THE REVEREND BARRY JAMES HICKEY THE ROMAN CATHOLIC ARCHBISHOP OF PERTH

Practice and procedure - Application to strike out statement of claim - Application out of time - Relevant principles - Turns on own facts

Fair Trading Act 1987 (WA), s 9

Rules of the Supreme Court, ) 1 r 4A, O 20 r 19, O 59 r 9

Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552

Bristile Ltd v Buddhist Society of Western Australia Inc [2003] WASC 30

Campomar Sociedad Limitada v Nike International Ltd [2000] HCA 12; (2000) 202 CLR 45

Codelfa Constructions Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337

Coe v The Commonwealth of Australia and the Government of the United Kingdom of Great Brittain and Northern Ireland [1979] HCA 68; (1979) 53 ALJR 403

Dalecoast Pty Ltd v Guardian International Pty Ltd [2003] WASCA 142

Deputy Commissioner of Taxation (Cth) v Robinswood Pty Ltd [2001] WASC 191; (2001) 24 WAR 284

Empire Shipping Co Incorporated v Owners of Ship Shin Kobe Maru [1991] FCA 499; (1991) 32 FCR 78

Express Newspapers Pty Ltd v News UK Ltd (1990) 3 All ER 376

Fiduciary Ltd v Morningstar Research Pty Ltd [2002] NSWSC 432; (2002) 55 NSWLR 1

Fraser v NRMA Holdings Ltd (1995) 55 FCR 452

Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1

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

Global Sportsman Pty Ltd v Mirror Newspapers Ltd [1984] FCA 180; (1984) 2 FCR 82

Harrison v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738

Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) [1988] FCA 40; (1988) 79 ALR 83

Itek Graphix Pty Ltd v Elliot [2002] NSWCA 104; (2002) 54 NSWLR 207

Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2000] FCA 1572; (2000) 104 FCR 564

Mark Foys Pty Ltd v TVSN (Pacific) Ltd [2000] FCA 1626; (2001) 181 ALR 90

McWilliam's Wines Pty Ltd v McDonald's System of Australia Pty Ltd [1980] FCA 159; (1980) 49 FLR 455

Personal Representatives of Tang Man Sit v Capacious Investments Ltd [1996] AC 514

SAP Australia Pty Ltd v Sapient Australia Pty Ltd [1999] FCA 1821; (1999) 169 ALR 1

Scanlan's New Neon Ltd v Tooheys Ltd [1943] HCA 43; (1943) 67 CLR 169

Stambulich v Ekamper [2001] WASCA 283; (2001) 48 ATR 159

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

United Australia Ltd v Barclays Bank Ltd [1941] AC 1

Waverley Municipal Council v Cheowiry [2003] NSWCA 12

1 MASTER NEWNES: This is an application by the first defendant under O 20 r 19 of the Rules of the Supreme Court to strike out the statement of claim so far as it relates to the first defendant. The plaintiff has also applied to amend the statement of claim in terms of a minute of amended statement of claim dated 6 May 2003.

2 The plaintiff has taken a preliminary point that the application to strike out the claim is out of time under O 20 r 19. The existing statement of claim was served on the defendants on about 15 August 2002. The first defendant's solicitors wrote to the plaintiff's solicitors on 25 September 2002 objecting to certain parts of it. The plaintiff's solicitors replied on 27 September 2002 rejecting those complaints. Nothing further was done by the first defendant's solicitors in relation to the statement of claim and the matter then proceeded through various interlocutory steps.

3 On 30 January 2003, the plaintiff's solicitors wrote to the first defendant's solicitors enclosing a minute of proposed amendments to the statement of claim. The first defendant's solicitors responded by letter of 25 March 2003 in which they advised that the proposed amendments would be opposed and that, unless a number of alleged defects in the existing statement of claim were rectified, an application would be made to strike it out. The current applications were subsequently brought.

4 It appears from an affidavit of Barbara Callahan, sworn 11 April 2003 and filed on behalf of the first defendant, that following the plaintiff's response on 27 September 2002 to the initial objections to the statement of claim, the first defendant's solicitors formed the view that a strike-out application may not be warranted given the time and expense involved and the question of a strike-out application was simply put to one side while other matters associated with the action were attended to.

