Kone Elevators Pty Ltd v Elex Pty Ltd

Federal Court of Australia|1988-09-19|Before: French J, Mansfield J

REASONS FOR DECISION 1 The respondents seek particulars of the applicant's Statement of Claim. It is convenient to refer to the pleadings generally before addressing the claims. The facts alleged are of small compass. The following recital is from the Statement of Claim. 2 The applicant is a manufacturer, supplier and servicer of passenger lifts. The first respondent also supplies and services passenger lifts, other than those manufactured by the applicant. The second respondent is the managing director of the first respondent. The Department of Administrative and Information Services ("DAIS") is the department of the State of South Australia responsible for the commissioning of public works on behalf of that State. 3 The applicant was the designer of a passenger lift known as the 'Ceser Monospace Traction' lift ("the lift"), which was registered in South Australia under reg 3.4.2 of the Occupational Health, Safety and Welfare Regulations 1995 (SA) ("the regulations"). 4 In June 1998 (the respondents say it was on 17 August 1998) DAIS invited tenders for the construction of building works at Mitcham Girls High School ("the invitation to tender"). The invitation to tender contained specifications for the installation of a traction lift in those works ("the works"). Cheesman Architects were architects retained by DAIS to advise in connection with the invitation to tender. 5 The applicants complain of three communications by the respondents in connection with the invitation to tender. They are claimed to give rise to claims based upon breaches of s 52 of the Trade Practices Act 1974 (Cth) and for defamation and injurious falsehood. The first two communications are admitted by the respondents, but the third is not. The communications are: (1) facsimile dated 25 August 1998 to Cheesman Architects and DAIS ("the first letter") (2) facsimile dated 31 August 1998 to DAIS ("the second letter"), and (3) letter under the letterhead "Prospect Building Co" dated 1 September 1998 to the applicant ("the third letter"). 6 It is alleged that the first letter contained the following representations ("the first representations"):

"(a) It is a requirement in order for the KONE MONOSPACE to operate safely that it comply with Australian Standard AS 1735. (b) The KONE MONOSPACE does not comply with AS 1735 because: (i) It only has one door lock per door; (ii) Should the lift jam between floors due to machine or rope failure, it could be necessary to cut into the cabin to extricate passengers; (iii) Its wiring is not mechanically protected; (iv) Its engine is not in a separate machine room; (v) Its sheave diameter does not comply; (vi) It does not comply in many other respects; (c) By reason of the fact that the KONE MONOSPACE does not comply with AS 1735, it is unsafe. (d) By reason of the fact that the KONE MONOSPACE does not comply with AS 1735, the customer and those involved in the Mitcham Girls High School project could be held responsible at law in the event of an accident. (e) Only KONE can legally provide maintenance services for the KONE MONOSPACE." 7 It is alleged that the second letter contained the following representations ("the second representations"):

"(a) It is a requirement in order for the KONE MONOSPACE to operate safely that it comply with AS 1735. (b) By reason of the fact that the KONE MONOSPACE does not comply with AS 1735, it is unsafe. (c) The KONE MONOSPACE does not comply with European Norms EN-81. (d) By reason of the fact that the KONE MONOSPACE does not comply with EN-81, it is unsafe. (e) By reason of the fact that the KONE MONOSPACE has no trapdoor, it would be necessary in the event of drive machine seizure, to cut open the lift car to extricate trapped passengers. (f) The KONE MONOSPACE has only one mechanical landing door lock in breach of AS 1735. (g) The wiring in the shaft of the KONE MONOSPACE is not physically protected as required by AS 1725. (h) Only KONE can safely service the KONE MONOSPACE without subjecting the workers to an unsafe workplace." 8 The applicant then alleges that the first representations and the second representations (together, "the representations") "are false", so that the conduct in making the representations was misleading or deceptive. It is then claimed that the applicant has suffered loss or damage as a result of that conduct, as well as the conduct associated with the third letter. 9 The third letter is alleged to have been sent with the intention of keeping secret the identity of the first respondent as its source. That letter claimed that Prospect Building Co intended to tender for the works, and invited the applicant to submit a quotation for the supply of a lift for the works. The applicant claims that the stated identity and stated purpose of the third letter are false. 10 The representations are alleged to contain defamatory imputations as follows:

