Canberra Data Centres Pty Limited v Vibe Constructions (ACT) Pty Limited [2010] ACTSC 20 (16 March 2010)

CANBERRA DATA CENTRES PTY LTD v VIBE CONSTRUCTIONS (ACT) PTY LTD

[2010] ACTSC 20 (16 March 2010)

PLEADINGS - Importance of pleadings - Ensure a cause of action is adequately pleaded

PLEADINGS - Part 2.3 Court Procedure Rules 2006 - Intelligibility of pleadings - Ambiguous pleadings - use of and/or in pleadings

PLEADINGS - Intelligibility of pleadings - Inadequate pleadings - Improper pleadings - Irrelevant pleadings - Dismiss application to file pleadings

COSTS - Substantial elements of 'hopeless cases principle' and 'abuse of process'

Civil Law (Wrongs) Act 2002 (ACT), s 42

Trade Practices Act 1974 (Cth), ss 52, 79, 82, 75B

Uniform Civil Procedure Rules 2005 (NSW), r 15.9

Corporations Act 2001 (Cth), s 1335(1)

Court Procedures Rules 2006 (ACT), rr 50(2), 505(1)(a), 483(1), 21, 405, 406, 512, 200, 407(1)(d), 417(1)(a), 1900

O 20 r 7 of the pre-1964 English Rules of the Supreme Court 1883

Sir Jacob, Jack 'The Present Importance of Pleadings' (1960) Current Legal Problems 171

Sir Jacob, Jack, and Goldrein, Iain S, Pleadings: Principles and Practice (London: Sweet and Maxwell, 1990)

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Summers RS, "Good Faith in General Contract Law and the Sales Provisions of the Uniform Commercial Code" (1968) 54 Virginia Law Review 195

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Balkin RP and Davis JLR Law of Torts (Sydney: LexisNexis Butterworths, 2004) 3rd edition

Colbran SE, Security for Costs (Melbourne: Longman Professional, 1993)

Heydon JD, Cross on Evidence (Sydney: Butterworths, 1996)

Weinberg J, 'The Australian Justice System - What is right and what is wrong with it?', National Judicial College of Australia on 25 October 2008

Inglis v Moore (1981) 51 FLR 293

Mckellar & Anor v Container Terminal Management Services Ltd & Ors [1999] FCA 1101; (1999) 165 ALR 409

Ting v Blanche [1993] FCA 524; (1993) 118 ALR 543

Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 258 ALR 14

Banque Commerciale SA En Liquidation v Akhil Holdings Pty Limited [1990] HCA 11; (1990) 169 CLR 279

Multigroup Distribution Services Pty Limited v TNT Australia Pty Limited [1996] FCA 1758; [1996] ATPR 41-522.

Chapman v Lumunis (1998) 86 FCR 513

Davey v Garrett (1878) 7 Ch D 473

The WA Teachers' Financial Society Ltd v Gorey, Middleton & Forbes (unreported, Supreme Court of Western Australia, 1229 of 1988, Staples M, 28 October 1988)

Carr v McDonalds' Australia Ltd & Ors (1994) 63 FCR 358

London Passenger Transport Board v Upson [1949] AC 155

General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125

Dey v Victorian Railways Commissioner [1949] HCA 1; (1948) 78 CLR 62

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Moldex Ltd v Recon Pty Ltd [1948] VicLawRp 15; [1948] VLR 59

Pinson v Lloyds and National Provincial Foreign Bank [1941] 2 KB 72

Masters v Cameron [1954] HCA 72; [1954] 91 CLR 353

Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd and Ors (1986) 40 NSWLR 622

Sinclair, Scott & Co Limited v Naughton [1929] HCA 34; (1929) 43 CLR 310

Scarf v Jardine (1882) 7 App Cas 345

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Commissioner of Taxation of the Commonwealth of Australia v Sara Lee Household & Body Care (Australia) Pty Ltd [2000] HCA 35; (2000) 201 CLR 520

Australian Competition and Consumer Commission v Pauls Ltd [1999] FCA 1750; (2000) ATPR 41-747

Bonitto v Fuerst Bros & Co Limited [1944] AC 75

Big River Timbers Pty Ltd v Stewart (1999) 9 BPR 16,605

R v Jasper [2003] NSWCCA 186; (2003) 139 A Crim R 329

Fadden v Deputy Commissioner of Taxation [1943] HCA 20; (1943) 68 CLR 76

Millen v Grove [1945] VicLawRp 45; [1945] VLR 259

Re Moage Limited; Moage Limited (in liq) v Jagelman [1998] FCA 296; (1998) 153 ALR 711

Metalix Ltd v Dearnly Cartage [1946] OWN 345 (Canada)

Tang Woung Shiu v Tang Kun Yeung and Anor (unreported, High Court of Hong Kong Special Administrative Region, Mr Recorder Kwok SC, No 5527 of 1998, 29 October 2002)

Extraman (NT) Pty Ltd & Ors v Blenkinship & Anor [2008] NTSC 31

Enima Pty Limited v Redevelopments Pty Limited [2009] ACTSC 95

Jaensch v Coffey [1984] HCA 52; (1984) 155 CLR 549

Perre & Ors v Apand Pty Limited [1999] HCA 36; (1999) 198 CLR 180

China and South Sea Bank Ltd v Tan [1990] 1 AC 536

Simaan General Contracting Co v Pilkington Glass Ltd (No 2) [1988] EWCA Civ 15; [1988] QB 758

Woolcock Street Investments Pty Limited v CDG Pty Ltd & Anor [2004] HCA 16; (2004) 216 CLR 515

Kenard Construction (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234

South Sydney District Rugby League Football Club Ltd v News Ltd & Ors [2000] FCA 1541; (2000) 177 ALR 611

Aiton Australia Pty Ltd v Transfield Pty Ltd (1999) 153 FLR 237

Australia Co-Operative Foods Ltd v Norco Co-Operative Ltd [1999] NSWSC 274; (1999) 46 NSWLR 267

Pierce Bell Sales Pty Limited v Frazer & Anor [1973] HCA 13; (1973) 130 CLR 575

Bartlett v Swan Television & Radio Broadcasters Pty Ltd [1995] FCA 1429; (1995) ATPR 41-434

Janssen-Cilag Pty Limited v Pfizer Pty Limited [1992] FCA 437; (1992) 37 FCR 526

Bloom v Kuji Pty Ltd (unreported, Federal Court of Australia, Drummond J, 31 May 1994)

Bradford Third Equitable Benefit Society v Borders [1941] 2 All ER 205

Wardley Australia Limited & Anor v Western Australia [1992] HCA 55; (1992) 175 CLR 514

Barclays Bank Ltd v W J Sims Son & Croke (Southern) [1979] 3 All ER 522

David Securities Pty Limited & Ors v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353

Harvey & Ors v Archbold & Ors [1825] EngR 359; (1825) 3 B & C 626; 107 ER 865

Standish v Ross [1849] EngR 319; (1849) 3 Exch 527; 154 ER 954

Scott v Miller [1837] EngR 748; (1837) 3 Bing(NC) 811; 132 ER 623

Jones v Carter [1845] EngR 1306; (1845) 8 QB 134 (at 138); [1845] EngR 1306; 115 ER 825

Chambers v Miller [1862] EngR 1080; (1862) 32 LJCP 30; 143 ER 50

Commercial Bank of Australia Limited v Younis [1979] 1 NSWLR 444

Kelly v Solari [1841] EngR 1087; (1841) 9 M & W 54; 152 ER 24

Louth v Diprose [1992] HCA 61; (1992) 175 CLR 621

Progressive Mailing House Pty Ltd v Tabali Pty Ltd [1985] HCA 14; (1985) 157 CLR 17

Sanders v Snell (1998) 196 CLR 329

Spotwire Pty Ltd v Visa International Services Inc [2003] FCA 762; (2003) ATPR 41-949

OBG Ltd and Anor v Allan and Ors [2007] 4 All ER 545

Ansett Transport Industries (Operations) Pty Ltd & Ors v Australian Federation of Air Pilots [1991] VicRp 36; [1991] 1 VR 637

Copyright Agency Ltd v Haines [1982] 1 NSWLR 182

Sid Ross Agency Pty Ltd v Actors and Announcers Equity Association [1970] 2 NSWR 47

Australian Wool Innovation Ltd v Newkirk [2005] FCA 290; (2005) ATPR 42-053

Coal Miners' Industrial Union of Workers of Western Australia, Collie v True (1959) 33 ALJR 224

Hughes v Western Australian Cricket Association Inc [1986] FCA 357; (1986) 69 ALR 660

Maritime Union of Australia v Geraldton Port Authority [1999] FCA 899

Crofter Hand Woven Harris Tweed Co Ltd v Veitch [1941] UKHL 2; [1942] AC 435

R v Blamires Transport Services Ltd [1964] 1 QB 278

Kuwait Airways Corporation v Iraqi Airways Co (No 3) [2002] UKHL 19; [2002] 3 All ER 209

City Motors (1933) Pty Ltd v Southern Aerial Service Pty Ltd [1961] HCA 53; (1961) 106 CLR 477

Associated Midland Corporation Ltd v Bank of New South Wales [1983] 1 NSWLR 533

Nelson v Nelson (1923) QSR 37

Clayton v Le Roy [1911] 2 KB 1031

Upton and Anor v TWV Enterprises Ltd & Anor (1985) ATPR 40-611

Lloyd v Osborne (1899) 20 NSWLR 190

Crowther v Australian Guarantee Corporation Ltd (1985) Aust Torts Reports 80-709

Spackman v Foster (1883) 11 QBD 99

Sheba Gold Mining Co v Trubshawe [1892] 1 QB 674

Cook v Cox (1814) 3 M & S 110 (at 114); [1814] EngR 506; 105 ER 552

Grubb v Bristol United Press [1963] 1 QB 309

Triggell v Pheeney [1951] HCA 23; (1951) 82 CLR 497

Broome v Cassell & Co [1972] UKHL 3; [1972] AC 1027

Broken Hill Proprietary Company Ltd v Fisher [1984] 38 SASR 50

Thompson v Australian Capital Television Pty Ltd & Ors (1997) 129 ACTR 14

Gray v Motor Accident Commission (1998) 196 CLR 1

Cotogno v Lamb (unreported, New South Wales Court of Appeal, CA 547 at 1983, Kirby P, Mahoney and McHugh JJA, 9 August 1985)

Buckley v Bennell Design Construction Pty Ltd (1974) 1 ACLR 301

Southern Cross Exploration NL & Ors v Fire & All Risks Insurance Co Ltd & Ors (1985) 1 NSWLR 114

Warren Mitchell Pty Ltd v Australian Maritime Officers' Union (1993) 12 ACSR 1

FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd [2000] WASCA 69; (2000) 156 FLR 116

Tipperary Developments Pty Ltd v State of Western Australia (1996) 22 ACSR 241

Rural & General Insurance Broking Pty Ltd v Australian Prudential Regulation Authority [2004] ACTSC 14

Churchills Ltd v Pilcher (1940) 57 WN(NSW) 109

Beach Petroleum NL v Johnson [1992] FCA 110; (1992) 7 ACSR 203

Ilat Nominees Pty Ltd v Murragong Nominees Pty Ltd [1980] FCA 162; (1980) 48 FLR 385

Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298

Master Club Consultants Pty Ltd v Stanbritt Pty Ltd [2000] ACTSC 18

HJA Holdings Pty Ltd v Iliev [2006] ACTSC 8

Smith v Samuels (1976) 12 SASR 573

Payne v Parker [1976] 1 NSWLR 191

Packer v Cameron (1989) 54 SASR 246

Re SCA Properties Pty Ltd (in lid) [1999] QSC 180; (1999) 17 ACLC 1611

Qantas Airways Ltd v Dillingham Corporation (unreported, Supreme Court of New South Wales, Rogers J, 14 May 1987)

Huntsman Chemical Company Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242

**1. That the application made by Application in Proceedings for leave to file an Amended Statement of Claim dated 17 September 2009 be dismissed.

2. That the application made by Application in Proceedings dated 1 June 2009 for an order that the plaintiff give security for costs be dismissed.**

**1. Before me is an application for leave to file an Amended Statement of Claim and for security for costs. I shall deal with each in turn, but first, briefly describe the proceedings.

