New South Wales Supreme Court CITATION : Fawcett v Cannon & Ors [2007] NSWSC 1267 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : 4 October 2007 JUDGMENT DATE : 8 November 2007 JURISDICTION : Supreme Court JUDGMENT OF : Rothman J (i) The motion seeking summary dismissal of the proceedings as against the sixth, seventh and eighth defendants be dismissed. (ii) So much of the Statement of Claim that pleads an involvement by Mr Schofield, the eleventh defendant, in a contravention of Part V of the Trade Practices Act be struck out and the proceedings insofar as it relies upon the aforesaid cause of action be dismissed. DECISION : (iii) Otherwise than the immediately preceding paragraph, the motion for the striking out of the Statement of Claim by the fifth, sixth, seventh, eighth and eleventh defendants be dismissed. (iv) The sixth, seventh and eighth defendants pay 50% of the plaintiff's costs of both motions and the proceedings in relation thereto, as agreed or assessed. Such costs to be payable forthwith. (v) The fifth, sixth, seventh, eighth and eleventh defendants pay a further 40% of the plaintiff's costs of both motions and the proceedings relating thereto, as agreed or assessed. CATCHWORDS : PRACTICE AND PROCEDURE - summary dismissal - motion to strike out pleadings in whole or in part - curable defects LEGISLATION CITED : Trade Practices Act 1974 (Cth) Batistatos v RTA of NSW (2006) 226 CLR 256 Cox v Journeaux (1935) 52 CLR 713 CASES CITED : General Steel Industries v Commissioner for Railways (NSW) (1964) 112 CLR 125 Laws v GWS Machinery [2007] NSWSC 316 McPherson's Limited v Eaton (2005) 65 NSWLR 187 Shalhoub Holdings Pty Ltd & Ors v CBA [2006] NSWSC 607 Plaintiff: Justin Stephen FAWCETT First Defendant: Geoffrey CANNON Second Defendant: Glenn Paul James WILTON Third Defendant: Deborah Ann WILTON Fourth Defendant: ACN 090 398 502 PTY LTD PARTIES : Fifth Defendant: RED BACK FIREWORKS PTY LIMITED Sixth Defendant: BLACK WIDOW IMPORTS & EXPORTS PTY LIMITED Seventh Defendant: BLACK WIDOW INTERNATIONAL PTY LIMITED Eighth Defendant: R & R NOMINEES PTY LIMITED Ninth Defendant: FIREWORKS AUSTRALIA (IMPORTERS) PTY LIMITED Tenth Defendant: Scott Anthony SOUTHWELL Eleventh Defendant: Raymond SCHOFIELD FILE NUMBER(S) : SC 20311/06 Plaintiff: A.P. Quinlivan First Defendant: - Second Defendant: - Third Defendant: - Fourth Defendant: - COUNSEL : Fifth Defendant: T.J. Brennan Sixth Defendant: T.J. Brennan Seventh Defendant: T.J. Brennan Eighth Defendant: T.J. Brennan Ninth Defendant: - Tenth Defendant: - Eleventh Defendant: T.J. Brennan Plaintiff: E. Ramsay (A R Conolly & Company) First Defendant: - Second Defendant: - Third Defendant: - Fourth Defendant: - SOLICITORS : Fifth Defendant: D.J. Kearney (Wotton & Kearney Insurance Lawyers) Sixth Defendant: D.J. Kearney (Wotton & Kearney Insurance Lawyers) Seventh Defendant: D.J. Kearney (Wotton & Kearney Insurance Lawyers) Eighth Defendant: D.J. Kearney (Wotton & Kearney Insurance Lawyers) Ninth Defendant: - Tenth Defendant: - Eleventh Defendant: D.J. Kearney (Wotton & Kearney Insurance Lawyers) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ROTHMAN J 8 NOVEMBER 2007 20311/06 Justin Stephen FAWCETT v Geoffrey CANNON & Ors JUDGMENT 1 HIS HONOUR: Geoffrey Cannon placed a very large firework inside a mortar tube and lit it, expecting it to launch into the sky and explode. The firework did not launch, but exploded on the ground causing serious injuries to Justin Fawcett. 2 Mr Fawcett sues Mr Cannon, the occupiers of the land (Mr and Mrs Wilton), the retailer of the fireworks ("the Fireworks King"), and the wholesale supplier of the fireworks to the Fireworks King. It is alleged that the wholesaler was one or more of the companies referred to in the pleadings as the Schofield companies and listed as the fifth, sixth, seventh and eighth defendants. The eleventh defendant is the principal of the Schofield companies, Scott Anthony Schofield. There is a possible alternate wholesaler, namely, the ninth defendant, Fireworks Australia (Importers) Pty Limited. (The tenth defendant is the principal of the company trading as the Fireworks King.) 3 The Schofield companies (except the fifth defendant) move to dismiss the proceedings against them. The Schofield companies submit that their case is made out by paragraph 7 of the Statement of Claim. It is in the following terms: "[7] The Plaintiff being in doubt as to which of the Schofield Companies owned and conducted a business of importing and supplying fireworks sues the Schofield Companies to the intent that the question of which of them is liable to the Plaintiff for his injury and damage hereinafter alleged may be determined." 