"(a) The Applicant, which has a duty to manufacture and supply lifts that are safe, is incapable of doing so with any degree of competence. (b) The Applicant is a manufacturer and supplier of lifts whom consumers should avoid. (c) The Applicant is unscrupulous in business. (d) The Applicant deliberatily or recklessly disregards recognised safety standards in the manufacture and supply of lifts." by reason of which the applicant has suffered damage to its reputation. 11 The representations are further alleged to have been made with the intention of inducing DAIS not to deal with the applicant and not to purchase the lift. As a consequence the applicant claims to have suffered loss and damage, so as to give rise to the claim for injurious falsehood. 12 The respondent seeks particulars of (1) the precise words complained of in the first letter and in the second letter ("the defamation particulars") (2) the falsity of the first representations and of the second representations ("the falsity particulars") (3) the loss and damage ("the damage particulars"). The defamation particulars 13 The respondents require the applicant to plead verbatim the precise words complained of in the first letter and in the second letter. They submit that it is not enough to merely plead the alleged effect of the two letters, relying upon the observations of Adam J in Rubenstein v Truth and Sportsman Ltd [1960] VR 473 at 476 ("Rubenstein") and of Lord Denning MR in DDSA Pharmaceuticals Ltd v Times Newspapers Ltd [1973] QB 21 at 26 ("DDSA"). The respondents contend that their pleading is sufficient, and further that it complies with O 11 r 4 of the Federal Court Rules ("the Rules"). They contend that, if under traditional pleading rules they were required to plead verbatim the precise words of which complaint is made, O 11 r 4 of the Rules has altered that position. However, they have provided the further "particular" that the applicant relies upon the whole of each of the first letter and of the second letter. (They also said they relied upon the whole of the third letter, but their counsel acknowledged that that was in error.) 14 The respondents' defence denies that the first letter made the representations which are (a), (b) (iii), (b) (vi), (c), (d) or (e) of the first representations but "plead the actual wordings of the [first letter] in these respects read in their context and in the context of the [first letter] as a whole". The first representations are otherwise admitted. They also deny that the second letter made the representations which are (a), (b), (d) and (f) of the second representations, again with the same explanation. The second representations are also otherwise admitted. 15 Order 11 r 4 provides:

"Where any document or spoken words are referred to in a pleading, it is permissible to state the effect of the document or spoken words without setting out the precise terms thereof." 16 In my judgment, the precise content of the matter which constitutes the conveying of the defamatory allegation of whether consisting of spoken words or written words or otherwise, is a material fact in a claim for defamation. In Harris v Warre (1879) 4 CP 125 at 128, Lord Coleridge CJ said:

