The Amended Defence
6 Whether any of the many complaints made by the ACCC in respect of the adequacy of the amended defence are warranted requires a consideration of the whole of that pleading in the context of the response it makes to the statement of claim. That makes it desirable to set out in full each of these pleadings. It would detract from continuity and ready comprehensibility of reasoning so to do in the main body of this judgement. I therefore annex the pleadings to it.
7 The ACCC's complaints with respect to the amended defence fall into two broad categories:
(a) those based on Mr Day's assertion that the imprecision in the use of the phrase "at all material times" in the statement of claim prevents any more precise response than that given in the amended defence to allegations which employ this phrase; and
(b) other paragraphs in the amended defence which are said to be non-responsive, vague, evasive or which otherwise fail to identify the point of substance or matter truly in issue.
8 When employed in pleading, the phrase "at all material times" is used to the end of complying with the requirement to plead material facts. That requirement is a feature of the system of pleading provided for in the rules of court which were made following the enactment in the United Kingdom in the late nineteenth century of the Judicature Acts 1873-1875 (UK) and its local analogues.
9 In respect of this Court, that heritage remains evident in O 11 r 2 of the Federal Court Rules:
2 Facts not evidence
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).
10 The general obligation of a party responding to a pleading, for example by a defence, is as stated in O 11 r 13:
13 Admissions and traverse
(1) Subject to subrule (3) and to Order 43, rule 7 (which deals with persons under disability), an allegation of fact made by a party in his pleading is deemed to be admitted by the opposite party unless it is traversed by that party in his pleading or a joinder of issue under rule 14 operates as a denial of it.
(2) A traverse may be made either by a specific denial or by a statement of specific non-admission.
(3) Subject to subrule (4), every allegation of fact made in a statement of claim or counterclaim which the party on whom it is served does not intend to admit must be specifically traversed by him in his defence or defence to counterclaim, as the case may be; and a general denial of such allegations, or a general statement on non-admission of them is not a sufficient traverse of them.
(4) Any allegation that a party has suffered damage and any allegations as to the amount of damages is deemed to be traversed unless specifically admitted.
11 The terms of O 11 r 17 and 18 ought also to be noted with respect to such subsequent pleadings.
17 General issue
A party shall not plead the general issue.
18 Denial to be substantial answer
When a party in any pleading denies an allegation of fact in the previous pleading of the opposite party, he must not do so evasively or generally, but must answer the point of substance, in accordance with rule 13 of this Order.
12 The general practice of this Court with respect to pleadings does not reflect the changes made to practice in England and Wales by the Civil Procedure Rules 1998 (Eng & Wales). Those rules introduced statements of case which are exchanged in conjunction with witness statements. It is nonetheless possible to discern the influence of these changes in some aspects of practice in this Court; see Practice Note No 30, Fast Track Directions and the provision in Pt 4 thereof for "Fast Track Statements, Responses and Cross-claims" and, in relation to taxation appeals, the provision for "appeal statements" in O 52B r 5, as read in conjunction with the Tax List Directions of 4 April 2008. None of these are applicable to this case.
13 The following statement by Murphy, Wilson, Brennan, Deane and Dawson JJ in Dare v Pulham (1982) 148 CLR 658 at 654 remains pertinent to the role of pleadings and particulars as provided for by O 11 and O 12 of the Federal Court Rules:
Pleadings and particulars have a number of functions: they furnish a statement of the case sufficiently clear to allow the other party a fair opportunity to meet it (Gould and Birbeck and Bacon v. Mount Oxide Mines Ltd. (In liq.) (1916) 22 CLR 490, at p 517 ; they define the issues for decision in the litigation and thereby enable the relevance and admissibility of evidence to be determined at the trial (Miller v. Cameron (1936) 54 CLR 572, at pp 576-577 ; and they give a defendant an understanding of a plaintiff's claim in aid of the defendant's right to make a payment into court. Apart from cases where the parties choose to disregard the pleadings and to fight the case on issues chosen at the trial, the relief which may be granted to a party must be founded on the pleadings (Gould and Birbeck and Bacon (1916) 22 CLR, at pp 517, 518 ; Sri Mahant Govind Rao v. Sita Ram Kesho (1898) LR 25 Ind App 195, at p 207 ). But where there is no departure during the trial from the pleaded cause of action, a disconformity between the evidence and particulars earlier furnished will not disentitle a party to a verdict based upon the evidence. Particulars may be amended after the evidence in a trial has closed (Mummery v. Irvings Pty. Ltd. (1956) 96 CLR 99, at pp 111, 112, 127 ), though a failure to amend particulars to accord precisely with the facts which have emerged in the course of evidence does not necessarily preclude a plaintiff from seeking a verdict on the cause of action alleged in reliance upon the facts actually established by the evidence (Leotta v. Public Transport Commission (N.S.W.) (1976) 9 ALR 437, at p 446; 50 ALJR 666, at p 668 ).
