Singh v Singh [2004] NSWSC 850 | Case summary

5239/99 BALJINDER SINGH -v- ANIL SINGH and ORS JUDGMENT 1 MASTER: These proceedings were instituted by statement of claim filed by the Plaintiff Baljinder Singh on 24 December 1999. By notice of motion filed on 4 April 2003 the Defendants Anil Singh, Subashni Singh and Actgrove Pty Ltd sought substantively an order that the statement of claim be struck out pursuant to Part 15 rule 26 of the Supreme Court Rules. Subsequently, on 15 May 2003, certain orders and directions were made by consent of the parties, including an order to the effect that the Plaintiff file and serve an amended statement of claim by 6 June 2003. 2 Such an amended statement of claim was in fact filed on 11 August 2003. Although no fresh notice of motion has been filed in respect to that pleading, the parties have been content to treat the notice of motion filed on 4 April 2003 as applying to the amended statement of claim, and the Defendants now seek an order that the amended statement of claim be struck out, and seek consequential relief. 3 The present application is brought pursuant to the provisions of Part 15 rule 26 of the Supreme Court Rules, upon the grounds that the amended statement of claim does not disclose a reasonable cause of action, and that, in any event, the form of the pleading is embarrassing. 4 At the conclusion of the hearing before me, Counsel for the respondent Plaintiff sought and, in the face of opposition in that regard by the applicant Defendants, was granted an opportunity to present further written submissions. The Defendants were also given an opportunity to respond to such written submissions. Those submissions, which have now been received from Counsel for the respective parties, will be retained in the Court file. 5 By the amended statement of claim the Plaintiff purports to plead a number of causes of action against the Defendant. Those causes of action relate to the conduct of the various parties concerning the acquisition of a franchise of a 7-Eleven Store at 103 Oxford Street, Darlinghurst ("the franchise"). 6 The Plaintiff, by the amended statement of claim, appears firstly to be asserting a cause of action in contract (paragraphs 1 to 23). 7 The Plaintiff then (paragraph 24) seeks to assert a cause of action in deceit, in that regard relying upon the facts set out in the foregoing paragraphs in the pleading, by alleging that, [T]he First and Second Defendants committed the tort of deceit against the Plaintiff by knowingly made [ sic ] false statements to the Plaintiff with an intention to induce him into investing and working in the franchise. 8 The Plaintiff provided particulars of the allegedly false statements (paragraphs 27, 28 and 29), and alleged (paragraph 30), [T]he First and Second Defendants knowingly made false representations to the Plaintiff with an intention to induce him into [ sic ] continue working in the franchise and to not exercise his rights as a director of the Third Defendant to protect his interest in the Third Defendant and the franchise. 9 The Plaintiff then provided particulars of the alleged false representations (paragraphs 31, 33-37). 10 By paragraph 38, the Plaintiff asserts causes of action grounded upon the statutory provisions of section 42 of the Fair Trading Act 1987 (New South Wales) (incorrectly designated as the Fair Trading Act 1984) and section 52 of the Trade Practices Act 1974 (Commonwealth). Particulars of the conduct of the Defendants alleged by the Plaintiff to be false and misleading (and thus to activate the foregoing statutory provisions) are then set forth (paragraphs 39 and 40). 11 By paragraph 41 the Plaintiff asserts a cause of action grounded upon the statutory provisions of section 51AA of the Trade Practices Act, alleging conduct on the part of each of the three Defendants "which was unconscionable", in breach of the foregoing section. Particulars of such conduct are then set forth in paragraph 42. 12 Paragraph 43 asserts that the Plaintiff suffered loss and damages [sic] as a result of the conduct of the First and Second Defendants. Particulars of such loss and damage are set forth in paragraph 44. By paragraph 45 the Plaintiff claims exemplary damages. Paragraphs 45.1 to 45.7 appear to be in the nature of particulars supporting the entitlement of the Plaintiff to exemplary damages. 