5 When the first defendant's solicitors received the minute of proposed amendments at the end of January 2003, counsel was briefed to advise on them and on the action generally. A brief was delivered to counsel on 14 March 2003 and counsel's advice received on 24 March 2003. That advice included advice that an application should be made to strike out the existing statement of claim to avoid difficulties that would otherwise arise at the outset of the trial if the deficiencies in it were raised only then. That led to the letter from the first defendant's solicitors of 25 March 2003 and, ultimately, to the current application by the first defendant.

6 The plaintiff submitted that the first defendant had made a deliberate decision not to pursue a strike-out application in September 2002 (when it was already out of time) and that there was no satisfactory explanation for the delay in making the current application. The application should therefore be dismissed without regard to the merits. The plaintiff also complained that there had not been proper conferral by the first defendant under O 59 r 9 before making this application and that that was a further reason the application should be summarily dismissed.

7 In relation to the delay in making the application, counsel for the plaintiff referred to Gardiner v Ray [1999] WASC 140 and, in particular, to the comments of Steytler J at [33] - [34] as follows:

"Applications to strike out pleadings are, in my opinion, overused. They are always productive of delay and expense, sometimes substantially so, and often produce no sufficient countervailing benefit, particularly when they are brought at a late stage of the proceedings. It was because of considerations of this kind that the time limit fixed by O 20 r 19 was introduced. (See Seaman: Civil Procedure Western Australia par 20.19.2.) The purpose underlying that time limit is that of ensuring that, if an application of this kind is brought, it should be brought promptly so that it might at once be disposed of and the action continued without further interruption. The time limit is one to which more than lip service should be paid. Those who wish to bring an application of this kind, whether in defamation proceedings or otherwise, should consider, within the period fixed for that purpose, what benefit will be derived by bringing the application and then weigh against that the inevitable consequences of delay and expense. If the benefit is outweighed by the delay or expense, or both, the application should not be brought. If the converse is true, the application should be filed promptly.

It seems to me, with due respect, that no sufficient basis has been shown for allowing this application to be brought late. While one or two points have been made out on behalf of the defendant, the defects raised are not, in my opinion, such as should, in any material way, impede the further progress of the action or prejudice its proper outcome."

8 It is apparent his Honour considered that the defects identified by the defendant in that case were not such as would in any material way impede the future progress of the action or prejudice its proper outcome. It was on that basis his Honour concluded that, in view of the delay, he should not accede to the application to strike out the statement of claim.

9 I do not, therefore, accept the plaintiff's submission that this application should be summarily dismissed, without regard to the merits, because of the delay. If the objections are properly taken and reveal defects that would, or may, materially impede the future progress of the matter, or prejudice its proper outcome, or where the claim as pleaded must inevitably fail at trial, the application should be determined on its merits, however late it may be. To do otherwise would be contrary to the principles enshrined in O 1 r 4A, which the time limit in O 20 r 19 is intended to advance. The fact that an application has been brought late may well, however, be relevant on the question of costs, including, in an appropriate case, costs of the action which have been unnecessarily incurred in the interim.

10 It is therefore, in my view, necessary to have regard to the merits of the application before a determination can be made whether leave should be granted to bring it out of time. I note that that was the course taken in Gardiner v Ray supra.

11 I therefore turn to the objections taken by the first defendant.

12 In the statement of claim, the plaintiff pleads that the first defendant, a duly incorporated company, carried on business as a real estate agent and was, at all material times, the agent of the second defendant. It is pleaded that the second defendant ("the Archbishop") owned certain land, defined in the statement of claim as "the Property". It is then pleaded as follows:

"5. Prior to 20 December 2000 the Archbishop engaged Parisi to act as the Archbishop's real estate agent to sell the Property.

6. Parisi represented to Crestland that the Property was:-

6.1 able to be redeveloped;

6.2 suitable for redevelopment as a retail shop or retail shops.;

A. The representation was made in writing on an advertising sign displayed on the Property.

B. The representation arose from:-

(i) the terms of the advertising sign pleaded in particular A above;

(ii) the location of the Property in a retail shopping area alternatively an area in which some retail shops are located; and

(iii) the Property had large windows facing Wellington Street which were prima facie suitable for a retail shop or retail shops.