14 In Australian Competition and Consumer Commission v Pauls Ltd [1999] FCA 1750 at [10], with reference to sentiments to that effect then recently expressed by Wilcox J in Coshott v Kam Tou Mak [1998] FCA 147, O'Loughlin J observed that there was a contemporary tendency against the taking of a pedantic approach to a pleading. A decade later that remains the case. Further, a pleading must be read as a whole. The countervailing consideration is whether, accepting it must be so read, the pleading fairly puts the other party on notice as to the case to be met. A pleading is but a means to the achievement of procedural fairness and of the efficient use of judicial resources and those of the parties by the identification of what is truly at issue.
15 The phrase "at all material times" can be a convenient form of legal shorthand. When employed in the pleading of a statement of claim the phrase embraces those times which are relevant to the cause or causes of action pleaded or at least to an allegation of a material fact which constitutes all or part of an element of such a cause of action. To have that effect the phrase must have a reference point to allow the reader to ascertain the day or period on or during which it is alleged that fact prevailed materially in the sense of being relevant.
16 Convenience is not necessarily to be equated with precision. This statement of claim exemplifies that proposition.
17 It was submitted on behalf of the ACCC that it was, for example, evident from the allegations in paras 5, 8, 11 and 13, what was the commencement of material times and para 3 and para 10 as to their conclusion in respect of Mr Day. The submission on behalf of Mr Day was that the phrase "is intermittently used in the statement of claim with either no date specified or different dates referred to. In a few instances a start date and end date can be deduced." Subject to substituting the words "indiscriminately" and "uncritically" for "intermittently", I regard the latter as an accurate summary of the way in which the phrase "at all material times" is employed in this statement of claim.
18 In para 2 of the statement of claim, the phrase "at all material times" is employed without an internal reference point. That, in itself, is not a vice if the times concerned are fairly and reasonably ascertainable reading the pleading as a whole. In, for example, a routine running down case in which the alleged tort was committed on a particular date and that date and event are elsewhere alleged in the pleading, it would be idle to suggest that the absence of any internal reference point in a paragraph such as para 2 of the statement of claim was of any moment so far as the pleading of a defence which, in terms of O 11 r 18, "answered the point of substance" was concerned. The time that was alleged to be material would be readily comprehensible as the date of the alleged tort.
19 In this statement of claim though the phrase "at all material times" engages with a number of other paragraphs in the statement of claim which also employ that phrase and do so in a variety of ways. They do so either without an internal reference point (e.g. para 5), with an end point but no start point (e.g. para 6 and para 8), or with an end point but no start point (e.g. paragraph 10 and, especially notably, para 34). This method of pleading truly does leave the reader to speculate as to what is the extent of the period concerned for the allegation made in it. To which other temporal point is the allegation to be regarded as "material" if there are different such points also in part at least defined by "at all material times"? Overall, the pleading seems to refer to conduct that occurred between August 2005 and June 2008 although not all of the conduct alleged occurred over the whole of that period. Such an understanding of the statement of claim, so far as Mr Day is concerned, is consistent with the declaratory relief sought in respect of him in para 3 of the application.
20 If, for example, on the available evidence, the ACCC's case were that particular conduct occurred over the whole of such a period and that Mr Day was knowingly concerned in the same, the following allegations might be made, without any need additionally to allege "at all material times":
(a) "During the whole of the period between August 2005 and June 2008 Craftmatic [engaged in the following particular conduct]";
(b) Mr Day was knowingly concerned in the conduct alleged in para (a).
Where it was alleged that different types of corporate conduct had occurred over different periods, para (a) would doubtless be expanded into discrete paragraphs referring to such conduct. Paragraph (b) might then permissibly enumerate each of these paragraphs as the conduct in which it was alleged that Mr Day was knowingly concerned. So pleaded, a complaint of the kind presently made on behalf of Mr Day would not be open.
21 Order 11, rule 18 was relied upon by the ACCC. In that regard, my attention was helpfully drawn to the reference to that rule by French J (as his Honour then was) in Smith v Barron (2004) 139 FCR 566 at 575-576 as part of his Honour's rationale for striking out a defence which consisted mostly of bare denials including a bare denial in respect of a particular paragraph of a statement of claim which made detailed factual allegations as to events in a particular period by reference to which it was alleged that there were reasonable grounds for suspecting that a company was either insolvent or would become insolvent by reason of incurring those debts. His Honour contrasted these bare denials with an affidavit read before him in which, on information and belief sourced from the company's directors, it was attested that they had reasonable grounds to expect and did expect that the company would be able to pay its debts at these times and with the requirement, found in the certificate in Form 15B which must accompany a pleading and derived from O 11 r 1B, that, inter alia, a legal practitioner certify that there existed a reasonable basis for the denial of allegations. His Honour also drew attention to particular matters alleged in the statement of claim that had not really been disputed by the director concerned in his public examination. Against this background, it becomes apparent why his Honour reached the conclusion that the defence filed was really just a "holding defence" rather than an attempt in good faith to plead to the statement of claim. This case is different.
22 In its prescription that a defence ought not to be pleaded in an evasive way, O 11 r 18 emphasises a principle of pleading practice which is a subset of the more general requirements, found in O 11 r 16(b) and r 16(c) respectively, that a pleading must not have a tendency to cause prejudice, embarrassment or delay to a proceeding or constitute an abuse of process. In the face of a statement of claim noteworthy for its temporal imprecision, it is not, for example, evasive, to admit, as this defence does (para 3.1), that "for a period of time prior to June 2008 [Mr Day] was a managing director of [Craftmatic]". Nor is it necessarily evasive to admit that one was but "a", rather than "the" managing director. One of the rules with respect to corporations, replaceable by virtue of s 135 of the Corporations Act 2001 (Cth), is that found in s 201J of that Act, which provides, "The directors of a company may appoint 1 or more of themselves to the office of managing director of the company for the period, and on the terms (including as to remuneration), as the directors see fit" (emphasis added). Further, even if Craftmatic did have but one managing director at any given time, the difficulty with this statement of claim is in ascertaining what is that given time. Mr Day's obligation is to respond to the allegation made, not to speculate by making an admission as to a period of office-holding which may be irrelevant to the contraventions alleged.
23 There is no doubt that O 11 r 18 is directed to the end of requiring a party responding to a pleading to identify what truly are the issues of fact which remain controversial in the proceeding. Other rules directed to that end are, in their application to a defence, O 11 r 1B and r 16, already mentioned, and O 11 r 13 and r 17.
24 I do not regard the first category of complaint with respect to the amended defence as made out.
25 As to the complaints in respect of the non-admission of the existence of the ACCC as alleged in the statement of claim, Mr Day is not obliged to admit that the ACCC exists. Whether it does is a question of law. It is true that, were the non-admission based on a constitutional question, the bare denial would have an evasive quality, but it would be evasive as to a matter of law, not fact. Further, and as the ACCC itself acknowledges in its submissions, the raising of such an argument would require the giving of notices under s 78B of the Judiciary Act 1903 (Cth). Were such a point to be raised in a way which necessitated an adjournment so as to allow for a reasonable time to elapse after the giving of notice, the price of so doing may be an order for costs, perhaps on an indemnity basis, in respect of costs thrown away. That same consequence might attend the belated raising of any other point of law in relation to the existence of the ACCC. Order 11, rule 9 permits a party to raise a point of law in a pleading, Mr Day has not done so in relation to the existence of the ACCC, save insofar as the non-admission
26 Yet further and in any event, especially before the days when a ready search of a national corporations' database could be made, it was not unknown for the allegation in a pleading as to the incorporation of a party not to be admitted. That raised a mixed question of fact and law. Did the statute concerned, assuming it was particularised in the allegation provide for incorporation, which, if that was an Australian statute was only a question of law, and, if so, was it proved that the mechanism for incorporation for which the statute provided had occurred, which was a question of fact? The latter was usually and readily proved by the tender of a certificate of incorporation. Often, in practice, the informal provision of a company search to the opposite party by the party alleging incorporation resulted in the amending of the non-admission as to incorporation to an admission. If not, then the cost of obtaining the certificate of incorporation formed part of the alleging party's costs in the event it succeeded in the action.
27 Given that the TPA directly provides for the incorporation of a body corporate termed the ACCC, as opposed to providing for incorporation upon registration, it does, with respect, seem odd, perhaps even churlish, for there to be a non-admission of para 1 of the statement of claim. I doubt though that this stance will occasion anyone any prejudice, delay or embarrassment in the proceedings. I had the impression that the ACCC drew attention to this aspect of the amended defence as a supposed exemplar of a more pervasive vice of that character in the amended defence. For reasons already given in relation to the difficulty presented by the way in which "at all material times" is used in the statement of claim, that supposition is misplaced.
28 Paragraph 3.4 of the amended defence denies the allegation in para 3.3 of the statement of claim that Mr Day, "with respect to his conduct pleaded in this statement of claim, acted within the scope of his actual or apparent authority as managing director of Craftmatic". This paragraph of the defence is criticised for not making it clear as to whether it is the alleged conduct which is denied or whether what is denied is that the conduct concerned, though it admittedly occurred, was within the scope of his actual or apparent authority. It was thus submitted, "presumably [Mr Day] seeks only to deny his engagement in the conduct pleaded, not that actions as found by him to be taken were within the scope of his actual apparent authority" [sic]. On behalf of Mr Day, that such a criticism might be made was, not unreasonably it seemed to me, conceded. That done, the submission made was that, read in context, the denial went only to the factual element of para 3.3 of the statement of claim, not to the issue of law with which an allegation of actual or apparent authority was pregnant. The further submission made was that, "it is not entirely clear what specific conduct the [ACCC] is referring to". That, it was submitted, was a subject for the ordering of particulars.
29 The latter of Mr Day's submissions exposes the true pleading vice. Paragraph 3.3 of the statement of claim contains "rolled up" allegations, i.e. multiple allegations rolled up into a single paragraph. That is contrary to O11 r 1(b), which requires that each matter in a pleading, as far as convenient, be put in a separate paragraph. To violate that rule in this manner is to author a pleading which has a tendency to embarrass in the technical way in which that word is used in O 11 r 16(b). For these reasons, the ACCC is the author of its own claimed complaint in respect of para 3.4 of the amended defence.
30 Complaint is also made on behalf of the ACCC that para 6 of the amended defence is inconsistent with para 7 in that, in para 6 of the amended defence "the allegation in para 5.2 [of the statement of claim] that telemarketer representatives of Craftmatic made telephone calls to potential customers [is not admitted] yet, as appears from para 7 of the defence, [Mr Day] makes this very admission". There is no such inconsistency. As is evident from its preamble, para 5 of the statement of claim, to which para 6 of the amended defence responds, is directed to the subject of Craftmatic's sales method. That it adopted that method is expressly not admitted in the amended defence on the expressed basis of absence of knowledge on the part of Mr Day of that alleged method. Paragraph 6 of the statement of claim makes a series of positive allegations as to the actual occurrence in a particular alleged way of one component of that method, the "initial telephone call" as defined in para 5 of the statement of claim. Responding to that in para 7 of the amended defence, Mr Day admits that Craftmatic's "telemarketer" representatives made telephone calls to potential customers but, consistently with the non-admission of method in para 6 of the amended defence, does not admit, on the basis of an asserted absence of knowledge, that an "initial telephone call" occurred as alleged.
31 Order 11 rule 13(2) expressly authorises a traverse by a "statement of specific non-admission". Paragraphs 6 and 7 of the amended defence each comply with that authorisation. In so doing on the basis of an alleged absence of knowledge on the part of Mr Day, they also each exemplify the observation made in Lindgren KE and Branson CM, Federal Civil Litigation Precedents (Butterworths, 1998 at [24,210]) that, "denial is usually employed where the alleged fact is in a party's knowledge and a non-admission where it is not". I respectfully agree with that observation. The practical effect of an express non-admission is the same as that of an express denial (Warner v Sampson [1959] 1 QB 297 at 319 per Hodson LJ) in that the opposing party is thereby put to proof of the issue but the difference between the two lies in the occasion for their employment as a matter of pleading practice.
