Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA

Citation : TRISTRAM -v- HYUNDAI AUTOMOTIVE DISTRIBUTORS AUSTRALIA PTY LTD & ANOR [2003] WADC 289

Practice and procedure - Scope of the indorsement of claim in writ - Whether causes of action in statement of claim outside the scope of the indorsement - Order 20 r 2 of the Supreme Court Rules - Turns on own facts

Rules of the Supreme Court, O 6 r 1, O 20 r 2(2), O 21 r 5(5)

Trade Practices Act 1974 (Cth), s 52, s 74A(3), s 74A(4), s 74B, s 74D, s 74J, s 75AD, s 82

ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd) v Hetherington & Anor [2001] WASCA 235

ABB Service Pty Ltd v Hetherington & Anor [2001] WASCA 417

BHP Iron Ore Pty Ltd v Westraint Resources Pty Ltd [2002] WASCA 18

Byass v Energy Power Systems Australia Pty Ltd [2003] WASC 160

Morgan v Banning (1999) 20 WAR 474

Stone James v Pioneer Concrete (WA) Pty Ltd [1985] WAR 233

The Bell Group Ltd (in liq) v Westpac Banking Corp [2001] WASC 315

Girrawheen Tavern v Joseph [2003] WASCA 224

Samways v Ansett Australia Ltd [2001] WASCA 140

1 WHEELER JA: I have had the advantage of reading in draft the reasons for decision of McLure JA. I agree with those reasons and have nothing to add.

2 MCLURE JA: The appellant appeals from a decision of Learned Commissioner Reynolds dismissing an appeal by the appellant from an order made by Deputy Registrar Harman on 5 June 2003 striking out the appellant's substituted statement of claim filed on 18 March 2003 ("the statement of claim").

3 The first respondent applied to strike out the statement of claim on the grounds, inter alia, that it pleaded causes of action that were outside the scope of the indorsement contrary to O 20 r 2(2) of the Rules of the Supreme Court ("Rules") and were statute barred.

4 The writ was issued on 4 May 2001 against Hyundai Australia Pty Ltd as the first defendant and Summerrain Pty Ltd as the second defendant. By order made on 22 April 2002 the writ was amended by substituting Hyundai Automotive Distributors Australia Pty Ltd (the first respondent) for Hyundai Australia Pty Ltd. The writ contained an indorsement of claim that materially provides:

"The Plaintiff's claim is for damages for personal injuries sustained as a result of a motor vehicle accident on or about 7 May 1998. The Plaintiff sustained physical and psychological injuries in the accident, which arose as a direct result of the negligence of the First Defendant in supplying to the Plaintiff a Hyundai Excel motor vehicle which was inherently defective and not of merchantable quality."

5 The appellant pleads in her statement of claim that she purchased a used 1995 Hyundai Excel vehicle ("the vehicle") in July 1996 from someone other than the first respondent and suffered personal injuries in an accident on 4 May 1998 caused by a defect in the vehicle. The defect is pleaded as cracking of the subframe resulting in difficulties with directional control and steering of the vehicle. It is also pleaded that as a result of severe steering problems when driving at high speed, the appellant put the car in for repair and on or about 18 September 1997 was told by the first respondent (and saw) that there was cracking in the subframe and that another piece of metal would be inserted to reinforce it. That repair work was undertaken by the second respondent.

6 The statement of claim pleads that the first respondent engages in the business of the importation, supply and distribution of Hyundai motor vehicles throughout Australia and is a deemed manufacturer pursuant to s 74A(3) and (4) of the Trade Practices Act 1974 (Cth) ("TPA").

7 In addition to a claim under the general law of negligence, the statement of claim pleads breaches by the first respondent of:

(1) s 52 of the TPA, the misleading and deceptive conduct said to arise from the first respondent's failure to effect a product recall or otherwise warn of the defect;

(2) s 74B of the TPA, alleging the vehicle was not reasonably fit for the purpose for which it was acquired;

(3) s 74D of the TPA, alleging the vehicle was not of merchantable quality;

(4) s 75AD of the TPA, alleging the first respondent supplied goods manufactured by it which had a defect causing a person to suffer injury.

8 It was not in dispute that a claim for damages under s 82 of the TPA based on a contravention of s 52 had to be commenced within three years after the day on which the cause of action accrued.

9 Causes of action under each of ss 74B and 74D of the TPA have a three-year limitation period which commences on the day on which the owner of the goods first became aware or ought reasonably to have become aware that the goods were not reasonably fit for the purpose for which they were supplied in the case of s 74B and were not of merchantable quality in the case of s 74D (s 74J of the TPA).

10 An action pursuant to s 75AD of the Act, subject to being commenced within 10 years of the supply by the manufacturer of the goods whose supply and defect is relied on in the action, must be commenced at any time within three years after the time the person became aware, or ought reasonably to have become aware, of the alleged loss, the defect and the identity of the person who manufactured the goods.

11 Deputy Registrar Harman concluded that the TPA causes of action were statute barred at the time of the issue of the writ on 4 May 2001. It seems he concluded that time began to run either from the date of purchase of the vehicle in July 1996 or (at the latest) November 1997 when the appellant became aware of the defect. The Deputy Registrar did not consider whether the substituted statement of claim exceeded the scope of the indorsement. Commissioner Reynolds took the view that the outcome of the appeal primarily turned on the question of whether or not the statement of claim exceeded the scope of the indorsement.

12 The appellant's grounds of appeal and outline of written submissions fell well short of the standard required in this Court. They served to obscure rather than identify the matters in issue in the appeal. The grounds of appeal provide:

"1. The learned Commissioner erred in law in concluding that the substituted Statement of Claim went beyond the scope of the Indorsement of the claim in the Writ having regard to the principles of the Full Court in Morgan v Banning (1990) 20 WAR 474, which decision was also drawn to his Honour's attention;

2. (abandoned);

3. Further and in any event, the Appellant indicated readiness and willingness to amend the Indorsement of claim to the extent necessary to cure its alleged defects. ...".

13 On the appellant's application at the hearing, the Court granted leave to delete ground 3 as formulated above and in its place insert "The trial Judge erred in refusing the appellant's application to amend the indorsement of claim".

14 The Commissioner dealt with each of the statutory causes of action in turn. He concluded there was no express or implied reference in the indorsement sufficient to support a claim for damages under s 82 based on a breach of s 52 of the TPA. On the claim under s 74B he said:

"The indorsement of claim makes no express reference to any particular purpose. Clearly when a consumer buys a car it is implicit from the very nature of the goods that the consumer wants the car to be fit for the purpose of accurately steering it on roads. However, in my view an ordinary reasonably minded person whether legally qualified or not on reading the indorsement of claim would not imply any allegation in relation to a particular purpose from the wording of the indorsement of claim."

15 As to the claims under s 74D and s 75AD, he concluded that the express reference to the words "merchantable quality" and "defective" were not broad enough to support the causes of action because those terms were confined by their context to a cause of action in negligence and went to explain that plea.

16 In reaching his conclusions the Commissioner relied on the reasons and result in ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd) v Hetherington & Anor [2001] WASCA 235 (ABB No 1). That case concerned an application to strike out a writ for failure to comply with O 6 r 1 of the Rules which requires that the writ be indorsed with "a concise statement of the nature of the claim made, and of the relief or remedy required in the action". In assessing what constituted compliance with that requirement, regard was had to the functions of an indorsement of claim which were identified as follows:

"... Firstly, it marks out the perimeter within which a plaintiff may frame the statement of claim. Pursuant to O 20 r 2(2) of the SCR:

'A statement of claim must not contain any allegation or claim in respect of a cause of action unless that cause of action is mentioned in the writ or arises from facts which are the same as, or include or form part of, the facts giving rise to a cause of action so mentioned.'

If a statement of claim or a proposed amendment exceeds the indorsement, the statement of claim should be struck out or the amendment refused unless the indorsement is amended: Stone James v Pioneer Concrete (WA) Pty Ltd [1985] WAR 233 at 238.

Secondly, an indorsement in a writ has important limitation ramifications. The Limitation Act 1935 is concerned with the date of issue of the writ. Provided a writ is not a nullity, amendments can be made to a defective indorsement on the writ if the terms of the writ are wide enough to encompass the proposed amendments as they particularise, clarify or expand a cause of action already instituted: Morgan v Banning (1999) 20 WAR 474; O 21 r 5(5) SCR. An open ended or otherwise defective indorsement may be relied on to the advantage of a plaintiff who seeks to amend its writ and then its statement of claim after the expiry of the limitation provided.

Thirdly, an indorsement also provides notice to the defendant of the nature of the plaintiff's claim and the relief sought in the action. However, it is not intended to be in the nature of a pleading but only a summary of the nature of the claim: Renowden v McMullin [1970] HCA 24; (1970) 123 CLR 584 at 595.

The nature and extent of the information necessary to meet the requirement that the indorsement contain a concise statement of the nature of the claim made and the relief or remedy required does not depend upon a rigid formula. Relevant information can be conveyed in different ways and adequacy is to be determined from the indorsement as a whole."

17 The Court concluded in ABB No 1 that the indorsement was defective but subsequently gave leave to amend the indorsement (ABB Service Pty Ltd v Hetherington & Anor [2001] WASCA 417 ("ABB No 2"). As noted in ABB No 1, a defective but unchallenged indorsement may be relied on to the advantage of a plaintiff.

18 The matter before the Commissioner in this case was not whether the indorsement of claim complied with the requirements of O 6, there being no challenge to its adequacy. The only issue before the Commissioner was whether the statutory causes of action were within the scope of the indorsement.

19 That question has to be answered by reference to the terms of O 20 r 2(2) of the Rules (set out above). The statutory causes of action in the statement of claim will be outside the scope of the writ unless they are:

(a) mentioned in the writ; or

(b) arise from facts which are the same as, or include or form part of, the facts giving rise to a cause of action so mentioned.

20 It is unnecessary to decide whether the term "cause of action" is used in the sense of the factual situation which will entitle a person to approach the Court for relief or, alternatively, the various categories of factual situations which entitle a person to a remedy (such as, for example, contract, tort, restitution): see Morgan v Banning (1999) 20 WAR 474 at 484.

21 The Commissioner answered the question in issue by construing the terms of the indorsement to determine whether the statutory causes of action were expressly or impliedly included in it. That approach is not consistent with O 20 r 2(2) of the Rules. It is apparent that, provided there is sufficient factual overlap with the cause of action mentioned in the writ, a statement of claim can plead a cause of action that is not mentioned in the indorsement. That being the case, it is not determinative that the indorsement is drafted in terms that confine the facts to a specific category or head of claim, in this case negligence, or that the relevant statute is not expressly identified. What is a sufficient factual overlap is a question of degree.

22 To assess whether there is a sufficient factual overlap with the facts giving rise to the negligence claim pleaded in the indorsement, regard must be had to the material facts giving rise to the statutory causes of action pleaded in the statement of claim. However, it must be remembered that O 6 r 1(1) of the Rules does not require a plaintiff to plead in the indorsement all of the material facts giving rise to a cause of action: ABB No 2 at [25] - [26].

23 The essence of the claimed breach of s 52 as pleaded in the statement of claim is the conduct said to give rise to the misrepresentation, being the failure to effect a product recall or otherwise warn of the defect. Those facts are not expressly or impliedly pleaded or related to the cause of action pleaded in the indorsement. The s 52 claim is outside the scope of the indorsement.

24 Section 74B of the TPA concerns fitness for purpose. The elements of the cause of action are:

(1) a corporation in trade or commerce supplies goods manufactured by it to another person for resupply;

(2) the supply (whether by the manufacturer or a third party) of the goods to a consumer. (A person will be a consumer if the goods are priced at $40,000 or less or if in excess of $40,000 are of a kind ordinarily acquired for personal, domestic or household use or consumption or in the case of vehicles, the vehicle is acquired primarily for use in the transport of goods on public roads (s 4B));

(3) the goods are acquired by the consumer for a particular purpose that was, expressly or by implication, made known to the corporation;

(4) the goods are not reasonably fit for the purpose;

(5) the consumer suffers loss or damage because the goods are not reasonably fit for the purpose.

25 Section 74B (and s 74D) are in Div 2A of Pt V of the TPA in which the ordinary definition of "manufactured" is extended. The appellant claims in the statement of claim that the first respondent is deemed to have manufactured the vehicle because it permitted the name of Hyundai Corporation or a brand or mark of the Hyundai Corporation to be applied to goods supplied by it (relying on s 74A(3)(b)) or alternatively it imported Hyundai motor vehicles into Australia when it was not the manufacturer of the vehicles at a time when the manufacturer did not have a place of business in Australia (s 74A(4)).