(i) the plaintiffs repeat the particulars to paragraphs 6.1 and 6.2;(ii)

the Property being offered for sale without any disclosure that it was structurally unsound;(iii) the building on the Property appearing to be structurally sound.

7. The Property could not be redeveloped, further or alternatively, could not be redeveloped for use as a retail shop without:-

7.1 approval from the Heritage Council;

7.2 further or alternatively, retaining the original facade on the Property in circumstances where:-

7.2.1 the facade was structurally unsound further or alternatively in a deteriorated state;

7.2.2 unable to be rebuilt alternatively unable to be rebuil dt without substantial expense.

7.3 further or alternatively, without incurring substantial expense to obtain and then comply with conditions imposed by the City of Perth on any approval.; 7.4

further or alternatively, without substantial expense being incurred in demolition and re-building works to render the Property structurally sound and to comply with current Building Code requirements.

The plaintiff repeats the particulars subjoined to paragraph 15.

8. The representation pleaded in paragraph 6 was misleading or deceptive alternatively likely to mislead or deceive.

PARTICULARS

9. Parisi did not inform Crestland of the matters pleaded in paragraph 7.

10. By reason of the matters pleaded in paragraphs 2-8 and s. 51A of the TPA further or alternatively s. 9 of the FTA, further or alternatively paragraphs 2-9 and s. 51A of the TPA further or alternatively s. 9 of the FTA, Parisi, in trade or commerce, has engaged in misleading or deceptive conduct or conduct likely to mislead or deceive in contravention of s. 52 of the TPA further or alternatively s. 10 of the FTA.

11. By reason of the matters pleaded in paragraphs 2-8 and ss. 51A and 84(2) of the TPA further or alternatively ss 9 and 82(4) of the FTA, further or alternatively paragraphs 2-9 and ss 51A and 84(2) of the TPA further or alternatively s. 9 and 82(4) of the FTA, the Archbishop, in trade or commerce, has engaged in misleading or deceptive conduct or conduct likely to mislead or deceive in contravention of s. 52 of the TPA further or alternatively s. 9 of the FTA.

12. In reliance on the representations pleaded in paragraph 6 Crestland:-

12.1 entered into a contract to purchase the Property for $1,250,000 (the 'Contract');

12.2 paid a deposit of $100,000 to Parisi (the 'Deposit').

13. Further or alternatively, by reason of the representations pleaded in paragraph 6 and but for the omission pleaded in paragraph 9, Crestland:-

13.1 entered into the Contract;

13.2 paid the Deposit.

14. Further or alternatively, it was an implied term of the Contract that the building constructed on the Property was:

14.1 structurally sound;14.2

further or alternatively, capable of use as a retail shop or retail shops.

The terms pleaded in paragraphs 14.1 and 14.2 are implied:A.

As those terms are reasonable and necessary for the Contract.

B.

Alternatively, the terms:

(i) are reasonable and equitable;(ii)

are necessary to give business efficacy to the Contract;(iii)

are so obvious that the terms go without saying;(iv)

are capable of clear expression; and(v) do not contradict any express term of the Contract.

C. By operation of law.15.

The building constructed on the Property at the date Crestland entered into the Contract was:

15.1 not structurally sound;15.2 further or alternatively, not capable of use as a retail shop or retail shops.

The defects in the building on the Property were as follows:

(a) Wellington Street Facade Upper Level - fretting of brickwork, visible cracking and old paintwork showing through;(b) Truncated Corner Wellington/Queen Street - upper level badly cracked at connection with Wellington Street facade, cracks on internal wall side, dislodged brickwork, extensive fretting and evidence of moisture problems;

(c)

Queens Street Facade Upper Level - vertical cracking through parapet and cracking mainly emanating from windows;(d)

Queen Street Facade Lower Level - minor cracking;(e)

Rear Wall off Queen Street - fretting of brickwork and mortar, old services penetrations, eastern corner needs making good and bricks in parapet wall was missing;(f)

Eastern Facade - the lower level render was inadequately adhered; (g)