2. The present proceedings arise out of the construction of a building (to use as neutral a term as I can) on premises at Hume, an industrial suburb in the Australian Capital Territory. The plaintiff, Canberra Data Centres Pty Ltd (CDC), was the lessee of the premises and the first defendant, Vibe Constructions (ACT) Pty Ltd (Vibe), was contracted to construct the building on them.

3. It appears from the pleadings that the parties initially contracted orally for the building works but that a written document was subsequently executed. Those contracts are referred to in more detail below.

4. The construction work proceeded and, as is customary with such enterprises, Vibe submitted claims for payment (Claims) which were paid, initially in full, but from about June 2008 only in part.

5. Disputes apparently arose, though the precise nature of them is not clear from the material before me. In any event, it is alleged that Vibe moved equipment from the site in about November 2008 and then, or thereafter, ceased construction work

6. On 3 February 2009, CDC commenced these proceedings against Vibe. A Statement of Claim was, as required by r 50(2) of the Court Procedures Rules 2006 (ACT) (Court Procedures Rules), attached to the Originating Claim. It pleaded claims, to mention them briefly, in contract, breach of duty of care, money paid under a mistake of fact and misleading and deceptive conduct. Other claims were subsequently added as noted below.

7. On 20 February 2009, Vibe filed a Defence and Counter-claim. The defence was in a somewhat curious form as follows:**

1. The defendant is unable to properly plead to the plaintiff's claim until it is re-pleaded or until further and better particulars have been provided.
2. The defendant reserves its right to defend the claim if and/or when the plaintiff re-pleads its claim or provides further and better particulars of the claim.

**8. I am not at all clear what "right" Vibe has that it is able to reserve in the circumstances, but the intention is clear. Certainly, it was clear enough to CDC for, on 24 March 2009, it filed an Amended Statement of Claim.

9. CDC also filed a Defence to Counter-claim on the same day. While I would not require that document to be amended on this account, I do note that it has fallen into the regrettably common, and quite inappropriate language of admitting or denying "paragraphs" of the opposite pleading rather than the facts alleged in them. I refer to what fell from Connor J in Inglis v Moore (1981) 51 FLR 293 where (at 296) his Honour said:**

Throughout all five defences the defendants purport to admit or deny paragraphs or sub-paragraphs. What should be admitted or denied or not admitted are the plaintiff's allegations. It is acceptable to deny each allegation in a particular paragraph. It is meaningless to deny a paragraph. All the defences are so riddled with this defect of wholesale general denial of paragraphs or sub-paragraphs that I have come to the conclusion that it will turn out to be simpler in the end to strike them out and give the defendants leave to start again.

**10. The Statement of Claim was amended under r 505(1)(a) of the Court Procedures Rules, which permits a party to amend its pleadings once without the court's leave before the close of pleadings. As there was a Counter-claim, the pleadings are closed at least seven (7) days after the Defence to the Counter-claim is filed: r 483(1). Given that the Amended Statement of Claim was filed on the same day as the Defence to Counter-Claim was filed, rule 505(1)(a) applied.

11. The Amended Statement of Claim made very substantial amendments, also including in it some quite detailed particulars. As well as the claims already made, it added claims, including a claim alleged to arise under s 42 of the Civil Law (Wrongs) Act 2002 (ACT), and claims for interference with economic relations and detinue and conversion. It does not seem to me that s 42 gives a right of action at all and that was one of the bases on which I struck out the Amended Statement of Claim: See [19] below.

12. On 20 April 2009, Vibe's solicitors sought detailed particulars of the Amended Statement of Claim and CDC's solicitors replied, purporting to supply the particulars under cover of a letter dated 30 April 2009.

13. On 1 June 2009, Vibe issued an Application in Proceedings seeking an order that CDC provide further particulars and for security for costs. The affidavit filed in support annexed correspondence showing that there had been communications between the solicitors for the parties with Vibe challenging aspects of the Amended Statement of Claim as well as the sufficiency of the particulars.

14. The application came before the Master who ultimately gave the parties leave to approach the List Clerk for a date for hearing. The application appears to have been listed on 6 July 2009. On that day, Gray J ordered that the application be adjourned generally and that the parties have leave to have the matter relisted. It appears that the parties were negotiating and there was an expectation of a resolution.

15. On 17 July 2009, Vibe, through its solicitors, issued an amended Application in Proceedings. It sought that the Amended Statement of Claim be struck out in full or in part and sought particulars as requested in a different letter. The Application in Proceedings was returnable on 29 July 2009.

16. A document purporting to be CDC's further and better particulars of the Amended Statement of Claim was filed on 22 July 2009.

17. The matter came before Gray J again on 24 July 2009 though whether it was the amended Application in Proceedings mentioned earlier at [15] as well or not, I cannot say. It was again adjourned generally. It was noted that the security for costs aspect had "been resolved" (though, that turned out to be rather optimistic) and that the parties were discussing the issues with respect to the particulars.

18. On 2 September 2009, CDC issued a further Application in Proceedings seeking leave to file a Further Amended Statement of Claim. That application came before me on 3 September 2009.

19. I considered the proceedings more generally including the challenge to the pleadings and the application for security for costs and, having perused the Amended Statement of Claim, read relevant correspondence and heard counsel for the parties, made the following directions:**

1. The plaintiff have leave to amend the Originating Claim within seven (7) days by adding Mr Ian Davies as the Second Defendant.
2. The plaintiff serve Mr Davies with the Amended Originating Claim within three (3) days of the amendment.
3. The Amended Statement of Claim be struck out.
4. The plaintiff have leave to apply to file an Amended Statement of Claim within fourteen (14) days.
5. Any application for leave to file an Amended Statement of Claim be filed together with a draft of the Statement of Claim sought to be filed which should be lodged by 17 September 2009.
6. The matter be adjourned to 9.30 am on 21 September 2009.

**20. I also reserved my decision on the application by Vibe for security for costs.

21. In accordance with these directions, an Application in Proceedings seeking an order permitting the filing of an Amended Statement of Claim was issued by CDC on 17 September 2009, returnable on 21 September 2009. An affidavit of a solicitor for CDC was also filed to which was annexed a draft Amended Statement of Claim.

22. On 21 September 2009, I adjourned the hearing of the application to 7 October 2009 and on that date gave further directions.

23. The matter was ultimately heard on 21 October 2009 when I reserved my decision on the application for leave to file an Amended Statement of Claim.

24. The system of pleadings which underpins the common law form of litigation as generally practised in the higher courts in Australia is not immune from criticism, even from distinguished jurists. Thus, Weinberg J (as his Honour then was), speaking extra-curially, said in a paper to the National Judicial College of Australia on 25 October 2008:**

A number of my colleagues see great virtue in retaining formal pleadings. I see none.

25. Nevertheless, lest this comment suggest an anarchic approach to litigation, his Honour continued:

I would much rather see us move to a system of narrative pleadings, whereby each side provides the other, and the court, with a detailed outline of the nature of its case. The test should be: does each party know with reasonable precision the case that it has to meet.

**26. Indeed, his Honour in Mckellar & Anor v Container Terminal Management Services Ltd & Ors [1999] FCA 1101; (1999) 165 ALR 409 set out (at 417-421) concisely and clearly the advantages of pleadings and the interests they serve.

27. As Hill J helpfully summarised them in Ting v Blanche [1993] FCA 524; (1993) 118 ALR 543 (at 551 [4]):**

Although in modern litigation pleadings are often perceived as a technicality they retain their significance as defining the issues between the parties. (footnotes omitted).

**At issue may be the way the identification of issues occurs, not whether it occurs at all.

28. Whatever the result of this controversy, the system of formal pleadings is currently the way each party is given notice, reasonably precisely, of the case that it has to meet. Further, however, the pleadings do more, much more, than merely give notice of the case of the other party. Secondly, and equally importantly, they apprise the court of the issues so that it can manage the trial and all pre-trial interlocutory proceedings.

29. Sir Jack Jacob, doyen of litigation proceduralists, set out the importance of pleadings in this second sense particularly in, "The Present Importance of Pleadings" (1960) Current Legal Problems 171 (at 174-5) as follows:**

Pleadings do not only define the issues between the parties for the final decision of the court at the trial; they manifest and exert their importance throughout the whole process of the litigation. They contain the particulars or the allegations of which further and better particulars may be requested or ordered, which help still further to narrow the issues or reveal more clearly what case each party is making. They limit the ambit and range of the discovery of documents and the interrogatories that may be ordered. They show on their face whether a reasonable cause of action or defence is disclosed. They provide a guide for the proper mode of trial and particularly for the trial of preliminary issues of law or of fact. They demonstrate upon which party the burden of proof lies, and who has the right to open the case. They act as a measure for comparing the evidence of a party with the case which he has pleaded. They determine the range of admissible evidence which the parties should be prepared to adduce at the trial. They delimit the relief which the court can award. They provide the basis for the defence of res judicata in subsequent proceedings by reference to the record in the earlier proceedings.

**30. I am mindful of the need to avoid arid technical disputes which do not advance any litigation but only cause delay and expense, contrary to the obligation imposed by r 21 of the Court Procedures Rules. See Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 258 ALR 14. Nevertheless, it is important to ensure that the legitimate objectives of pleadings are met by ensuring that a cause of action is (or causes of action are) adequately pleaded and that the parties and the court can manage the litigation efficiently and cost-effectively as a result of the definition of the issues thereby achieved. Intelligibility is crucial to this.

31. In order to evaluate the pleading of the Statement of Claim, it is worth noting briefly the rules of pleading. They are generally set out in Pt 2.6 of the Court Procedures Rules, especially rr 405 and 406. The principal rules may conveniently be summarised as follows:

1. The pleading must be divided into consecutively numbered paragraphs, each of which should desirably deal with only one matter.

2. The pleading should set out all the material facts on which the party relies to establish the claim or defence sought to be advanced.

3. While facts not strictly material can be included where it is necessary or desirable to make the pleading comprehensible, these should be kept to a minimum as it is preferable to include only material facts.

4. Only facts should be pleaded, not the evidence by which the facts may be proven or matters of law.

5. Subject to specific rules of pleading (such as those relating to conditions precedent in r 512 and so on), the pleading should ensure that all facts are stated which, if not included, may take the other party by surprise.

32. In these rules, "material" means "necessary for the purpose of formulating a complete cause of action; and if any one 'material' fact is omitted, the statement of claim is bad": Bruce v Odhams Press Ltd [1936]1 KB 697 per Scott LJ (at 711-13].

33. These rules are, of course, designed to achieve the function of pleadings which has been helpfully and authoritatively set out in the statement of Mason and Gaudron JJ in Banque Commerciale SA En Liquidation v Akhil Holdings Pty Limited [1990] HCA 11; (1990) 169 CLR 279 where (at 286) their Honours said:**

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) 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.

34. There have been many other statements in the cases which have refined or nuanced this. The threads have been helpfully drawn together in Multigroup Distribution Services Pty Limited v TNT Australia Pty Limited [1996] FCA 1758; [1996] ATPR 41-522. Burchett J said (at 42,679):

The primary function (of a statement of claim) is to tell the defending party what the claim is that he has to meet. That is a matter of elementary and natural justice; the claim cannot be answered until it is known. When a sufficient defence has been filed to a sufficient statement of claim, a further function will generally have been performed - that of defining the question or questions for decision. This definition is required, of course, from an early stage, or else discovery and other interlocutory procedures are likely to prove misdirected, wasteful and unproductive. In order to achieve these fundamentals, a statement of claim must set out clearly, not just the bare claim that is made, but also 'the material facts on which it is based', including facts that, if not specifically pleaded might take the other party by surprise.

35. Given the extensive reference in this case to particulars, it is also worth repeating what is trite law but necessary to be emphasised, namely the difference between pleadings and particulars and, especially, the role of each. I refer to the often cited observation of Scott J in Bruce v Odhams Press Ltd where his Honour said (at 711-3):

... but it is beyond question that there is a radical distinction [between a statement of material facts and particulars] and none the less so that in cases near the dividing line there is a penumbra where the two may and often do overlap, just as between night and day there is a zone of doubt which we call dusk ...