"In libel and slander everything may turn on the form of words … the very words complained of are the facts on which the action is grounded. It is not the fact of the defendant having used defamatory expressions, but the fact of his having used those defamatory expressions alleged, which is the fact on which the case depends." 17 Denman J at 129 agreed. See also Adam J in Rubenstein at 474; Bullen & Leake & Jacobs, Precedents of Pleadings (Sweet & Maxwell, 13ed, 1990 at 623); Tobin and Sexton, Australian Defamation Law and Practice (Butterworths, 1999, par 25,015). That requirement, in the case where the allegedly defamatory words form part of a longer document, requires the identification of the particular passages complained of: DDSA at 26 per Lord Denning MR (with whom Phillimore and Cairns LJJ agreed). 18 I do not consider that O 11 r 4 of the Rules has the effect of changing that fundamental rule of pleading for defamation claims. No authority was cited in support of that proposition. It is clear that the intention of pleadings to define the issues and so to inform the parties of the case they have to meet: Dare v Pulham (1982) 148 CLR 658 at 664, underlies O 11 generally. Order 11 r 2(a) requires a party to plead a statement in summary form of the material facts relied upon. The material facts, in the case of a defamation claim, include the words actually published which are said to contain the defamatory imputation. Order 11 r 4 is permissive in its terms. It is a surprising submission that its permissive terms have the effect of entitling a party not to plead material facts where the pleading of those facts is a matter of "elementary and natural justice", to use the words of Burchett J in Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR 41-522 ("Multigroup"). I do not consider that O 11 r 4 has that effect. In my view it is directed to ensuring, where appropriate, the objective specified in O 11 r 3 that a pleading shall be as brief as the nature of the case admits. 19 There are similar rules to O 11 r 4 in other Australian jurisdictions: High Court Rules, O 20 r 22; Supreme Court Rules: Australian Capital Territory O 23 r 21; New South Wales, Pt 15 r 9; Northern Territory r 13.03; Queensland O 22 r 21; South Australia r 46.05; Tasmania O 21 r 23; Victoria r 13.03 and Western Australia O 20 r8. In most instances the rule is expressed in a mandatory way, but with a clause to the effect that the precise words must be pleaded if they are themselves material. (See also Supreme Court Rules, UK O 18 r 7). I do not think that the textual differences are significant in determining the proper operation of O 11 r 4. That is because it is expressed in a permissive way, and because the purpose of pleadings underlies O 11 as it does in other jurisdictions. In Cairns, Australian Civil procedure (LBC, 4ed, 1996 at 201-202) and in Colbran and others, Civil Procedure (Butterworths, 1998 at 327) there is no suggestion that those textual differences have any particular significance. 20 I therefore reject the applicant's contention that O 11 r 4 excuses it from pleading the precise words which constitute each of the defamatory statements alleged. 21 In my judgment, the applicant should identify the words in each of the first letter and of the second letter which constituted the defamatory imputations alleged in par 23 of the Statement of Claim. The device of adopting by reference the first representations and the second representations (par 22), and then pleading that those representations (not the letters) were each publications containing the four defamatory allegations, is unsatisfactory. The problem is compounded by the particular which simply refers to the first letter and to the second letter as a whole. 22 The first letter and the second letter were placed before me on the hearing of this application. It is sufficient to observe that not all of the first representations and the second representations are extracted verbatim from those letters. The respondents make no complaint about that. The next step then of basing the defamatory allegations upon the representations represents a further remove from the contents of the letters. Nor does the reference to the whole of the letters assist; it is not at all clear, in my view, that all the words of each of the letters are capable of conveying the defamatory meanings alleged. Indeed, parts of each of those letters may not be relied upon by the applicant as conveying the alleged defamatory imputations. In my view, the applicants should have to identify which of the words in each of those letters convey each of the defamatory allegations referred to in par 23 of the Statement of Claim. 23 In my judgment, the applicant should provide that material now. I am satisfied that that is necessary for the respondents to know the case against them. I am also satisfied that that is necessary to define the issues for decision. It is therefore necessary to secure the basic requirement of procedural fairness: Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286. 