26 In any event, the form of pleading against the second respondent by adopting the representations in pars 31, 32 and 33 of the statement of claim as against the second respondent as if it were making those representations attracts attention to the quality of those pleadings. Paragraphs 31 and 32 are set out above. They contain inadequate pleadings as to representations. Reference is made to two written communications, but sub pars (a) to (b) are said to have been made after the second of them, namely the letter of 12 July 1999. How they were made is not specified. By whom they were made is not specified. Importantly how they came to be repeated and/or adopted by the second respondent is not clearly specified. In addition, because the statement of claim asserts, for reasons which are unclear, that the second respondent knew or ought to have known of the falsehood of those representations by the first respondent, it is necessary to plead the facts upon which that state of mind is based: see O 12 r 3 of the Federal Court Rules.
27 Paragraph 33 of the statement of claim does not contain allegations of any representations. As noted above, it contains allegations as to how the first respondent did not in fact fulfil the representations which it is alleged to have made.
28 Given the nature of the allegations against the second respondent, in large measure but not entirely through the project report and the funding report, it is significant that there is no factual allegation, as distinct from assertion, as to the means by which or the circumstances in which the accountants and Auslink came to be or were the agents of the first respondent. Alternatively, the case may be that the second respondent conveyed those documents to the applicants other than simply as a conduit.
29 Paragraph 16 of the statement of claim contains the independent (that is, apparently unrelated) allegation that the funding report and the project report grossly exaggerated the anticipated profit from the tour. It is unclear whether, and if so how, that allegation is to be developed. It is not repeated nor adopted in that section of the statement of claim headed 'Particulars of the Conduct by the Second Respondent'. Some particulars subsequently given do, however, suggest that the allegation is also to be pursued. That would be an allegation based upon principal rather than accessorial liability. The particulars provided do not adequately elucidate the identification of each section or expression of each of the project report and the funding report which is said to contain a representation as to anticipated profit from the tour available to the first applicant. It is then necessary to plead how and why each of those representations separately is misleading or deceptive. As the representations are probably as to future conduct, the applicants would need also to address s 51A of the TP Act. The particulars provided in response to the request for particulars presently refer generally to categories of discoverable documents. That is not an adequate particular of the nature of that claim.
30 As noted, it would appear likely (but it is a matter for the applicants) that such representations are as to future matters, and that the applicant's mean to assert that there was an absence of reasonable grounds on the part of the second respondent to have made those representations, assuming in favour of the applicants that they were made by the second respondent. Indeed, there is presently no allegation that the project report or the funding report were received by the applicants, and if they were, in what circumstances.
31 That is important not simply as a primary fact to make out any cause of action against the second respondent, but also (if it be the case) to establish that in respect of the representations in pars 31 and 32 of the statement of claim, the second respondent adopted and presented those representations on its own behalf. If it was a mere conduit for that information, it may not be liable for having made those representations: see Yorke v Lucas (1985) 158 CLR 661 at 666. Consequently, the precise conduct of the second respondent in 'adopting' those representations should be carefully pleaded.
32 It is unclear what conduct is said to fall within s 53 of the TP Act. Counsel for the applicants was unable clearly to identify that conduct in the course of submissions. That is a matter which the applicants should address. The statement of claim should indicate clearly which sub-clause of s 53 is said to be engaged and by virtue of what facts, if that claim is to be pursued. It is also presently not apparent to me, by way of aside, that the pleading of s 53 enhances in any way the prospects of the applicants succeeding in their claim. It may do so.
33 The pleading also invokes s 59(2) of the Act. It may be that s 59(2) is that provision which is sought to be enlivened, along with s 52, by the allegation that the project report and the funding report grossly exaggerated the potential profitability of the tour. I have indicated why the pleading presently is unsatisfactory in that regard. The pleading, if it is to be maintained, must assert clearly how the second respondent invited the first applicant's participation in the tour.