4 Further the Schofield companies rely on an affidavit of Mr Schofield that attests to the following: that the sixth defendant has never traded, and never filed a tax return or Business Activity Statement; that the seventh defendant has never imported fireworks; and, that the eighth defendant is a building developer and has "never traded in fireworks import or sale". 5 The Schofield companies submit that the proceedings are an abuse of process and seek dismissal under UCP Rule 13.4 of the proceedings against each of them except the fifth defendant. 6 Further and in the alternative, all of the Schofield companies and Mr Schofield (together referred to as the Schofield interests) move to strike out aspects of the Statement of Claim. Principles on Summary Dismissal of Proceedings 7 The principles usually employed for the striking out of proceedings are well known: General Steel Industries v Commissioner for Railways (NSW) (1964) 112 CLR 125. Further this Court has an inherent power or jurisdiction to strike out a proceeding because it is so weak and/or because it depends upon facts, which, on the plaintiff's case, cannot be proven and/or is an abuse of process. 8 I have been referred to the judgment of the High Court in Batistatos v RTA of NSW (2006) 226 CLR 256 in which the majority cited in the context of a personal injury claim comments of the Court in two criminal cases. They said: "[14] In Ridgeway v The Queen , Gaudron J explained: 'The powers to prevent an abuse of process have traditionally been seen as including a power to stay proceedings instituted for an improper purpose, as well as proceedings that are "frivolous, vexatious or oppressive". This notwithstanding, there is no very precise notion of what is vexatious or oppressive or what otherwise constitutes an abuse of process. Indeed, the courts have resisted, and even warned against, laying down hard and fast definitions in that regard. That is necessarily so. Abuse of process cannot be restricted to "defined and closed categories" because notions of justice and injustice, as well as other considerations that bear on public confidence in the administration of justice, must reflect contemporary values and, as well, take account of the circumstances of the case. That is not to say that the concept of "abuse of process" is at large or, indeed, without meaning. As already indicated, it extends to proceedings that are instituted for an improper purpose and it is clear that it extends to proceedings that are "seriously and unfairly burdensome, prejudicial or damaging" or "productive of serious and unjustified trouble and harassment".' [15] Earlier, in Rogers v The Queen , McHugh J observed: 'Although the categories of abuse of procedure remain open, abuses of procedure usually fall into one of three categories: (1) the court's procedures are invoked for an illegitimate purpose; (2) the use of the court's procedures is unjustifiably oppressive to one of the parties; or (3) the use of the court's procedures would bring the administration of justice into disrepute.' His Honour added: 'Many, perhaps the majority of, cases of abuse of procedure arise from the institution of proceedings. But any procedural step in the course of proceedings that have been properly instituted is capable of being an abuse of the court's process.' To that it should be added that the power to deal with procedural abuse extends to the exclusion of particular issues which are frivolous and vexatious. Further, the failure to take, as well as the taking of, procedural steps and other delay in the conduct of proceedings are capable of constituting an abuse of the process of the court."(Per Gleeson CJ, Gummow, Hayne and Gummow JJ). 9 The exercise of jurisdiction to dismiss on a similar basis to that here agitated was discussed by me in Shalhoub Holdings Pty Ltd & Ors v CBA [2006] NSWSC 607. There I said: "[28] Rule 13.4 of the Uniform Civil Procedure Rules (UCP Rules) empowers the Court, in its discretion, to order that proceedings be dismissed where the proceedings are frivolous or vexatious; or no reasonable cause of action is disclosed; or the proceedings are an abuse of the process of the Court. The usual application, which seeks to rely on this Rule, depends upon an examination of the pleadings. [29] The usual course is for such an application to be made in circumstances where the pleadings do not disclose a cause of action and there is no possibility of the facts pleaded giving rise to a good cause of action: Dey v Victorian Railway Commissioners (1949) 78 CLR 62. This application is not a usual application. It depends upon the inherent jurisdiction, described in the Rule, to strike out the plaintiffs' case because it is so weak and/or because it depends upon facts, which, on the plaintiffs' case, cannot be proven. It is a most unusual course, upon which the Court would embark only in exceptional circumstances and only where it came to the view that to proceed further would be futile. [30] Notwithstanding that the course impressed upon the Court is unusual, it is a course which has been discussed by this Court, and others, over a long period of time. Often, the Court discusses the principles associated with the exercise of discretion agitated in the course of refusing to exercise that discretion. [31] The High Court, in Burton v The President of the Shire of Bairnsdale (1908) 7 CLR 76, referred to the discretion in the following way: 'The rule is that every plaintiff is entitled to have his action tried unless it can be shown obviously that the action is frivolous or vexatious, or otherwise an abuse of the process of the Court. A litigant is entitled to use, not to abuse, the process of the Court… So, there is power to strike out a pleading on the ground that it discloses no reasonable cause of action or of defence; and in any such case, or in the case of the action being shown by pleadings to be frivolous or vexatious, the Court may order the action to be stayed or dismissed, or judgment to be entered. This rule applies to a wider area of cases than the general power; and yet it has been held not to apply except in plain or obvious cases; and if there is a point of law that requires any serious discussion, it should be set down for argument: Hubbuck v Wilkinson . The pleading must be "obviously frivolous or vexatious, or obviously unsustainable," if it is to be struck out (per Lindley LJ in Attorney General of the Duchy of Lancaster v London and North Western Railway Co ). The pleading must be "so clearly frivolous that to put it forward would be an abuse of the process of the Court": Young v Holloway ." (Per Higgins J at 98, 99, 100) [32] In Cox v Journeaux (1935) 52 CLR 713, the principles relating to a strike out of this kind were once more discussed. That case concerned an allegation of conspiracy by the defendants, as co-directors of the plaintiff, to injure the plaintiff by false representation. There are significant similarities between the allegations made in Cox v Journeaux and the present proceedings. Sir Owen Dixon, who dealt with the notice of motion then before the Court, said: 'The inherent jurisdiction of the Court to stay an action as vexatious can be exercised only when the action is clearly without foundation and when to allow it to proceed would impose a hardship upon the defendants which may be avoided without risk of injustice to the plaintiff. The principle, in general paramount, that a claim honestly made by a suitor for judicial relief must be investigated and decided in the manner appointed, must be observed. A litigant is entitled to submit for determination according to the due course of procedure a claim which he believes he can establish, although its foundation may in fact be slender. It is only when to permit it to proceed would amount to an abuse of jurisdiction, or would clearly inflict unnecessary injustice upon the opposite party that it should be stopped. But the Court is not concluded by the manner in which the litigant formulates his case in his pleadings. It may consider the undisputed facts. Further, it is not limited to cases where there is no dispute of fact…. In the present case I am satisfied that the Court should exercise its power to stop the action summarily. The plaintiff's case is clearly hopeless. It is true that some examination of the facts is necessary before this appears.' (Per Dixon J at 720) [33] The Court of Appeal in England has expressed the view that in order for the inherent jurisdiction to be invoked successfully it must be "impossible for the party concerned to succeed on his claim": Charles Forte Investments Ltd v Amanda [1964] 1 Ch 240 at 250-251. [34] This Court has dealt with the principles and application of them on a number of occasions, the three best known examples of which are: Brimson v Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937; Peter Kent Development Propriety Ltd v ANZ Banking Group Ltd (unreported, NSWSC, Hunt J, 6 May 1980); Pountney v Dang (unreported, NSWSC, Barr J, 22 August 1997). [35] In Brimson , Cross J dealt with both a claim that the pleadings did not, themselves, disclose a cause of action and a claim that the plaintiff's case was so weak as to warrant summary dismissal. The latter claim was, with respect rightly, dealt with under both the inherent power of the Court and under the Supreme Court Rules , then applicable, which reflected the inherent power. The UCP Rules also reflect the inherent power. Justice Cross referred to: Bayne v Baillieu (1908) 6 CLR 382 at 387; Dey v Commissioner of Railways ; and General Steel Industries v Commissioner for Railways (NSW) (1964) 112 CLR 125. His Honour said: 'Where the court is asked to reject the plaintiff's case, either under its statutory rules or its inherent jurisdiction, the fundamental principle is that prima facie a plaintiff is entitled to have his case come to trial; and applications to deprive him of that right will succeed only in the clearest of cases. True, the court will not look merely at the suggested weakness of the plaintiff's case… but... at the suggested strength of the defendant's case; and, true, forensic argument and subsequent judicial reflection are not necessarily inconsistent with a firm conclusion that the cause of action should not be allowed to proceed. But fatal defects in the plaintiff's case must be very clear before the court will intervene in this fashion.' (at 944) [36] The principle is that the defendant must show that there is no possibility that there could be a good cause of action consistent with the pleadings and the facts. These same principles and this same approach were adopted in the other two judgments; Hunt J in Peter Kent Development , supra, described the power here discussed as 'much wider' than the power to strike out pleadings. His Honour went on to say: 'Both Rules reflect the inherent jurisdiction of the Court to deal with the abuse of its process… Under that inherent jurisdiction - although now more properly under Part 13 Rule 5 [now UCP Rules Rule 13.4] - there is power to stay an action which, although properly pleaded, is bound to fail. Such an action may be called either vexatious or an abuse of process. One such case would be where the legislature has provided an absolute defence… Another such case would be where a second action was brought seeking to litigate an identical issue to that already decided against the plaintiff… Such cases are very rare; the genus of which they are but species is aptly named an abuse of the Court's process, for relief will not be given in such cases unless the claim or defence being dismissed or struck out under such power amounts to an improper use of the machinery of the Court.'" 10 I adhere to the view earlier expressed. Batistatos is not inconsistent with that approach. 11 Applying those principles, I do not form the view that, in relation to any one of the Schofield companies, giving the plaintiff his day in court would be an improper use of the machinery of the Court or "would clearly inflict unnecessary injustice upon the opposite party." (Sir Owen Dixon in Cox v Joumeaux, supra.) Conclusion on Summary Dismissal 12 The facts upon which the Schofield companies rely are not accepted. An issue of fact is sufficient to warrant the proceedings continuing. Further, the facts do not go far enough. It would be possible, for example, for the fifth defendant to have provided the fireworks, and imported it. But it is also possible, even on the version of Mr Schofield, for the seventh defendant (who, he says, has never imported) to have supplied after another has imported. It is possible for the sixth defendant to have acted relevantly on fireworks without trading in them. On the facts that are accepted, it cannot be said of any one of the Schofield companies that it is not possible for the plaintiff to succeed or that further proceedings are unjustifiable or an abuse. The proceedings have not been commenced for an improper purpose. I dismiss the motion. 13 None of the above is in any way critical of Mr Schofield. It is likely that his evidence will, ultimately, be accepted by the plaintiff and/or by the trial judge. But that is not the test. His affidavit does not bind the fifth defendant, nor is there any admission by any one of the Schofield companies. Strike Out Motion – Application and Principles 14 The Schofield interests move to strike out the pleading generally as against the Schofield companies. This is an alternative to the dismissal of proceedings. It is submitted that the terms of paragraph 7 of the Statement of Claim (see [3] infra) does not allege as against any one of the companies that it supplied the fireworks. 15 This is not the pleading. Paragraph 6 of the Statement of Claim claims that one, "some or all" of the Schofield companies imported and supplied fireworks. Paragraph 16 of the Statement of Claim alleges that the Schofield companies imported the firework and were the deemed manufacturer (paragraph 41) under the Trade Practices Act 1974 (Cth) and liable thereunder (paragraph 42). Paragraph 46 of the Statement of Claim alleges negligence by the Schofield companies. 16 The terms of paragraph 7 of the Statement of Claim reflects the prevalence of private trading companies in society and their regrettable intermingling. Until one or more of the companies admits either or both importing or supplying the fireworks, the plaintiff is entitled to pursue all of them. 17 A number of other pleading matters are raised. They relate to: (a) the alleged breach of section 75AD of the Trade Practices Act where it is said that the pleadings do not disclose: (i) when the importation occurred; (ii) who the manufacturer was; (iii) whether the actual manufacturer had a place of business in Australia; (iv) how it is said the Schofield companies (or any of them) are corporations within the meaning of the Trade Practices Act ; (b) unconscionable conduct where it is said: (i) there is no allegation of special disadvantage; (c) negligence: (i) there is no pleading of duty of care; (ii) there is no pleading of the content; (iii) there is no pleading of the conduct said to be in breach of any such duty; (iv) there is no pleading of the material facts; (v) there is no pleading of the facts giving rise to the breach of the statutory provisions to which reference is made; (vi) there is no pleading establishing the facts upon which one can determine whether the NSW or ACT statutes upheld; (vii) no reasonable cause of action. 18 The issues raised by the Schofield interests in relation to the alleged breach of section 75AD of the Trade Practices Act is a matter on which, to the extent that the plaintiff knows them, the Schofield interests are entitled to obtain the information. The more fundamental question however is whether the lack of information in the Statement of Claim is such as to warrant the pleading in that regard being struck out. It cannot be said that the pleading, even if deficient, is an abuse of process simply because it does not provide that information. Nor can it be said that it does not disclose a reasonable cause of action. 19 The jurisdiction of the Court to strike out pleadings on the basis that the pleadings do not disclose a reasonable cause of action is exercised only in plain and obvious cases: see General Steel, supra. It is clear that the allegation made in the Statement of Claim necessarily implies (or expresses) that an importation occurred and that the provisions of section 75AD apply. While it is for the plaintiff to prove that section 75AD of the Trade Practices Act applies, the details of factual allegations proving the application of section 75AD of the Trade Practices Act are either a matter for particulars or a matter on which there needs to be an addition to the pleadings. In other words, the complaint that is made, if correct, is curable and not one which, in its discretion, the Court ought use to strike out the Statement of Claim or any part of it. 20 Further in relation to the manner in which it is said the Schofield Companies (or any of them) are corporations within the meaning of the Trade Practices Act, the Statement of Claim alleges that each and all of the Schofield companies traded by importing and supplying the fireworks (see above). In those circumstances the allegation that there is no pleading establishing how the Schofield companies are corporations within the meaning of the Trade Practices Act is untenable. 21 The pleading alleges that the plaintiff was injured "by reason of the unconscionable conduct … of the Schofield Companies". Damages are sought for the injury. As a consequence of that pleading it is a necessary incident that an allegation is being made by the plaintiff that there is a special disadvantage. The special disadvantage is not pleaded. It should be. The allegation of special disadvantage would be an additional pleading to that filed and the pleading in its current form, if it discloses a defect, is, in every sense, curable. I am not prepared to strike out any part of the Statement of Claim on the basis of the failure to allege special disadvantage. 22 Next the strike out motion deals with the question of negligence. The Statement of Claim pleads negligence on the part of the Schofield interests and damages as a result of that negligence. The conduct of the Schofield interests are pleaded, but are not related to the breach of duty (a fortiori, in circumstances where the duty is not adumbrated). A pleading of negligence necessarily gives rise to the assertion that there is a duty of care that has been breached. 23 During the course of argument counsel for the plaintiff made clear that the duty of care on which they rely is that expressed by the Court of Appeal in McPherson's Limited v Eaton (2005) 65 NSWLR 187 and applied by me in Laws v GWS Machinery [2007] NSWSC 316. Nevertheless it is important for the expeditious and appropriate processing of a claim that issues such as the precise duty of care, the content of the duty, the conduct necessary to satisfy the duty and/or the conduct which is said to be in breach of the duty are detailed in the pleadings that are before the Court. In these pleadings, they are not. Nevertheless, it is curable. It is certainly not a basis upon which a court should strike out any part of the Statement of Claim. No order is sought by the applicants on the motion for the provision of particulars or for any other order as to the filing of an Amended Statement of Claim. The pleadings have not closed and there is no reason why an Amended Statement of Claim can not be filed without leave or order or direction of this Court. To the extent necessary leave would be granted to file an Amended Statement of Claim to take account of the matters raised in this judgment. 24 All of the same comments can be made in relation to the issues associated with the "statutory count". I do not on that basis strike out the pleading. 25 Lastly, I deal with the issue relating to the liability of Mr Schofield for a cause of action based upon his involvement in the contraventions of Part V of the Trade Practices Act alleged to have been perpetrated by the Schofield companies. The only cause of action to which the Statement of Claim refers that is contained within Part V of the Trade Practices Act is a reference to the statutory warranty in section 71. In that section, the legislature implies a condition into contract, but the cause of action continues to remain a cause of action in contract. As such, a breach of the contract does not involve a contravention of the Trade Practices Act. If the supply of goods breaches the implied condition, there is a breach of the contract only. In those circumstances it is impossible for Mr Schofield to be involved in the contravention of Part V of the Trade Practices Act (or at least so much of it as is alleged in these proceedings). That cause of action against Mr Schofield should be struck out. Conclusion 26 As a result of the foregoing, the issue arises as to the appropriate order as to costs in the proceedings. I take the view that the motion for summary dismissal of the proceedings ought be costs paid by the applicants on the motion and payable forthwith. Further I take the view that the applicants on the motion to strike out should pay the costs of that motion except to the extent that Mr Schofield was successful. I estimate that a proper allowance for the requirement of the plaintiffs to pay Mr Schofield's costs of that part of the motion that was successful and the remainder of the proceedings is that the plaintiff should forgo 10% of his costs. Otherwise I apportion the plaintiff's costs 50% on the motion for summary dismissal and the remaining 40% on the motion to strike out. 27 The Court makes the following orders: (i) The motion seeking summary dismissal of the proceedings as against the sixth, seventh and eighth defendants be dismissed. (ii) So much of the Statement of Claim that pleads an involvement by Mr Schofield, the eleventh defendant, in a contravention of Part V of the Trade Practices Act be struck out and the proceedings insofar as it relies upon the aforesaid cause of action be dismissed. (iii) Otherwise than the immediately preceding paragraph, the motion for the striking out of the Statement of Claim by the fifth, sixth, seventh, eighth and eleventh defendants be dismissed. (iv) The sixth, seventh and eighth defendants pay 50% of the plaintiff's costs of both motions and the proceedings in relation thereto, as agreed or assessed. Such costs to be payable forthwith. (v) The fifth, sixth, seventh, eighth and eleventh defendants pay a further 40% of the plaintiff's costs of both motions and the proceedings relating thereto, as agreed or assessed. ********** 09/11/2007 - Notice received for change of solicitors for the fifth, sixth, seventh, eighth and eleventh defendants. - Paragraph(s) Coversheet 13/11/2007 - "inflect" replaced with "inflict". - Paragraph(s) 11 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.