26 There are a number of facts pleaded in the indorsement that are material to the s 74B claim, including the supply of the vehicle by the first respondent, the named brand of the vehicle and its defective nature which caused the appellant to suffer personal injuries. The first respondent contends that the statement in the indorsement concerning the first defendant supplying the vehicle to the appellant can only mean the direct supply (presumably by way of sale) of the vehicle from the first respondent to the appellant. I do not accept that submission. An indorsement is not a pleading and it should not be read narrowly: Stone James v Pioneer Concrete (WA) Pty Ltd [1985] WAR 233 at 239 per Burt CJ.

27 There was a very significant, if not almost complete, overlap with the material facts of the negligence plea foreshadowed in the indorsement and the claim under s 74B of the TPA. For example, the facts relevant to the tortious duty of care largely overlap with facts relevant to the claim that the first respondent is deemed to have manufactured and supplied the vehicle. Further, the alleged unfitness is directly linked with the obvious purpose in acquiring the vehicle, being to drive it. In addition, the factual basis for the conclusion of unfitness for purpose is the same as that relied on to support the conclusion that the goods were not of merchantable quality and were defective, concepts expressly referred to in the indorsement. As the case law reveals, the notions of fitness for purpose and merchantable quality are closely related. I am satisfied that the statutory cause of action under s 74B of the TPA arises from facts which include or form part of the facts of the negligence cause of action mentioned in the indorsement and thus, is within the scope of the indorsement.

28 The first two elements of the s 74D claim are the same as s 74B of the TPA. In addition, it is necessary to establish that the goods are not of merchantable quality and the consumer suffered loss or damage by reason thereof. It follows from my reasons relating to s 74B that the claim based on s 74D is also within the scope of the indorsement.

29 The pleaded claim under s 75AD also relies on the extended definition of "manufactured" in s 74(3) and (4). The Court below was not called upon to consider whether the extended definition applies. (I note that s 75AD is in a different part of the Act which has its own interpretation provision (s 75AA)). The elements of the cause of action under s 75AD are:

(1) a corporation in trade or commerce supplies goods manufactured by it;

(2) the goods have a defect; and

(3) because of the defect, the individual suffers injuries.

30 Assuming the extended definition arguably applies, the claim under s 75AD clearly arises from facts which include or form part of the facts giving rise to the cause of action in negligence and are within the scope of the indorsement.

31 For these reasons I would uphold ground of appeal 1, save in relation to the s 52 TPA claim. The Commissioner did not rule on the correctness of Deputy Registrar Harman's conclusion (or, if relevant, the appropriateness of determining the issue at an interlocutory stage) that the statutory causes of action are statute barred. As the matter was not addressed before this Court, it must be remitted to the Court below for determination.

32 Although it is strictly unnecessary to deal with ground of appeal 3, it is appropriate to refer to some obiter comments of the Commissioner concerning limitation.

33 Amended ground of appeal 3 claims the trial Judge erred in refusing the appellant's application to amend the indorsement of claim. The ground is misconceived. At no stage did the appellant make any such application. Counsel went no further than foreshadowing the possibility of such an application. However, the Commissioner referred to limitation matters at pars 21 and 23 of his reasons as follows:

"As at 18 March 2003 when the plaintiff filed her substituted statement of claim she was out of time for all of the causes of action under the Act included in the substituted statement of claim no matter whether the loss accrued on 29 July 1996 when she purchased the car or about November 1997 by which time she was aware of the defect or on or about 7 May 1998 when the accident occurred and the plaintiff suffered injury.

...

For all of these reasons, in the circumstances of this particular case the delivery of the substituted statement of claim cannot operate to amend the writ. Further, the indorsement in the writ should not be amended in order to allow causes of action under the Act to be pleaded because as at 18 March 2003 they were all out of time. See Weldon v Neale (1887) 19 QBD 394 and Wardley v State of Western Australia [1992] HCA 55; (1992) 175 CLR 514 at 561 - 562."

34 These remarks have to be seen in the context of the foreshadowed application which was that the appellant have leave to amend the writ by deleting the indorsement and substituting the statement of claim. I do not understand the Commissioner to be suggesting that the delivery of a statement of claim can itself operate to amend the writ. It cannot. I understand the Commissioner to be saying that he could not grant leave to amend the writ to include the statement of claim because the statutory causes of action were outside the scope of the indorsement and were statute barred at the time of the amendment application. However, it appears the Commissioner failed to have regard to O 21 r 5(5) which gives the Court a discretion in limited circumstances to amend the writ to add a cause of action that is statute barred at the time of the amendment application: see ABB No 2. Whether it would change the result depends on whether there is any material difference between the test in O 20 r 2(2) and that in O 21 r 5(5). That question is for another day.

35 I would uphold ground of appeal 1 save for the s 52 claim, allow the appeal and remit the matter to the District Court for determination of the question whether Deputy Registrar Harman erred in striking out the statutory causes of action (apart from s 52) on the ground they were statute barred.

36 PULLIN JA: The appellant issued a writ containing the indorsement set out in McLure JA's reasons.

37 Order 6 r 1(1) of the Rules of the Supreme Court states the requirements as to an indorsement. It reads:

"Before a writ is issued it must be indorsed with a concise statement of the nature of the claim made, and of the relief or remedy required in the action."

38 The nature and extent of the information necessary to meet the requirement that the indorsement contain a concise statement of the nature of the claim made and the relief or remedy required does not depend upon a rigid formula. Relevant information may be conveyed in different ways and adequacy is to be determined from the indorsement as a whole. See ABB Service Pty Ltd (formerly known as ABB Engineering Construction Pty Ltd) v Hetherington & Anor [2001] WASCA 235. The indorsement in this case discloses that the remedy claimed is damages, and the damages are for personal injuries suffered in a motor vehicle accident arising as the result of the negligence of the first defendant in supplying to the appellant the motor vehicle which was inherently defective and not of merchantable quality.

39 The appellant then filed a statement of claim. The content of the statement of claim is set out in McLure JA's reasons. This was followed by an application by the first respondent to strike out the statement of claim on the grounds, inter alia, that:

(a) it pleaded causes of action that were outside the scope of the indorsement, contrary to O 20 r 2(2) of the Rules of the Supreme Court; and

I agree with the Commissioner and McLure JA that the claim for the remedy of damages under s 82 of the Trade Practices Act, based on a contravention of s 52 of the Trade Practices Act, is not mentioned in the

indorsement in the writ and nor does it arise from facts which are the same as, or include, or form part of the facts giving rise to the cause of action mentioned in the indorsement.

40 I also agree with McLure JA that the claim for damages under s 82, based on a contravention of s 74B and s 74D of the Trade Practices Act, and the claim for compensation under s 75AD of the Trade Practices Act, are claims arising from facts which form part of the facts giving rise to the cause of action in the indorsement in the writ, and which therefore complies with O 20 r 2(2).

41 Ground 3 must be dismissed. The appellant foreshadowed an application to amend the indorsement but the Commissioner did not err merely because the appellant expressed a willingness to amend the indorsement. If the appellant wishes to apply to amend the writ and to add to the indorsement the s 82/s 52 claim or any other entirely new claim not otherwise permitted by the Rules of the Supreme Court, then a proper application will have to be made.

42 If the application to amend the indorsement on the writ is one to add an entirely new cause of action, and if it is resisted on the ground that the respondents claim to have a limitation defence, which they would have if a new writ were issued, but which would be defeated by an amendment to the existing writ, then the correct course would normally be to allow the amendment subject to a condition that it operate only from the date of amendment or to leave the question as the date from which the amendment takes effect to the trial Judge. For orders of these kinds see BHP Iron Ore Pty Ltd v Westraint Resources Pty Ltd [2002] WASCA 18 per Steytler J at [97] - [279]; The Bell Group Ltd (in liq) v Westpac Banking Corp [2001] WASC 315 at [278] - [279]; Byass v Energy Power Systems Australia Pty Ltd [2003] WASC 160 at [5] to [7].

43 Otherwise I agree with McLure JA who observes that Commissioner appears not to have had regard to O 21 r 5(5) which confers a discretion in limited circumstances to amend the writ to add a cause of action which is statute barred at the time of the amendment application.

44 I would therefore allow the appeal against the Commissioner's order in part. This involves setting aside the order and allowing the appeal in relation to the s 82/s 52 claim and remitting the matter to the Commissioner for determination of the question whether the Deputy Registrar erred in striking out the statutory causes of action apart from s 52 on the ground that they were statute barred.

• The Scope of the Indorsement (ground 1)
• Limitation
• Conclusion