Paragraph 33: Pleading allegedly fails to link representations and loss and damage
80 The pleading of loss and damage is found at paragraph 33 of the ASOC which provides:
33. By reason of Trina US and/or Trina Australia's contravening conduct as alleged above, Jasmin has suffered loss and damage.
PARTICULARS
But for the contravening conduct, Jasmin would have obtained 250W panels from ET Solar Inc at 485 sites in lieu of the 195W ,200W and 240W panels supplied by Trina US. As such, the contravening conduct caused Jasmin to incur the following increased costs:
(a) increased costs of installation at 298 sites by an additional $300 per site in respect of labour (totalling $89,400);
(b) at 485 sites, the roof fixtures supplied by Trina were not fit for purpose or supplied at all and had to be replaced at a total cost of $313,742.00 ($0.13 per watt);
(c) solar panels supplied by Trina US failed at 276 sites due to water ingress because they were unfit for purpose. They were replaced by Jasmin and Jasmin did not generate a feed-in tariff of approximately $80,592 during the replacement period.
In addition, Jasmin has incurred storage costs of approximately $37,500 in respect of unsaleable products supplied by Trina US, which Trina US has refused to repossess despite request.
Further, by reason of the delay in supply, Jasmin lost customers. Approximately 300 customers who had registered via Jasmin with Energex and switched to an alternative solar panel installer because of this delay. In addition, Jasmin's marketing campaign to attract customers from other solar installers was harmed by Jasmin's inability to build a reputation as a reliable solar installer. The lost profit in respect of lost customers will be the subject of expert evidence to be filed and served prior to trial.
81 The respondents' complaint is that the pleading merely alleges loss and damage arising as a result of alleged contraventions of the ACL without providing the necessary facts to show the loss and damage was in fact caused by the representations: McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409. That submission ought to be accepted. Putting aside the particulars, the facts alleged merely assert the existence of some causative effect of the misleading conduct rather than specifying the links in the causal chain.
82 The principles relating to the pleading of the necessary connection between contravening conduct and loss and damage under the ACL were referred to in Wyzenbeek v Australasian Marine Imports Pty Ltd [2017] FCA 1460 at [84] - [85]:
[84] The applicants further plead that "as a result of" the various representations they have suffered loss and damage which are particularised as being the costs of repairing the defects, the costs of and incidental to repairing and rectifying the vessel, the costs of rendering the vessel closer to fitness for the purpose for which it was purchased, diminution in the value of the vessel and loss of use. It should be recognised that attempts to plead causation in TPA / ACL claims by the use of phrases such as "as a result of", "by reason of" or "because of" have long been deprecated. Those pieces of legislation require that the party alleging the breach plead the necessary material facts to establish the causal relationship between the misleading or deceptive conduct and the loss. In Bond Corp Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 215 at 222 French J said that "facts and circumstances should be set out leading to a reasonable inference that the conduct and the damage stood to each other in the relation of cause and effect." This observation has been referred to on numerous occasions (Barns v Forty Two International Pty Ltd (2014) 316 ALR 408; Graham & Linda Huddy Nominees Pty Ltd v Byrne [2016] QSC 221; Hastie Group Ltd (In Liq) v Bourne; Hastie Group Ltd (In Liq) v Moore [2017] NSWSC 709 at [217]; Willmott Forests Ltd (recs and mgrs apptd) (in liq) v Armstrong Dubois Pty Ltd [2016] VSC 61). In Southern Cross Mine Management Pty Ltd v Ensham Resources Pty Ltd [2004] QSC 457, Chesterman J said at [15]:
In any cause of action in respect of which causation is an essential element it is necessary to plead the material facts which are said to give rise to the causal connection. In particular it is necessary to plead the facts which lead to a reasonable inference that the acts complained of (here the relevant non-disclosure) and the alleged later event (here the making of the dragline agreement) stand to each other in the relation of cause and effect. Douglas J put it this way in LBS Holdings Pty Ltd v The Body Corporate for Condor Community Title Scheme 13200 & Ors [2004] QSC 229 (at para [3]):
… The principle relied on is that facts must be set out which lead to a reasonable inference that the acts complained of and the loss claimed stand to each other in the relation of cause and effect and that the plaintiff must plead the necessary facts showing that causal link …
His Honour referred to Dow Hager Lawrance v Lord Norreys & Ors (1890) 15 App Cas 210at 221 and Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd & Ors (1987) 14 FCR 215 at 221-222. In the first of those cases Lord Watson had said:
There must be a probable, if not necessary, connection between the fraud averred and the injurious consequences which the plaintiff attributes to it; and if that connection is not sufficiently apparent from the particulars stated, it cannot be supplied by general averments. Facts and circumstances must in that case be set forth, and in every genuine claim are capable of being stated, leading to a reasonable inference that the fraud and injuries complained of stood to each other in the relation of cause and effect.
[85] Here the pleading barely suffices to establish the matters required of the above authorities. The conclusory statement in paragraph 60 that "as a result of" the alleged representations the applicants suffered loss and damage is, of itself, insufficient. However, other allegations to the effect that the applicants relied on the representations when purchasing the vessel, and, implicitly, that its true value was less than its sale value probably save the pleading in this respect.
83 Realising the deficiencies in the existing pleading, Mr Mitchell for Jasmin sought leave to amend the statement of claim further to add in a paragraph 24A. It reads as follows:
24A. Had Jasmin decided to source its supply of solar modules from ET Solar Inc:
24A.1 it would have been able to purchase 10MW of 250W solar modules for delivery in full before 31 May 2013;
24A.2 the panels would have been delivered to Jasmin in Brisbane commencing 6 to 8 weeks after making the decision to purchase from ET Solar Inc;
24A.3 the 10MW of panels would have been delivered periodically in such amounts as were requested by Jasmin; and
24A.4 the panels would have cost US$0.86 per watt DAP inclusive of mounting equipment.
