Mohareb v Lambert & Rehbein

**[1] By application dated 4 March 2010, the first defendant (the only remaining of four defendants) sought orders that the plaintiff's Third Further Amended Statement of Claim ("3FASOC") filed 21 January 2010 be struck out pursuant to r 171 of the Uniform Civil Procedure Rules 1999 (Qld) ("UCPR"), that his claims against the first defendant be permanently stayed, and for costs on the indemnity basis.

[2] On 30 April 2009, the plaintiff, who is an engineer, commenced proceedings against Lambert & Rehbein Pty Ltd, on the basis that it was the entity with which he had entered into a contract of employment but it was the present first defendant who employed the plaintiff. That error was subsequently corrected. The first defendant carries on the business of consulting engineers. Initially the plaintiff sued, as the second, third and fourth defendants, the directors of the company, as well as the company, for breach of his contract of employment and damages for breaches of sections 52 and 53B of the Trade Practices Act 1974 (Qld).

[3] In July 2008 the plaintiff was interviewed for a position with the first defendant as a structural engineer. He was then carrying on his own engineering business in New South Wales. The plaintiff alleges that he was induced to enter into a contract of employment by representations by at least one of the directors that he would lead the busy and successful structural engineering division of the company's practice in Brisbane.

[4] On 17/26 July 2008 the plaintiff entered into a contract in writing with the first defendant in the position of Senior Structural Engineer located in Brisbane. This was less than he understood his role was to be but he alleges that he was reassured by one of the directors that this was the title of a "settling in" position. The plaintiff alleges that when he commenced work on 1 September 2008, he was not given the leadership position he had been interviewed for nor was there any prospect that that would eventuate as someone else had been employed to fill that position. Furthermore, the plaintiff alleges that the state of affairs in the structural engineering division was poor - losing money and losing clients. Matters deteriorated at a personal level within the office, and from the plaintiff's perspective, he was demeaned and his work was denigrated. On 5 November 2008, nine weeks after he commenced employment, the first defendant summarily terminated the plaintiff's employment for failure to carry out a direction about work.

[5] By a claim filed on 17 December 2008 in the Magistrates Court at Brisbane, the plaintiff sought to have his claim heard against the first defendant as an employment claim pursuant to the provisions of Part 5A of the Magistrates Court Act 1921 (Qld). That claim was dismissed with costs on 27 March 2009 because it was not a claim by a "low income" employee, as the plaintiff's wages were beyond the threshold of the jurisdiction.

[6] The plaintiff filed and served a claim and statement of claim in this court on 30 April 2009 against Lambert & Rehbein Pty Ltd and three directors, seeking compensation for breach of the contract of employment and damages for breach of sections 52 and 53B of the Trade Practices Act 1974 (Qld).

[7] On 28 May 2009, the defendants filed their notice of intention to defend and defence, pleading that the then first defendant company was not the employer of the plaintiff and that the directors were not proper defendants. The defendants pleaded the essential facts of the employment contract and alleged that the pleading was otherwise embarrassing.

[8] On 30 April 2009, the plaintiff filed an application in this court to stay the magistrate's costs orders made on 27 March 2009.

[9] On 1 June 2009, the defendants filed and served an application to strike out the plaintiff's statement of claim pursuant to r 171 of the UCPR and to dismiss his application to stay the costs order. That application was returnable on 16 June 2009. On 15 June 2009, the plaintiff filed an amended statement of claim substituting the first defendant for the previous incorrect first defendant.

[10] On 16 June 2009, Daubney J ordered that the plaintiff's amended statement of claim filed on 15 June 2009 be struck out, giving him leave to file and serve a further amended statement of claim by 14 July 2009 and made orders that the plaintiff pay the defendants' costs.

[11] On 22 June 2009, the parties signed a consent order dismissing the plaintiff's application to stay the magistrate's costs order.