Roof Shed - fretting of brickwork, asbestos roof held down by bricks placed on top of the roof and the western facade was in poor condition; (h)

Awning - the roof sheeting and pressed metal soffit was in poor condition, the turnbuckled tie rods were corroded and the internal structure was not in good condition;(i)

Internally there was fretting in the corner walls from moisture ingress, the first major wall up Queen Street shows moisture problems at the bottom (rising damp) and the pressed metal ceiling is visible in some locations;(j)

The upstairs truncated corner was badly cracked, fretting external walls, sagging and moisture affected ceilings and inadequate floor structure;(k) Rear Verandah - no balustrade and stairs.

16.By reason of the matters pleaded in paragraph 15, the second defendant breached the terms of the Contract pleaded in paragraphs 14.1, 14.2 and 14.3 above.

14.17 Crestland has rescinded the Contract.

By letter dated 8 August 2001 from Crestland to Parisi, Crestland rescinded the Contract.

1518 The Archbishop has treated the letter referred to in the particular subjoined to paragraph 14 17 as a repudiation of the Contract and purported to accept that repudiation and terminated the Contract.19.

Alternatively, by reason of the matters pleaded in paragraphs 6-7 further or alternatively paragraphs 14-16:

19.1 the Contract has been frustrated;19.2

the plaintiff was discharged from performance of the Contract;19.3

the plaintiff is entitled to repayment of the Deposit.

1620 By reason of the matters pleaded in paragraphs 9-15 9-13 alternatively 14-16 Crestland has suffered loss and damage further or alternatively is likely to suffer loss and damage.

A. Crestland incurred expenditure of in excess of $60,000 in relation to the Property after entering into the Contract.

B. The Archbishop has claimed that the Deposit is payable to the Archbishop.

C. The Archbishop sold the Property for less than $1,150,000 $1,250,000 and intends to bring a counter-claim for breach of the Contract against Crestland.

D. The Deposit has not been repaid to the plaintiff.

E. Costs of these proceedings.

A. A declaration that it lawfully terminated the Contract, further or alternatively a declaration pursuant to s. 87 of the TPA further or alternatively s. 77 of the FTA that it lawfully terminated the Contract.

B. An order pursuant to s. 87 of the TPA further or alternatively s. 77 of the FTA that the Deposit be paid to Crestland.

C. Damages, further or alternatively damages pursuant to s. 82 of the TPA further or alternatively, s. 79 of the FTA;

D. Further or alternatively to C, compensation pursuant to s. 87 of the TPA further or alternatively s. 77 of the FTA.

E. Further or alternatively, an order pursuant to s. 87 of the TPA further or alternatively s. 77 of the FTA that Parisi indemnify Crestland for the Deposit, any other amount payable by Crestland to the Archbishop and for the costs of these proceedings on a solicitor and own client basis.F.

Alternatively a declaration the Contract has been frustrated and Crestland discharged from the Contract.G. An order that the $100,000 paid into court by Parisi be paid to Crestland.

F.H. Interest on all amounts payable to Crestland at the rate of 6% per annum pursuant to s. 32 of the Supreme Court Act 1935.

G.I. Costs."

13 The underlined passages are the amendments the plaintiff now seeks to make to its statement of claim.

14 The first objection is to par 6 of the statement of claim. The first defendant says it does not know whether pars 6.1 and 6.2 plead one or two representations and, if two, says that there is no relevant difference between them.

15 In my view, it is sufficiently clear that two representations are pleaded, although the particulars, rather unhelpfully, refer to "the representation". Counsel for the plaintiff said in argument that the particulars would be amended to make it clear that they referred to two representations.

16 I consider there is clearly a material difference between the two representations. The first, in par 6.1, refers to a representation that the property can be redeveloped; that is, redeveloped in some shape or form. The second, in par 6.2, refers to a representation that it is suitable for a specific type of redevelopment, namely, as a retail shop.

17 I would not accept the objections to par 6, on the basis that the particulars are amended as indicated by the plaintiff's counsel.

18 The next objection was to pars 7, 8 and 9. The first defendant said that the representations pleaded in par 6 could not be regarded as misleading simply because the plaintiff was not informed of the matters pleaded in pars 7.1 to 7.3.

19 It was submitted, first, that the plea in par 7 that the property could not be redeveloped except subject to the matters referred to in pars 7.1 to 7.3 did not establish that the representation pleaded in par 6.1 (that it was able to be redeveloped) was misleading or deceptive. On the contrary, it was implicit in the pleas in pars 7.1 to 7.3 that the property could be redeveloped, subject only to a certain approval and to various costs. Moreover, it was not suggested that the approval referred to was not readily procurable nor that the costs involved in redevelopment would be prohibitive.

20 Secondly, the alternative plea in par 7 that the property could be redeveloped as a retail shop only subject to the matters referred to in pars 7.1 to 7.3, did not establish that the plea in par 6.2 (that it was suitable for redevelopment as a retail shop) was misleading or deceptive.

21 The plaintiff's contention, in effect, was that, unless informed of the matters pleaded in par 7.1 to 7.3, a reasonable purchaser would be, or was likely to be, misled by the representations pleaded in par 6 into believing that any such redevelopment was not conditional on approval of the Heritage Council and that redevelopment could be carried out without retaining the façade and without substantial expense or the imposition of onerous conditions by the City of Perth. The plaintiff said that by making the representation in par 6 without such qualifications, the first defendant's conduct was misleading or deceptive. As its counsel put it, the plaintiff's case is that by omitting to tell the plaintiff of the matters pleaded in par 7 the representations pleaded in par 6 were a "half truth".

22 In Demagogue Pty Ltd v Ramensky [1992] FCA 557; (1992) 39 FCR 31, Gummow J (with whom Cooper J agreed) said, at 40:

"If a corporation fails to disclose a fact which, absent disclosure in the circumstances of the case, would reasonably be expected not to exist, then that non-disclosure may convey the misleading impression that the fact does not exist."

23 The difficulty with the plea in pars 7, 8 and 9 of the statement of claim, in my view, is that the plaintiff does not, or at least does not sufficiently, plead the circumstances which it is alleged would have led a reasonable purchaser to assume that, absent disclosure, the matters pleaded in par 7 did not exist. In other words, the statement of claim does not make it clear why it is said that a reasonable purchaser would assume that if Heritage Council approval was required, or if the facade had to be retained - and could only be retained at substantial expense - or if substantial expense would be necessary to meet council conditions of redevelopment or to rectify defects in the building to enable redevelopment, then that would be disclosed by the first defendant. It is not suggested that Heritage Council approval was difficult to obtain, nor are any facts pleaded to suggest that a purchaser would not otherwise expect to have to retain the facade or to incur "substantial expense" (whatever that may mean in this context) in redeveloping the property.

24 Accordingly, I consider that the statement of claim does not disclose a reasonable cause of action against the first defendant. I would strike out pars 7, 8 and 9.

25 I should say that in the course of argument counsel for the plaintiff said that in par 7 the words "further or" should be omitted and that in fact the first part of the plea was intended to read:

"The Property could not be redeveloped. Alternatively it could not be redeveloped for use as a retail shop without:

... "

26 Counsel accepted that, as the plea was currently framed, pars 7.1 to 7.3 also qualified the phrase "The Property could not be redeveloped". That is, the Property could not be redeveloped as a retail shop or for any other purpose except subject to the matters pleaded in pars 7.1 to 7.3. I was told that, in fact, it was intended to allege that the Property could not be redeveloped at all, alternatively it could be redeveloped as a retail shop only subject to the matters pleaded in pars 7.1 to 7.3.

27 There are two things to be said about that. First, what I was told par 7 was intended to allege is not what it currently alleges. Counsel for the plaintiff conceded that. Secondly, if the statement of claim were amended to reflect the intended plea, the alternative plea relating to redevelopment as a retail shop would still be defective for the reasons I have mentioned above.

28 The first defendant also complained that par 10 of the statement of claim is embarrassing because it did not identify what was alleged to be the conduct for which s 51A of the Trade Practices Act 1974 (WA) and s 9 of the Fair Trading Act 1987 (WA) are relied upon.