34 I note further that the allegations in par 36(a) of the statement of claim, even if properly particularised, would not enhance the claim under s 52 of the Act. Either misleading and deceptive conduct was engaged in or it was not. It does not take its character from the financial circumstances of the applicants. Presumably, therefore, that conduct or that stated knowledge may be relevant to the unconscionability claim only. If that is intended, it is not clear. It may also be relevant to a contractual or negligence claim, but neither is pleaded.
35 It is presently difficult also to discern what facts are pleaded to demonstrate unconscionable conduct on the part of the second applicant. I am aware that particulars of alleged unconscionable conduct have been provided. They are not, on their face, sufficient to make out that claim.
36 In my judgment, it is necessary for the second respondent to know the nature of the case it must meet to have clearly identified for it those facts which are said to give rise to the claim of contraventions of ss 52, 53 (if it is pursued) and 59(2) (if it is pursued) of the TP Act, and to have clearly identified those facts which are said to amount to unconscionable conduct in contravention of s 51AC of the TP Act. When those allegations are clearly identified, the question of whether they are capable in law of sustaining the claim or whether they should be struck out is a matter which the second respondent is then entitled to address.
37 The above consideration is sufficient, in my judgment, to demonstrate that the present statement of claim has grave deficiencies. I do not think it can be usefully amended whilst maintaining an adequate level of integrity. Although there are parts of it which are clear enough, in my view the appropriate order is that the whole of the statement of claim should be struck out and that the applicants should be given leave to file and serve an amended statement of claim. It is appropriate to observe that, in significant respects, I do not regard the pleading through the particulars provided by correspondence satisfactorily to identify those causes of action properly.
38 Those matters were raised with counsel for the applicants in the course of the hearing. It is necessary to make an order striking out the statement of claim because the applicants, through counsel, did not take up the opportunity of seeking leave to amend the statement of claim in the light of the submissions made to that point despite the invitation to do so. Counsel for the applicants indicated that the applicants faced difficulties in pleading their case as clearly as they would like because they did not have full discovery from the respondents, and suggested that there should be an order for discovery before the pleadings are completed. I do not think that is appropriate. There has been no application for pre-action discovery (cf O 15A of the Federal Court Rules). Moreover, as the above discussion indicates, the essential elements of the cause of action can readily be pleaded, provided instructions are clearly given by the applicants and the pleading identifies the nature of the case. That is, the applicants know what was conveyed to them and know what was incorrect or misleading and deceptive about that, and what was the unconscionable conduct, because the first applicant apparently elected to treat the arrangement (I do not use the word contract because no contract was pleaded) with the first respondent as at an end within a week or two of the commencement of the tour. The reasons for the first applicant's conduct at that time are known to it. The reasons which caused it to abandon the tour when it did should be the focus of its pleadings. If the applicants suspect that other representations may not have been fulfilled, but those matters were not part of its reasons for abandoning the tour, there is little point in pleading those issues in the statement of claim because the necessary causal link will not be able to be established.
39 I have not separately addressed the inadequacy of the statement of claim concerning the deed. It is self-evident. Counsel for the applicants acknowledge that.
40 I accordingly propose to strike out the statement of claim and to give the applicants leave to file and serve an amended statement of claim.
41 To accommodate a reasonable timetable, I make the following orders:
- The statement of claim filed on 30 June 2004 is struck out.
2. The applicants are given leave to file and serve an amended statement of claim by 23 December 2004.
3. The matter is referred to the Registrar, Northern Territory District Registry, or her nominee for mediation under O 72 of the Federal Court Rules to the intent that the mediation commence at a time fixed by the Registrar in accordance with O 72 r 6 but that the mediation not be completed until after the filing and service of any amended statement of claim in accordance with Order 2 hereof unless the mediation successfully resolves the proceeding before that date.
- The mediation be completed by 28 January 2005.
5. The mediator report to the Court as to the outcome of the mediation by 31 January 2005.
6. The notice of motion of the first respondent of 11 October 2004 and the notice of motion of the second respondent of 11 October 2004 to the extent it seeks an order for security for costs are each adjourned to 9 am 1 February 2005 for judgment.
- The directions hearing is adjourned to 9 am 1 February 2005.
- The costs of the respondents' notices of motion of 11 October 2004 are reserved.
- Liberty to apply.