[12] On 9 July 2009 the plaintiff sought and was granted an extension of time within which to file and serve the amended pleading, to 28 July 2009. No order as to costs was made.

[13] The plaintiff filed and served his further amended claim and statement of claim on 28 July 2009. The defendants filed and served an application on 26 August 2009, returnable on 30 September 2009, for orders striking out the further amended statement of claim pursuant to r 171 and that the plaintiff's claims against the second, third and fourth defendants (the directors) be permanently stayed.

[14] On 8 September 2009, the plaintiff sought orders that the costs that he had been ordered to pay by Daubney J on 16 June 2009 not be assessed until the proceedings ended and other associated orders.

[15] On 7 October 2009, I ordered[1] that the plaintiff's further amended statement of claim be struck out pursuant to r 171 with leave to file and serve a second further amended statement of claim on or before 28 October 2009. In default, the proceedings would be stayed. Costs were ordered to be paid on the indemnity basis.

[16] The plaintiff filed and served a second further amended statement of claim on 28 October 2009. The defendants filed an amended defence to that pleading on 25 November 2009 which alleged, in effect, that they could not plead to such a defective and embarrassing pleading. On 25 November 2009, the defendants also filed an application seeking orders that the second further amended statement of claim be struck out and the plaintiff's claims against them be permanently stayed.

[17] That application was returnable on 21 December 2009, giving the plaintiff ample time to respond. On that date, the plaintiff appeared. Daubney J struck out paragraphs 10-13 and the plaintiff's claims against the second, third and fourth defendants. Leave was granted to the plaintiff to file and serve a third further amended statement of claim, containing amendments to paragraphs 4, 6, 8 and 18 of the second further amended statement of claim, to be filed and served by 29 January 2010. Failure to do so would lead to the claim being struck out.

[18] The 3FASOC was filed on 21 January 2010. On 3 March 2010, the first defendant's solicitors wrote a detailed letter to the plaintiff, addressed to him in Queensland and in New South Wales at addresses previously utilised by the defendant and to his email address, pointing out the deficiencies in the new pleading in considerable detail.

[19] On 4 March 2010, the first defendant filed an application returnable on 16 March 2010 that the 3FASOC be struck out and the plaintiff's claims be permanently stayed.

[20] Leaving aside the formal matters in paragraph 1, the 3FASOC pleads:

• The plaintiff commenced employment negotiations on 24 June 2008 with the first defendant that concluded in a formal offer of employment on 26 July 2008. There follows some six particulars identified as the first to fifth interviews stating who was present but not what was said, although, as is pleaded in paragraph 6, it was at those meetings that the alleged representations were made. The seventh particular alleges an offer of employment in writing made on or about 26 July 2009.

• On or about 26 July 2008, the plaintiff and the first defendant entered into a contract of employment.

• "The contract was party oral and partly in writing. The written part of the contract is dated 17 July 2008... In addition to the written terms the contract contains oral terms". What were formerly particulars are now pleaded as allegations of fact and are set out as such in paragraph 4(b):**

(i). The oral contract is consequent to the representations made in the interview process as pleaded in paragraph 2 and 6 herein.

(ii) The contract includes the following oral terms ("the oral terms"):

(a) The plaintiff would be employed as structures division manager ("first oral term");

(b) The title of senior structural engineer would be temporary ("second oral term");

(c) The position was a leadership position that would allow him the-plaintiff to build on what he had achieved previously ("third oral term");

(d) The plaintiff would be in charge of the structures division ("fourth oral term");

(e) The plaintiff would be provided with clients with ready to go new projects opportunities ("fifth oral term");

(a) The plaintiff would have a free hand in running the structures division or words to that effect ("sixth oral term");

(a) That the plaintiff would be supported in an initial transition period by the first defendant ("seventh oral term");

(b) That during the transition period the plaintiff would lead the structures division in all aspects to do with structural engineering ("eighth oral term")."