84 Although that amendment was objected to by the respondents, it is largely an embellishment of the allegation in the particulars of paragraph 33 to the effect that, but for the contravening conduct, Jasmin would have obtained the 250W panels from ET Solar. In the circumstances, the broad allegation comprehends within it the implicit allegation that the panels so obtained from ET Solar would have been delivered on time and installed. That being so, the proposed amendment in this respect is a matter of relocating the allegations from the particulars and elevating them as an allegation of material fact. As the allegations were already part of the pleading, albeit they were incorrectly contained in particulars, the proposed amendment should be allowed.
85 The proposed amendment overcomes a number of complaints made by the respondents and, in particular, the nature and circumstances of the delivery of the solar panels. That said, it seems to fall slightly short of establishing the existence of loss resulting from the misrepresentations. On the other hand, it might be implicit in the pleading that the panels from ET Solar would have been installed for the customers whom Jasmin had signed up so that it could put its business model as originally contemplated into effect. That would then constitute the counter-factual from which damages could be assessed by comparing it to the position which Jasmin found itself in, having relied upon the representations. However, if that is the case which is to be agitated, it should not be left to implication. It ought to be expressly pleaded.
86 A further complaint was made to the effect that there is no causal link between the alleged representations and the losses arising from Jasmin incurring costs associated with replacing solar panels which failed due to water ingress and the cost of storing unusable panels. There is, at first blush, some force in that submission. The claim is not a contractual one and, in that sense, no claim for the loss of bargained for benefits (expectation losses) are directly available. That is, however, not to say that elements of expectation losses cannot appear in a claim under the ACL for misleading conduct. In this case there is an indication that Jasmin seeks to calculate its loss as being the difference between the economic position it would have been in had it not relied upon the misrepresentations - namely it would have purchased panels from ET Solar and installed them on the roofs of their customers' houses - and the economic position that it is in as a result of that reliance - namely that it made do with the panels it received from Trina Solar and installed them as best it could. That latter position was made worse, so it is seemingly said, because of the additional expenses relating to increased costs of installation, the unfit roof fixtures, defective panels and storage costs, all of which would not have been incurred had Jasmin acquired panels from ET Solar. The claim for loss of profits in relation to lost customers also appears to be consistent with the damages claim as identified.
87 Again, it is not unfair to observe that the pleading tends to adopt a conclusory approach to the allegations of causation and that is a practice which is best avoided, not in the least because it does not explicitly disclose to the respondents the case which they have to meet. So, for instance, if the damages claim is as has been explained above, Jasmine should plead that the additional costs would not have been incurred in the counter-factual scenario. That would then squarely establish a legally logical basis for them.
88 The respondents also complained that the allegation that Jasmin lost customers by reason of the delay in supply is objectionable. In this respect it was submitted there is no pleading that establishes the link between that delay and either Jasmin's "choosing" Trina US in July 2012 (alleged in the ASOC at paragraph 18), or the failure to obtain solar panels from ET Solar at some later unspecified date as a result of Trina Australia's representation that it would "honour" the Second Purchase Order. That submission cannot be sustained and the allegations sufficiently identify the connection even if is not entirely explicit. In particular, at paragraphs 18 and 24 Jasmin asserts that it relied upon the representations in not pursuing other avenues for the supply of products. The delay which caused Jasmin to lose customers was apparently the manifestation of the falsity of the representations and the connection to the counterfactual being that had the representations not been made, the loss caused by the delay would have been avoided by acquiring the product from ET Solar. Whilst it is possible to discern that connection by necessary implication, there is force in the submission that it should be expressed with greater clarity. In this respect also the pleading should be recast to elucidate the connection which is relied upon.
89 The respondents made a number of other complaints about several paragraphs of the damages claim, but they are of the same nature as those dealt with above such that any deficiency in the pleading does not warrant striking out any paragraph. It can be added that in the recent decision of Wyzenbeek v Australasian Marine Imports Pty Ltd (in liq) (2019) 373 ALR 79 at [67]-[121], the Full Court appears to have adopted a much broader view of causation under the ACL and accepted that a loss which would not have been sustained "but for" the reliance on misrepresentation is compensable. It also seems to have radically extended the nature of the losses for which damages might be awarded under the ACL. Although special leave was refused from that decision: Gold Coast City Marina Pty Ltd v Wyzenbeek [2020] HCATrans 54; the Court recognised that a question of principle arose in that case but that the appeal did not provide a suitable vehicle for its consideration.
90 The result is that the complaints about the pleading of causation and damage were not made out. On the other hand, the respondents' submissions did identify a number of areas where the statement of claim has adopted loose or conclusory language which, to an extent, obscures the case to be advanced. As I have identified above, Jasmin ought to clarify those matters by particulars or re-pleading so as to expose its case with greater clarity.
91 The respondents further complained that Jasmin's claim for damages resulting from its loss of customers was unquantified. Although there is no express specification of how that loss arises, above it has been assumed that those customers would have been secured had Jasmin, rather than relying on the veracity of the representations made to it by the respondents, secured solar panels from ET Solar and installed them on the roofs of those customers' houses in accordance with its business plan and thereby have secured an ongoing relationship. If that, or some variation of it, is the causal chain connecting the misrepresentations to this particular head of damages, the respondents are entitled to have it articulated in a manner that allows them to respond by way of a defence. Until an expert's report is produced to quantify the claim, it is permissible for the amount of the claim to remain unstated, but that aside, the facts on which Jasmin intends to rely as founding the loss should be stated with some clarity.