Clark v Auspicious Yacht Sales Pty Limited & Ors; Gibbs & Anor v Auspicious... [2006] NSWSC 37 | Case summary

JUDGMENT 1 His Honour: Each plaintiff was the purchaser of a yacht manufactured by the fourth defendant (Hunter Marine Corporation). The first defendant was a distributor of yachts manufactured by the fourth defendant. 2 Each plaintiff brought a separate proceeding in the District Court. Each plaintiff had been a purchaser of a yacht from the first defendant. Each of them sought relief in relation to that purchase. 3 Whilst the proceedings were before the District Court, an order was made giving liberty to join the fourth defendant as a party. Jurisdictional considerations led to the proceedings being removed to this court. The joinder order is not regarded as being of any significance by the parties for present purposes. 4 The statement of claim was amended to make the fourth defendant a party thereto. Subsequently, it was served with process in Florida. It is a New Jersey corporation, having its principal place of business located in Alachua, Florida, United States of America. 5 The relief sought against the first defendant arises from alleged breach of contract and misrepresentation (in this respect, the plaintiffs look to the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (NSW)). 6 The claim brought against the fourth defendant is founded on the misrepresentations and alleges that the first defendant was an agent of the fourth defendant. The plaintiffs look to s84 of the Trade Practices Act (which has been described as a "deeming" provision). 7 The relevant allegations made in the pleading against the fourth defendant may be found in paragraph 21 of the amended ordinary statement of claim filed 15 July 2005. It reads as follows:- 21. The Plaintiff repeats paragraphs 13 to 19 inclusive of this Amended Statement of Claim and says that at all material times: (a) The First Defendant in making the Representation and/or Implied Representation engaged in conduct on behalf of and as an agent of the Fourth Defendant pursuant to section 84(2) of the Trade Practices Act and/or section 70(2) of the Fair Trading Act (NSW) : (b) further and in the alternative to paragraph 20(a), the Second and/or Third Defendant in making the Representation and/or Implied Representation engaged in conduct on behalf of and as agent/s of the Fourth Defendant pursuant to section 84(2) of the Trade Practices Act and/or section 70(2) of the Fair Trading Act (NSW) . 8 Paragraphs 13 to 19 of that pleading make allegations concerning the misrepresentations. 9 The relevant provisions of s84 of the Trade Practices Act are as follows:- 84. Conduct by directors, servants or agents (1) Where, in a proceeding under this Part in respect of conduct engaged in by a body corporate, being conduct in relation to which section 46 or 46A or Part IVA, IVB, V, VB or VC applies, it is necessary to establish the state of mind of the body corporate, it is sufficient to show that a director, servant or agent of the body corporate, being a director, servant or agent by whom the conduct was engaged in within the scope of the person's actual or apparent authority, had that state of mind. (2) Any conduct engaged in on behalf of a body corporate (a) by a director, servant or agent of the body corporate within the scope of the person's actual or apparent authority; or (b) by any other person at the direction or with the consent or agreement (whether express or implied) of a director, servant or agent of the body corporate, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, servant or agent; shall be deemed, for the purposes of this Act, to have been engaged in also by the body corporate. 10 On 21 September 2005, the fourth defendant filed a notice of motion. It seeks, inter alia, an order that service be set aside. The fourth defendant seeks that order pursuant to the provisions of rule 11.7 of the Uniform Civil Procedure Rules 2005 (the Rules). 11 The contested application was heard on 7 February 2006. The plaintiffs and the fourth defendant were represented by counsel, who relied on written submissions supplemented by oral argument. The court was referred to a number of decided cases. 12 The other parties did not appear at the hearing. However, the court was informed that the first defendant neither consented to nor opposed the application. 13 The substance of the application is that the claim sought to be made against the fourth defendant is defective as a matter of pleading. The application is not brought in the character of a strike out application, as this would involve a submission as to jurisdiction. There is no dispute between the parties that the avenue pursued by the fourth defendant is open to it. 14 The approach to be taken by the court in dealing with the present application is well established (Agar v Hyde (2000) 201 CLR 552). The decision of the court must be directed to the way in which the claims have been framed in the pleadings. 15 The Rules provide that a pleading must contain only a summary of the material facts on which the party relies (rule 14.7). The fourth defendant contends that the claim made against it is deficient in that it lacks the allegations of essential material facts and is devoid of particularity. 16 Indeed, it does rely on a bare allegation that it engaged in the relevant conduct on behalf of and as agent of the fourth defendant. It seems to me that the additional material which alleges that it was pursuant to, inter alia, s84(2) of the Trade Practices Act, does not assist the plaintiffs. It is essential to the operation of the deeming provisions that the conduct by a director, servant or agent of the body corporate is within the scope of that person's actual or apparent authority. 17 In my view, these prescribed ingredients are absent from the pleading. This absence means that the pleading fails to allege a cause of action and is liable to be struck out. It also means that the functional requirements of Schedule 6 to the Rules are not met. The pleading must demonstrate that the alleged conduct took place within the jurisdiction. 18 On one view, the reaching of this view suffices to dispose of the application. In opposition to that approach, the plaintiffs contend that they are entitled to rely on other material before the court to rectify any defect in the pleadings. 19 The plaintiffs have sought to adduce other material (an affidavit sworn by Gisela Ramensky on 9 November 2005 and the exhibits thereto, together with Exhibit 1). 20 The fourth defendant has taken objection to the admissibility of that material and the consensus was reached whereby the material was received subject to that objection. 21 In submitting that the court was entitled to look at this material, the plaintiff relies on what was said in paragraph 52 of Agar and in paragraph 31 of Elliott v Bali Bungy Co [2002] NSWSC 906. In my view, the passages relied on by the plaintiffs do not support the admissibility of the material in this case. 22 Even if a different view were to be taken on that matter, it would not affect the result in this application. 23 Whilst the material may show that the first defendant was a distributor for the fourth defendant and had some representation of it in this country, there is a lack of material to support an allegation that the misrepresentations were made within the scope of authority had by it. I should add that Exhibit 1 (which is a copy of an international distributor sales agreement between the parties) contains, inter alia, the following:- F. Other Provisions 1. This Agreement does not make either party the employee, agent or legal representative of the other for any purpose whatsoever. The Distributor buys and sells in its own name and for its own account. Neither party is granted any right or authority to assume or to create any obligation or responsibility, express or implied, on behalf of or in the name of the other party. In fulfilling its obligations pursuant to this Agreement each party shall be acting as independent contractor. [p4] 24 The power to set aside service of process is discretionary. It is exercised having regard to the relevant circumstances of the particular case before the court and so that the dictates of justice are best served. 25 It has been submitted that the court should take the approach adopted in Elliott and not proceed to set aside the service. It does not seem to me that the court should take that course. The circumstances are not the same. 26 The plaintiffs have not sought to move to have the process amended. Whether or not they can do so and whether or not they have evidence available to support any amended pleading lies in the area of the unknown. 27 It remains open to the plaintiffs to make any relevant applications, and if successful, to re-effect service. 28 Certain submissions have been made on the question of onus. It seems to me that in an application of this nature, the fourth defendant bears the onus of demonstrating an entitlement to the relief sought by it. In my view, that onus has been discharged. 29 The service of the amended ordinary statement of claim on the fourth defendant is set aside. The plaintiffs are to pay the fourth defendant's costs of the notice of motion. The exhibit may be returned.

Clark v Auspicious Yacht Sales Pty Limited & Ors; Gibbs & Anor v Auspicious Yacht Sales Pty Limited & Ors

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