**The pleading notes that the written contract describes the position as "Senior Structural Engineer" with the duties and responsibilities as outlined in the position description in the annexure.

• "During the interview process the first defendant made representations ("the representations") that were relied on by the plaintiff in his acceptance of the offer and subsequent entry into the contract". Again, what were formerly particulars have now become allegations of fact.**

"(i) During the first interview the first defendant represented that:

(a) That the Structures Division Managers position was vacant and available to the plaintiff on successful completion of the interview process ("first representation");

(b) That the vacancy was for a leadership position consistent with the plaintiff's current position at the time of the offer, that would allow the plaintiff to build on what he had achieved so [sic] ("second representation").

(ii) During the second interview the first defendant represented:

(a) That the position would involve the plaintiff leading the structures division to improve profitability from 15% to 20% ("third representation");

(b) That the plaintiff would be in charge of the structures division ("fourth

(c) That the plaintiff would be able to take charge of the structures division to provide strong leadership to enhance profitability ("fifth representation");

(d) That there were many opportunities for the plaintiff and many clients with ready to go projects ("sixth representation").

(iii) During the third interview the first defendant represented that:

(a) The plaintiff would have a free hand in running the structures division or words to that effect; ("seventh representation")

(b) That the structures division will be 'your (the plaintiff's) baby' or words to that effect ("eighth representation").

(iv) During the fifth interview the first defendant represented that:

(a) The defendant would have a temporary title of senior structural engineer; ("ninth representation")

(b) That the plaintiff would be supported in an initial transition period by the first defendant ("tenth representation") with a view to gradually easing the plaintiff into taking effective charge and leadership of the Structures Division

(c) That the plaintiff would ease into the leaders position ("eleventh representation")

(d) That during the transition period the plaintiff would lead the structures division in all aspects to do with structural engineering and that a second engineer - Mr. Joss Watson - would lead the Division in all aspects to do with civil engineering ("twelfth representation")"

**[21] There follows the heading "Deceptive and misleading conduct pre employment".

• The representations are pleaded to be "false and misleading".

• The allegations of fact to support the allegation of misleading and deceptive conduct are that in making the representations**

"(A). ... the first defendant knew or ought to have known at the time of making the representations were deceptive and misleading and consequently were misrepresentations."

• What were formerly particulars are now pleaded as material facts:

"(i). Contrary to the first representation the position of structures division manager was not vacant and available to the plaintiff it was occupied by Mr. Joss Watson ("first misrepresentation");

(ii). Contrary to the second representation the vacancy that the plaintiff was placed in was not for a leadership position that would allow the plaintiff to build on what he had achieved so far ("second misrepresentation");

(iii). Contrary to the third representation the plaintiff could not lead the structures division and had no opportunity to lead that division to improve profitability to 20% ("third misrepresentation");

(iv). Contrary to the fourth, fifth, seventh and eighth representations the plaintiff could not be in charge of the structures division and was not placed in a position to take charge of the structures division ("fourth, fifth, seventh and eighth misrepresentations");

(v). Contrary to the sixth representation opportunities were not made available to the plaintiff with ready to go clients ("sixth misrepresentation");

(vi). Contrary to the ninth representation the title of senior structural engineer was not a transitional title ("ninth misrepresentation");

(vii. Contrary to the tenth representation the plaintiff was not supported in an initial transition period ("tenth misrepresentation);

(viii). Contrary to the eleventh representation the first defendant did not, ease into the plaintiff the Structures Division Leaders role ("eleventh misrepresentation");

(ix) Contrary to the twelfth representation the plaintiff was not assigned the leadership of the structures division in all aspects to do with structural engineering ("twelfth misrepresentation")."

**• "(B) Making the offer that the first defendant was not in a position to fulfill."

• "Acting in reliance upon the representations and misrepresentations referred to in paragraphs 6 and 8 herein and induced thereby the plaintiff" entered into the contract with the first defendant and would not have done so save for the misrepresentations made during the interview process and would not have done so "save for the offer and the execution of the contract by the first defendant".

• "The first defendants conduct in making the representations and misrepresentations and the misleading statements ... was:

(a) in trade and commerce within the meaning of s 52 and 53B of the Act and,

(b) misleading and deceptive in contravention of sections 52 and 53B of the Act."

• "Acting in reliance on the representations and the misrepresentations, the misleading statements and actions referred to in paragraphs 6 and 8 herein and induced thereby the plaintiff has suffered loss and damage as a result of the misleading and deceptive conduct of the first defendant in:**

(c) entering into the contract with the plaintiff.;

❖ $2,000, being the cost of relocating from Brisbane to Sydney ("on or around the 10 September 2009");

❖ $29,587.52, being the loss suffered on the purchase and subsequent sale of accommodation in Brisbane; and

❖ $3,000, being the cost of payments to the body corporate associated with that real estate purchase.

• The plaintiff "would not have remained in the employ of the first defendant save for the misleading statements made by the first defendants".

• In a further claim for damages based on reliance on the representation, the plaintiff seeks:

❖ $20,000, "being the difference between the income the plaintiff would have earned in previous employment between 1 September 2008 and 5 November 2008" and income earned whilst employed by the first defendant; and

❖ $123,300, "being the decrease in value to the defendant's shareholding in NM Structural Engineers Pty Ltd as a result of the company being closed to trade". This is calculated as the average value of the company's income over three tax years.

• The first defendant breached the contract in the following alleged ways:

❖ An express written term required the plaintiff to report to the national structures manager. He was required to report to the structures division manager on 17 September 2008.

❖ The first defendant did not employ nor did it have the capacity to employ the plaintiff as structures division manager and thereby breached the first, fourth and sixth oral terms of the contract.

❖ The first defendant failed to support the plaintiff in an initial transition period and breached the seventh oral term.

❖ The first defendant failed to place the plaintiff in charge of the structures division with respect to structural engineering in breach of the eighth oral term.

❖ On 15 September 2008, the first defendant confirmed to the plaintiff that the title of senior structural engineer was permanent and breached the second oral term.

❖ The first defendant failed to offer the plaintiff a leadership position and subsequently breached the third oral term.

❖ The first defendant breached the fifth oral term by not providing "ready to go clients" and only engaged the plaintiff in remedial work.

❖ The first defendant breached cl 3.3 of the written contract by altering the substantial nature of the employment to an extent that was inconsistent with the parties' intention at the date of the contract.

❖ The first defendant breached cl 16 of the written contract by wrongfully terminating the plaintiff's employment on 5 November 2008 for wilful disobedience of the employer's reasonable direction.

• The damages claimed for those breaches are $2,884.61, being the alleged balance of payments owed under the contract.

The Trade Practices Act claim

[22] The first defendant contends that the claim pursuant to the Trade Practices Act is not properly pleaded because it does not allege what was misleading or deceptive about the representations at the time when they were allegedly made. As is

well-established, a cause of action for misleading or deceptive conduct is not established unless the statement of claim sets out the circumstances which gave the representation its misleading or deceptive character or from which that character may be inferred. As Kenny J noted in Pioneer Electronics Australia Pty Ltd v Edge Technology Pty Ltd:[2]**

"It should be borne in mind that the mere non-fulfilment of a statement as to a future matter does not establish that the statement was relevantly misleading and deceptive. If that non-fulfilment is to be relied upon as part of the circumstances which render the statement misleading and deceptive, such an inference must be specifically pleaded along with the facts and matters relied on to support the inference."

**The UCPR in r 150(2) require that any fact from which any of the matters mentioned in subrule (1) is claimed to be an inference must be specifically pleaded. Rule 150(1)(k) requires conditions of mind including knowledge to be specifically pleaded.

[23] The first defendant submits that the form of the pleading in paragraphs 6(ii)(a)-(c); 6(iii)(a)-(b) and 6(iv)(a)-(d) concern representations about future events. That much is plain. The first defendant then argues that paragraphs 8(A)(iii), (iv), (vi), (vii), (viii) and (ix) merely plead non-fulfilment of future events. That submission might also be true of paragraph 8(A)(ii) and (v). So far as those allegations are concerned, there is no allegation in the pleading of the facts and circumstances at the time the representations were allegedly made, which would make those representations misleading or deceptive. It is not clear whether paragraph 8(A)(i) (that the position of structures division manager was occupied by Mr Joss Watson) concerns an existing situation or something that, although it occurred after the first representation was made, was in contemplation when the representation was made.

[24] The plaintiff might have submitted in support of his pleading, that the allegations in paragraph 8 that, "contrary" to the representations, a different state of affairs existed or would exist, can be inferred and sufficiently alerts the first defendant about the facts and circumstances which made the representations misleading or deceptive at the time when they were made. But such an approach would require the first defendant to imply into the pleading more than the words can bear. This allegation is at the heart of the plaintiff's case and needs to be pleaded with care. An opposite party is not required to struggle to find in the pleadings a construction of the other party's case favourable to that other party. As has been observed on numerous occasions, and to this plaintiff, the purpose of pleadings is not to engage in some arcane and overly technical game, but, by setting out as concisely as possible all necessary material facts to support the cause(s) of action underlying the proceedings, crystallise the matters in issue and so inform the opposite party of the case to be met.

[25] There is a further complaint that the representors are not identified. The representations are impliedly attributed to identified persons, but by the rather awkward process of linking paragraph 2 (the interviews) to paragraph 6 (the representations). It would not be difficult to draft a pleading to comprehend both the representations and their makers. Although the plaintiff has shed much of the irrelevant narrative found in the earlier statements of claim, there is still much surplusage. The first defendant complains that the particulars to paragraph 2 ought to be allegations of material fact. Of themselves, the "interviews" are not material, but it is alleged that the representations were made at the interviews. A preferable pleading would combine, in a precise manner, paragraphs 2 and 6.

[26] Further, there is authority for contending that since the representations are about a future matter, and if the evidentiary provisions in s 51A of the Trade Practices Act are to be relied upon, that must be flagged in the pleadings.[3] There should be an allegation that the representations were made as to future events without reasonable grounds for doing so.

[27] Some of the representations also appear as alleged oral terms of the contract of employment. The written employment contract provides, in cl 20.1, that it is the entire agreement between the parties and excludes any other prior agreement or understanding. Between educated and sophisticated parties who expressed their agreement in a detailed written document, it may be difficult to persuade a court that the "representations" were contractual promises rather than "mere" representations.

[28] Clause 20.2 of the written contract provides that:**

"Each party has entered into this Agreement without relying on any representation by any other party or any person purporting to represent that party."

**[29] In O'Neill v Medical Benefits Fund of Australia Ltd,[4] the applicant had been "head hunted" from a secure job with a rival medical fund to join the respondent and was told that he had a long-term future with the respondent. The respondent was found to have made a representation as to a future matter on which the applicant relied when changing employers. The applicant was subsequently retrenched. The fact that the applicant's contract had provided for termination on one month's notice was relevant but not determinative. These are not, however, pleading issues, although the manner of pleading is awkward.

Loss and damage arising from the alleged misleading and deceptive conduct

[30] It is trite to say that any loss and damage suffered must have been caused by the misleading or deceptive conduct. The plaintiff claims in paragraph 17 that he sustained a loss of $123,300, being the decrease in value of "the defendants" shareholding, presumably meaning "the plaintiff's" shareholding, in NM Structural Engineers Pty Ltd. There are no facts and circumstances which link the monetary claim to the conduct of the first defendant.