13 The Plaintiff claims declaratory relief concerning his alleged entitlement to be allotted 50 per cent of the shares in the Third Defendant (prayer 1); "An order that the first defendant holds his share in the third defendant on trust for the Plaintiff" (prayer 2); an order for an account in respect to the Plaintiff's "loss [sic] profits of the business of the third defendant" (prayer 3); an order for an account in respect to the proceeds of the sale of the franchise (prayer 4); a declaration that the meeting removing the Plaintiff as a director of the Third Defendant was invalid (prayer 5); an order that "the Defendants account to the Plaintiff for an amount of $58,000 plus interest at the Supreme Court Rate" (prayer 6); an account for what is alleged to have been underpayment of wages and employment benefits (prayer 7); damages, including damages pursuant to section 82 of the Trade Practices Act, and damages pursuant to section 68 of the Fair Trading Act and exemplary damages (prayer 8); interest (prayer 9); costs (prayer 10); and further or other relief (prayer 11). 14 The grounds upon which the applicant Defendants seek to have the amended statement of claim struck out are set forth in the letter of 19 September 2003 from the Solicitors for the Defendants to the Solicitors for the Plaintiff (exhibit 1 in the hearing before me). 15 In respect to the material pleaded in paragraphs 1 to 23, the Defendants submit that much of that material is embarrassing and/or pleads no reasonable cause of action, and should be struck out. The parts of the pleading complained of are paragraphs 1, 2, 6 (as well as the new matter in 6), the second line in 7(b), the second sentence in 7(e), the second and third sentences of 12, and the second sentence of 13, 15, 18, 19, 20, 21, 22 and 23. 16 In respect to the alleged cause of action in contract, only paragraphs 3, 4, 5, 7, 8, 9, 10, 12 and 13 appear to attempt to plead such a cause of action. Paragraphs 1 and 2 may be regarded as being in the nature of prefatory averments. However, paragraphs 6,11 and 14 to 23 are clearly immaterial to a cause of action in contract, and should be struck out as embarrassing. (The allegation contained in paragraph 21 may be relevant to the relief claimed in prayer 5, but there is no substantive allegation in the body of the pleading which could support such relief.) 17 The next complaints of the Defendants regarding the pleading (as identified in the letter of 19 September 2003) relate to various aspects of the prayers for relief. Those complaints are in respect to the claim for wages (prayer 7); claims for loss of profits and sale of business (prayers 3 and 14); claim for an account for $58,000 (prayer 6); declaratory relief for allegedly invalid removal as a director (prayer 5). 18 In respect to each of the foregoing prayers for relief the complaint of the Defendants is that there is nothing in the substance of the pleading that supports the relief claimed. 19 It is my understanding that, strictly, a prayer for relief does not constitute part of the pleading. But, in any event, a court of equity is always enabled to mould its relief to the case established by a plaintiff. The case of a plaintiff cannot be defeated by the fact that he makes in his pleading a claim for relief which ultimately is not supported by the evidence or is otherwise found to be inappropriate to that case. 20 Accordingly, I am not disposed, merely on account of the nature of the relief claimed or on account of the fact that it may be inevitable that the Plaintiff will not obtain relief precisely (or even generally) of the nature claimed, to strike out any part of the pleading. 21 The next complaint of the Defendants relates to what is described in the letter of 19 September 2003 as the First Claim in deceit, being the claim pleaded in paragraphs 25 to 29.4 and 40 to 45. 22 Paragraph 24 of the pleading is in the following terms Further and in the alternative, relying on the facts set out in paragraphs 1 to 23 herein, the First and Second Defendants committed the tort of deceit against the Plaintiff by knowingly made [ sic ] false statements to the Plaintiff with an intention to induce him into investing and working in the franchise. 23 Paragraphs 25 and 27.1 to 27.5 (there being no paragraph 26) set forth the particulars of the alleged false statements. Paragraph 28 sets forth the conduct of the Plaintiff performed by him in reliance on the false statements allegedly made by the First and Second Defendants. Paragraph 29 sets forth particulars of the falsity of the statements. 24 In this regard it is a further complaint of the Defendants that paragraphs 27.3 and 27.5 plead matters which do not appear to have any causal connection with the loss alleged in paragraphs 43 to 44.4. 