The statement of Mason CJ and Gaudron J as to the function of pleading in Banque Commerciale SA En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286 bears repeating:
"The function of pleadings is to state with sufficient clarity the case that must be met: Gould and Birbeck and Bacon v. Mount Oxide Mines Ltd. (In Liq.) per Isaacs and Rich JJ. In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision. The rule that, in general, relief is confined to that available on the pleadings secures a party's right to this basic requirement of procedural fairness."
These principles were restated more recently by Burchett J in Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR ¶41‑522. At 42,679 his Honour said:
"The primary function (of a statement of claim) is to tell the defending party what the claim is that he has to meet. That is a matter of elementary and natural justice; the claim cannot be answered until it is known. When a sufficient defence has been filed to a sufficient statement of claim, a further function will generally have been performed - that of defining the question or questions for decision. This definition is required, of course, from an early stage, or else discovery and other interlocutory procedures are likely to prove misdirected, wasteful and unproductive. In order to achieve these fundamentals, a statement of claim must set out clearly, not just the bare claim that is made, but also 'the material facts on which it is based', including facts that, if not specifically pleaded, might take the other party by surprise: Federal Court Rules, Order 4, r. 6; Order 11, rr. 2, 10."
If the applicants do not wish to rely on such matters as implied statements as to present or past facts, present intention or present state of mind but rather rely upon the evidentiary provisions of s 51A they must, in my view, make it clear that they are so relying. An example of a case where representations were made, only to some of which s 51A applied, is found in Jacques v Cut Price Deli Pty Ltd (1993) ATPR (Digest ¶46‑102), discussed by Hill J in Ting v Blanche (supra, 552 ‑ 553).
In my opinion the applicants' pleading in relation to future matters is adequate as a matter of pleading in that it does disclose a cause of action, albeit one where an evidentiary burden is cast upon the respondent. This conclusion is supported, in my opinion, by the cases to which I have referred and the observations of Ormiston J in Futuretronics International Pty Ltd v Gadzhis (supra, 240) where his Honour said:
"In my opinion, therefore, accepting that s. 51A and s. 10A each assumes that a promise may give rise to an implied representation that the promisor will perform an act in the future, namely the promised act, then the promisee is not, in proceedings under s. 52 or s. 11, bound to show that the promisor had no intention or no ability to perform the promise at the time of its making. The promisor will be deemed not to have reasonable grounds for making the representation or promise, unless he satisfies the court by evidence to the contrary that he had reasonable grounds for making that representation. He may achieve this, in part, by showing that he had a genuine intention to perform his promise and that he had the ability at the time to perform it, but in the end he must show objectively that he had reasonable grounds for making the representation."
I have therefore reached the conclusion that the pleading invoking s 51A should be allowed to stand and that leave should be granted to allow the applicants to raise it in the proposed form. So long as the applicants' reliance on the evidentiary burden on the respondent to establish reasonable grounds for making the representation is articulated, the applicants are not required to plead affirmatively absence of reasonable grounds.
The issue can also be approached by reference to O 11 r5 of the Federal Court Rules which provides that:
"A party need not plead a fact if -
(a) ...
(b) the burden of disproving the fact lies on the other party,
except so far as may be necessary to meet a specific denial of the fact by the other party in his pleadings or failure to plead such fact is likely to cause the other party to be taken by surprise."
In my view this rule is certainly satisfied if the applicants allege the respondent did not have reasonable grounds for making the representations, but I do not consider that that is the only manner in which the rule can be satisfied. I also consider that it is satisfied if reliance on s 51A is pleaded. Such a pleading can only mean that the applicants are asserting that the respondent did not have reasonable grounds for making the representations; it cannot sensibly have any other meaning. On one view para 14 (p4 above) does not precisely raise the relevant issue when it concludes "by reason of which the representations are misleading". The words "by reason of which" refer back to the fact that the representations were made with respect to a future matter and the fact that the applicants rely on s 51A. But those facts alone do not make the representations misleading; they only achieve that status if the respondent does not have reasonable grounds for making the representations. Nevertheless the reference to the applicants' reliance on s 51A makes it clear what case the respondent has to meet and the respondent cannot be heard, in my view, to say it is taken by surprise if at trial it finds that it has cast upon it the evidentiary burden of leading evidence to establish that it had reasonable grounds for making the representations.
In the light of the authorities to which I have referred and the content of the proposed para 14 I consider that the applicants should be allowed to amend their statement of claim in the form proposed so far as the s 52 cause of action is concerned as it does disclose a reasonable cause of action which is clearly tenable having regard to the authorities to which I have referred and does not have a tendency to cause prejudice or embarrassment to the respondent.
