The trial Judge was bound to approach the matter in that way.
An allegation, perhaps the most important allegation in the case, was that there had been conduct on the part of Nescor and Mr Nelson which had been in breach of s 52 of the Trade Practices Act and of s 11 of the Fair Trading Act. The pleader had pleaded the case along the lines of the old common law pleadings for breach of warranty and for fraudulent misrepresentation. The statutory breaches however turn their attention to conduct.
The trial Judge was correct in considering first, what was conveyed by the statement in the letter, just as in Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112 at 131-2, Hill J considered what was represented by the attachment of a certificate under s 149 to a draft contract for the sale of land. Hill J concluded that that step did not constitute a representation that the zoning was in accordance with the terms of the certificate but rather a representation that the certificate attached was a copy of the certificate issued by the Council and was the whole of that certificate. Similarly, in the present case, the trial Judge was bound to consider what was the message conveyed by the subject statement in the letter, having regard to the whole of the letter and the context in which it was written. The second task of the trial Judge was to determine whether the making of the statement in the letter was conduct which was in breach of the statutory provisions having regard to all the circumstances of the case.
I agree with the trial Judge that the letter of 3 July 1990 conveyed the fact that the average takings of operators in the Northland Food Court were $10,000 per week, notwithstanding that the statement was qualified by the words "It is our understanding". Those words merely qualified the communication by indicating that the information came from another source and not from the writer's direct knowledge. However, in the context of the letter, it was not the state of mind of the franchisor which was important. The $10,000 was put forward as a fact which Mr & Mrs Vittouris and the financier could take into account in their calculations of the viability of the franchise. The other figures, the projection of weekly sales of between $8,000 to $12,000 per week, fell into a different category for they were not a statement of present fact, except insofar as they implied the fact that the writer of the letter believed the projection to be true and based on rational grounds.
Because the trial Judge's analysis of the issue was correct in law, his Honour was not obliged to consider the matter in the way that counsel on both sides at first sought to put the matter and, indeed, it would have been wrong for him to have done so.
The ordinary principle with respect to pleadings is that stated by Mason CJ and Gaudron J in Banque Commerciale SA (En Liquidation) v Akhil Holdings Ltd (1990) 169 CLR 279 where their Honours said at 286-7:
"The function of pleadings is to state with sufficient clarity the case that must be met: Gould and Birbeck and Bacon v. Mount Oxide Mines Ltd. (In liq.) (1916) 22 C.L.R. 490, at p.517, per Isaacs and Rich JJ. In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision. The rule that, in general, relief is confined to that available on the pleadings secures a party's right to this basic requirement of procedural fairness. Accordingly, the circumstances in which a case may be decided on a basis different from that disclosed by the pleadings are limited to those in which the parties have deliberately chosen some different basis for the determination of their respective rights and liabilities. See, e.g. Browne v. Dunn (1893); Mount Oxide Mines (1916) 22 C.L.R., at pp. 517-518."
However, pleadings are not always well-drafted and expressed with clarity and, however expressed, they cannot require a judge to decide a case otherwise than in accordance with the law. If the pleadings proceed on a misapprehension of law, the judge should, as the trial Judge did in this case, make it clear to the parties what is the correct approach and should proceed accordingly. When that happens, as it did in the present case, then the case must proceed otherwise than in accordance with a strict reading of the words of the pleading.
In the present case, no amendment to the statement of claim was sought. However, failure to amend is not necessarily decisive. In Water Board v Moustakas (1988) 180 CLR 491, Mason CJ, Wilson, Brennan and Dawson JJ said at 497:
"In deciding whether or not a point was raised at trial no narrow or technical view should be taken. Ordinarily the pleadings will be of assistance for it is one of their functions to define the issues so that each party knows the case which he is to meet. In cases where the breach of a duty of care is alleged, the particulars should mark out the area of dispute. The particulars may not be decisive if the evidence has been allowed to travel beyond them, although where this happens and fresh issues are raised, the particulars should be amended to reflect the actual conduct of the proceedings. Nevertheless, failure to amend will not necessarily preclude a verdict upon the facts as they have emerged (See Dare v. Pulham (1982), 148 C.L.R. 658). In Leotta v. Public Transport Commission (N.S.W.) (1976) 50 A.L.J.R. 666, at p.668; 9 A.L.R. 437, at p.446, a case having been submitted to the jury which was factually different from that alleged in the pleadings and particulars, Stephen, Mason and Jacobs JJ. observed that the pleadings should have been amended in order to make the facts alleged and the particulars of negligence precisely conform to the evidence. The failure to apply for the amendment in that case was held not to be fatal. But in Maloney v. Commissioner for Railways (N.S.W.) (1978) 52 A.L.J.R. 291, at p.294; 18 A.L.R. 147, at pp.151-152, Jacobs J., with whom the other members of the Court agreed, pointed out that the new issue or new way of particularizing the existing issue had emerged at the trial and had been litigated.
It is necessary to look to the actual conduct of the proceedings to see whether a point was or was not taken at trial, especially where a particular is equivocal."
I am satisfied that the ground on which his Honour gave judgment was raised and that it was litigated. I shall return to this point in more detail later. Had this not occurred, the judgment would, of course, be set aside. The Court must be satisfied that the parties were afforded a fair trial and that the principles of natural justice were complied with. In this case that occurred, in part because the relevant statement was raised in the pleading as an element of what was said to be misleading and deceptive conduct, and in part because the trial Judge directed the attention of counsel to the correct issues.
Counsel for Nescor and Mr Nelson relied upon two matters in submitting in this appeal that it was plain to Mr & Mrs Vittouris that Nescor and Mr Nelson were merely passing on information for what it was worth. The first is that Mr Nelson had, before 3 July 1990, informed Mr & Mrs Vittouris that he had been told by Mr Macrae that the average weekly takings were $10,000 per week. The second was that, in a letter of 12 November 1990 which Mr Vittouris wrote to Mr Nelson seeking a reduction in the rental, Mr Vittouris said, inter alia:
"The rent Muffin Break pays ($5,213.00 incl outgoings) is at least 30% over what any other food retailer in the food court is paying and (if Northland Centre Management is to believed) their income was in the vicinity of $10,000.00 per week. Measure this against $3,255.75 for Muffin Break and you can see why I am at my wits end to make ends meet." (emphasis added)