25 The tort of deceit as presently recognised has its origins in the decision of the Court of King's Bench (constituted by Lord Kenyon CJ and Grose and Buller JJ) in Pasley v Freeman (1789) 3 TR 51; 100 ER 450, where the tort was held to lie whenever one person, by a knowingly false statement, intentionally induced another to act upon it to his detriment. It should be recognised that only representations of fact are actionable as deceit, and that the action for deceit requires proof of fraudulent intent. This fundamental basis of the tort should be contrasted with a mere promise, breach of which is not actionable either as a tort or on any other basis than contract. (See Fleming, The Law of Torts, 9 ed. (1998), 694f.) 26 In the instant case the alleged false statements all relate to future conduct of the parties and proposed arrangements between them. None of those statements refer to any facts which are asserted to have been in existence at the time when the statements were made. The material which is provided as purported particulars of the false statements, allegedly knowingly made by the First and Second Defendants to the Plaintiff with an intention to induce him into investing and working in the franchise, cannot support the tort of deceit. In consequence, therefore, paragraphs 24 to 29.4 will be struck out. It will be appreciated that the Plaintiff will not thereby be deprived of reliance upon those alleged facts, if established, in support of his cause of action in contract. 27 The Defendants' next complaint concerns what they describe as the Second Claim in deceit, being paragraphs 30 to 33.2 and 43 to 45. 28 Paragraph 30 is in the following terms, Further, the First and Second Defendants knowingly made false representations to the Plaintiff with an intention to induce him into continue [ sic ] working in the franchise and to not exercise his rights as a director of the Third Defendant to protect his interest in the Third Defendant and the franchise. 29 Paragraph 31 purports to provide particulars of the alleged false representations. Those particulars assert a failure on the part of the First and Second Defendants to inform the Plaintiff of certain matters. I am in agreement with the submission of the Defendants that the alleged particulars of false representations are no such thing. Paragraphs 31.1 and 31.2 do not allege any representations made by the First and Second Defendants to the Plaintiff, let alone any false representations being made. Similarly, the representations asserted in paragraphs 33.1 and 33.2 to be false were not representations alleged to have been made to the Plaintiff. So far as I can glean, the most that is being asserted by those paragraphs is that the First and Second Defendants failed to perform their side of an alleged bargain. Accordingly, those paragraphs will be struck out. 30 The Defendants in regard to the Second Claim in deceit also complain concerning paragraphs 43 to 45. In this regard I would repeat what I have already said concerning those paragraphs, which allege loss and damage suffered by the Plaintiff by reason of the conduct of the First and Second Defendants. 31 The Defendants complain concerning paragraphs 34 to 37.4. Paragraph 34 is in the following term, Further, the First and Second Defendants knowingly made false representations to the Plaintiff and third parties with an intention to force the Plaintiff out of any employment with the Third Defendant and out of sharing in any profits from the operation of the Third Defendant. 32 Paragraphs 35 to 35.4 purport to provide particulars of the false representations, which include assertions that the First and Second Defendants represented to the franchisor that the Plaintiff was dishonest and unreliable, that the First and Second Defendants made false representations to the police and the Local Court for the purpose of applying for and obtaining orders against the Plaintiff in [sic] an Apprehended Violence Order, that they failed to inform the Plaintiff that they intended to remove him as director of the Third Defendant and that they failed to inform the Plaintiff that they intended to terminate his employment with the Third Defendant in the franchise. 33 Paragraph 36 then pleads that the Plaintiff relied on the false representations made by the First and Second Defendants, particulars of such reliance (essentially the absence of any conduct by the Plaintiff to remedy the situation) are then set forth. Paragraph 37 purports to provide particulars of the falsity of the foregoing representations. 34 I am in agreement with the submission on the part of the Defendants that it is unclear what cause of action is being sought to be pleaded by paragraphs 34 to 37.4. They certainly do not amount to the tort of deceit, since there is no allegation, or even suggestion, that the Plaintiff himself was deceived. 35 These paragraphs clearly do not properly plead any cause of action and must be struck out. 36 The balance of the amended statement of claim attempts to plead causes of action grounded upon breach of section 42 of the Fair Trading Act 1987 (New South Wales) and upon breaches of section 52 and section 51AA of the Trade Practices Act 1974 (Commonwealth). The Plaintiff alleges in paragraph 38 that, in reliance upon the facts pleaded in paragraphs 1 to 23, the First and Second and Third Defendants "engaged in conduct which was false and misleading and in breach of" the foregoing statutory provisions. Particulars of what is described as "the misleading and deceptive conduct" are set forth in paragraph 39. Paragraph 40 alleges that the Plaintiff relied on the representations of the Defendants, and paid to the Defendants $58,000, guaranteed the borrowings of the Third Defendant, and commenced and remained in employment with the Third Defendant. 