strike out para 29, when it is claimed that the subject matter of the agreement (the dealership) was less valuable than it would have been if the representation were true. This is clearly arguable under the provisions of the TPA. 31 Further and better particulars of para 29 have been foreshadowed after discovery and inspection. The respondents are entitled to understand the case on causation since they would be entitled to deny causation as well as denying loss and damage or to disclaim liability from losses if they can negate the causal effect of the representation. Particulars subjoined to para 29 to date do not make it clear if or how the applicant is worse off because of the conduct nor is it clear whether the applicant lost any benefits by reference to benefits under a previous agreement. Proper particulars of causation need to be provided at the same time as full particulars of quantum are provided. The orders I propose will enable the respondent to re‑agitate this issue should it become necessary to do so. 32 Paragraphs 33 and 34 contain claims against the third respondent as a person involved in the first respondent's alleged contraventions. The respondents seek to strike out these paragraphs. Even if the first TPA claim were not struck out, it was submitted for the respondents that the present pleading lacked the particularity necessary to establish a valid cause of action bearing in mind the principles established in Yorke v Lucas (1985) 158 CLR 661 at 667 ('Yorke v Lucas'), namely that before a person can be said to be a party to a contravention he must be an intentional participant, the necessary intent being based on knowledge of the essential elements of the contravention. Counsel for the applicant did not dispute the principles established in Yorke v Lucas but relied on the particulars subjoined to para 33 in confidential annexure 4, as constituting the material facts upon which it proposes to rely to substantiate the cause of action against the third respondent. I do not accept these submissions because, whilst the particulars provided in the confidential annexure allege the third respondent knew of the representation in the sense he was involved in making it, that does not constitute particulars of his knowledge of the falsity of the representation. To enable the third respondent to understand the applicant's reliance on s 75B of the TPA, I will order the provision of particulars of knowledge of the falsity of the representation in respect of para 33 (O 12, r 5(2)). Second trade practices claim 33 Paragraph 45 pleads the Second Representation complained of namely, that the first respondent represented that certain sums of money were not to be included as part of the remuneration payable to the applicant pursuant to the 2003 Agreement. It was pleaded that the representation was made in trade and commerce (para 44), relied upon and induced the applicant (para 47) and caused loss and damage (para 53). 34 It was asserted on behalf of the respondents that paras 43 and 44 are embarrassing as they bear no narrative relationship to para 45 in the form now proposed. Counsel for the applicant responded that the two paragraphs are important as narrative paragraphs relevant to the whole section of the pleading on this aspect, namely paras 43 to 53 (inclusive). I accept this submission. It would not be a proper exercise of the discretion to strike out these paragraphs. 35 Similarly it was contended for the respondents that subpara 48(c) and para 49 should be struck out as no longer relevant to para 45 in the form now proposed, as they were relevant to parts of that paragraph which are no longer pursued. 36 The response was that these paragraphs remained relevant to the Second Representation as it was now pleaded. 37 It seems to me correct that references in these paragraphs once naturally referred back to references in paras 45(a) and (b) as they once stood. However, it is possible to read those references differently now as constituting averments relevant to causation. Accordingly, I decline to strike out those paragraphs. Third trade practices claim 38 The complaints about this section of the pleading are best understood by reference to the proposed paragraphs: '59. By letter dated 13 February 2004 ("the Letter of Demand"), [the first respondent] wrongfully demanded that [the applicant] repay to it the sum of $21,283,642.61 alleged by it to have been overpaid by [the first respondent] under the 2002 and 2003 Agreements. Particulars The letter from [the first respondent] is dated 13 February 2004 and is signed by Willis. A copy of the letter may be inspected at the office of [the applicant's] Solicitors during ordinary business hours by prior appointment. 60. The Letter of Demand: (a) required [the applicant] to pay the sum of $21,283,642.61 as soon as possible; (b) constituted a formal notice of the requirement to pay the said sum as soon as possible; (c) stated that non‑payment of the said sum would constitute a material breach under the 2003 Agreement. Particulars [The applicant] refers to the express terms of the Letter of Demand. 60A. [The first respondent] was at all relevant times under an obligation to act in good faith in relation to any demands it made in purported reliance upon the 2003 Agreement. Particulars The term is implied by the need to give business efficacy to the 2003 Agreement and is otherwise implied by law. 61. At no time was there any, alternatively any proper, basis upon which [the first respondent] acting in good faith, could reasonably have formed the opinion that: (a) [The applicant] owed to [the first respondent] under the terms of the 2002 and 2003 Agreements the sum of $21,283,642.61; (b) [The applicant] owed any sum at all to [the first respondent] under the terms of the 2002 and 2003 Agreements; and (c) [The first respondent] was entitled to treat non‑payment by [the applicant] of the sums demanded in the Letter of Demand as constituting a material breach under the 2003 Agreement. 62. At all times, [the first respondent] demanded that [the applicant] comply with the Demand contained in the Letter of Demand. Particulars (a) . . . (b) . . . (c) . . . (d) . . . 63. [The first respondent] extended the time within which the Notice must be complied with to 31 March 2004. Particulars (i) . . . (ii) . . . (iii) . . . (iv) . . . Copies of the written communications may be inspected at the office of [the applicant's] Solicitors during ordinary business hours by prior arrangement. 64. On Wednesday 31 March 2004 [the applicant], to preclude [the first respondent] from seeking to terminate the 2003 Agreement, made an involuntary payment under protest to [the first respondent] in the sum of $21,283,642.61. 65. [The first respondent] by making the wrongful demand for payment contained in the Letter of Demand has: (a) acted in breach of its obligations to act in good faith towards [the applicant]; and (b) breached clause 7.1 and Schedule 5 of the 2003 Agreement. Particulars The obligation to act in good faith towards [the applicant] is to be implied by operation of law and to give business efficacy to the 2003 Agreement. 66. By reason of the matters alleged in paragraphs 42 and 59 to 65 both inclusive above: (a) the Letter of Demand is and was at all times invalid and of no force and effect; and (b) [The applicant] has suffered and continues to suffer loss and damage. Particulars [The applicant] has been deprived of the sum of $21,283,642.61 together with interest thereon. 67. Further, by reason of the matters alleged in paragraphs 61 and 62 above in: (a) sending the Letter of Demand; (b) representing that it had an entitlement to have [the applicant] comply with the Letter of Demand; and (c) representing that it has an entitlement to treat non‑payment by [the applicant] of the sums in the Letter of Demand as constituting a material breach under the 2003 Agreement; [The first respondent], in trade or commerce, engaged in conduct that was: (i) misleading and deceptive; in contravention of section 52 of the TPA. Particulars (a) The representation referred to in sub‑paragraph (b) was partly oral and partly in writing. Insofar as it was oral it was constituted by the conversations described in the particulars appended to paragraph 62 above. Insofar as it was in writing it was contained in the Letter of Demand. (b) The representation referred to in sub‑paragraph (c) was in writing and was contained in the Letter of Demand. 68. Further or in the alternative, in engaging in the conduct described in paragraphs 59 to 64 both inclusive above, [the first respondent] in trade or commerce, in connexion with the supply or continued supply of services under the 2003 Agreement, or in connexion with the promotion by any means of the supply or use of services under the 2003 Agreement made a false or misleading representation in contravention of sub‑section 53(g) of the TPA concerning the existence, or effect of a right or remedy namely, an entitlement to: (a) have [the applicant] comply with the Letter of Demand; and (b) treat non‑payment by [the applicant] of the sums demanded in the Letter of Demand as constituting a material breach under the 2003 Agreement. 68A. There were terms of the 2003 Agreement that: (a) [The applicant] was required, within 5 business days of receiving notice from [the first respondent] to do so, to refund to [the first respondent] any overpayment the subject of a notice from [the first respondent] (clause 5 of schedule 5); (b) without prejudice to its rights under clause 8.3 and 8.5, [the first respondent] might, notwithstanding any other clause, suspend the provision of any goods and services to the dealer during any period in which amounts owing to it under the agreement were unpaid (clause 8.6); (c) a party might terminate it by giving 7 days notice in writing to the other party if the other party was in breach of any of its material obligations under the agreement, or any other agreement in force from time to time between [the first respondent] and one or more of the other parties to the 2003 Agreement and, if such breach was capable of remedy, did not rectify such brief within 14 days after receiving a notice to do so (clause 8.5). 