32 Paragraph 8 of the amended defence responds to para 7 of the statement of claim. In the way in which it is cast, para 7 of the statement of claim also makes "rolled up" allegations in that it conjoins allegations in respect of the separate matters of the provision of a script and the giving of instructions for the use of that script. Mr Day admits that a script was available but otherwise expressly does not admit the allegations in para 7 of the statement of claim on the basis of absence of knowledge. This he is entitled to do.
33 On behalf of the ACCC criticism is further made of the way in which Mr Day's amended defence responds to the allegations as to his knowledge of pleaded facts. Allegations as to his knowledge are to be found in para 10, 15, 24 and 34 of the statement of claim with the responses to these allegations being found in para 10, 13, 27 and 37 of the amended defence. The responses take the form of express non-admissions on the basis of absence of knowledge. A noteworthy feature of these paragraphs of the amended defence is their engagement with para 3.5 of that document. In para 3.5, in some detail, Mr Day makes positive allegations as to the management and control of Craftmatic and as to the nature and extent of his involvement in that management and control. It is submitted on behalf of the ACCC, with reference to the responsive paragraphs of the amended defence, as read with para 3.5, that, "These paragraphs are in substance and effect pleadings of circumstances by which it might be that [Mr Day] does not know particular things but are vague and evasive and do not address the pleaded issue of whether he knows those particular things (underlining in written submission)". Thus, it is submitted, para 3.5 does not amount to an allegation of material facts, contrary to O 11 r 2. A more detailed critique, which I have taken into account, of para 3.5 follows to the end of seeking to demonstrate that para 3.5 is evasive.
34 Mr Day's response to this inter-related assault on para 3.5, 10, 13, 27 and 37 of the amended defence recognises, as the ACCC does not, perhaps surprisingly in view of the apparent appreciation of the substance of para 3.5 evident in the passage from its submission quoted, that the allegations in para 3.5 form a basis upon which the ACCC's case of Mr Day's being knowingly concerned in Craftmatic's corporate conduct might fail at trial. Mr Day submits he has made permissible non-admissions as to the allegations of knowledge made against him.
35 Paragraph 3.5 is pleaded in further response to the allegations made in para 3 of the statement of claim as to Mr Day's corporate office-holding and shareholding, responsibilities and authority. These allegations are expressly admitted or traversed in para 3.1, 3.2, 3.3 and 3.4 of the amended defence. Were Mr Day to have confined his amended defence with respect to allegations of knowledge on his part merely to an absence of knowledge, he may well have been met with an objection at trial to his leading evidence in relation to the subjects which are detailed in para 3.5 of the amended defence. When permissibly employed, a non-admission in a defence puts an opponent to proof in respect of an allegation but does not constitute an expressly alleged positive factual case to the contrary. In para 3.5 of the amended defence Mr Day is giving notice to the ACCC that he will mount a positive case in respect of the facts there alleged.
36 That is not to say, especially taking into account the more detailed critique which the ACCC makes of para 3.5, that there is no scope for the provision on request of particulars in respect of some of the allegations made in that paragraph. That is not though the nature of the application made by the ACCC. Paragraph 3.5 is not evasive. It may though be wanting in particularity in respect of the positive allegations there made. The ACCC's submission confuses what constitutes an evasive response to an allegation in a statement of claim with what may constitute a positive allegation in a defence which warrants better particularisation if that is sought.
37 Read with para 3.5, para 10, 13, 27 and 37 of the amended defence provide an adequate, comprehensible and permissible response to the allegations of knowledge made against Mr Day.
38 For these reasons, I do not regard the amended defence as a "holding defence". I dismiss the application that it be struck out. It necessarily follows that I also dismiss the ACCC's alternative application that no further time be allowed for its amendment. Insofar as the same is necessary, I grant leave to Mr Day to file the amended defence on 5 August 2009.
39 Mr Day should have his costs of and incidental to the application made by the ACCC.