The cardinal provision in r 4 is that the statement of claim must state the material facts. The word 'material' means necessary for the purpose of formulating a complete cause of action; and if any one 'material' fact is omitted, the statement of claim is bad; it is 'demurrable' in the old phraseology, and in the new is liable to be 'struck out' ...

The function of 'particulars' under r 6 is quite different. They are not to be used in order to fill materials gaps in a demurrable statement of claim - gaps which ought to have been filled by appropriate statements of the various material facts which together constitute the plaintiff's cause of action. The use of particulars is intended to meet a further and quite separate requirement of pleading, imposed in fairness and justice to the defendant. Their function is to fill in the picture of the plaintiff's cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial. Consequently in strictness particulars cannot cure a bad statement of claim. But in practice it is often difficult to distinguish between a 'material fact' and a 'particular' piece of information which it is reasonable to give the defendant in order to tell him the case he has to meet; hence in the nature of things there is often overlapping.

36. The proposed Amended Statement of Claim (the proposed pleading) which the CDC sought leave to file was annexed to the affidavit of the solicitor for CDC sworn on 15 September 2009. It followed the prescribed form, Form 2.6 (AF 2006-447), which is slightly different in layout to the traditional form of the Statement of Claim. For instance, it requires a statement of the plaintiff's claims at the beginning of the document.

37. Because of the multiplicity of claims and causes of action made by CDC, particular care is necessary to see that intelligibility is maintained. This is particularly so when alternative claims, which may be inconsistent with each other, are pleaded. This is permitted: Chapman v Lumunis (1998) 86 FCR 513 (at 522). It calls, however, for careful drafting of the pleading and it must be made clear that the claims are made in the alternative and that separate facts are distinctly stated: Davey v Garrett (1878) 7 Ch D 473 (at 489).

38. In addressing a pleading, it is sometimes easy to make what might be regarded as stylistic comments, rather than comments addressing the substance of the pleading.

39. As Master Staples said in The WA Teachers' Financial Society Ltd v Gorey, Middleton & Forbes (unreported, Supreme Court of Western Australia, 1229 of 1988, Staples M, 28 October 1988):**

It must be accepted, I think, that within certain broad limits, a party is allowed to formulate his case in his own way and that his opponent should not be too ready to find himself embarrassed. The question is not whether the pleading could be better expressed ... the question is whether [the pleading] is so lacking in clarity that it is embarrassing and should be struck out.

40. To similar effect is the comment of Burchett J in Carr v McDonalds' Australia Ltd & Ors (1994) 63 FCR 358 (at 367) that

... the so-called 'new' system of pleading requires of a party that he state the material facts on which his claim is based, not that he formulate his claim as an elegant model of legal purity: Konskien v B Goodman Ltd [1927] 1 KB 421 at 427; Wickstead v Browne (1992) 30 NSWLR 1 at 15-16; Rawinder Rohini Pty Ltd v Kriziac [1991] FCA 318; (1991) 30 FCR 300 at 314-315, per Wilcox J (with whom Davies J (at 303) relevantly agreed).

**41. I shall try to avoid making these kinds of criticisms, though style can affect the intelligibility of a pleading and, where that is so, comment is appropriate.

42. The proposed pleading is divided into sections. That can be useful. It can, however, lead to unnecessary complexity if not done well and can undermine the reader's ability to comprehend the claims.

43. In particular, while it is permissible to include multiple causes of action in the one claim (r 200 of the Court Procedures Rules), it is highly desirable that the grounds of each claim should be stated separately and distinctly. As was set out in O 20 r 7 of the pre-1964 English Rules of the Supreme Court 1883:**

Where the plaintiff seeks relief in respect of several distinct claims or causes of complaint founded upon separate and distinct grounds, they shall be stated, as far as may be, separately and distinctly.

**44. As noted in Jacob, Jack, and Goldrein, Iain S Pleadings: Principles and Practice (London: Sweet and Maxwell, 1990) (at 73n), "[t]he practice provided by the pre-1964 RSC, Ord 20 r 7 remains though the rule itself has disappeared". See per Wright LJ in London Passenger Transport Board v Upson [1949] AC 155 (at 169).

45. Another matter referred to by Sir Jack Jacob and Mr Goldrein, also worthy of note in the context of this proposed pleading, is the need for consistency of description throughout the pleading. This includes not only references to persons but also other things, such as contracts, the subject matter of the suit and the like.

46. The approach to be taken to the proposed pleading is similar to that to be taken to the summary termination of proceedings. These principles have been enunciated clearly in General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 (especially at 128-30) and Dey v Victorian Railways Commissioner [1949] HCA 1; (1948) 78 CLR 62 (at 91). See Financial Integrity Group Pty Limited v Scott Farmer and Bravium Pty Limited [2009] ACTSC 143 (at [11] to [15]).

47. It is worth referring also to what fell from Shepherd J more recently in Trade Practices Commissioner v Pioneer Concrete (Qld) Pty Ltd (1994) 124 ALR 685 (at 695):**

... 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.

48. It is, of course, true that the current approach to pleadings is less rigid, and as Beaumont J said in Pancontinental Mining Ltd v Posgold Investments Pty Ltd & Ors [1994] FCA 983; (1994) 121 ALR 405 (at 414):

... under the modern system of pleading, the question is not whether the facts pleaded are in themselves sufficient to give rise to a cause of action. Rather, the question is whether it would be open to the applicant upon the pleadings to prove facts at the trial which would constitute a cause of action: see Mutual Life & Citizens' Assurance Co Ltd v Evatt [1970] UKPCHCA 2; (1970) 122 CLR 628 at 631.

**49. It seems to me that this is the proper approach. This means that the pleading should not be scrutinised for elegance or perfect pleading practice. It needs to specify with reasonable compliance with the rules of pleading all the material facts which constitute a cause of action sought to be made out, and to the degree necessary to maintain intelligibility and efficiency, only material facts, in such a way that would permit the plaintiff to adduce evidence which, if accepted, might justify a court in granting the plaintiff the relief sought.

50. If, on the other hand, it does not do so, or cannot be reasonably construed as intelligibly doing so, then it should not stand. In addition, while considerable latitude is currently offered to litigants in their pleadings, excessive irrelevance or pleadings of evidence or law would justify refusal of leave to file the proposed pleading.

51. Turning, then to the proposed pleading, I shall consider its terms section by section as each is entitled in the proposed pleading.

52. It is important to identify the parties. Where a party is not a natural person but is otherwise entitled to sue, that should be pleaded: Moldex Ltd v Recon Pty Ltd [1948] VicLawRp 15; [1948] VLR 59. The proposed pleading does this.

53. It goes further, however, and identifies non-parties for various purposes. For example, it identifies certain persons (including a party) as agents for the first defendants. It is not clear what the purpose of this is as that relationship is repeated elsewhere in the proposed pleading, making its inclusion here superfluous. It also appears that such allegations are actually matters of particulars, for the persons identified are all employees or directors of the corporate defendant which, of course, can only act through human agents. Which such director or employee had effected action by the corporation would, if required or necessary, ordinarily be identified in particulars not necessarily in the pleadings. They are not material facts in themselves and, as such, may be embarrassing to the defendant who is not required to plead to particulars, but is required to plead to material facts alleged in the proposed pleading.

54. Additionally, the proposed pleading includes under this heading also some specific relational allegations that are only relevant to one of the causes of action subsequently pleaded. It would improve intelligibility were these allegations included at the relevant point in the proposed pleading where the appropriate cause of action was pleaded.

55. I cannot help but note, too, that in paragraph 5 the pleader refers to "it's [sic] site manager". I recommend Truss, L, Eats Shoots and Leaves (Profile Books: London, 2003) ch 2 for those troubled by the correct use of the apostrophe.

56. While an argument could be made for striking out the paragraphs which are really particulars, the modern tendency is to particularise fully, and I do not consider that, while the defendant should not be required to plead to particulars (Pinson v Lloyds and National Provincial Foreign Bank Ltd [1941] 2 KB 72 (at 75) per Scott LJ), this would itself justify a refusal to permit the filing of the proposed pleading.

57. Under this heading, the reader expects to find a contract pleaded. The requirements for pleading a contract are well-known. Master Staples, in The WA Teachers' Financial Society Ltd v Gorey, Middleton & Forbes quoted with approval what was set out in Bullens and Leake and Jacobs' Precedents of Pleadings (London: Sweet and Maxwell, 1975), 12th edition, at 345:**

... Where the action is brought upon an agreement not under seal, the Statement of Claim should show whether the agreement relied on is in writing or made by word of mouth or is to be implied or inferred from the conduct of the parties. In all cases the date, the parties, and the general substance and effect of the agreement so far as is material, must be set out in the Statement of Claim.

In the case of a written agreement the document or documents containing it should be described sufficiently to identify it or them (see Turquand v Fearon (1879) 40 LT 543). In the case of an implied agreement the facts and circumstances from which the implication arises should be stated. Where the agreement is to be implied from a series of letters, or conversations, or from circumstances, it is sufficient to allege the agreement as a fact, and to refer generally to the letters, conversations, or circumstances, without setting them out in detail (Hussey v Horne-Payne (1879) 4 App Cas 311).

**58. In general, paragraphs 10 to 15 of the proposed pleading comply with these requirements in pleading an agreement (the Agreement). I do note, however, that at one stage, the obligation of the first defendant under the Agreement is alleged to be to "conduct the building works" and in the next paragraph to "execute the project". It is entirely unclear whether "the project" is "the building works" or more or less and what the significance of the two different verbs may be. This goes significantly to intelligibility. While particulars might resolve the issue, particulars cannot fill a gap in the pleading itself: Pinson v Lloyds and National Provincial Foreign Bank Ltd (at 75).

59. By itself, these issues would not require rejection of the proposed pleading, though amendments would likely be required.

60. The proposed pleading then alleges in paragraphs 16 and 17, still under the heading, "The Agreement", that the first defendant prepared claims under the Agreement and they were paid. In the way the proposed pleading is constructed, this is an odd place to insert such allegations. This applies to some other paragraphs, too, such as paragraph 28. While in part a matter of style, as I shall show later, it does also affect intelligibility.

61. A very real problem, however, arises in paragraphs 18 to 22 which then plead what is defined as "the Contract". This is, curiously, not referred to in the heading to the section. The pleader draws paragraph 18 as follows:**

1. On or about 14 March 2008 the plaintiff and the first defendant formalised the Agreement by executing the Master Contractor Contract (hereafter referred to as 'the Contract').

62. This is clearly embarrassing on a number of counts. It is entirely unclear what this means contractually. At first blush, it appears to be a contractual arrangement within the first category of arrangements identified in Masters v Cameron [1954] HCA 72; [1954] 91 CLR 353 (at 360), namely:

... the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect.

63. Alternatively, however, it could be an arrangement of a type said to add a fourth category to those identified in Masters v Cameron. Under this category, identified by McLelland J in Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd and Ors (1986) 40 NSWLR 622 (at 628), relying on what was said by Knox CJ, Rich and Dixon JJ in Sinclair, Scott & Co Limited v Naughton [1929] HCA 34; (1929) 43 CLR 310 (at 317):

... the parties were content to be bound immediately and exclusively by the terms which they had agreed upon whilst expecting to make a further contract in substitution for the first contract, containing, by consent, additional terms.

64. It is also possible that what was intended was the novation of the Agreement by the Contract. As Windeyer J described it in Olsson v Dyson (1969) 120 CLR 365 (at 388):

Novation is the making of a new contract between a creditor and his debtor in consideration of the extinguishment of the obligations of the old contract.

**65. While usually a novation includes a new party who is to take over some obligation in the contract from one of the original parties, that is not necessarily so; it may be simply a new, replacement contract between the same parties: Scarf v Jardine (1882) 7 App Cas 345 (at 351). There is, of course, a need for consideration for the new contract, which must be pleaded: Coulls v Bagot's Executor and Trustee Co Limited [1967] HCA 3; (1967) 119 CLR 460.