37 Paragraph 41 alleges that, relying on the facts pleaded in paragraphs 1 to 23, the First and Second and Third Defendants engaged in conduct which was "unconscionable in breach of section 51AA of the Trade Practices Act 1974 (Cth)". Particulars of that allegation of unconscionable conduct are set forth in paragraph 42. 38 Paragraph 43 alleges that the Plaintiff suffered loss and damages [sic] as a result of the conduct of the First and Second Defendants. Particulars of such loss and damage are then set forth in paragraph 44. By paragraph 45 the Plaintiff claims exemplary damages. The bases upon which the Plaintiff asserts an entitlement to exemplary damages are then set forth in paragraphs 45.1 to 45.7. 39 The Defendants submit that paragraph 38 is embarrassing, in that it simply repeats a stream of evidence without any differentiation of that evidence into material facts comprising the elements of any recognised cause of action. 40 The Defendants point to the fact that the pleading does not allege that the asserted misleading and deceptive conduct took place in trade and commerce. It is submitted on behalf of the Defendants that it is not self-evident that a transaction concerning the ownership of a company, which transaction took place before the company started trading, would necessarily be conduct in trade and commerce. Further, the Defendants point to the fact that although paragraph 38 includes reference to the Third Defendant, none of the subsequent particulars or allegations in the pleading suggest that the Third Defendant made any misrepresentation or did anything that was misleading or deceptive. 41 It was essentially in respect to those parts of the pleading asserting a cause of action grounded upon the breach of the foregoing statutory provisions, and the complaints of the Defendants concerning that aspect of the pleading, that the Plaintiff sought the opportunity to place before the Court additional submissions in writing, in support of the pleading. As I have already recorded, that application, although opposed by the Defendants, was, in the event, granted. 42 I have had the benefit of receiving written submissions from Counsel for the Plaintiff and written submissions in response thereto from Counsel for the Defendants. Those documents will be retained in the Court file. 43 I am in agreement with the submission of the Defendant that paragraph 38 is embarrassing. It does not differentiate between the conduct of each of the three Defendants, nor between the provisions of each of the two statutes. Neither does it plead with specificity or particularity the facts relied upon in support of the alleged statutory breaches by each of the three Defendants. It is not in my view sufficient for the Plaintiff to incorporate by reference the totality of the facts pleaded in paragraphs 1 to 23. I consider that for each of the foregoing reasons paragraph 38 is embarrassing and must be struck out. 44 Other problems, however, confront the Plaintiff in reliance upon those statutory causes of action which he attempts to plead. Even assuming that the pleading did include the absent allegation that the conduct complained of took place in trade or commerce, the Plaintiff is faced with a number of further difficulties. Not least of those is that the statutory provisions of the Trade Practices Act relate to corporations, and do not on their face relate to natural persons. It is not disputed that the First Defendant and the Second Defendant is each a natural person. 45 A further problem confronting the Plaintiff is the consequence of the amendment of the Trade Practices Act in 1998. 46 The Financial Sector Reform (Consequential Amendments) Act 1998 introduced section 51AF into the Trade Practices Act 1974 and Part 2 Division 2 into the Australian Securities and Investments Commission Act 2001. 47 The effect of section 51AF, which came into force on 1 July 1998, is, as will shortly emerge, to preclude the Plaintiff from relying upon the statutory cause of action grounded upon alleged contraventions of section 52 of the Trade Practices Act on or after 1 July 1998. Thus, any claim under section 52 must be confined to alleged conduct of the Defendants before that date. The pleading does not distinguish between conduct before that date and conduct on and after that date. To that extent, the pleading is embarrassing.

(Since the phrase "financial service" in the Trade Practices Act has the same meaning as in Division 2 of Part 2 of the Australian Securities and Investments Commission Act , it is unnecessary for me to proceed to a consideration of the definition contained in the Corporations Act 2001.) 52 On behalf of the Defendants it was submitted that the provisions of section 52 of the Trade Practices Act are expressly excluded from conduct "in relation to financial services", and that that latter phrase encompasses the conduct complained of by the Plaintiff in the instant case concerning, inter alia, the alleged failure of the Defendants to allot or transfer to the Plaintiff any shares in the Third Defendant. 53 I have been taken to a useful summary of the legislative history of section 51AF of the Trade Practices Act in the judgment of Austin J in Cleary v Australian Co-operative Foods Ltd [1999] NSWSC 991; 32 ACSR 701 at 730-731. 54 The Plaintiff has also referred to two decisions of the Federal Magistrates Court, Mahoney v AGD Mining Ltd [2002] FMCA 237 and Walker v Lifespan Financial Planning [2003] FMCA 519 (19 November 2003), as well as a decision of the United States Court of Appeals, Seventh Circuit, Goodman v Epstein (1978) 582 F. 2d 388. I would observe that neither of the foregoing Australian decisions is inconsistent with my conclusion that the alleged conduct of the Defendants concerning the interest of the Plaintiff in the Third Defendant by way of allotment to him of shares in that company, is, in consequence of that alleged conduct being "in relation to financial services", excluded from the ambit of section 52 of the Trade Practices Act. In an event, each of those cases was essentially decided upon its own facts. Further, not only was the American case decided upon its own facts, but the decision in that case also appears to have depended upon the provisions of American legislation the terms of which were not made available during the present hearing and which is not necessarily comparable to the various statutes of the Commonwealth and of New South Wales which are asserted by the Plaintiff to ground his cause of action. 55 Whilst, as submitted on behalf of the Plaintiff, there appears to be little authority directly on this point, I am satisfied that, to the extent that the Plaintiff asserts conduct on the part of the Defendants that is misleading or deceptive, or is likely to mislead or deceive, in relation to the allotment of shares in the Third Defendant, any redress to which the Plaintiff might otherwise have been entitled, grounded upon section 52 of the Trade Practices Act, is denied him in consequence of the provisions of section 51AF. 56 It will be appreciated that, even if I am incorrect in the conclusion which I have just expressed, the pleading will not thereby be saved, since section 52 can afford redress to the Plaintiff only in respect to the conduct of the Third Defendant, which is a corporation, and not in respect to the conduct of the First and Second Defendants, each of which is a natural person. Further, as I have already observed, unless the conduct complained of is separated, so as to expressly identify, firstly, which of the three defendants is asserted to have acted in contravention to each of the two statutes, and secondly, the dates upon which each of those parts of the conduct complained of occurred (being either before or on and after 1 July 1998, when section 51AF came into effect), the pleading, even if not demurrable, is certainly embarrassing. 57 Although section 51AA (prohibiting a corporation from engaging in conduct that is unconscionable) is not caught by the foregoing provisions of section 51AF (since section 51AA does not come within Part V, but comes within Part IVA of the Act), nevertheless, section 51AAB provides (in subsection (1)) that section 51AA does not apply to conduct engaged in in relation to financial services, and (in subsection (2)) that section 51AB does not apply to the supply, or possible supply, of services that are financial services. (I note that the pleading does not, in terms, purport to invoke the provisions of section 51AB but only the provisions of section 51AA, which expressly (by subsection (2) thereof) does not apply to conduct that is prohibited by section 51AB or 51AC.) 58 For the reasons which I have outlined in respect to the exclusion of conduct "in relation to financial services" in respect to section 52 of the Act, I consider that the purported reliance by the Plaintiff on a cause of action grounded upon the statutory prohibition against unconscionable conduct set forth in section 51AA is excluded by the express provision of section 51AAB. 59 The Plaintiff, however, submits that even if the statutory causes of action grounded upon the foregoing provisions of the Trade Practices Act be struck out, he is still entitled to rely upon the provisions of section 42 of the Fair Trading Act. That section which replicates, in the case of a person, the provisions of section 52 of the Trade Practices Act, in the case of a corporation, provides, in subsection (1), A person shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. 60 For the reasons which I have already outlined, I consider that those parts of the pleading which seek to assert a cause of action grounded upon the foregoing provision of the Fair Trading Act are embarrassing and must be struck out. 61 In the written submissions lodged on behalf of the Plaintiff, it was stated that should section 52 of the Trade Practices Act be excluded from the pleading then the Plaintiff would consider seeking leave to amend the present pleading in order to include a claim under section 995 of the Corporations Law [sic] (despite the fact that that section was repealed in 2001). 62 I consider it to be premature for any leave to be given for the Plaintiff further to amend the present pleading. If the Plaintiff is desirous of filing a further amended statement of claim, then, as has been observed by Counsel for the Defendants, the appropriate course is for a draft of the proposed fresh pleading to be provided to the Defendants; and if the Defendants do not consent to the filing of a pleading in accordance that draft, for application then to be made by the Plaintiff for leave to file such a further pleading. 63 I make the following orders: 1. I order that paragraphs 6 and 11, paragraphs 14 to 23, paragraphs 24 to 29, paragraphs 31 to 33, paragraphs 34 to 37, and paragraphs 38 to 42 in the amended statement of claim be struck out. 2. I order that the Plaintiff pay the costs of the Defendants of the notice of motion filed by the Defendants on 4 April 2003.

Singh v Singh

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Judgment (8 paragraphs)

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