The respondent also complains about the pleading in para 11 that the representations constituted collateral warranties which were breached. It is submitted by the respondent that it is untenable to allege that the statements pleaded in para 10(i), (j), (k), (l), (r), (t), (u), (w) and (x) were capable of having a promissory effect, reliance being placed upon J J Savage & Son Pty Ltd v Blakney (1970) 119 CLR 435 and Hospital Products Ltd v United States Surgical Co (1985) 156 CLR 41. However, treating the application as one where I should apply the principles in Dey v Victorian Railway Commissioners (1949) 78 CLR 62, 91 and General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, 129, I do not consider that the claims for breach of collateral warranties are hopeless and quite untenable. Indeed there are passages in the cases relied upon by the respondent which support the pleading. Those cases recognise that statements may be promissory and not merely representational but that the determination of that issue is a question of fact depending upon the context in which the statements are made. In J J Savage & Son Pty Ltd v Blakney (supra) the High Court upheld the decision of the trial judge (reported [1973] VR 385) who said at 388:
"The effect of the cases may be stated in the following propositional form.
First, it is not necessary that the statement to constitute a warranty must contain an express form of words such as 'promise', 'assurance' or 'warranty'. It is sufficient if the words in the context used import the requisite meaning to impose on the vendor a contractual obligation by way of promise or guarantee ...
Secondly, whether a statement was intended as a warranty must be determined objectively in the light of the whole of the circumstances. ...
Thirdly, the question of whether or not an animus contrahendi exists is a question of fact, and can only be answered by looking at all the circumstances attending the making of the contract. In Heilbut Symons's case [[1913] AC 30], Lord Moulton at (A.C.) p.51 said: 'The intention of the parties can only be deduced from the totality of the evidence ..'."
The High Court, in upholding the trial judge, said at 442 that the only conclusion which would support a collateral warranty is that the statements relied upon were "promissory and not merely representational". In Hospital Products Ltd v United States Surgical Co (supra) Gibbs CJ said at 61:
"A representation made in the course of negotiations which results in a binding agreement may be a warranty - i.e., it may have binding contractual force - in one of two ways: it may become a term of the agreement itself, or it may be a separate collateral contract, the consideration for which is the promise to enter into the main agreement. In either case the question whether the representation creates a binding contractual obligation depends on the intention of the parties."
His Honour then made it clear that whether or not the circumstances justified the conclusion of a warranty depended upon the intention of the parties to be ascertained objectively from their words and behaviour.
On an application for leave to file an amended statement of claim which is, in effect, an application by the respondent to strike out the pleading, I do not consider that the pleading of the collateral warranties is untenable. In any event, I consider the observations of Kirby P in Wickstead v Browne (1992) 30 NSWLR 1 at p 5 apposite where he dissented from the majority's view that a cause of action in negligence should be dismissed when other causes of action were to proceed. At p 5 Kirby P said:
"1. Conformably with the decision of this Court, the matter will now proceed to trial. It will be tried upon the two causes of action which the court has unanimously upheld, viz, the statutory count based upon the Code and the claim for breach of fiduciary duty. If there were to be no trial, there might be particular reasons for affirming the conclusion which Handley JA and Cripps JA have reached. Then, the summary termination of this claim might save the respondent altogether from the 'vexation of the continuance of useless and futile proceedings': see Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 84; Pannizutti v Trask (1987) 10 NSWLR 531 at 536. But as the trial must now proceed, there is merit (as it seems to me) in permitting the appellant to present his case in various ways. The marginal utility to the respondent of preventing the appellant from proceeding upon the alternative cause of action in negligence is minimal. But the marginal cost of doing so would be very great if, subsequently, the trial was concluded, limited by the orders proposed, and it was then held, either by this Court of by the High Court of Australia, that the appellant's cause of action in negligence was viable;
2. Common experience teaches that it is usually more efficient and just to consider the viability of a cause of action when the facts said to support it are adduced and the suggested action can be judged with a full understanding of all relevant evidence. Testimony gives colour and content to the application and development of legal principle. ..."
The High Court allowed an appeal, after granting special leave to appeal, from the dismissal of the negligence claim and expressed general agreement with the reasons of Kirby P for the conclusion that the negligence claim should not be dismissed: Wickstead v Browne [1993] 10 Leg Rep 522.
The respondent also submitted that at the directions hearing on 25 June 1997 when the applicants obtained leave to file and serve an amended statement of claim their counsel, in the course of submissions, indicated that the applicants proposed to make out the case based on the "state of mind" of the respondent at the time of the making of the representations and that the applicants should be held to that cause of action rather than relying on a cause of action invoking s 51A. However, a reading of the transcript of that directions hearing discloses that counsel for the applicants, in responding to questions and observations from the Bench, was rather canvassing the possible range of causes of action which might be relied upon by reference to s 52 when he accepted that the applicants had to plead more than simply a statement as to future conduct and the failure of the future event to occur. In any event, I do not consider that it is appropriate to hold the applicants to a cause of action foreshadowed at a directions hearing when further consideration leads the applicants' legal advisers to the conclusion that they should plead the applicants' case in a different way.
The respondent also complains that the representations now found in para 10(j) and (v) were deleted in the amended statement of claim filed 18 July 1997 and that the applicants should be held to their election to abandon those allegations. I do not consider that on an application such as this in the context in which it arises the doctrine of election is relevant.
The respondent submits that para 10(i), (j), (k), (l), (r) and (w) would be struck out on the basis of pleading no more than a mere puff but I do not consider it appropriate to make an examination of that issue in a summary way in isolation from the remaining representations having regard to the evidence which might be led to support them: Wickstead v Browne (supra). Although it has been said that a certain degree of puffing or exaggeration is to be expected in ordinary commercial dealings: General Newspapers Pty Limited v Telstra Corporation (1993) 45 FCR 164, 178, it does not follow that I can determine on this application that general statements cannot arguably be characterised as representations and not mere puffing; much depends upon the evidence led as to the context and circumstances in which they were made (note the discussion in (1995) 111 LQR 100 at 111 ‑ 113).
The respondent also submits that the pleading of the agreements to lease is immaterial to the cause of action and constitutes surplusage as it is said that the agreements, in effect, merged in the leases and that any losses claimed must have been incurred from the grant of possession under the relevant leases. It is said that no loss is alleged to flow from the entry by the first applicant into the agreements to lease. However, the making of the agreements to lease occurs in the context of a claim that representations were made and warranties given prior to the making of the agreements to lease and it seems to me that they may be relevant in the context of the sequence of events leading up to the grant of possession. In any event the applicants in their claim that the first applicant has suffered loss and damage rely in their particulars on expenditure which occurred between the making of the agreements to lease and the entry by the first applicant into possession of the premises. To that extent the agreements to lease may be relevant to the issue of assessment of damages. Although this may give rise to an issue whether such expenditure is outside the limitation period of three years fixed by s 82(2) of the Act it is not desirable to seek to resolve limitation issues of this kind in interlocutory proceedings such as this: Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514, 533. If this was an application under O 11 r16 I would not consider that the pleading of the agreements to lease was embarrassing or would otherwise prejudice the fair trial of the proceeding.
The respondent also complains about the fact that in the particulars under para 16, which alleges that the applicants have suffered loss and damage by reason of the contravention of s 52, some of the particulars are not particularised and it is said that particulars will be provided prior to trial. It is accepted by the applicants that proper particulars and loss of damage must be provided. The incurring of loss and damage is one of the elements of a cause of action under s 52 where orders are sought under s 82. In such circumstances the applicants are obliged to plead the relevant material facts in relation to how they have suffered loss and damage: Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 193, 222. However, the respondent's complaint is rather as to the fact that in respect of a number of heads of loss and damage particulars are yet to be provided. I am prepared to grant leave to the applicants to file the proposed further amended statement of claim on the basis that they condescend to full particulars in paras 16 and 17.
The respondent invites the Court to exercise its discretion against allowing the filing of the further amended statement of claim on the basis of the time which has elapsed between the occurrence of the relevant events, the commencement of the proceeding and the difficulties the applicants have had in pleading their case. However, it must be remembered that fourteen months or thereabouts elapsed before the complaint during which further particulars and answers to interrogatories were filed and in the circumstances I am not disposed to shut out the applicants from the opportunity they seek to propound their statement of claim in the proposed form.
The only other matter to which I wish to draw attention is that when I granted leave on 25 June 1997 to the applicants to file an amended statement of claim I did so on the basis that the document filed would be comprehensive and complete as to relevant particulars. The proposed further amended statement of claim in para 10 relating to the representations relied upon and para 13 relating to the falsity of the representations and breach of the warranties provides particulars but they refer back to earlier particulars which have been filed. That is not a desirable situation in the circumstances specially having regard to the change in the pleading from the pleading in respect of which the particulars were given. I understood the applicants to agree that if leave is granted to file the further amended statement of claim the particulars set out under para 10 and para 13 in it will be comprehensive and detailed and will not refer to earlier documents. On that basis I am prepared to grant the leave sought.
As the applicants are seeking leave to file a further amended statement of claim notwithstanding their filing of an amended statement of claim in accordance with the leave granted on 25 June 1997, I consider it appropriate that the applicants pay the respondent's costs of the motion.
The order of the Court will be that the applicants have leave to file and serve a further amended statement of claim and an amended application generally in the forms annexed to the notice of motion filed 23 September 1997 within fourteen days of this date. The applicants should pay the respondent's cost of that motion.
I certify that this and the preceding eighteen (18) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg