New South Wales Supreme Court CITATION : Zeaiter v Reliance Financial Services Pty Ltd [2007] NSWSC 929 HEARING DATE(S) : 25 May 2007 JURISDICTION : Equity Division Duty List JUDGMENT OF : Brereton J EX TEMPORE JUDGMENT DATE : 25 May 2007 DECISION : Order that plaintiff file a verified statement of the nature of its case in respects in which Statement of Claim deficient. CATCHWORDS : COSTS – Interlocutory costs order – whether should be assessable forthwith - PROCEDURE – Pleading – application to strike out – late application – liberal view taken of pleading (CTH) Trade Practices Act 1974 ss 51AA, 51AB, 51AC, 82, 87 (NSW) Contracts Review Act 1980 s 9 LEGISLATION CITED : (NSW) Fair Trading Act 1987 ss 68, 72. (NSW) Supreme Court Rules 1970 Pt 52A, r 9 (NSW) Uniform Civil Procedure Rules 2005 rr 15.10, 42.7 CASES CITED : Fiduciary Limited v Morningstar Research Pty Limited (2002) 55 NSWLR 1 Annette Theresa Zeaiter (plaintiff) PARTIES : Reliance Financial Services Pty Ltd (first defendant) Sam Peter Cassaniti (second defendant) FILE NUMBER(S) : SC 3801/06 COUNSEL : Mr A F Fernon (plaintiff) Mr D A Allen (first defendant) SOLICITORS : McCabe Terrill Lawyers Pty Ltd (plaintiff) Hancocks Solicitors (first defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION DUTY LIST BRERETON Friday, 25 May 2007 3801/06 Annette Therese Zeaiter v Reliance Financial Services Pty Limited JUDGMENT (ex tempore) 1 HIS HONOUR: Before the Court are two Notices of Motion: the first originally was an application by the plaintiff for judgment but ultimately only a question of costs remains, and the second is an application by the defendant to strike out the Statement of Claim. First Motion 2 The first motion was filed by the plaintiff Annette Therese Zeaiter on 17 May 2007 and claims, in substance, orders striking out the defendant's Cross-Claim for want of prosecution, and default judgment on the Statement of Claim as a result of the defendant's failure to file a Defence. Since that motion was filed, the default has been cured by the filing of a Defence, and so far as the allegation of want of prosecution is concerned – which depended essentially on the defendant's failure to file further affidavits – the defendant/cross-claimant indicated that it intends to proceed to trial on the affidavits already filed in connection with the interlocutory application in the matter. In those circumstances, the plaintiff has pressed its motion only insofar as it seeks costs, seeking also an order that those costs may be assessed forthwith. The defendant does not seriously oppose an order that it pay the plaintiff's costs of the motion, but opposes the order for assessment forthwith. 3 The circumstances in which the Court might order that an interlocutory costs order be assessed forthwith are not strictly constrained. (NSW) Uniform Civil Procedure Rules 2005, r 42.7 provides as follows: (1) Unless the court orders otherwise, the costs of any application or other step in any proceedings, including: (a) costs that are reserved, and (b) costs in respect of any such application or step in respect of which no order as to costs is made, are to be paid and otherwise dealt with in the same way as the general costs of the proceedings. (2) Unless the court orders otherwise, costs referred to in sub-rule (1) do not become payable until the conclusion of the proceedings. 4 The facility for the Court to order otherwise, authorises an order having the effect of making an interlocutory costs order payable forthwith. Some of the relevant factors were identified in (former) Supreme Court Rules Part 52A, r 9, which provided as follows: 9 Order for costs—when payable (1) Where before the conclusion of any proceedings, other than proceedings entered in the Commercial List or the Technology and Construction List, the Court makes an order for the payment of costs or a motion is refused with costs, the costs shall not, unless the Court otherwise orders, be payable until the conclusion of the proceedings. (2) Where, in any proceedings, it appears to a registrar, on application, that there is no likelihood of any further order being made in the proceedings, the registrar may order that any costs ordered to be paid shall be payable forthwith. (3) Where in any proceedings: (a) it appears to the Court that: (i) a party has been subject to unreasonable delay or default on the part of any other party, (ii) the proceedings are unreasonably protracted, or (ii) justice otherwise demands it, or (b) a costs order is made under rule 43 or rule 43A, the Court may order that costs, or a specified amount on account of costs, be payable forthwith. 5 Although sub-rule (3)(a) is not replicated in the current rules, the factors specified in my view remain relevant to the exercise of the discretion to otherwise order. Other relevant factors are identified in Barrett J's judgment in Fiduciary Limited v Morningstar Research Pty Limited (2002) 55 NSWLR 1. 6 The basis on which it is contended that the court should order otherwise here is unreasonable conduct on the part of the party against whom costs have been ordered. 7 It is true that there has been some considerable default and delay on the part of the defendant in filing a Defence. To the extent that that has occasioned additional costs, including costs of this application, the defendant will have to bear them, but it is not apparent that this is a case in which there is a great deal more to be done before trial, and the defendant says that it is practically ready to take dates for hearing. 8 Although at a late stage, it has been suggested that there is a dispute as to whether the plaintiff is indebted to the defendant, at least to the extent of $35,000, and there seems at least a reasonably arguable case that the plaintiff is so indebted; that is a powerful argument against making an order that costs may be assessed forthwith, as if there is such a set-off available, there could be no practical utility or benefit in an order for assessment forthwith. Moreover, making such orders tends to distract parties from getting on with preparing the main case for hearing, while they have subsidiary disputes over the assessment of costs. 9 I order that the defendant pay the plaintiff's costs of the plaintiff's motion filed on 17 May 2007. I decline to order that the plaintiff may proceed to assessment forthwith. Second Motion 10 The second motion is that filed by the defendant on 22 May 2007, in which it seeks an order that the Statement of Claim be struck out, with liberty to replead. The alleged defects in the pleadings are identified in Mr Allen's helpful written submissions. However, I propose to approach the matter rather more broadly, having regard to the circumstance that the application is made at what must be said to be an inappropriately late stage. 11 The Statement of Claim was served on 24 July 2006. Numerous directions for the filing of a Defence have been made, which have been complied with only recently, yet it is only now that objection has been taken to the pleadings. I therefore take a rather more liberal view of the pleading than might have been appropriate had the application to have it struck out been made promptly, in particular, where it is tolerably clear what is intended by the pleading and what is implicit in it. 12 The first complaint relates to paragraphs 39 and 57 of the Statement of Claim. I do not accept that the plaintiff must go so far as to plead fraud or non est factum, as the defendant's submissions contend. The plaintiff simply asserts the conclusion, from the facts previously pleaded, that there was no agreement binding her because she did not sign the relevant document. If established, that supports the declaration claimed in paragraph 1 of the relief claimed in the Statement of Claim. 13 The next complaint is paragraphs 48, 58 and 59 of the Statement of Claim, which are said to be inconsistent with preceding paragraphs, in particular 39. In 39 the plaintiff alleges that she did not sign the relevant document. In 40 she alleges, in the alternative, that if she did so, then the circumstances were such as to give rise to a defence of what might, in broad terms, be called unconscionability. I do not see any fundamental inconsistency in the pleading in that respect. On the one hand, the plaintiff says "I did not sign the document", and on the other she adds, "But if my recollection about that is wrong, and I did sign it, I did so in circumstances that render the transaction unconscionable." 14 In respect of paragraph 40, the complaint is also made that the various sub-paragraphs involve conclusions of agency, and allegations of fraud, special disability, undue influence, duress and inequality of bargaining power, the material facts underlying which are not pleaded. So far as the alleged agency is concerned, any difficulty in that respect can be clarified by particulars. So far as the other matters are concerned, I take them to pick up the conclusions pleaded earlier, in paragraph 32 of the Statement of Claim, the facts underlying which are identified, in the prefatory words of that paragraph, as being the matters pleaded in paragraphs 4 to 22 and 28 to 29 of the Statement of Claim. 15 The next complaint is paragraph 41. It pleads that the Reliance engagement letter, one of the impugned transactions, contains terms not reasonably necessary for the protection of Reliance's interests. It particularises certain terms of the relevant transaction. The pleading does not articulate the basis or grounds on which it is said that those terms are not reasonably necessary. I think that in this respect, the pleading requires supplementation, and I will make an order having that effect, and it is not, on the face of paragraph 41, self-evident why at least some of them are said to be not reasonably necessary for the protection of Reliance's interests. 16 The next complaint relates to paragraphs 43, 61, and 82 of the Statement of Claim. They allege that the Reliance engagement letter was an unfair contract within the (NSW) Contracts Review Act 1980, or unconscionable in equity, or unconscionable within the meaning of the (CTH) Trade Practices Act 1974. The complaint is that it said that no relationship is established between what is earlier pleaded, and the basis for relief. I disagree. The relationship is alleged in the prefatory words of paragraph 43, and is with the matters alleged in paragraphs 40 and 41 – which are relevant factors under Contracts Review Act, s 9. 17 As to paragraph 43, there is validity in the complaint that at least one significant element of the cause of action under the Trade Practices Act, s 51AC, is not pleaded, and the causes of action under ss 51AA and 51AB are not pressed. 18 The next objection is to paragraph 44, which pleads, in effect, a misrepresentation by silence. I do not accept that that is a non sequitur, at least in the legal sense; it is well accepted that a misrepresentation can be conveyed by a party remaining silent in certain circumstances which import a duty to speak. 19 Paragraph 46 complains that by making the relevant representation Reliance engaged in misleading and deceptive conduct. There is no pleading that identifies the falsity in the representation, and in that respect I agree that the pleading is defective, as Mr Fernon for the plaintiff was prepared to concede. 20 In respect of the Trade Practices Act claims, there is validity in the complaint that damage or, at least the likelihood of damage, is an essential part of the cause of action under Trade Practices Act, ss 82 or 87, and there is no pleading to that effect. There is some limited force in the response that such an obligation is implicit, but it has always been regarded as essential – for example, in cases in negligence and nuisance – that damage be specifically pleaded, and rules of Court make clear that damage is to be specifically pleaded. Again, the pleading requires supplementation in this respect. 21 Paragraph 49 pleads that the Reliance engagement letter has been abandoned and is of no legal force or effect. Contrary to Mr Allen's submission, I think this is to be understood as a pleading that the contract has been terminated by abandonment. 22 Given the circumstances and the timing of the strike-out application, and except in a limited and relatively uncontroversial respect, I do not propose to make an order striking out the Statement of Claim, but will adopt an alternative course to remedy the defects that have been identified. Orders 23 I order that in each of paragraphs 43(c), 61(c), and 82(c), of the Statement of Claim, the words, "51AA, 51AB and" be struck out. 24 Pursuant to Uniform Civil Procedure Rules, r 15.10(1)(b), I order that by 8 June 2007 the plaintiff file a statement of the nature of its case verified by affidavit, in the following respects: (1) As to the agency referred to in paragraphs 40(a), 58(a) and 79(a) of the Statement of Claim and, in particular, as to whether the agency is actual, implied or ostensible and, if actual, whether it is oral or written, providing the usual particulars thereof; (2) In respect of paragraphs 41, 59 and 80 of the Statement of Claim, the basis on which any of the terms impugned are said to be not reasonably necessary for the protection of Reliance's interests; (3) In respect of paragraphs 46, 64 and 85 of the Statement of Claim, the basis on which the relevant representation is said to be false or misleading or deceptive; (4) In respect of paragraphs 43(c), 61(c) and 82(c) of the Statement of Claim, the basis on which s 51AC is said to be engaged, having regard, in particular, to s 51AC(7); (5) In respect of claims for relief 3(b) and (c), 6(b) and (c), 9(b) and (c), 12(b) and (c), and 15(b) and (c), what, if any, damage it is alleged that the plaintiff has suffered or is likely to suffer, that attracts Trade Practices Act , ss 82 or 87 or (NSW) Fair Trading Act 1987, ss 68 or 72. 25 There will be no orders as to costs of the motion, to the intent that each party bear its own costs. 26 The proceedings are adjourned to Tuesday, 29 May 2007 at 9.30am before the Registrar. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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