[31] The damages claimed as a result of the alleged breaches of contract set out in paragraph 18(i) to (ix) is for $2,884.61. Other material (pay slips) suggest that this is one week's pay. That is the value of the plaintiff's notice entitlement under the contract. Except for the failure to give the money in lieu of notice, the alleged breaches of contract go nowhere.

[32] The first defendant also complains that paragraphs 8 (B) and (C), set out above, plead conclusions without any supporting facts. That contention may be accepted but, in a properly arranged pleading, those conclusions could probably stand if they appeared appropriately after the allegations of misleading and deceptive conduct.

[33] The first defendant contends that the pleading discloses no reasonable cause of action. As presently pleaded, the plaintiff would struggle to make out a case. Properly pleaded, he may have a case that calls to be defended but, apparently, he refuses to retain an appropriately skilled lawyer to act for him to settle these pleadings, notwithstanding his own dismal attempts to do so on three occasions. The question is whether, against the history of his attempts to produce an acceptable statement of claim, the analysis of his pleadings, both by the solicitors for the first defendant in correspondence, counsel's submissions, and the observations of the court on the strike out applications, the plaintiff ought to be permitted to continue.

[34] Costs have been awarded against the plaintiff in favour of the defendant(s), some on the indemnity basis, but such a basis of assessment will rarely compensate an opposite party fully for the losses sustained, particular the professional time of the defendant's officers giving instructions. Furthermore, the plaintiff has shown a disinclination to pay costs when ordered to do so and has contested the assessment. On no occasion when the plaintiff has appeared before me can I recall him raising impecuniosity.

[35] There is a reluctance to cut off a would-be litigant from access to the courts but neither should a party be permitted to continue to litigate with disregard for the rules relating to proper pleadings. This is not to be unduly technical but to allow, ultimately, for a fair trial. As Muir JA observed in du Boulay v Worrell & Ors:[5]**

"It may be that self-represented litigants should be afforded a degree of indulgence and given appropriate assistance. But if a

self-represented person wishes to litigate, he or she is as much bound by the rules of Court as any other litigant. Those rules exist to facilitate efficient, fair and cost-effective litigation. The Court's duty is to act impartially and ensure procedural fairness to all parties, not merely one party who may be disadvantaged through lack of legal representation. The other party to the litigation is entitled to protection from oppressive and vexatious conduct regardless of whether that conduct arises out of ignorance, mistake or malice."

**[36] I have concluded that the plaintiff has been given ample opportunity to produce a pleading which pleads a case reflecting the elements of the cause of action and which appraises the first defendant of the case it must meet. The 3FASOC should be struck out, it being pointless to salvage the odd satisfactory paragraph, the plaintiff not be given leave to re-plead, and the proceedings be stayed.

[37] Given the history of the attempts to produce an acceptable statement of claim and the failure of the plaintiff to have made any reasonable attempt to comply with the rules of court, the plaintiff should pay the first defendant's costs on the indemnity basis.

1. Strike out the plaintiff's Third Further Amended Statement of Claim filed 21 January 2010.

2. The plaintiff's proceedings against the first defendant be stayed.

3. The plaintiff pay the first defendant's costs of and incidental to the application on the indemnity basis.

[1] Mohareb v Lambert & Rehbein (SEQ) Pty Ltd [2009] QSC 324.

[2] [1999] FCA 142 at [7]. See also McKellar v Container Terminal Management Services Ltd per Weinberg J [1999] FCA 1101; 165 ALR 409 at 419 at [25].

[3] Fubilan Catering Services Ltd v Compass Group (Aust) Pty Ltd [2007] FCA 1205; O'Neill v Medical Benefits Fund of Australia Ltd [2002] FCAFC 188; (2002) 122 FCR 455.

[4] [2002] FCAFC 188. See also Sheldrick v WT Partnership (Aust) Pty Limited (1998) 89 IR 206.

[5] [2009] QCA 63 at [69].