24 I accordingly direct the applicant to file and serve further particulars setting out the precise words in each of the first letter and the second letter which give rise to each of the defamatory allegations contained in par 23 of the Statement of Claim. It is probably the case that that material is not properly particulars, as distinct from material facts: Bruce v Odlams Press Ltd [1936] 1 KB 697 at 712-713. But the Court does not place such emphasis on the refined distinction between material facts and particulars as perhaps was once the case: Beach Petroleum NL v Johnson (1991) 105 ALR 456. The provision of that information by way of particulars will satisfy the need to ensure that the respondents are accorded procedural fairness in knowing the case they have to meet. The falsity particulars 25 The falsity of the first representations and of the second representations is blandly asserted in the Statement of Claim. The respondents rely on the decision of Pincus J in Schindler Lifts Australia Pty Ltd v Debelak (1989) 89 ALR 275 to say they are entitled to more. The applicants dispute that the respondents are entitled to any further particularity of the alleged falsity, and further say that as they will shortly be filing and serving their witness statements for the hearing of the action that will provide sufficient information for the respondents. 26 In accordance with O 12 r 5(3) of the Rules, the application for particulars has been pursued at the close of pleadings. It is, therefore, possible to see the nature of the issues joined. In respect of the misleading conduct claim, the defence simply denies that the first representations and the second representations were false. In respect of the injurious falsehood claim, it also pleads (by reference to par 23.4 of the defence, which is otherwise part of the defence to the defamation claim) a series of other matters which in turn are dealt with in the applicant's reply. Paragraph 23.4 of the defence pleads by way of alternative that the first representations and the second representations meant and only meant that there were certain aspects of the lift which did not comply with Australian Standard AS 1735 and that "so understood" they were true in substance and in fact. 27 The facts so asserted, and the reply, refer to the following: Defence Reply The lift has one door lock per door but cl 14 of AS 1735 requires two door locks The relevant clause of AS 1735 is 13.1.2. The ruling of SAA requires each elevator door panel to have two door locks unless the doors are coupled. The lift doors are coupled, and have one door lock per panel, so the lift complies with As 1735. The lift has one electrical contact but cl 14 of AS 1735 requires two contacts Joins issue The driving machine in the lift is not housed in a machine room but cl 5.1 of AS 1735 requires that Clause 5.1 of AS 1735 is not correctly referred to, and the lift complies with it The lift has only one lamp in the machine room but cl 5.13 of AS 1735 requires a minimum of two lamps The lift is not required to have a machine room so cl 5.13 is not applicable The lift has its speed governor in the lift shaft and does not provide access from outside the shaft but cl 6.1.2(c) of AS 1735 requires that The lift has its speed governor in the lift shaft, with access via the lift roof platform, so the lift complies with cl 6.1.2(c) of AS 1735 The driving sheave flanges in the lift do not project beyond the ropes but cl 19.1 of AS 1735 requires that Clause 19.1 of AS 1735 is not correctly referred to, and the lift complies with it The lift has a rope to driving sheave diameter of 40:1 but cl 19.2 of AS 1735 requires a rope to sheave diameter of 43:1 Cl 19.2(a) of AS 1735 requires a rope to sheave diameter of at least 40:1 and the lift complies with that The lift does not have guards to prevent fingers from being caught between sheaves and ropes, but cl 19.4 of AS 1735 requires that The lift provides nip point guards on the machine, the car sheaves, the counterweight sheaves and the governor and idle sheaves, and so complies with cl 14.4 (sic, 19.4) of AS 1735 The lift's suspension rope sockets are of welded construction, but cl A1.3 of AS 1735 requires that they not be welded Admitted, The Department of Industrial Affairs (SA) has accepted the deviation as being satisfactory in meeting the requisite safety standards The maintenance and emergency unlocking devices on the landing doors in the lift do not comply with cl 12.25 of AS 1735 as they do not have a cylinder lock Admitted, The Department of Industrial Affairs (SA) has accepted the deviation as being satisfactory in meeting the requisite safety standards The flushing panels in the lift do not extend from the landing sill to the door hanger recess on the floor below, but cl 15.1.3.2 of AS 1735 requires that Admitted, The Department of Industrial Affairs (SA) has accepted the deviation as being satisfactory in meeting the requisite safety standards The lift does not have a roof trapdoor in the lift car but cl 23.14 of AS 1735 requires that Admitted, The Department of Industrial Affairs (SA) has accepted the deviation as being satisfactory in meeting the requisite safety standards The lift has only one door contact in respect of wiring of door locks, but cl 26.9 of AS 1735 requires two door lock circuits Joins issue The wiring enclosure methods used on the lift has many wires which are not enclosed but cl 28.2.4 of AS 1735 requires all wiring to be enclosed Clause 28.2.4 of AS 1735 is not correctly set out. The lift complies with that clause