68B. At all material times, [the applicant] understood that the representation constituted by the statement in the Letter of Demand referred to in paragraph 60(c) above, was a threat by [the first respondent] that a failure by it to pay the sum demanded by [the first respondent], would result in or be likely to result in: (a) an immediate cessation of the supply by [the first respondent] to [the applicant] of the services under the 2003 Agreement pursuant to clause 8.6; and/or (b) termination of the 2003 Agreement pursuant to clause 8.5; and (c) irreparable damage being suffered by [the applicant's] business. Particulars [The applicant's] business was and has been at all material times, dependant upon [the first respondent] supplying services in relation to the Mobile Service (within the meaning of the 2003 Agreement). Any suspension of the supply of those services would prevent [the applicant's] business from re‑supplying those services to members of the public and thereby result not only in the immediate effective cessation of the business, but irreparable damage to its reputation and goodwill as a reliable supplier of the Mobile Service. 68C. In reliance upon the representation constituted by the statement in the Letter of Demand referred to in paragraph 60(c) above and n the circumstances described in paragraph 68A and 68B above, [the applicant] made the involuntary payment described in paragraph 64 above. 69. By reason of the matters alleged in paragraphs 67 to 68C above, [the applicant] has suffered and continues to suffer loss and damage. Particulars [The applicant] has been deprived of the sum of $21,283,642.61 together with interest.' 39 It was contended paras 67 to 69 (inclusive) should be struck out as no material facts of reliance are pleaded, ie. it is not pleaded that the applicant believed the representation or was deceived by it. It was further asserted that paras 61, 62 and 68C make it clear the applicant did not believe the pleaded representation. 40 It was then contended that without a belief in the representation there can be no requisite causal connection between the alleged loss and damage and the alleged contravening conduct. Observations by Lander J in Ford Motor Company of Australia Ltd v Arrowcrest Group Pty Ltd (2003) 134 FCR 522 at [88]–[128] were relied upon by the respondent. 41 Counsel for the applicant contended that substantial amendments proffered in respect of paras 67 to 69 (inclusive) now set out the material facts relied on. It appears that it is the applicant's understanding of the effect of the representations alleged (para 68B) that allegedly caused the applicant to make what it describes as 'involuntary payment' to the first respondent. Whether or not the applicant succeeds on causation is a question for later. Given the collateral contract and First Representation claims, it would not be a proper exercise of discretion to treat the paragraphs as now proposed as pleading an untenable cause of action. 42 Paragraphs 70 and 72 were also the subject of continuing objection. They contained claims against the second respondent as a person involved in the first respondent's alleged contraventions by reason of the representations pleaded in para 67. The arguments were the same as those raised in respect of the third respondent, dealt with above, with a similar outcome. To enable the second respondent to understand the reliance by the applicant on s 75B of the TPA, I will order particulars of knowledge of the falsity of the representation to be provided in para 70 (O12 r 5(2)). Conclusion 43 It is not appropriate in the present context to express views about whether the collateral contract pleaded is likely to be found invalid or whether ss 82 and 87 of the TPA might encompass a claim for expectation loss or whether causation might be inferred rather than proven by direct evidence. In requiring an examination of some documentary evidence and by making extensive reference to authorities relevant to substantive issues of collateral contract and causation, submissions exceeded what should be sufficient given that pleadings will not be struck out unless they are manifestly untenable or clearly embarrassing. The fact that a defence and counterclaim has been filed, and that the respondents' objections have changed since they were first raised by solicitor's letter dated 17 August 2004, suggests that no clear embarrassment subsisted in the pleading even in its unamended form. Whilst certain particulars have been ordered, that result could possibly have been achieved without a motion to strike out significant parts of the pleadings. I have reached the conclusion that the applicant should be granted leave to amend in accordance with the proposed further amended statement of claim, subject to the provision of certain further and better particulars and in accordance with these reasons. I will hear the parties on the costs of the applicant's motion. I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Crennan. Associate: Dated: 23 March 2005 Counsel for the Applicant: David Shavin QC Stewart Anderson Edward Woodward Solicitor for the Applicant: Corrs Chambers Westgarth Counsel for the Respondent: Kim Hargrave QC Michael Wyler Solicitor for the Respondent: Mallesons Stephen Jaques Date of Hearing: 7 December 2004 Date of Judgment: 23 March 2005