QIC Logan Hyperdome Pty Ltd & Anor v Briridge Pty Ltd & Anor [2011] QSC 43

[1] CHIEF JUSTICE: The plaintiffs apply for an order under Rule 171 of the Uniform Civil Procedure Rules striking out the third amended defence and counter claim filed on 2 July 2010.

[2] The original defence and counter claim was filed on 31 July 2009. The plaintiffs objected to it on the grounds particularized in their solicitors' letter of 15 September 2009, and that led to the filing of an amended defence and counter claim of 7 October 2009. A further amended pleading was filed following further complaint. That was filed on 23 November 2009. The defendants then changed their solicitors, and after further communications between solicitors, the defendants filed the current third amended defence and counter claim on 2 July 2010.

[3] The plaintiffs refuse to accept that third amended defence and counter claim as being adequate, and their application for the striking out of that pleading was preceded by the requisite letter under Rule 444 which the defendants have resisted.

[4] The plaintiffs claim rent and outgoings due under a lease over premises within the Logan Hyperdome Shopping Centre, used as a video store. The term of the lease was six years from 2 June 2003. The second defendant is the guarantor of the first defendant's obligations as lessee. The plaintiffs claim only the sum of $82,731.65, but the defence and counter claim brings the matter into the Supreme Court because of claims for damages for alleged contraventions of s 52 of the Trade Practices Act 1974 amounting to $740,000, and for compensation under the provisions of the Retail Shop Leases Act 1994 (s 43(1)(c)).

[5] The third amended defence and counter claim covers 33 pages. A number of objections are taken to it:

• (a) that single paragraphs contain more than one allegation (for example paras 42B, 42C, 43A, 44A, 45, 48, 48B, 49A, 50, 52A, 55B, 56A, 62, 64);
• (b) that the particulars which are given are inadequate or not particulars at all (paras 4.2, 4.4, 8, 11, 18, 19(xA), 28A, 38, 38A, 55A, 55B);
• (c) that irrelevant matters are pleaded as if material facts (paras 5-18, 39-41A, 49A, 51, 51A, 58-63A);
• (d) that matters alleged are vague and uncertain (paras 19A, 22, 23, 23B, 24, 26, 27, 27A, 28A, 28B, 29A, 29B, 31A, 31(vii), 36A, 38, 39A, 40-41A, 42, 42A, 42B, 42C, 44-7, 49, 50, 51, 51A, 53, 58, 63, 64);
• (e) that the proposed basis for the calculation of damages (to bring about a restitutio integrum) is misconceived (paras 52, 65, 66(a)); and
• (f) that the recitation of some matters of law should not have been included (paras 27A, 28A, 28B, 29A, 29B, 36A, 42B, 42C, 49A, 52A).

[6] Mr Sheahan for the plaintiffs submitted that the pleading is so flawed that it should be struck out, with leave to replead, and seeks costs on the standard basis. Mr Alford, for the defendants, supporting the pleading, rejected the plaintiffs' criticism, essentially on the basis that it was nitpicking. He sought the dismissal of the application, with indemnity costs.

[7] After analysing the challenges to the pleading, I have reached the view that I should make the orders sought by the plaintiffs. I do not consider that would involve an overly technical or pedantic analysis of the suggested shortcomings in the pleading. It simply falls far short of the procedural requirements for proper pleading laid down in the Rules.

[8] The defendants appear to be suggesting, in short terms, that the first defendant took the lease on the assurance that the customers of the video store would enjoy access to nine marked parking bays, and as well, to a host of other bays; that during the negotiations for the lease, the plaintiff intended to expand the overall centre, and that were that to occur, there would be limitation on the first defendant's customers' access to the parking spaces generally, yet did not disclose that intention to the first defendant as prospective lessee, contrary to its disclosure obligations under the Retail Shop Leases Act; that this involved misrepresentation in addition, and breach of other legislative constraints; and that the first defendant should be compensated.

[9] I do not propose canvassing all of the points of challenge raised by the plaintiffs, though in any repleading all should be addressed. It suffices if I provide some of the major examples.

1. The claim for damages is allegedly based on restitutio in integrum (paras 52, 65, 66(a)). Yet no rescission of the lease is pleaded (cf. Cook's Construction Pty Ltd v SFS 007.298.633 Pty Ltd [2009] QCA 75, para 73). In principle, the first defendant cannot claim both a refund of the purchase price for the business, and as well, loss of profits and future income as if the lease were on foot (paras 43, 43A, 52A, 57).
2. The critical representation drawn from the signs referring to nine parking bays is not properly pleaded. Paragraph 12(ii) refers to the presence of the signs at the time of the disclosure made by the first plaintiff under the Retail Shop Leases Act. In para 23B and C the defendants allege that they represented the allocation of nine parking bays to the prospective leased area, on which the defendants relied. Paragraph 31A alleges that the signs were misleading or deceptive, contrary to s 52 of the Trade Practices Act. There is simply no allegation as to the nature of the alleged misrepresentation, and it is not obvious.
3. The statutory disclosure obligation covered "any intended conduct" of the first plaintiff which "may" impact on the proposed lessee's business. The alleged representation was that the first plaintiff had "not approved any proposal" which would have that effect. The pleading goes on to allege a duty in the first plaintiff to disclose its intended further development, which it did not fulfil, thereby engaging in misleading and deceptive conduct and breaching its obligation under the legislation. That emerges sufficiently, I think, from the pleading, but a number of detailed matters need to be rectified, apart from the issue whether the proposed lessor could "approve" of something, or "intend" to do something, which depended on local authority approval yet to be obtained . As to those other matters:
   • (a) Paragraph 29A refers irrelevantly to "advice" in the disclosure statement: I understand the defendants' case not to concern what was said, but what was not said.
   • (b) Honesty and reasonableness as referred to in para 29A seem to me to miss the point: the question is simply whether the first plaintiff in fact made sufficient disclosure.
   • (c) Section 22(5) concerns a situation where the lessee has terminated a lease, but that is not alleged to have occurred here.

The deficiency is the failure to identify any person or person who on behalf of the first plaintiff had the knowledge or was knowingly concerned in that way, and to identify the content of the "knowledge" which was had (knowledge of what), and further, the circumstances founding the allegation of anyone's being "knowingly concerned" in the misleading conduct. Also, that allegedly misleading conduct should be more precisely identified.

Then there is para 42C, which hinges on the making of a representation, but the alleged representation has not been specified. The reader's attention is invited to paras 33 and 34. The representation may be said to be that the first plaintiff had approved a proposal for the further development of the centre. But how any such approval arose is not clearly spelt out.

Paragraph 37A refers to "clear conduct of advanced schematic drawings" and the appointment of "a number of consultants preparing the necessary reports and submissions to the Logan City Council". That seems to suggest that the proposal was still at the preparatory stage, albeit perhaps advanced, and that the first plaintiff may not have yet "approved" its presentation to the Council. Whatever the position actually being advanced or intended to be advanced, it should be particularized with much greater clarity and certainty than presently emerges from para 37A.

1. The alleged breach of contract case has not been adequately pleaded. For example, the basis of the knowledge alleged in para 45 should be properly particularized (see para 8 above), as should be the nature of the effect alleged in (i), the nature of the change alleged in (ii), and the nature of the effect alleged in (iii). More fundamentally one queries the relevance of the allegation of knowledge in para 45. One would have thought the relevant allegation was of breach of the covenants alleged in 44A, and if so, then the nature of the breach should be specified. As to the implied terms in para 46, the basis of the alleged breaches should be particularized. Paragraph 48A is entirely broad: who are the agents, when and how did they give the relevant "indications", and were they given orally or in writing or by some conduct or other? Is there a difference between an "indication", a statement, a representation? The position is unclear.
2. Going on from the last mentioned paragraphs, the meaning of the first sentence in para 48B is not clear. The breach alleged in para 49 has not been particularized. Paragraph 49A is argumentative and prolix. Paragraph 50 alleges knowledge, without particularization, and alleges "meaningful changes to traffic" without specifying what they would be. In para 51, the allegation that the plaintiffs "knew or should have known" suggests a cause of action in negligence or breach of duty, which is not however mounted: one queries therefore the relevance of the allegation.
3. Finally, I refer to paras 56-58A.

The reference in para 56 to "breach" of s 43 of the Retail Shop Leases Act is inappropriate. That section simply accords a right to compensation if certain things happen.

One assumes that para 56A harks back to what has gone earlier, although that is not clear and should be clarified.

Then para 56B ties the right to compensation to paras 11-19A, which are largely historical narrative, vulnerable to criticism for the reasons expressed in para 4 above. What precise "actions" are in mind here?

I have already dealt with the difficulty involved in the presently framed claim for damages or compensation (para 57).

Paragraphs 58 and 58A are objectionable for "pleading" evidence.

Much of the allegation in paras 59-64A concerns irrelevant negotiations between the parties, arguably relevant in some circumstances where mitigation of loss is in question, but seemingly not here.

[10] This is not a case where one could confidently conclude that the plaintiffs have no arguable claims. Rather it is a case where their apparent claim has not been advanced in a comprehensible, concise form appropriate for consideration both by the court, and for the purpose of the preparation of a response by the plaintiffs. Mr Alford relied on cases which emphasize the need for circumspection in approaching the striking out of a pleading. On my assessment, this pleading is substantially flawed, and departs so substantially from the ordinary requirements established by the Uniform Civil Procedure Rules, that it should be struck out, but with leave to the defendants to replead.

[11] I propose allowing 60 days for the preparation of a further amended pleading. A lot of careful work will be needed and it is critical that this time, the pleading emerge in proper order. Costs should follow the event.

[12] I therefore order:

1. that the third amended defence and counter claim filed 2 July 2010 be struck out;
2. that the defendants have leave to deliver a fourth amended defence and counter claim within 60 days; and

3. that the defendants pay the plaintiffs' costs of and incidental to the application, to be assessed on the standard basis.