28 It is apparent that the issues in dispute involve in some instances questions as to whether certain of the representations were made, and in some or all instances questions as to the falsity of the representations. The respondents have endeavoured to anticipate the detailed allegations of falsity in that part of the defence dealing with the claims for defamation and injurious falsehood, in par 23.4 of the defence, and to that extent the issues are joined through the reply. 29 However, the applicant is not technically limited by its reply to the facts which it will seek to prove at the hearing to demonstrate the falsity of the representations. Moreover, in respect of the defamation claim and the injurious falsehood claim, the applicant has identified the whole of the letters as conveying the alleged defamatory imputations. It may therefore not be confined to making out the representations as the foundation for those claims, or in the case of the injurious falsehood claim that those representations were false. 30 In Harris v Cigna Insurance Australia Ltd (1995) ATPR 41-445, Kiefel J said at 41,009:

"It is not sufficient to require the respondents to speculate as to what are the circumstances alleged to give the facts alleged the quality of being misleading or deceptive." 31 As par 23.4 of the defence illustrates, the respondents have identified issues concerning the falsity of the representations. The reply then enables those issues to be clearly defined. That ensures a fair trial, and also enables the Court to make rulings about the admissibility of evidence during the hearing on those issues. 32 However, the allegations of falsity are not confined by the respondents' defence. The alleged falsity of the representations are in some respects capable of conveying that AS 1735 does not apply or that it does not apply as alleged or that, as it applied, it was complied with. Paragraph 23.4 of the defence and the reply shows that that series of options may arise in respect of one or more of the representations. It may be that the respondents have correctly anticipated all the issues, but the Court and the respondents do not know that that is the case. The applicant must know what facts and matters it intends to prove to demonstrate the falsity of the representations. In my judgment it is necessary to ensure procedural fairness to the respondents that those facts and matters be pleaded. It is also necessary to ensure the trial proceeds efficiently. The facts or particulars so pleaded may then require the respondents to revisit their defence to determine whether there are any additional facts or matters which should be pleaded to comply with O 11 r 10 of the Rules, in addition to those referred to in par 23.4 of their defence. 33 I accordingly direct the applicant to file and serve particulars of pars 17 and 27 of the Statement of Claim, setting out with respect to each of the representations, the facts by reason of which it is alleged that each of the representations is false. For reasons previously given, I think it is more convenient to have that material in that form even though the matters may technically constitute material facts. By requiring the information in that form, I do not intend to relieve the respondents from then complying further with O 11 r 10 if that is necessary. The damages particulars 34 The Statement of Claim contains no particulars of damages in respect of any of the causes of action alleged. 35 The applicant has provided some particulars. It says that the loss or damage by reason of the misleading conduct is the loss of the tender to the first respondent, and that further particulars of loss or damage will be provided "on the exchange of witness statements and following the issue of subpoenas". It declined to give any particulars of the damages claimed for defamation or injurious falsehood. Later, it said that the witness statements which it would file will address the loss of profit arising from the loss of the tender and the damage to its reputation. It also referred to a discovered document numbered 276 which discloses the difference between the tendered price of the elevator and the cost to the applicant was $20,752, which "constitutes a part of" the claim for damages. 36 Order 12 r 4 obliges a party to give particulars of moneys which that party has paid or is liable to pay. No such particulars have been given. It may be assumed that the applicant will not seek to prove at the hearing any such moneys. The applicant's claims must be for general damages only. Order 12 r 5(1)(c) authorises the Court to order any party to file and serve particulars of any claim for general damages, but it should not do so before the filing of the defence unless it is necessary or desirable to do so: O 12 r 5(5). 37 In my view, the applicant should be ordered to provide particulars of its three claims for damages. It has not sufficiently provided such particulars. The respondents are given no information as to the potential of the applicant's claims, or the facts which it will be sought to prove at the trial. They cannot prepare to investigate and answer the claim. Burchett J in Multigroup at 42,679 said that the specification in the pleadings of the nature of the claim which a respondent has to meet is "a matter of elementary and natural justice". The proposed evidence of the applicant, through its witness statements, will not provide a substitute for proper pleadings: Allstate Life Insurance Co v Australia & New Zealand Banking Group Ltd (1995) 130 ALR 469. Order 11 r 2(a) provides that the pleading should not contain the evidence by which the facts alleged are to be proved. 38 In addition, where separate causes of action are pleaded with damages said to result separately from each, the respondents are entitled to know what loss and damage is alleged to flow from each of the causes of action. It may be the same loss and damage, or it may be different. The respondents do not know. The respondents are also entitled to know the nature of each of the claims for damages so that they may consider the making of a payment into court or an offer of compromise under O 23 of the Rules: Westside Typographics Pty Ltd v Flexi-Products International Pty Ltd (French J, 19 September 1988, unreported). The particulars of damage may also inform the respondents as to whether, or when, to seek an order for mediation under O 72 of the Rules. At present the only particularised loss is the loss of opportunity to be part of the successful tender, which it is said deprived the applicant of $20,752. If that is the extent of the applicant's claimed loss, obviously that would have significance to the respondents in the resources that they might allocate to the defence of the matter, as well as to their consideration of any offer or payment under O 23 or to the possible compromise of the claim, either by private negotiations or through mediation under O 72. (It may also ultimately have some relevance to any order for costs made in the applicant's favour if it succeeds in its claims: O 62 r 36A). 39 I accordingly direct the applicant to file and serve proper particulars of its claims for damages as made in each of pars 19, 25 and 30 of its Statement of Claim. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Decision herein of the Honourable Justice Mansfield.

Counsel for the Applicant: Mr D Rydon with him Mr C Gray

Solicitors for the Applicant: Allen Allen & Hemsley

Trade Practices Act 1974(Cth)s 52

Occupational Health, Safety and Welfare Regulations 1995(SA)reg 3.4.2

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