66. Finally, it may be that the contractual arrangements were so unclear that the pleader was unsure whether the claim was under the Agreement or the Contract and, for more abundant caution, wished to include both. If that was the motive, then the reference to "formalising" the Agreement was inappropriate and the pleader should make clear that the claim on the Contract was in the alternative (see comments above at [37]) because it was unclear which of the two contractual arrangements was the source of the relevant obligations. The pleader cannot hide behind uncertainty; in compliance with the function of pleadings, it is the duty of the plaintiff's pleader to state clearly the case to be made.

67. That the pleading is so ambiguous as to admit of all these meanings results in the need for repleading. The proposed pleading on this ground is clearly embarrassing; it would at least have to be repleaded to make clear how the claim is put.

68. This is reinforced by the fact that the subsequent paragraphs clearly show that under the Contract there is, or at least may be, differences in the description of the works to be undertaken and the terms of the contract (including procedures specified) from the Agreement.

69. Finally, it might be implied in the terms of paragraph 18 that the Contract was in writing but this is not expressly pleaded. It is desirable that it should be so pleaded as noted above (at [57]).

70. Such differences make it essential that the pleader come to terms with the way in which the contractual obligations are said to arise and what they are. This has not been done.

1. The Contract in clause 16 (sic) provided for a different procedure for the rendering of payments than that which had been carried out under the Agreement. Notwithstanding the provisions of this clause the procedure applied under the Agreement for the rendering of Claims continued and, by this conduct, the parties varied the Contract to continue the Claims procedure applied prior to 14 March 2008.

**The Contract is defined in clause 18, not clause 16, probably a typographical error, but careful pre-filing checking is required as such errors can lead to an embarrassing pleading or unintelligibility.

72. Unless a contract, in its terms (and none are here pleaded) permit variations to be made unilaterally or without an agreement, a variation is, in effect, a contract to alter the terms of the existing agreement and, to be enforceable, must be supported by consideration which needs to be pleaded. See Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd [2000] HCA 35; (2000) 201 CLR 520 (at 533). No such consideration is pleaded and the claim is, therefore, bad.

73. Again, a further variation is pleaded in paragraph 24, but also without a pleading of consideration and so, again, is bad.

74. As noted above (at [60]), some of the pleaded paragraphs in the section headed "The Agreement", namely paragraphs 16, 17 and 28, should more appropriately appear elsewhere. Paragraphs 16 and 17, in particular, would be appropriate in this section.

76. Paragraph 31 pleads that Claims were made, "pursuant to the Agreement and the Contract". This cannot be supported. At least some of the particularised Claims were made before the date of the Contract and so can only be made under the Agreement. Claims made after that date are made under either the Contract or the Agreement (depending on the relationship between them) but not both. This pleading cannot stand.

77. The paragraphs in this section then proceed to make claims of various kinds. While it is not mandatory to separate different aspects of the pleading by headings, it is very confusing to use headings which do not accurately represent the paragraphs. Here, paragraphs 33 to 37 appear to be claims under s 52 of the Trade Practices Act 1974 (Cth). Paragraphs 38 to 43 appear to make claims in conversion or detinue. Paragraphs 44 to 46 seem to plead evidence about the notification of a dispute, which do not appear to be material to any claim. Paragraphs 47 to 51 seem to plead a breach of the term earlier pleaded, not to remove equipment from the site. Paragraph 52 makes an apparent claim for failure, "to return to the site", an obligation not pleaded as a contractual one. Paragraph 53 is a claim for defective works. Paragraphs 54 to 56 are an incomplete claim for conversion or dentinue. Paragraphs 58 to 63 appear to be a claim for interference in contractual relations.

78. Many of these paragraphs include allegations that were not "actions taken by the first defendant" (in the words of the section heading), though many were. Why they are included here is unclear.

79. This section is then followed by a number of sections that plead claims, some of which, depend on various paragraphs in this section.

80. This is a very confusing way to plead. It is desirable, as noted above [30] that intelligibility be maximised. A fundamental purpose of pleading is to avoid surprise and give fair notice of the claims made by a party. This clearly is not achieved where the pleading is confusing, ambiguous or unintelligible.

81. As also noted above (at [43]-[44]), where there are multiple claims made, particular care has to be taken in pleading. As Lord Wright said in London Passenger Transport Board v Upson [1949] AC 155 (at 169):**

... the correct pleading would be to allege each cause of action separately so as to avoid ... confusion.

**82. Thus, where allegations of a general nature are made which apply to all the causes of action, they may be set out in one identified part of the pleading. For example, where numerous breaches of contract are alleged, details of the contract might conveniently be set out separately. The definition of the contract as alleged would then link each separate cause of action to the contractual underpinning of it.

83. It would seem, however, that the term which is alleged to have been breached is better pleaded where the separate cause of action is pleaded. A very helpful example is Precedent 170,120 in Court Forms, Precedents and Pleadings New South Wales (Sydney: LexisNexis Butterworths, 2003) v 2, pp 37,463-37,466. For a helpful discussion of some of the issues involved in pleading multiple causes of action, see also per O'Loughlin J in Australian Competition and Consumer Commission v Pauls Ltd [1999] FCA 1750; (2000) ATPR 41-747 (at 40,649-40,651).

84. The current layout of the proposed pleading is confusing and unhelpful. With time and patience, it is possible to follow what it is pleading, but the contribution this confusion makes to its unsatisfactory nature is not irrelevant to a consideration of whether leave to file it should be given.

85. Finally on this section, I note the liberal use of the device "and/or", the so-called "bastard conjunction" (per Viscount Simon LC (at 82) in Bonitto v Fuerst Bros & Co Limited [1944] AC 75). Though some senior judges have accepted its use (e.g. per Mason P in Big River Timbers Pty Ltd v Stewart (1999) 9 BPR 16,605 (at 16,608) and R v Jasper [2003] NSWCCA 186; (2003) 139 A Crim R 329 at [31] and [37]), it is generally regarded as unacceptable: "embarrassing expression which endangers accuracy" (per Williams J in Fadden v Deputy Commissioner of Taxation [1943] HCA 20; (1943) 68 CLR 76 (at 82)); "common and deplorable affection [for it] inviting trouble" (per Gavan Duffy J in Millen v Grove [1945] VicLawRp 45; [1945] VLR 259 (at 260)); "particularly unhappy" (per Burchett J in Re Moage Limited; Moage Limited (in liq) v Jagelman [1998] FCA 296; (1998) 153 ALR 711 (at 717)). It is disapproved of by most writers on drafting (e.g. Robinson S, Drafting (Sydney: Butterworths, 1973) at p 68; Doonan, E, Drafting (London: Cavendish Publishing, 1995) at p 187; Aitken JK and Butt P, Piesse's Elements of Drafting (Sydney: Thomson Lawbook Co; 2004) at p 81; Butt P and Castle R, Modern Legal Drafting (Melbourne: Cambridge University Press, 2006) at p 214). As well as the UK, it is also disapproved of internationally; see, for example, Metalix Ltd v Dearnly Cartage [1946] OWN 345 (Canada) and Tang Woung Shiu v Tang Kun Yeung and Anor (unreported, High Court of Hong Kong Special Administrative Region, Mr Recorder Kwok SC, No 5527 of 1998, 29 October 2002) (at [22]). For more recent disapproval, see per Angel J in Extraman (NT) Pty Ltd & Ors v Blenkinship & Anor [2008] NTSC 31 (at [43]).

86. While in a number of places, the "bastard conjunction" is merely vague or ambiguous, there are uses where it is positively inaccurate (as in paragraph 56, as to which see [168] below). A careful drafter should avoid its use.

87. It is easier to deal with the adequacy of the relevant paragraphs in this section so far as they do or do not disclose a cause of action when dealing with each relevant cause of action below, for they should be dealt with as a whole.

4. Duty of reasonable care and skill - the Agreement

88. This heading and the next, namely "Duty of care - the Contract", appear to suggest that the Contract did not "formalise" the Agreement as might be expected under the Masters v Cameron analysis and was perhaps a novation. It is simply not clear.

89. The central allegation, intended to establish a duty of care is set out in paragraph 64 as follows:**

1. Under the Agreement and/or by reason of the close business relationship between the parties arising because of the Agreement the first defendant owed a duty of care to exercise reasonable care and skill in preparing and rendering upon the plaintiff Claims for payment of the construction costs, managing contractors costs and expenses and management fees.

**90. There are a number of things to be said about this paragraph. In the first place, it is not clear whether it is alleged (in the alternative, or additionally) that it was a term of the Agreement that the alleged duty of care was owed. If it is so alleged, it should be stated expressly and identified whether it was an express or implied term (though that could be provided by way of particulars). This would then be a claim in contract.

91. Thus, the "bastard conjunction" obscures the issue of whether the term is said to be implied from the fact of the Agreement together with the "close business relationship" as cumulative indicia of the basis on which a term may be implied: See Enima Pty Limited v Redevelopments Pty Limited [2009] ACTSC 95 (at [119]-[122]). It does appear from a later reference in paragraph 67 to "implied term" that this is what is intended.

92. If, on the other hand, it is being suggested that the duty of care arises as a matter of tort law, it is unclear how the Agreement is relevant. It is, then, a separate cause of action and should be separately pleaded, disclosing the facts which are said to give rise to the duty of care, which is claimed to arise.

93. Because of this confusion, I would not allow the pleading to stand. Re-pleaded as a contractual term it would be permissible.

94. As a matter of tort, the question is more problematic. While the categories of negligence are never closed (per Lord MacMillan in Donoghue v Stevenson [1932] AC 562 (at 619)), I can find no example of where a duty of care was imposed to redress pure economic loss based merely on a close business relationship. On the one hand, as Deane J noted in Jaensch v Coffey [1984] HCA 52; (1984) 155 CLR 549 (at 585), the notion of proximity is not enough by itself to show there is a duty of care but**

... the question whether the relationship between plaintiff and the defendant with reference to the alleged negligent act possessed the requisite degree of proximity is a question of law to be resolved by the process of legal reasoning by induction and deduction.

On the other hand, and more recently, the features identified in Perre & Ors v Apand Pty Limited [1999] HCA 36; (1999) 198 CLR 180 as giving rise to a claim in negligence for pure economic loss required more than a close business relationship. Thus, the pleading does not disclose a basis on which the claim could reasonably be made. The tort claim, if pressed, would need more to be alleged than is here pleaded, and would need to be pleaded separately.

95. It is also important, when dealing with, as here, an alleged breach that would more commonly be seen as a matter which the parties could, if they wished, regulate by contractual terms, to bear in mind, the caution expressed by the Privy Council in China and South Sea Bank Ltd v Tan [1990] 1 AC 536 (at 543-4):

... the tort of negligence has not yet subsumed all torts and does not supplant the principles of equity or contradict contractual promises or complement the remedy of judicial review or supplement statutory rights.

**96. I am also reminded that, in general terms, where an injured party has a remedy in contract (as the alleged breach of the Agreement would suggest) they are generally not allowed to use the law of tort to recover for that economic loss: Simaan General Contracting Co v Pilkington Glass Ltd (No 2) [1988] EWCA Civ 15; [1988] QB 758. Recently, the High Court has seemingly accepted that people should take reasonable steps to protect their own financial interests so that, a person who is not "vulnerable" (as a business such as CDC is unlikely to be) is not owed a duty of care to avoid economic loss: Woolcock Street Investments Pty Limited v CDG Pty Ltd & Anor [2004] HCA 16; (2004) 216 CLR 515.

97. I heard no argument on whether a tortious cause of action arose in these particular circumstances and, accordingly would not be prepared to decide that no such cause of action could possibly arise, notwithstanding my inability to find any authority to support it. It would, however, need to be pleaded properly. That is to say, in separate sections there would have to be pleaded on the one hand the existence of an implied term (of which particulars should be given) and then on the other the alleged duty of care with the circumstances said to give rise to it.

98. I also note that the reference in paragraph 63 to paragraph 65 is clearly in error. I assume it is meant to refer to paragraph 64. This again shows the importance of careful checking of cross-references, especially when a document passes through a number of drafts.

99. Whilst it may appear pedantic to rely on traditional categories of legal claims and require traditional forms to be used, this at least has the advantage of intelligibility and immediate understanding.

100. Thus, while the terms alleged under this heading refer to a requirement to exercise care and skill, it is really a contractual term that is in issue rather than a common law duty which this formulation seems to allege. It would help comprehension, therefore, if the pleading were drafted to show a breach of a specified term by failing to discharge or deliver the care required by the term, namely to use skill and judgment or to work in a thorough and tradesman-like manner (terms actually used in the Contract), rather than to plead simply a breach of a duty of care, which may be different.

101. Other than this comment, which would not, of itself, justify refusing to permit the proposed pleading to be filed, but may suggest amendment, I have no comment on this section of the proposed pleading.

102. This cause of action appears to depend upon an express clause in the Contract which was a warranty that, in performing certain obligations, Vibe would exercise a duty of the utmost good faith.

103. The alleged breach is, as pleaded, in rendering Claims for payment which were said to be, "incorrect, inaccurate and/or inflated". I shall not repeat what I have said about "the bastard conjunction" at [85] above. It could have an effect here, however, for the three concepts are different and if only one were able to justify the claim of a breach of the warranty, then the pleading would not make out a cause of action. It is, for example, hard to see how a claim that is merely incorrect or inaccurate, say by inadvertence or mathematical error, would breach the duty alleged.

104. The duty of good faith or utmost good faith has not yet acquired a clear, unambiguous and unchallenged meaning. Indeed, there seems to be two schools of thought currently: the "excluders", namely those who see it as a concept which, "serves to exclude many heterogeneous forms of bad faith" (Summers RS "Good Faith in General Contract Law and the Sales Provisions of the Uniform Commercial Code" (1968) 54 Virginia Law Review 195 (at 199), adopted by Priestley JA in Kenard Construction (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 (at 266-7)) and those who claim it has a "core meaning", sometimes described as "loyalty to the contract" (per Finn J in South Sydney District Rugby League Football Club Ltd v News Ltd & Ors [2000] FCA 1541; (2000) 177 ALR 611 (at 426]), and sometimes as "restraint on self-interest" (per Einstein J in Aiton Australia Pty Ltd v Transfield Pty Ltd (1999) 153 FLR 237 (at [133]).

105. The duty of good faith does not require altruism or prevent a party bound by it from acting in its own best interests (per Bryson J in Australia Co-Operative Foods Ltd v Norco Co-Operative Ltd [1999] NSWSC 274; (1999) 46 NSWLR 267 (at 283)).

106. It would appear that acting in bad faith, or in breach of a duty to act in good faith, requires some motive or intention on the part of that party, so that the actions are dishonest, done for an ulterior purpose, arbitrary or capricious: per Gibbs J in Pierce Bell Sales Pty Limited v Frazer & Anor [1973] HCA 13; (1973) 130 CLR 575 (at 590).

107. In this case, however, all that is pleaded is that Claims alleged to be incorrect, inaccurate or inflated (or all three) were submitted. This is not a good claim, for that would not necessarily be sufficient to breach the duty of good faith. The cause of the errors may have been negligence, incompetence, computer error, genuine belief in the correctness of the claims, or some other cause consistent with Vibe complying with its duty of good faith. Good faith does not mean perfection in performance, whatever else it may mean.

108. This claim should, therefore, not be permitted to be pleaded in its present form, but proper re-pleading may justify its inclusion.

7. Duty not to engage [sic] misleading or deceptive conduct

109. There are two causes of action pleaded under this heading, each based on s 52 of the Trade Practices Act 1974 (Cth). They should be separated clearly.

110. Paragraph 74 pleads that in the premises, the first defendant owed a duty under that section not to engage in conduct in the course of trade or commerce that was misleading or deceptive or likely to mislead or deceive. The premises are, in such a complex pleading, not clearly identifiable. As noted above at [83], it is preferable to plead all the elements of a separate cause of action together with the pleaded cause of action to improve intelligibility.

111. Although this is, then, a problematic pleading, this in itself would not require leave to file the proposed pleading to be refused.

112. In general, however, what follows is an adequate, if somewhat irrelevant pleading of a claim under s 52 of the Act. Such a pleading can be set out quite simply. See, for a good example, Bartlett v Swan Television & Radio Broadcasters Pty Ltd [1995] FCA 1429; (1995) ATPR 41-434.

113. There are two problems with paragraph 75 in this section. In the first place, it does not connect representations with the documents defined in the proposed pleading as "the Claims" as defined. This may be a typographical error but where defined terms are used, they should be scrupulously accurately used so as to avoid confusion and ambiguity.

114. In the second place, it claims that the Claims submitted, the submission of which is alleged to be the representations said to be the conduct breaching the duty, are said to be representations that the amounts claimed "were properly due and payable ... in accordance with the terms of the Agreement and Contract". Given the uncertainty about the status and relationship between the Agreement and the Contract, this is a problematic pleading and needs attention. Again, the lack of clarity about the contractual basis for the claim fatally infects the pleadings.

115. Paragraph 76 is convoluted and, while that would not, of itself, justify refusal to permit filing of the proposed pleading, it would be better if the simple approach recommended above at [112] were to be followed.

116. Paragraphs 79 and 80 complete a claim for damages where allegedly misleading statements were made to a third party. Such a claim is, of course, maintainable so long as damage caused by the conduct constituted by the making of the statements is proved: Janssen-Cilag Pty Limited v Pfizer Pty Limited [1992] FCA 437; (1992) 37 FCR 526. The claim apparently relies on earlier paragraphs 58 to 62. By separating these paragraphs, there were a number of repetitious allegations. This duplication has the effect that the pleading becomes prolix. That can be a basis for refusal to permit proposed amendments: see Bloom v Kuji Pty Ltd (unreported, Federal Court of Australia, Drummond J, 31 May 1994).

117. I note, too, that the alleged representations are not set out in the pleading itself (being paragraph 60) but only as particulars to it. That is not correct, for the representations made are a material fact: Bradford Third Equitable Benefit Society v Borders [1941] 2 All ER 205 (at 211). I also note that while the representations are said to be untrue, no basis for that allegation is provided. That may be able to be supplemented by particulars, though it were better that it be included in the Statement of Claim, rather than in a separate document.

118. The pleading, however, is not complete for there is no allegation that the recipient relied on the misleading or deceptive conduct nor that such reliance caused the damages allegedly suffered: Wardley Australia Limited & Anor v Western Australia [1992] HCA 55; (1992) 175 CLR 514 (at 525).

119. In its present form, the pleading of this cause of action should not be permitted.

120. Paragraphs 81 to 88 of the proposed pleading seek to plead a claim that payment of the "inaccurate, incorrect or inflated" Claims was made under a mistake and the overpayment should be repaid.

121. Such a claim is recognised: Barclays Bank Ltd v W J Sims Son & Croke (Southern) [1979] 3 All ER 522; David Securities Pty Limited & Ors v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353. It is, in effect, a claim for money had and received.

122. It appears that the pleader of the proposed pleading has not recognised this and has pleaded a number of extraneous matters which are not required for such a claim. Thus, the pleadings suggest that the claims were representations which were misleading or deceptive. None of that is required.

1. The defendant must have received a sum certain: Harvey & Ors v Archbold & Ors [1825] EngR 359; (1825) 3 B & C 626; 107 ER 865.

2. The money recovered must have been the plaintiff's money or money to which the plaintiff is relevantly entitled: Standish v Ross [1849] EngR 319; (1849) 3 Exch 527; 154 ER 954.

3. The money must have come into the defendant's hands: Scott v Miller [1837] EngR 748; (1837) 3 Bing(NC) 811; 132 ER 623.

4. There must be a privity of contract between the plaintiff and defendant: Jones v Carter [1845] EngR 1306; (1845) 8 QB 134 (at 138); [1845] EngR 1306; 115 ER 825 (at 826).

5. The mistake must have been between plaintiff and defendant: Chambers v Miller [1862] EngR 1080; (1862) 32 LJCP 30; 143 ER 50.

6. The mistake must have caused the payment to be made for money payable notwithstanding the mistake is not recoverable: Commercial Bank of Australia Limited v Younis [1979] 1 NSWLR 444.

7. While the mistake may be unilateral, the plaintiff must ensure that the defendant has had notice of the mistake before action and demanded repayment: Kelly v Solari [1841] EngR 1087; (1841) 9 M & W 54; 152 ER 24.

124. Thus, the allegations in the proposed pleadings that the Claims were misleading or deceptive is irrelevant. All that is necessary is to claim that the moneys were not properly due and payable.

125. Further, it is not necessary that the first defendant intended the plaintiff to rely on the Claims, nor is it necessary that the mistake was induced by the first defendant.

126. Thus, paragraphs 82 and 85 would need amendments before this claim was permitted and paragraph 84 would not be allowed.

127. Shorn of these unnecessary irrelevancies, the pleading seems adequate, if not elegant.

128. The pleader then adds paragraph 87 as follows:**

87. Further, or alternatively, in the circumstances it is unconscionable for the first defendant to retain the benefit of the said overpayment.

**129. It is not clear what to make of this. The "[f]urther" is otiose, for unconscionability does not add anything to the claim for money had and received where paid under a mistake. It is not an element of the cause of action.

130. As to the "alternatively", there is no general claim in equity where unconscionability permits a claim for repayment of moneys received in such circumstances, even when induced by fraud. As Toohey J said (at 654) in Louth v Diprose [1992] HCA 61; (1992) 175 CLR 621:**

Although the concept of unconscionability has been expressed in fairly wide terms, the courts are exercising an equitable jurisdiction according to recognised principles. They are not armed with a general power to set aside bargains simply because, in the eyes of the judges, they appear to be unfair, harsh or unconscionable. This is in contrast to some legislation which 'permits the courts to exercise a broad discretion to control harsh, oppressive, unconscionable or unjust contracts'. The equitable jurisdiction exists when one of the parties 'suffers from some special disability or is placed in some special situation of disadvantage'.

**131. It does not seem to me that any claim here is being properly made and the paragraph and its consequential paragraph 88 should not be permitted to be included in the amendments to be allowed.

132. This section also appears to depend on earlier paragraphs which should be placed here so that the whole cause of action can be seen clearly.

133. Paragraph 89 alleges a breach of the Contract. It does not, however, plead that such a breach was one which was such as to evince an intention by the first defendant no longer to be bound by the Contract. Such a pleading is necessary to raise the question of repudiation. See The Progressive Mailing House Pty Ltd v Tabali Pty Ltd [1985] HCA 14; (1985) 157 CLR 17 (at 33, 40). Thus, this paragraph either requires amendment or omission.

134. I say omission, for the next paragraph appears to be sufficient to raise the issue of repudiation. It would be preferable if the conventional approach were followed and the allegation be pleaded, not merely that by the actions enumerated Vibe repudiated the Contract, but also that it unequivocally evinced an intention to renounce the Contract or not be bound by it. Vibe would be entitled to particulars of these matters and it is easier if they are expressly pleaded.

135. This section, comprising paragraphs 93 to 97, sets out claims against Vibe for carrying out the building works in a defective manner. As elsewhere, it pleads breaches under both the Agreement and the Contract, without suggesting that these may be alternative claims or otherwise contractually based and explained or relating the separate periods (which would be important to know which works were carried out under which contractual regime) or that they are otherwise related. Comments about this issue made earlier are relevant.

136. Subject to this, the pleading is in an adequate form, though paragraph 95 pleads that it was a term of the Contract that CDC relied on the advice, skill and judgment of Vibe, an unnecessary allegation breach of which does not seem to be alleged and, in any event, the breach alleged was of the other term, also pleaded, that Vibe would carry out the works in a proper and workmanlike manner. In any event, in this part of the section, only the latter terms of the Contract is the one pleaded to have been breached. Thus, paragraph 95 should not be included in an amended Statement of Claim.

11. Unlawful interference with plaintiff's economic relations

137. CDC claims that an email sent to the Bureau of Meteorology by Vibe amounted to an unlawful interference with CDC's economic relations with the Bureau.

138. This tort is still a developing one; in Sanders v Snell (1998) 196 CLR 329 the High Court (at [29] - [31]) left unanswered the question as to whether such a tort should be recognised in Australia, though, perhaps suggesting that it may. It then made it clear that an unlawful act was necessary to the definition of the tort. See also Spotwire Pty Ltd v Visa International Services Inc [2003] FCA 762; (2003) ATPR 41-949.

