Each of those proposed additional paragraphs begins with the words, "In furtherance of the said fraudulent conduct and in aggravation thereof". That is a reference to conduct which is pleaded in pars51 and 52 of the substituted statement of claim, in which it is alleged that certain representations and warranties were fraudulently made by the first respondent, either knowing them to be false or recklessly not caring whether they were true or false. That is, those paragraphs plead an action in the tort of deceit. The representations to which those paragraphs relate are, without particularising in any detail, alleged to have occurred in the years 1988 to 1990. In addition, the substituted statement of claim in par1 of the claim seeks damages and exemplary damages under s82 of the Trade Practices Act 1974 (Cth).
In support of the notice of motion an affidavit is filed which is made by Mr B Taylor, the solicitor for the applicants ("the solicitor"). Without endeavouring to read every detail in that
affidavit, the following are salient features of it. Firstly, the solicitor deposes that on the morning of 20 March 1995, he was informed by the sixth applicant that he had entered into an agreement with the secretary of the first respondent, on behalf of the first respondent, whereby for a payment of $225,000 by the first respondent to the sixth applicant, he was to "sabotage" the first to fifth applicants' claims in this action so that their application would be dismissed.
Next, the affidavit attaches a copy of the alleged agreement. That document is headed "Instructions to Trustee" and is dated 5 March 1993. It purports to be signed between the person named as secretary of the first respondent and the sixth applicant and it makes provisions to the effect of the solicitor's deposition. It also states that if "information and documentation" is provided by the sixth applicant, having the effect of the present action being dismissed or settled, certain payments would follow.
The solicitor's affidavit also deposes that he was informed by the sixth applicant that that agreement was never carried out and that subsequently in or about mid to late May 1993 he had a telephone conversation with the secretary of the first respondent in which that person informed him that he considered the agreement was cancelled but continued by saying that if the sixth applicant gave a statement to the first respondent and totally cooperated with it, the first respondent would pay him the sum of $25,000. To the extent it may be necessary, I shall return to any other factual matters deposed to in that affidavit.
The application falls for consideration in accordance with O13 rr2(1), (2) and (3) of the Rules of the Federal Court of Australia ("FCR"). Sub-rule (1) of r2 provides no impediment to the court making an amendment at the present stage of this proceeding, that is 2 weeks into what is projected as an 8 week trial. Sub-rule (2) provides that all necessary amendments shall be made for the purpose of determining "the real questions"
raised by or otherwise depending on the proceeding, or of avoiding multiplicity of proceedings. It is not contended before me that there is a case to be made in terms of the avoidance of multiplicity of proceedings.
Under subr2(3) the Court may grant leave if it thinks it is just to do so in all the circumstances.
In Instant Colour Pty Ltd v Canon Australia Pty Ltd (Heerey J, 9 December 1993, judgment no. 994/93, unreported) Heerey J dealt with matters arising on an application which led as a result of his judgment and order to a substituted statement of claim. In his judgment he dealt generally with the position of the law pertaining to the making of amendments to pleadings at what he described as the macro level and then in relation to the particular pleadings at the micro level. It is sufficient to say that the present application has not been argued before me in the same terms and that it does not really give rise to issues in accordance with the law which might be applicable to the application for leave to amend pleadings. In particular, no prejudice is asserted on the part of the respondents if an amendment is made.
For the respondent it is alleged that a submission made yesterday on behalf of the applicants (that the sixth applicant had made his own inquiries about the specific allegations of dishonesty, which in the solicitor's affidavit were said to have been levelled against the second and sixth applicants, was satisfied they were ill-founded and did not proceed with the agreement) should be taken by me as leading to an inference that all the applicants must have known of the existence of the agreement referred to in the solicitor's affidavit prior toyesterday. That is, the significance of that submission is that an issue of timing arises under the law normally applicable to an application to amend pleadings. In my view, that inference is not open because there is no basis for an assumption that the sixth
applicant had directed his inquiries to any of the other applicants. I therefore do not make that inference and I do not consider any issue of timing can be considered as arising from those contentions.