29 I think it is sufficiently clear that the conduct referred to is that pleaded in par 6, so far as it can be regarded as a representation with respect to a future matter. The plaintiff's counsel confirmed in argument on this application that that was the conduct referred to.

30 The first defendant went on to contend that none of the conduct pleaded in par 6 amounted to a representation with respect to a future matter, but rather in each case was a representation as to the existing state of affairs. I am inclined to think that that is the case, but, in the circumstances of this application, I would not be prepared to strike out par 10 on that basis.

31 The next complaint by the first defendant was that the claim of loss and damage was not made out on the pleading.

32 Counsel for the first defendant argued that the substantive claim against it is for the sum of $60,000 in expenditure by the plaintiff in relation to the property after the contract of sale was entered into. The first defendant says that the statement of claim does not plead facts that would entitle the plaintiff to recover that sum. It is pleaded at par 14 that the plaintiff rescinded the contract, and in par 16 that it thereby lost the money it had spent after entering into the contract, but it is not alleged that the plaintiff rescinded for any reason connected with the first defendant's alleged conduct. The first defendant says that until that nexus is made no basis is made out for the claim.

33 Counsel for the plaintiff argued, first, that the particulars to par 14 refer to a letter of 8 August 2001 from the plaintiff to the first defendant as effecting the rescission. I was informed from the bar table that that letter contained essentially the same allegations as are pleaded in the statement of claim. Counsel argued that, because it is a particular of the plea, the letter forms part of the pleading and the matters set out in it could therefore be relied upon as the reason for the rescission. I do not accept that. In the first place, if the reason for the rescission is material it must be pleaded. Particulars cannot take the place of a material averment. Secondly, as I understand it, the letter is referred to simply as a particular of the allegation that the contract was in fact rescinded. It is by no means clear that the content of the letter is relied upon as particulars of the reason for the rescission. If it is intended to particularise the reasons for the rescission those reasons should be specifically set out. The defendants should not be left to try to extract them from the contents of another document, in this case a letter.

34 The plaintiff's counsel argued, secondly, that the plaintiff is not obliged to plead any nexus between the rescission of the contract and the first defendant's conduct in order to make good the claim for damages. It is sufficient to plead that it entered into the contract in reliance on the misleading and deceptive conduct of the first defendant, that the contract was later rescinded by the plaintiff and that the plaintiff incurred expense as a consequence of entering into the contract. The reason the plaintiff rescinded the contract (and thereby lost the money it had already spent in relation to the land) does not have to be pleaded.

35 I do not agree. In my view, the statement of claim is defective in that it does not plead facts that are capable of establishing that its loss was caused by the alleged conduct of the first defendant. There is no sufficient nexus pleaded between the conduct complained of and the alleged loss. In any event, as it stands it seems the pleader is seeking to have a bet each way, also relying on the letter referred to in the particulars as pleading the reason for the rescission of the contract. If the latter is intended then those matters must be specifically pleaded.

36 I would grant leave to the first defendant to make the current application and would strike out pars 7, 8, 9, 14 and 16 of the statement of claim, with leave to the plaintiff to replead. In reaching that conclusion, I am conscious that the first defendant's application is some seven months out of time. It is, however, a case in which I consider that the timely and efficient disposition of the action is likely to be adversely affected if it proceeds with the statement of claim in its current form. The matters raised by the first defendant should not be left to the trial. It is appropriate, given that the plaintiff now seeks to make other amendments to the statement of claim, that the matter should be dealt with at this stage.

37 Turning to those amendments, I would allow the amendment to add par 6.3. I would not have allowed the amendment to add par 7.4 for the same reasons that I consider that the existing par 7 should be struck out. No objection was taken by the first defendant to pars 14, 15 and 16 of the minute, which plead an implied term of the contract between the Archbishop and the plaintiff, and I would allow those amendments.

38 I do not understand par 19 of the minute, despite the reference to pars 6 and 7, to be a plea against the first defendant and apparently no objection has been taken to it by the second defendant. On that basis, I would allow the amendment.

39 I would not have allowed the amendment in par 20 of the minute (to par 16 of the statement of claim).

40 I will hear counsel on the precise form of the orders and on costs.