139. Nevertheless, its development has proceeded in the United Kingdom and was extensively reviewed, and accepted, by the House of Lords in OBG Ltd and Anor v Allan and Ors [2007] 4 All ER 545. There, the House, by majority, held that the elements of the tort were (per Lord Hoffmann (at 569-70)):

(1) a wrongful interference with the actions of a third party in which the plaintiff has an economic interest;

(2) an intention thereby to cause loss too the plaintiff;

(3) that the acts of interference are only wrongful if they are actionable by the third party (except if the only reason they are not actionable is because the third party has suffered no loss) as an interference with the third party's freedom to deal with the plaintiff; and

(4) that there must have been loss or damage sustained.

140. Despite the reserve expressed by the High Court, I do not consider that on an application such as this, I should prevent CDC from arguing its case that such a tort does exist in Australia. There are, indeed, strong statements in Australian courts recognising it. It was accepted by Brooking J in Ansett Transport Industries (Operations) Pty Ltd & Ors v Australian Federation of Air Pilots [1991] VicRp 36; [1991] 1 VR 637 (at 667-8), relying in part on what McLelland J said in Copyright Agency Ltd v Haines [1982] 1 NSWLR 182 (at 193-4) and Else-Mitchell J in Sid Ross Agency Pty Ltd v Actors and Announcers Equity Association [1970] 2 NSWR 47 (at 52). All these cases were, of course, decided before Sanders v Snell. Indeed, Brooking J observed, "[w]hat the law is in Australia on this subject must await the authoritative determination of the High Court, but my duty is to apply the law as laid down by the House of Lords". That may now have changed since the High Court has begun to address the matter, but not by refusing to recognise such a claim.

141. It should, however, be pleaded in accordance with the principles enunciated by the House of Lords for it clearly gains its genesis from the jurisprudence of that Court. The pleading in this section does not do so.

142. I note also that the section again relies on earlier pleadings (namely paragraphs 58 to 63) but without reference to them and clear links back to show how it does so. This is undesirable at least and tends to confuse or unintelligibility or both.

143. The proposed pleading does not allege that the sending of the email was wrongful because it was an interference with the freedom of the Bureau of Meteorology (BOM) to deal with CDC.

144. It pleads that Vibe was aware of the contractual relationship with the BOM but it does not set out any material facts to show how this was relevant to the elements of the tort. For example, it does not plead how the allegedly unlawful acts impinged on the contract or what loss was relevantly incurred in respect of the contract there pleaded or how it was incurred under that contract.

145. Thus, the present pleading cannot stand but the cause of action properly reformulated, should be allowed to be raised by a proper pleading.

146. Section 79 of the Trade Practices Act 1974 (Cth) criminalises a conspiracy to breach the Act. That, however, does not provide a civil claim for conspiracy.

147. This section, comprising paragraphs 104 to 109 purport to plead a common law conspiracy based on alleged breaches of s 52 of the Act. It appears, however, that this is a claim that is covered by s 82 of the Act, for a person who conspires with others to contravene a provision of the Act is taken to be "a person involved in a contravention of" the Act (s 75B) and recovery against such persons is provided for under s 82 of the Act.

148. As a result, the claim is not maintainable: McKellar & Anor v Container Terminal Management Services Ltd and Ors (1999) (at [197]) and the authorities there cited.

149. It seems to me, further, that it is not open to plead as an alternative to a substantive cause of action already pleaded, namely the damage done by the submission of claims which are alleged to be false and misleading under s 52 of the Act, the tort of conspiracy to commit the substantive wrong: Australian Wool Innovation Ltd v Newkirk [2005] FCA 290; (2005) ATPR 42-053 (at 42,675).

150. For these reasons, the proposed pleading containing this section should not be permitted.

151. As Dixon CJ described it in Coal Miners' Industrial Union of Workers of Western Australia, Collie v True (1959) 33 ALJR 224 (at 227),**

A combination to threaten and if necessary carry out an unlawful act as a means of securing an end is actionable as a civil conspiracy.

**152. Like fraud, however, conspiracy is not an allegation that should lightly be made: Hughes v Western Australian Cricket Association Inc [1986] FCA 357; (1986) 69 ALR 660 (at 700).

153. There are two forms of conspiracy, but the one alleged, in accordance with the dictum of Dixon CJ above (at [151]), is what is generally called "unlawful means" conspiracy. The necessary elements are:

1. a combination or agreement between two or more persons;

3. acts carried out in furtherance of the combination or agreement and with that intention; and

154. In this case, the pleading does not claim that the combination of the alleged conspirators was "wrongful and malicious" or "unlawful" as is commonly pleaded: see, for example, Bullen & Leake & Jacobs Precedents of Pleadings (London: Sweet & Maxwell, 1990) 13th ed, p226, 227; Britts, MMG Pleadings Precedents (Sydney: Law Book Co, 1994) 4th ed, 253; Graham, T Victorian Pleading Precedents (Sydney: Law Book Company, 1982) p 52. It is certainly a common form of the pleading. See, for example, Maritime Union of Australia v Geraldton Port Authority [1999] FCA 899 (at [416]).

155. On the other hand, pleadings which have been challenged have not been held to be deficient because of an absence of such a claim: Australian Wool Innovation Ltd v Newkirk (at 42,675-6).

156. It is probably better included but the pleading does not appear to be so deficient in its absence that it should be struck out.

157. The pleading, however, is deficient in failing to clearly identify the object or objects of the conspiracy.

158. It is also deficient in the pleading of the alleged wrongful means. The relevant pleading simply states that the demands constituted by the Claims were made in breach of certain sections of the Criminal Code 2005 (Cth) and the Criminal Code 2002 (ACT) (though not so cited).

159. It is necessary to plead the material facts on which CDC relies to say that the overt acts were unlawful. For example, the pleading makes reference to s 134.2 of the Criminal Code 2005 (Cth). This section provides:**

(1) A person is guilty of an offence if:

(a) the person, by a deception, dishonestly obtains a financial advantage from another person; and

(b) the other person is a Commonwealth entity.

Penalty: Imprisonment for 10 years.

**160. The relevant pleaded paragraph merely refers to the rendering by the defendants to CDC of the Claims. There is no allegation that:

2. the defendants' believed that the rendering of the Claims was or would be deceptive or were at least aware of a substantial risk that the rendering of the claims would be deceptive and, having regard to the circumstances known to them, that it was unjustifiable to take the risk;

3. the deception resulted in the defendants obtaining a financial advantage from CDC;

4. the defendants obtained the financial advantage dishonestly; and

5. CDC was a Commonwealth entity. This seems unlikely but is an element of the offence and needs to be show if alleged.

161. Similar allegations would need to be made, setting out the material facts in each case, for the other provisions said to justify the claim that the means used by the defendants to effect the object of the conspiracy were unlawful.

162. At one stage, I was concerned that the two parties to the alleged conspiracy were a company (through the agency of a named employee) and one of its employees. I am satisfied, however, that, so long as it can be shown that the employee was acting with an appropriate degree of independence and not merely obeying orders which could not be disregarded, there would be a combination between them: Crofter Hand Woven Harris Tweed Co Ltd v Veitch [1941] UKHL 2; [1942] AC 435 (at 441, 468). Even the criminal law accepts that a company can conspire with its directors, and, therefore, presumably, its employees: R v Blamires Transport Services Ltd [1964] 1 QB 278.

163. Nevertheless, this section of the proposed pleading is defective substantially and in its present form the proposed pleading cannot be permitted to be filed.

164. This is another section, consisting of paragraphs 111 and 112, involving a separate cause of action which needs to rely on paragraphs earlier pleaded. In particular, paragraphs 38 to 43 and 54 to 57 seem to be relevant. These should be all grouped in the one place.

165. Conversion is, in summary, the intentional dealing with goods inconsistently with the possession or right to immediate possession of another, though it is said that a precise definition is "well nigh impossible"; per Lord Nicholls in Kuwait Airways Corporation v Iraqi Airways Co (No 3) [2002] UKHL 19; [2002] 3 All ER 209 (at 221-2). His Lordship did, however, identify the critical features as:**

In general, the basic features of the tort are threefold. First, the defendant's conduct was inconsistent with the rights of the owner (or other person entitled to possession). Second, the conduct was deliberate, not accidental. Third, the conduct was so extensive an encroachment on the rights of the owner as to exclude him from use and possession of the goods. The contrast is with lesser acts of interference. If these cause damage they may give rise to claims for trespass or in negligence, but they do not constitute conversion.

**166. It is important to note, however, that post 1977 English decisions must be read with caution for changes were made by the Torts (Interference with Goods) Act 1977 (UK) which have not been made in Australia. Thus, some pleading precedents should not necessarily be followed.

167. The critical element here is the right of the plaintiff to possession of the goods in question. Ownership will not necessarily bear that right; indeed, a bailee may have a greater right to possession than an owner: City Motors (1933) Pty Ltd v Southern Aerial Service Pty Ltd [1961] HCA 53; (1961) 106 CLR 477. In this pleading, CDC has relied on ownership or possession in paragraphs 43 and 56 (but with the use of the "bastard conjunction" - see [85] above) of the relevant goods, a linen plan, thus rendering the pleading a bad one. Ownership by itself, without an immediate right to possession is not enough. The right protected is the right to possession: Associated Midland Corporation Ltd v Bank of New South Wales [1983] 1 NSWLR 533 (at 549).

168. Further, CDC pleaded merely that Vibe has failed to deliver the linen plan. This is, of course, consistent with a non-deliberate non-delivery. For example, omission to reply to a letter of demand has been held not to constitute a refusal: Nelson v Nelson (1923) QSR 37. Thus, CDC must either plead an actual refusal or such a positive act as would amount to an intention to withhold the goods in defiance of CDC's right to possession: Clayton v Le Roy [1911] 2 KB 1031 (at 1052). I am aware that pleadings alleging a "refusal or failure" have been used (e.g. Upton and Anor v TWV Enterprises Ltd & Anor (1985) ATPR 40-611) but in my view, it is clear that not every withholding of goods is a conversion and so a failure by itself is insufficient.

169. The claim is one that CDC can make but it must plead it properly and the present pleading cannot be allowed.

170. The next section, paragraph 113, pleads a claim in detinue.

171. Detinue as a cause of action has been abolished in England but is still a valid claim in this Territory. It amounts to a wrongful detention of goods for which a demand for return has been made by the person with a right to immediate possession: Lloyd v Osborne (1899) 20 NSWLR 190 (at 193). There are a number of advantages in suing in detinue over conversion (usefully set out in Balkin RP and Davis JLR Law of Torts (Sydney: LexisNexis Butterworths, 2004) 3rd ed at pp 109-11) but in this case, the fact that the court can order the actual return of the line plan, rather than damages, would seem salient because of its necessary use to finalise the sub-lease with the Commonwealth.

172. It seems that wherever detinue lies, so normally does conversion: City Motors (1933) Pty Ltd v Southern Aerial Service Pty Ltd (at 491). The pleadings will be similar, if not identical. The comments made above are also applicable to this claim.

173. The one paragraph specifically pleaded, though earlier paragraphs 38 to 43 and 54 to 57 seem also to be required, is in the following terms:**

113. The first defendant has detained the documents set out in paragraph 54 above without authority and the plaintiff seeks the return of these documents.

**174. Curiously, the linen plan is not there sought to be redelivered by the detinue claim, even though it is stated in paragraph 42 to be required to finalise the sub-lease.

175. In any event the pleading is inadequate. Detention without authority does not necessarily give rise to a claim in detinue. For example, a bailee whose bailment period has expired no longer has an authority to retain the goods. His detention of them does not give rise to a claim in detinue, however, until there is a demand and a refusal to deliver. See Crowther v Australian Guarantee Corporation Ltd (1985) Aust Torts Reports 80-709 (at 69,102); Spackman v Foster (1883) 11 QBD 99.

176. This pleading shows the problem of separating paragraphs where they form part of the one cause of action. In a sense, subject to the comments above about the interest of CDC and the characterisation of the Vibe's response, all the material facts may be said to have been already set out in the earlier paragraphs referred to in [173] above and this paragraph appears merely to be a "make-weight" to show that there is a claim in detinue. In a better laid out pleading, it would be neither necessary nor desirable. The claim can be made, however, if properly pleaded.

177. The pleaded paragraphs 114 to 120 under this heading are generally unremarkable save for the following.

178. In paragraph 115, CDC claims interest payments at 1% over the overdraft rate without pleading the material facts which give rise to such a claim, for example that moneys had to be borrowed and that this was the rate of interest paid: Sheba Gold Mining Co v Trubshawe [1892] 1 QB 674 (at 687).

120. By reason of the first and second defendants [sic] conduct the plaintiff has suffered damage to its business reputation and that damage is continuing.

**180. The problem with this claim is that no pleading has been made earlier which supports this claim. The claim for damage to reputation is the tort of defamation. Defamation requires the communicating of an imputation, though it can be communicated by gestures which accompany words: Cook v Cox (1814) 3 M & S 110 (at 114); [1814] EngR 506; 105 ER 552 (at 554); Grubb v Bristol United Press [1963] 1 QB 309 (at 328). Unspecified conduct, however, cannot found a claim in defamation.

181. As there are no material facts as would be necessary to justify this claim, the paragraph cannot be permitted to be included in a Statement of Claim filed in these proceedings.

182. Aggravated damages are awarded where a defendant has acted in an insulting, improper, unjustifiable or malicious way: Triggell v Pheeney [1951] HCA 23; (1951) 82 CLR 497 (at 514).

183. Paragraph 121 claims aggravated damages referring expressly to the claim for breach of the warranty of good faith, unlawful interference with economic relations and the two conspiracy claims.

184. Such damages, however, are only available in cases where damages are "at large" (see Broome v Cassell & Co [1972] UKHL 3; [1972] AC 1027 (at 1073) for the meaning of that term) and thus are not available for actions in breach of contract: Broken Hill Proprietary Company Ltd v Fisher [1984] 38 SASR 50 (at 66).

185. Accordingly, the present pleading which refers to one of the breach of contract claims, namely breach of the warranty of good faith, cannot be permitted as it would be to allow a claim that is bad at law.

186. So far as the other claims are concerned, namely the claims for unlawful interference with CDC's economic relations and conspiracy (apart from the conspiracy claim which I have rejected and which also cannot be permitted) they are permissible causes of action to attract a claim for aggravated damages.

187. There is some authority so suggest that the paragraph is not necessary. In Thompson v Australian Capital Television Pty Ltd & Ors (1997) 129 ACTR 14, Miles CJ said (at 19[24]):**

There is no claim for aggravated damages in the present case. However, I know of no authority that aggravated damages have to be pleaded. The court deals with the material before it.

188. While I cannot find any such cases either, there are some suggestions to the contrary. In Gray v Motor Accident Commission (1998) 196 CLR 1, Kirby J (at 35) noted:

In England and Canada, authority exists that claims for exemplary damages do not need to be pleaded and, by analogy, the same might be said of aggravated damages, being within a claim for compensatory damages, generally expressed. In Australia, a stricter approach has been taken to the pleading of aggravated damages.

(footnotes omitted).

**189. The Australian authority to which his Honour referred was Cotogno v Lamb (unreported, New South Wales Court of Appeal, CA 547 at 1983, Kirby P, Mahoney and McHugh JJA, 9 August 1985).

No claim was made by the plaintiff in respect of aggravated damages in this proceeding prior to the possibility of their being claimed being raised during the course of the hearing of the plaintiff's appeal. The plaintiff's particulars of claim referred specifically to exemplary damages but made no reference to aggravated damages. It is agreed by counsel, both of whom were counsel at the trial, that no claim was made at the trial that the plaintiff should have aggravated damages and that the Master was not asked to award such damages. The trial being so conducted, no evidence was called directed to aggravated damages as such although, it may be, some of the evidence which was called would have been relevant to that issue had aggravated damages been sought. The defendant, accordingly, directed no cross-examination or evidence to that issue.

**191. McHugh JA had earlier referred, similarly, to "there is no doubt that no specific claim was made at the trial for [aggravated damages]".

192. With the greatest respect to Kirby J, it is not entirely clear that their Honours in Cotogno v Lamb were necessarily referring to a requirement to plead a claim for aggravated damages. In any event, that has now been made a requirement under r 15.9 of the Uniform Civil Procedure Rules 2005 (NSW).

193. In this Territory, the matter is now put beyond doubt in the Court Procedures Rules 2006, where rr 407(1)(d) and 417(1)(a) which require damages "of every kind" to be specifically pleaded.

194. There are a number of claims that I have found that cannot properly be pleaded. It is clear that there are claims which, properly pleaded, are certainly arguable in CDC's apparent case. The proposed pleading, however, is so full of inadequate, improper or irrelevant pleadings and also errors that CDC cannot be permitted to file it and I will dismiss the application that it be filed. I shall hear the parties as to consequential orders.

195. Vibe also applied for security for costs. This application was made under s 1335(1) of the Corporations Act 2001 (Cth), which provides:**

Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given.

**196. There is no doubt that CDC is a plaintiff in an action and so the section can found such an application.

197. The application was, alternatively, made under r 1900 of the Court Procedures Rules. The grounds for an order for security for costs under that rule are set out in r 1901. It does not use the words, "if it appears by credible testimony" but is otherwise of identical effect. It does not seem to me to matter under which provision the application is made; I am of the clear view that the principles which a court would apply to both provisions are the same.

198. The evidence was given by affidavit by both parties. Vibe relied on two affidavits of Dean Desmond Rutherford affirmed 1 June and 31 August 2009. A further affidavit of Mr Rutherford of 7 October 2009 brought the expenditure of Vibe on costs incurred by it relating to the Statement of Claim up to date. Vibe further relied on a copy of Management Accounts of CDC prepared to 30 June 2009 and for the period from 1 July 2009, consisting of a Profit and Loss Account and Balance Sheet. A further set of Management Accounts were also tendered for an uncertain period from 1 July 2009. They were dated 2 September 2009 and may have been accurate to that date. They consisted also of a Profit and Loss Account and Balance Sheet.

199. CDC relied on the tendered accounts also together with an affidavit of a director, Craig John Sebbens, sworn on 12 June 2009 and an affidavit of Eddie Senatore, Accountant, sworn on 12 June 2009. Mr Sebbens gave some additional oral evidence and was cross-examined.

200. The evidence showed that CDC had commenced operations in the financial year ending 30 June 2008 and, in that time, had only traded for one month as it spent time investing in infrastructure and development of its business model. It made a loss in that year of $823,996.

201. In the 2009 Financial Year, the interim accounts showed a loss of $574,780.15, though that did not include provisions for depreciation or "interest or third party loans". These could, of course, be quite significant for the loans, as will be noted below, were for not inconsiderable amounts and the balance sheet showed equipment valued at over $4 million.

202. The company was trading profitably in the 2010 Financial Year, though this was again, presumably, without the provisions mentioned above. This confirmed a trend, for the Management Accounts showed a profitable last month in the previous financial year.

203. Mr Sebbens noted, in his oral evidence, that CDC had entered into a number of contracts, some for periods of two years or thereabouts, two for three years and one for four years with an option. These generated substantial amounts of revenue per month, although I was not told what the costs incurred were in generating this revenue. The total monthly revenue advised, however, exceeded $375,000 per month (apparently in most cases exclusive of GST). Additional contracts hiring out space had been made with revenue under them totalling $27,000 per month.

204. CDC had borrowed extensively. It had four registered charges showing loans to it by CBFC Ltd. The evidence varied but, according to the records held in the Australian Securities and Investment Commission (ASIC), the amounts owed under these loans, including interest, totalled $2,346,502.80. A further registered charge showed a loan by Teo Tran, formerly the owner of a company which held a quarter of the issued shares in CDC. This loan was for $2,000,000 of which, it appeared, most had been advanced. A facility had also been granted by the Commonwealth Bank which was also registered as a charge. I was told that it was for $2.1 million to pay for two data pods. Mr Sebbens said the pods would generate $120,000 income per month but, again, I was not told at what cost. There was also a loan from Anabit Pty Ltd of $4,913,815.00. It was a facility which allowed borrowings up to $5 million. There were special conditions as to payments of interest, namely only when CDC has "cash available". This is defined in the facility to mean cash after making allowances for working capital, cash to fund planned expenditure, to pay creditors and an amount determined by CDC as a prudent reserve. The company was associated with one of the directors of CDC.

205. The balance sheets showed current assets in 2009 as $373,657.62 (including cash on hand of $70,782.12) and in 2010 of $582,675.44 (including cash on hand of $135,394.93).

206. Mr Senatore expressed the view that, after discounting goodwill, which was shown in the Balance Sheet as an asset, the net asset position as at 31 May 2009 was $1,845,917.

207. He further expressed the view, based on his examination, that CDC:**

is solvent and that it is able to met (sic) any order as to costs that is likely to be made against it in relation to these proceedings.

**208. Much of the evidence of Vibe was directed to the difficulties it had encountered in having CDC correctly formulate its claim. As can be seen from my earlier remarks, the pleadings have not elucidated what is being claimed but have rather obscured it and there has been protracted attempts to get CDC to formulate its claim properly.

209. Mr Rutherford estimated that the Statement of Claim had been amended six times. Certainly, there was evidence of much correspondence seeking particulars, complaining about the particulars sought, pointing out deficiencies in the Statement of Claim (in its various forms) and the like. Mr Rutherford estimated that the costs to Vibe of the legal team addressing just these issues was, as at 7 October 2009, $33,239.75.

210. The records of ASIC showed that CDC had a share capital of $100,000. It had five shareholders, one of whom, Mr Kenneth Ronald Lowe of Sydney, held 55% of the shares. Mr Sebbens, through his company, CTT(ACT) Pty Ltd, of which he was the sole director and shareholder, held 25% of the shares in CDC. Mr Sebbens appears to have purchased the shares in CTT(ACT) Pty Ltd from Teo Tran on 23 May 2008. These records also showed that Anabit Pty Ltd was owned by Mr Lowe and his wife.

211. The rationale for the special regime providing for security for costs against an incorporated company is set out in the decision of Street CJ in Buckley v Bennell Design Construction Pty Ltd (1974) 1 ACLR 301, a decision of the NSW Court of Appeal, where his Honour said (at 303-4) in respect of s 363((1) of the Companies Act 1961 (the predecessor of s 1335(1)):**

Section 363(1) of the Companies Act has a long history in companies legislation in England and in this country. It reflects the concern of the legislature that, in permitting the incorporation of a limited liability entity, it was necessary to ensure that persons who might have dealings, whether voluntary or involuntary, with such an entity should have a measure of protection against the consequences of limited liability. In cases of contract the other party to the dealing would be on notice of the limited liability of the company and, the transaction being voluntary, he could be presumed to be competent to look after his own interests in that regard. Where, however, a company commences litigation against another party, that other party could find himself involuntarily prejudiced by the limited liability character of the plaintiff who had commenced proceedings against him. To protect the other party from this consequence of limited liability, there has always in companies legislation been a provision along the lines of s 363 of the New South Wales Act.

212. The approach of the courts has been accurately set out in the well-known case of Southern Cross Exploration NL & Ors v Fire & All Risks Insurance Co Ltd & Ors (1985) 1 NSWLR 114, where Waddell J said (at 116):

Two questions have to be decided. The first may be described as a threshold question. It is, whether, having regard to the whole of the evidence before the court, there is credible testimony by which it appears that there is reason to believe that the plaintiffs will be unable to pay the costs of the defendants if successful in their defence. If this question is answered, yes, the second question arises which is whether, in the exercise of the discretion given to the court by the subsection, the relief sought should be granted wholly or in part or should be refused.

213. The meaning of "credible testimony" is not particularly difficult to grasp. As put by Lee J in Warren Mitchell Pty Ltd v Australian Maritime Officers' Union (1993) 12 ACSR 1 (at 5),

The use of the word 'credible' suggests a requirement that evidence to be relied upon has some characteristic of cogency. Qualification of the word 'testimony' by the word 'credible' suggests that an evidentiary burden is undertaken by the party seeking the order. It amounts to an obligation on an applicant for an order to show that the material before the court is sufficiently persuasive to permit a rational belief to be formed that, if ordered to do so, the corporation would be unable to pay the costs of that party upon disposal of the proceedings.

**214. The comment by Lee J that there is an evidentiary burden on an applicant has been rejected by a majority, comprising Pigeon and Owen JJ, of the Western Australian Court of Appeal in FFE Minerals Australia Pty Ltd v Mining Australia Pty Ltd [2000] WASCA 69; (2000) 156 FLR 116 (at 122 [24]). Murray J dissented (at 128 [50]), reaffirming the views he had expressed in Tipperary Developments Pty Ltd v State of Western Australia (1996) 22 ACSR 241 (at 244).

215. Gray J in this Court in Rural & General Insurance Broking Pty Ltd v Australian Prudential Regulation Authority [2004] ACTSC 14 expressed his agreement with the views of Lee J and Murray J. I respectfully express my preliminary support for that position also, though the matter was not argued before me and a final view should perhaps await a case where the matter requires determination.

216. In this case, whatever view is ultimately taken of the application, CDC has adduced evidence which is to be considered along with that adduced by Vibe to determine whether there is credible testimony as required.

217. In addition, the NSW Full Court has noted that the evidence does not need to be conclusive, prima facie evidence is sufficient: Churchills Ltd v Pilcher (1940) 57 WN(NSW) 109.

218. As to inability to pay, a company that has no assets or income clearly has an inability to pay but the concept is a little wider than that. In the well-known decision of Beach Petroleum NL v Johnson [1992] FCA 110; (1992) 7 ACSR 203, von Doussa J explained it (at 205[25]):**

A corporation 'will be unable to pay' the costs within the meaning of the section if it can only do so if given extended time to realise assets which might be difficult to realise, at least at a price sufficient to provide a surplus over other liabilities, sufficient to pay the costs: see Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd (1985) 1 NSWLR 114 at 121. The company will also be unable to pay the costs within the meaning of the section if the payment would be one that will amount to a preference of the defendant over other creditors such that the payment would be liable to be set aside either as a preference or as a fraudulent disposition (that is a payment made by the plaintiff corporation with the intention to defeat or delay one or more other creditors) in the event of the plaintiff corporation later going into liquidation. When the court is required to make a judgment which anticipates future events the court of necessity is required to judge the degree of probability that a particular event might occur. The court can do no more than evaluate the chances: cf Malec v J C Hutton Pty Ltd [1990] HCA 20; (1990) 92 ALR 545.

**219. There is some controversy about whether the courts should assess the plaintiff company's financial position as at the date of the application as an estimate of its likely position at the date of judgment or whether the court should speculate on the likelihood of future events. Some courts make limited orders with liberty to apply on the happening of future events. For a useful summary, see Colbran, S E, Security for Costs (Melbourne: Longman Professional, 1993) at 206-7.

220. At the stage of discretion, the second question, other issues arise and these include the strength of the plaintiff's case and whether, for example, it is a sham: Ilat Nominees Pty Ltd v Murragong Nominees Pty Ltd [1980] FCA 162; (1980) 48 FLR 385 (at 386).

221. Vibe seemed to have two main submissions: that the substantial prior year losses amounted to credible testimony that CDC would be unable to meet any costs orders within the meaning of the relevant statutory provisions and also that the difficulty in CDC formulating a claim entitled Vibe to the protection that such an order would bring.

222. In addition to the evidence adduced as noted above, Vibe also submitted that the failure of CDC to adduce evidence about the amount drawn down under the various facilities and when the amounts fell due permitted me to draw an inference that the company would be unable to pay a costs order, relying on the principles enunciated in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298.

223. In that submission, Vibe relied on a decision of Master Connolly (as his Honour then was) in Master Club Consultants Pty Ltd v Stanbritt Pty Ltd [2000] ACTSC 18, but that was a case where the plaintiff company adduced no evidence at all and resisted producing material, even challenging a Notice for Non-Party Production. That is not the position here.

224. Mr Gray also referred me to HJA Holdings Pty Ltd v Iliev [2006] ACTSC 8 where Master Harper ordered security for costs against the plaintiff company and relied on Jones v Dunkel. There, however, while a director of the plaintiff did make an affidavit deposing to the financial situation of the plaintiff, he did not attach or produce any balance sheet, profit and loss account or bank statements. His Honour felt that this failure permitted him to draw the conclusion that the plaintiff would have been unable to pay any costs orders as submitted by the defendant more confidently, relying on the principles in Jones v Dunkel.

225. One must bear in mind the limits of the principle in Jones v Dunkel. In the first place, the rule does not apply if the failure to adduce certain evidence said to raise the application of the principle is properly explained. Thus if there is an acceptable reason for not calling a witness, such as that the witness hostile (Smith v Samuels (1976) 12 SASR 573 (at 581)) or is ill, overseas or dead (Payne v Parker [1976] 1 NSWLR 191 (at 202)) or where the evidence is not relevant to an issue between the parties (Packer v Cameron (1989) 54 SASR 246 (at 253-4)), the principle does not apply.

226. Here, for example, Mr Sebbens asserted commercial confidentiality for the relevant contracts. This is a reasonable explanation, especially where the effect of the contracts have been asserted in evidence.

227. The second matter is one which litigants, and then legal advisers, often ignore, forget or mistake. It is conveniently described in Heydon J D, Cross on Evidence (Sydney: Butterworths, 1996), loose-leaf, at p 1088, where it is explained as follows:**

Secondly, while the rule in Jones v Dunkel permits an inference that the untendered evidence would not have helped the party who failed to tender it, and entitles the trier of fact to take that into account in deciding whether to accept any particular evidence which relates to a matter on which the absent witness could have spoken, and the more readily to draw any inference fairly to be drawn from the other evidence by reason of the opponent being able to prove the contrary had the party chosen to give or call evidence, the rule does not permit an inference that the untendered evidence would in fact have been damaging to the party not tendering it. The rule cannot be employed to fill gaps in the evidence, or to convert conjecture and suspicion into inference. Nor does the rule prevent any inference favourable to the party who has failed to call the witness from being drawn: other evidence may justify the drawing of the inference. (footnotes omitted).

**228. Thus, there must first be an inference available to be drawn in favour of the party who wishes to rely on the non-adducing of evidence. Then, the drawing of that inference may more confidently be made. It is not correct to say that the court can draw an inference from failure to adduce the evidence itself. Here, I apprehend that Mr Gray seeks that I draw the inference from the prior year losses and the indebtedness that CDC will not be able to pay a costs order. On the material, that is an available inference and, were there no evidence from CDC, I could draw it more confidently.

229. In this case, however, there is such evidence, both documentary in the form of the various accounts, including balance sheets, and the oral evidence of Mr Sebbens. In addition, I have the evidence of an accountant who has examined the relevant books of CDC and has asserted details of relevant indebtedness. Thus, there is evidence of the matters Mr Gray sought to suggest were absent and could give rise to a strengthening of the inference.

230. Indeed, while the trading losses had been significant and had "eroded" the assets of CDC, the evidence, relevantly unchallenged, was that CDC was now trading at a profit, the earlier periods were a period of "start up" when losses would be expected and that the principal shareholders had stood behind the company with substantial loans, at least one of which did not appear to be secured and so risked being lost on an insolvency of the company.

231. Thirdly, there must be a matter that calls for an answer. Here, there was no call for or notice to produce seeking the relevant material, as there had been in Master Club Consultants Pty Ltd v Stanbritt Pty Ltd, nor was there an obvious lack of accounts. Further, there was no cross-examination to suggest, for instance, that the relevant documents should have been produced. Indeed, when asked about them, Mr Sebbens merely responded, appropriately, "I have not been asked to produce them". So far as I can tell no subpoenas were issued by Vibe, no notices to produce, nor any notices for non-party production.

232. Curiously, Mr Thomas asked questions in re-examination which seemed merely to amplify some examination-in-chief but which traversed issues that had not been mentioned at all in cross-examination. Thus, he commenced his re-examination with the following exchange:**

In relation to the contracts that you mentioned when I was asking you some questions in-chief and you, if I'm correct, linked the contracts to the income that flows to the data centre, correct? Yes, that's correct.

**233. He then proceeded to adduce evidence about details of all the contracts. Nevertheless, no objection was taken to this course of action.

234. In these circumstances, it could be said that there was no real issue about at least the contracts and only a faint one about any other documents.

235. In my view, this was not a case where the principle in Jones v Dunkel would help Vibe.

236. On all the material, I am not satisfied that there is credible testimony that CDC will be unable to pay the costs of Vibe if successful in its defence. In my view, the inference from the past losses is substantially if not wholly met by the current profitable trading together with evidence of medium term contracts that assure continuing cash flow. While the costs of meeting these contracts have not been put in evidence, the current profitability allows me to draw some inference of that. In addition, the assets are substantial and a significant portion of loans are from related parties.

237. While there has not been evidence of matters such as the due dates for payments, the costs of business, details of the buildings and their saleability, I am conscious that there is the expert opinion of an accountant who has inspected the relevant books and documents of CDC. I am also as aware, as was said by Gray J in Rural and General Insurance Broking Pty Ltd v Australian Prudential Regulation Authority (at [16]), that there is no credible evidence that indicates that the major asset of CDC may not be available to be realised if required. There are, also, recurrent assets of some significance.

238. The application for security for costs must be dismissed.

239. In principle, it seems to me that costs should simply follow the event. Thus, CDC should pay Vibe's costs of the hearings relating to the pleadings issues. There were a number of them. Vibe should pay the costs of the application for security for costs. At the hearing on 3 September 2009, both issues were, however, addressed. There should be some apportionment.

240. I am also conscious that Vibe has been brought back to court on an application to permit filing of the Statement of Claim where CDC has been wholly unsuccessful and where many of the defects had been earlier pointed out to CDC by Vibe.

241. Vibe has, in part, sought to ameliorate the prejudice it has suffered by an application for security for costs. This has been unsuccessful.

242. It seems to me that there is a case for awarding Vibe its costs of the unsuccessful application to file an amended Statement of Claim on the indemnity basis. This is a combination of the "hopeless cases" principle (Re SCA Properties Pty Ltd (in lid) [1999] QSC 180; (1999) 17 ACLC 1611 (at 1622)) and the "abuse of process through prolongation of litigation" principle (Qantas Airways Ltd v Dillingham Corporation (unreported, Supreme Court of New South Wales, Rogers J, 14 May 1987) (at 2)). The situation here does not reach quite the standard of either but has substantial elements of both.

243. My only hesitation is that, as Kirby P suggested in Huntsman Chemical Company Australia Ltd v International Pools Australia Ltd (1995) 36 NSWLR 242 (at 249), such an order should be made ideally only where there is a due and timely warning by the successful party to the unsuccessful party that such an order would be sought. So far as I am aware, no such warning has been given. That is not determinative.

1. That the application made by Application in Proceedings for leave to file an Amended Statement of Claim dated 17 September 2009 be dismissed.

2. That the application made by Application in Proceedings dated 1 June 2009 for an order that the plaintiff give security for costs be dismissed.

245. I propose the following further orders, but shall not make them without hearing further submissions from the parties:

3. That the plaintiff have leave to apply within 14 days for leave to file an Amended Statement of Claim and on such application it shall, unless the court otherwise orders, pay the defendant's costs of such an application on an indemnity basis.

4. The plaintiff pay the defendant's costs, other than the costs referred to in order 5 below, of the application made by Application in Proceedings dated 1 June 2009.

5. The defendant pay the plaintiff's costs of the application for security for costs, comprising the following:

(a) the affidavit of Dean Desmond Rutherford affirmed 31 August 2009;

(b) the affidavits of Craig John Sebbens sworn 12 June 2009;

(c) the affidavit of Eddie Senatore sworn 12 June 2009;

(d) three quarters of the hearing on 3 September 2009;

(f) any necessary attendances, conferences, perusals, drafting, correspondence or copying in connection with items |(a) to (e), at least as far as they relate to the issue of security for costs.

6. The plaintiff pay the defendant's costs of the Application made by Application in Proceedings dated 17 September 2009, such costs to be payable on an indemnity basis.**

I certify that the preceding two hundred and forty five (245) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Refshauge.

Solicitor for the plaintiff: Trevor Barker & Associates