The next issue which arises is this. The case for the applicants is that post-tortious conduct, including conduct relating to this litigation, ought to be a matter which is relevant to the assessment of exemplary damages. The case in support of that proposition is made on authorities relating to defamation or false imprisonment. In particular, reliance is placed upon the decision of the High Court in Lamb v Cotogno (1987) 164 CLR 1. In that case, in the reasons for judgment of the court, reference was made to the decision in Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118, describing it as a libel action in which the Court had affirmed that in actions for tort, exemplary damages may be awarded for conduct of a sufficiently reprehensible kind. The High Court then continued at page 8 by saying that, notwithstanding the remarks of the House of Lords in Rookes v Barnard [1964] AC 1129, it was plain that what was said by the Court in Uren (supra) was not restricted to the law of libel and that the well settled judicial approach in Australia extends exemplary damages to "a wider range of torts". Their Honours placed reliance upon what was said in Mayne and McGregor on damages 12th ed (1961) at 196 in relation to such damages and in what was also said by Brennan, in XL Petroleum (NSW) Pty Ltd v Caltex Oil (Aust) Pty Ltd (1985) 155 CLR 448 at 471. In the light of what is there said, I am not prepared to conclude that exemplary damages in respect of post-tortious conduct is confined to the tort of defamation or false imprisonment and that those torts ought to be regarded as being in a special category. The critical question is whether evidence of post‑tortious conduct, which is in this case the subject of the application for further amendment to the substituted statement of claim, is conduct which is itself rightly referable to exemplary damages. If it is, in my opinion, exemplary damages can extend to such post-tort conduct.
On the next question of the relationship between the post-tort conduct and the tort in issue, my attention has been directed to Davis v Russell McVeagh McKenzie Bartleet & Co [1994] 2 NZLR 175. That was a decision of Henry J in the commercial list of the High Court of New Zealand on 13 December 1993. I have not had drawn to my attention, nor has my own research shown, that that decision has been taken on appeal or has been referred to elsewhere. In that case, a firm of legal practitioners, being one of several defendants, in an action based on the tort of deceit had made against them allegations said to be referable to exemplary damages which concerned the manner in which the litigation itself was being conducted. That conduct included: failure by them to prevent destruction of documents; concealment of written contracts; concealment of documents notwithstanding agreements reached; and compounding of the deceit by failure to discover documents. It was there held on the application to strike out the pleadings, that to support a claim for exemplary damages there must be a close factual link between the conduct complained of as justifying an award and the conduct constituting the cause of action to which it is attached. It was further held that it would be an unwarranted extension of this principle to recognise in a general way that the defendants' conduct of the litigation process, if not directly referable to the actionable wrong can found a claim for exemplary damages. Accordingly, the relevant specific paragraphs of the statement of claim were struck out.
In the course of his reasons for judgment, Henry J referred to the primary purposes of exemplary damages being to punish for outrageous conduct and to deter, in order to mark in an appropriate way the contumelious disregard of the plaintiff's rights. He emphasised that the unusual features of the case before him were that all the conduct occurred long after the commission of the tort and related solely to a failure to comply with discovery obligations laid down by the rules of procedure. He also said that in the many reported cases on exemplary damages
there could be found repeated references to the effect that it was the conduct exhibited in the course of committing the tortious activity itself which is at issue - that is, to mark the heinous conduct in the course of the tortious activity. He referred to authorities to which I have also been taken in the defamation area - namely, Warwick v Foulkes (1844) 12 M&W 507; Walter v Alltools Ltd (1944) 61 TLR 39 and Lamb (supra). He concluded that in all three cases the close link between the later conduct and the commission of the actionable tort was clear. He regarded the false representation cases as comparable to the defamation cases and all of them as distinguishable from the pleading which he had under consideration.
His Honour made reference (at 180) to the unreported decision of Harding v Kummer (High Court, Auckland, A 1107/80, 21 March 1983) in which a broader view of the matter was taken but concluded that in principle there may be some difficulty in justifying an award holding a defendant liable in damages for conduct not directly related in the sense that it is not part of the wrong which is the subject of the suit. To do this, he said, would be to go beyond expressing society's condemnation of that wrong and the way in which it was perpetrated and, in effect, to provide a measure of compensation for another wrong which does not form the cause of action. It is a conduct which is beyond that directly referrable to the substance of the primary complaint which, with its attendant consequences, is compensable. He concluded by finding it an unwarranted extension of principle to recognise in a general way that a defendant's conduct of the litigation process, if directed at interfering with the remedy sought by a plaintiff but not directly referrable to the actionable wrong, can found a claim for exemplary damages.
The question here, therefore, becomes whether the matters alleged in the affidavit of the solicitor, forming the subject of the application for amendment of the substituted statement of claim, are properly to be characterised as directly referrable to the
substance of the primary complaint or as to another act or wrong not part of that cause of action - namely, the tort of deceit in the present action.
The agreement referred to by way of annexure to the affidavit of the solicitor provides that if the sixth applicant made available the information or documentation leading to the result of dismissal or settlement of the action, a payment would be made. It did not in its terms require that the sixth applicant give evidence of untruths or conceal evidence from the court. Indeed, if the sixth applicant had taken action to provide information or documentation having the required effect the other applicants would have had to agree to the dismissal of the action, it having been listed for trial on 3 May 1993, or have entered into the settlement agreement which the annexed agreement proposed.
So far as the alleged offer of $25,000 is concerned, that was for a statement by the sixth applicant to the first respondent and total co-operation by him with it. Again, in its terms, this offer does not require the sixth applicant to give evidence of untruths. However, in his affidavit the sixth applicant says that the purpose of the agreement was to "sabotage" the claims of the other applicants so that their application would be dismissed. That is clear evidence that the alleged actions of the respondents were directions to preventing the honest truth emerging. That is, that the respondents object was to conceal the tort. It is this which the applicants submit provides the link between the action of deceit and the subsequent conduct of which complaint is now sought to be made.
I am unable to accept that submission. All the conduct which is referred to in the proposed pleadings occurred approximately 3 years after the date on which the commission of the tort of deceit is alleged. Taken at its worst, that alleged conduct relates to alleged interferences with the course of justice, which may or may not attract another cause of action or criminal
consideration. I have not been addressed on those possibilities other than by way of general reference. In my opinion, so far as the application to amend this pleading is concerned, that subsequent conduct is properly to be seen as conduct which is beyond that directly referable to the substance of the primary complaint in the tort of deceit.
For those reasons I would not accede to the application for the amendment of the substituted statement of claim.
My orders are that the notice of motion for amendment of the substituted statement of claim be dismissed and, secondly, that the costs of the application be in the cause.
31 MARCH 1995
SIMILAR FACT EVIDENCE OBJECTION
EVIDENCE - admissibility and relevancy - similar facts - whether logically probative of facts in issue - whether proof of system or practice.
The applicants seek to have admitted the evidence of William Frederick Holman which has been heard on a voir dire. The evidence was led on the basis that all of it was admissible similar fact evidence. Objection is taken to its admissibility. Two recent decisions in this Court have addressed the law relevant to the determination of the basis upon which similar fact evidence is admissible. They are Jaldiver Pty Ltd v Nelumbo Pty Ltd (1993) ATPR (Digest) 46-097 and D F Lyons Pty v Commonwealth Bank of Australia (1991) 100 ALR 468. My attention was directed to an article by Frank Bates in "Similar Facts in Civil Cases" 108 Law Quarterly Review 200, in which it is concluded that the decision in Lyons (supra) represents a new development in the law relating to similar fact evidence. As pointed out in that article at 204, Gummow J in Lyons (supra) at
477, relied upon what was said by Rowland J in Peet & Co Ltd v Rocci [1985] WAR 164 at 172-6, to the effect that he was not convinced that the rule which allowed the reception of similar fact evidence applied to similar statements. That aspect was not put in argument before me. However, at the same page Gummow J in Lyons (supra) also relied upon what was said by Beaumont J in Fisher v Commonwealth Bank of Australia (11 April 1990, judgment no.286/1990, unreported), where he drew a distinction between discussions between A' and other witnesses which could be of some probative value as tending to establish the general tenor or thrust of discussions between A' and B', and the failure of such material to be probative of the particular terms of the conversation that took place between A' and `B' (the fact in issue), the particular terms being of critical importance because it was they which were relied upon to constitute the alleged misrepresentations founding the case. That aspect was relied upon, among others, in submissions for the respondents. Apart from saying that, however, it is not necessary for me to develop a statement of the law relevant to the matter requiring ruling beyond those which appear in Jaldiver (supra) and Lyons (supra) and subsequent references made in these reasons.
I accept that it is of critical importance to the determination of the probative value of the similar fact evidence to be clear in relation to the nature of the inquiry; that is to identify the matter which is in issue. Central to dealing with the ruling is the question whether in the particular circumstances of the case before me the similar fact evidence is logically relevant to the fact in issue: Jaldiver (supra) at 53401.
(1) Evidence of representations by first respondent to Mr Holman:
In order to determine that, it is necessary to deal with the evidence of Mr Holman on the voir dire in accordance with the issues which it purports to address. The first main aspect of his evidence is that which addresses six representations made to him which are said to be logically probative of representations in issue in this proceeding.
The first piece of his evidence relates to the issue of prices. It is pleaded in par19.23 of the Statement of Claim that during the period from July 1988 the first respondent represented and warranted to the second and third applicants (or alternatively there was a collateral agreement upon purchase of two photocopier machines) that "laminated copies produced from the CLC machines would sell to members of the public for $12 for each A3 copy and $8 for each A4 copy". I reject the submission for the respondents that, because the evidence of Mr Holman on this matter is not precisely in terms of the pleaded representation, it cannot be logically probative. His evidence speaks of "the vicinity" in which the prices were set and, more importantly, is evidence that the first respondent made a representation to him about price and consequently that such representations were part of the system or pattern of operation of the first respondent in the marketing of CLC 100 machines.
The second aspect of the evidence of Mr Holman is that he was told by Mr Channing on behalf of the first respondent that he could expect somewhere between 5,000 and 10,000 copies without touching the machine and at 20,000 copies there was a major service which would be included in the copy price. It is conceded on behalf of the respondents that the case for the admission of this evidence is a stronger one than any other portion of the evidence. I agree with that submission. I also consider that the evidence is logically probative of a system or practice and that such probative effect is not so slight that the omission of this evidence could be justified.
Next Mr Holman's evidence addressed the question of representations concerning how long it would take for a service person to arrive and perform a service. He testified that it would be in the vicinity of two hours. The pleading in the Statement of Claim at par19.4 is that a representation was made "that the first respondent would arrange for a service technician
to arrive at wherever the CLC machines were located, within two hours of a service call having been requested". In my view it is not to the point that this evidence does not go to the making of the specific pleaded representation to the second and third applicants on behalf of the first respondent because it goes to establishing a system or practice on behalf of the first respondent in relation to the CLC 100 machine. It is evidence of a system or practice of representations on response time in relation to that machine in the same city as some of the applicant's machines. It is therefore logically probative of the pleaded fact.
The next aspect of Mr Holman's evidence of representations is in relation to the subject of the long-term possibility of the CLC 100 being superseded by other technology. His evidence was that he was advised by Mr Channing on behalf of the first respondent that this would not occur for "several years". The pleading in the Statement of Claim in par31.5 is that a representative for and on behalf of the respondents "represented and warranted that there would not be a new version of the copier for the life of the Lease". It was not in contention before me that the reference to "the Lease" referred to a lease of a CLC 100 machine, normally being of three years duration. In my opinion the evidence of Mr Holman on this aspect is logically probative of the system or practice of the first respondent in relation to the CLC 100 machine in that representations were made about its replacement. The difference between the terms of his evidence and the pleaded representation is of no material substantive difference.
Then Mr Holman testified that there was a discussion that "After two years we would get a trade-in of around $30,000, given that the price of the machine was about $50,000". In par19.7 of the Statement of Claim, it is pleaded that the representation was made that "The CLC machines would have a re-sale value of 60% of $51,950 at the end of two years after purchase". For the respondents it is contended that evidence of "trade-in" cannot be evidence of "re-sale" value so that the evidence cannot be logically probative of the fact in issue. A "sale" is "the transfer by common consent of the ownership of a thing... from one person to another in exchange for a price in money" (The Oxford Companion to Law at 1099). A "trade-in" involves the same element except that the price for money is reflected in the value of the goods received. The distinction is one without substance when the purport of the pleaded issue is that after a certain period of time the CLC machines would have a certain value. In my view the matter raised on behalf of the first respondents may go to the weight of the evidence but does not occasion this aspect of evidence to be lacking in the quality of being logically probative of the system or practice of the first respondent in making representations concerning the CLC 100 machines.
In further evidence Mr Holman testified that the copy quality which he needed was one which was good and consistent and it was his understanding from his conversations with the representative of the first respondent that he could expect consistency. In par19.21 of the Statement of Claim it is pleaded that one of the representations and warranties made between 12 - 19 July 1988 was that "Good quality colour photocopies produced by Adolphe on a demonstration CLC machine at the first respondent's premises between 12 - 19 July 1988 would be the quality that "you" would obtain from every copy produced by the CLC machines". It is apparent that Mr Holman's evidence on this aspect is not logically probative of that specific pleading. For the applicants, reliance was also placed upon a pleading in par25 of the Statement of Claim in which it was said that between August 1988 to September 1988 the first respondent represented and warranted to the second and third applicants that in respect of copies produced by the copiers "The colour quality will be flawlessly crisp and clear every time". However, that pleading is particularised with reference to the contents of the Internal Sales Manual of Canon and the evidence of Mr Holman on this aspect is not logically probative of that. I was also taken to
a question asked of the second applicant in cross‑examination whether he had been told "in the first discussions" that a copy would be of flawless character. However, the discussions referred to are those which arose in evidence-in-chief as to what he had heard in the video. I accept the submission for the first respondents that the nature of the pleadings on this aspect does not establish any logically probative basis for the admission of the evidence on this subject of copy quality.
It is therefore the position that, in relation to the evidence of representations, with the exception of the evidence relating to copy quality, I consider that there is a "similarity" of the proposed evidence in the narrower sense referred to by Gummow J in Lyons (supra) at 476 because the common characteristic which is the significant one is the system or practice of the first respondent in relation to making representations concerning the CLC 100 machine. What is sought to be proved is the business practice of the respondents - that is, their system or practice in marketing the CLC 100 - cf Turner v Jenolan Investments Pty Ltd (1985) ATPR 40-571 at 46635 citing Martin v Osborne (1936) 55 CLR 367 at 375-6.
(2) Evidence of performance of Mr Holman's machine:
I turn now to the second main division of the evidence of Mr Holman and that is evidence which relates to the performance of the CLC 100 machine which he obtained from the first respondent and operated. In par44.33 of the Statement of Claim it is pleaded that "the machine was inherently faulty" and in par44.34 that "the machine was not free of technological or other problems". This is a pleading which, by virtue of the opening words of par44 sets out the ambit of the claim on behalf of the applicants that the representations and warranties elsewhere pleaded were "false, untrue, misleading and deceptive". I do not accept the submission for the respondents that the pleading in these paragraphs can be limited to matters raised in pars33.3 (c)
and (d) relating to the drum. Ultimately, however, what is in issue is whether the representations made to the applicants, if established, were false and misleading because their particular machines were inherently faulty.
The evidence of Mr Holman on the machine performance issue includes evidence of the particular requirements of his business requiring high quality and faithful reproduction to service a specific section of the market. He referred to a folder of photographs of a scientific nature and in some cases involving computer screen enhancements. The breadth of the pleading in pars44.33 and 44.34 cannot mean that the nature of the applications dealt with by Mr Holman cannot be logically probative of inherent fault or technological and other problems, but it does limit the weight which may be given to that evidence.
On this aspect of Mr Holman's evidence it is also submitted for the first respondents that his evidence is really to be seen as evidence that the machines were in need of service, not that they were inherently faulty or free of technological or other problems. That contention also goes to the weight of the evidence.
On behalf of the applicants it is said that I should take into account that there are certain "Knowledge of Respondent" files admitted into evidence relating to worldwide performance of the CLC machines and, in addition, a "Warranty Claim File" which relates to all warranty claims on the machine. These, however, relate to the issue of the respondents' knowledge. The applicants contend, nevertheless, the evidence extends to the nature of the problems which, it is submitted, show a "striking similarity" to evidence in this case of problems with the CLC 100 machine. That similarity is a common characteristic which is not ultimately the fact in issue here. Inherent fault in the CLC 100 machine may be able to be found if the evidence concerning the large number of machines utilised by the applicants establishes
that fact. It is significant that the number of machines utilised by the applicants is numerous so that there is already a large body of evidence on the operability of the CLC 100 machine.
In my opinion this is a case where it is necessary to consider, even if the evidence passes the test of being logically probative of the claim, if it is so widely cast that it should nevertheless be excluded because it is too remotely relevant or would give rise to a multiplicity of issues so that it would be profitless to pursue it: Lyons (supra) at 475. It is true that there is a quantative element to take into consideration - Jaldiver (supra) at 53401 citing Aroutsidis v Illawarra Nominees Pty Ltd (1990) 21 FCR 500 at 509 and Shepherd v R (1990) 170 CLR 573 at 580. However, weighed as against the potential weight of the "Knowledge of Respondent" and "Warranty Claim" exhibits, the additional probative force to be derived from exploring the particular specialist applications of Mr Holman is slight. It could not be strongly probative. Furthermore it would open up a cobweb of subsidiary factual disputes: Lyons (supra) at 478. In my opinion this evidence should not be admitted.
(3) Evidence of the machine's performance on Mr Holman's business: