Fourth Respondent's Application to Strike Out Rejected

OUTCOME: Dismissed

FEDERAL COURT OF AUSTRALIA

[COMPANY] v [COMPANY] [2005] FCA 326

PRACTICE AND PROCEDURE – pleadings – application to strike out statement of claim – whether pleadings fail to disclose a reasonable cause of action.

Fair Trading Act 1987 (SA) Trade Practices Act 1974 (Cth)

Federal Court Rules O 20 r 2

[NAME] v [NAME] (1985) 158 CLR 661 applied [COMPANY] [NAME] [PHONE] & [NAME] v [COMPANY] ([COMPANY]) [NAME] [PHONE] & [NAME] 206 of 2004 LANDER J 23 MARCH 2005 ADELAIDE

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY SAD206 OF 2004

BETWEEN: [COMPANY]

[NAME] [PHONE]

FIRST [NAME]

[COMPANY] ([NAME] [COMPANY] [COMPANY])

[NAME] [PHONE]

[NAME[NAME]

[COMPANY] [NAME] [PHONE] (RECEIVERS AND MANAGERS APPOINTED)

(IN LIQUIDATION)

[NAME[NAME]

AND: [COMPANY] ([COMPANY]) [NAME] [PHONE]

FIRST RESPONDENT

[NAME]

[NAME] RESPONDENT

[NAME]

[NAME] RESPONDENT

[NAME] [RESPONDENT] [NAME]

[NAME] RESPONDENT

[COMPANY]

[NAME] [PHONE]

[NAME] RESPONDENT

[NAME] RESPONDENT

JUDGE: LANDER J

DATE OF ORDER: 23 MARCH 2005

WHERE MADE: ADELAIDE

THE COURT ORDERS THAT:

1. The application be dismissed.

2. The [NAME] respondent pay the applicants' costs of the notice of motion filed on 28 February 2005.

3. The [NAME] respondent, if so advised, provide a request to the applicants for any particulars within 10 days.

4. The applicants respond to the proper request for particulars within 17 days.

5. The [NAME] respondent file his defence within 28 days.

6. The directions hearing be adjourned until 12 May 2005 at 9.00am.

7. The applicants advise each respondent (other than the [NAME] respondent) of the date and time of the next directions hearing. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY SAD206 OF 2004

BETWEEN: [COMPANY]

[NAME] [PHONE]

FIRST [NAME]

[COMPANY] ([COMPANY])

[NAME] [PHONE]

[NAME[NAME]

[COMPANY] [NAME] [PHONE] (RECEIVERS AND MANAGERS APPOINTED)

(IN LIQUIDATION)

[NAME[NAME]

AND: [APPELLANT] [COMPANY] ([COMPANY]) [NAME] [PHONE]

FIRST RESPONDENT

[NAME]

[NAME] RESPONDENT

[NAME]

[NAME] RESPONDENT

[NAME] [RESPONDENT] [NAME]

[NAME] RESPONDENT

[COMPANY]

[NAME] [PHONE]

[NAME] RESPONDENT

[NAME] RESPONDENT

JUDGE: LANDER J

DATE: 23 MARCH 2005

PLACE: ADELAIDE

REASON FOR

JUDGMENT 1 This is an application by the [NAME] respondent to strike out the applicants' application and statement of claim upon the ground that it is embarrassing and fails to disclose a reasonable cause of action against him. The [NAME] respondent relies upon O 20 r 2 of the Federal Court Rules. [NAME] are parties to what is described as a strategic alliance agreement in which the first [NAME] acts as the [NAME[NAME]'s agent for the purpose of arranging and managing finance contracts. The [NAME[NAME] is a company to which [NAME] advance money. It is now in liquidation. 2 The first respondent is a [NAME] which acted as the agent of the first [NAME] in sourcing prospective customers and effected rental agreements for customers on behalf of the first [NAME]. The [NAME] respondent is a director of the first respondent. The [NAME] respondent is an employee of the first respondent. The [NAME] respondent, who brings this application, is alleged to have been a consultant of the first respondent between 5 February 2001 and 4 February 2002. Moreover, he is alleged to have been an employee and/or agent of the first respondent. The [NAME] respondent is a valuer and [NAME] is a director with the [NAME] respondent. The roles of the [NAME] and [NAME] respondents are irrelevant for the purposes of this application. 3 It is alleged that the first respondent sent the first [NAME] an application on behalf of the [NAME[NAME], seeking finance for two [NAME] in the amount of $1.8 million. Subsequently the finance sought was extended by a considerable sum. It is pleaded that in pursuance of that transaction the first respondent provided the first [NAME] with two statutory declarations signed by [APPELLANT] [NAME] on behalf of the [NAME[NAME], which were witnessed by the [NAME] respondent. It is not pleaded that the [NAME] respondent is a Justice of the Peace. 4 It is asserted in paragraph 49 that the statutory declaration contained express representations that the two [NAME] the subject of a sale and lease-back agreement existed and were owned by the [NAME[NAME]. In paragraph 49 it is pleaded: '49. The Statutory Declarations contained (and in providing AIF with a copy of the Statutory Declarations, [NAME] made to AIF and AVS) the following express representations:- 49.1. The two [NAME] the subject of the "Sale and Lease back" Agreements existed, and were owned by [NAME].' 5 The applicants allege that by providing AIF with a copy of the statutory declarations, the persons there referred to were parties to the representations included in the statutory declarations. In paragraph 50 of the statement of claim, reference is made to implied representations: '50. In providing AIF with the Statutory Declarations, [NAME] impliedly represented to AIF and AVS that:- 50.1. [NAME] [NAME] had signed the Statutory Declarations on behalf of [NAME]. 50.2. [NAME] [NAME] had done so in the presence of [NAME]. 50.3. They believed the representations pleaded in the preceding paragraph and sub-paragraph. 50.4. They had a reasonable basis for so believing.' 6 Both paragraph 49 and 50 suggest - if not expressly, implicitly - that the [NAME] respondent was a party to the provision of the statutory declarations to AIF. It may be, as Mr [RESPONDENT] argued on behalf of the [NAME] respondent, that there is some tension between the allegations in paragraphs 49 and 50 and paragraph 48. In paragraph 48 it is pleaded that [NAME] provided AIF with the two statutory declarations signed by [NAME]. However, paragraph 48 does not deny that the statutory declarations were provided by [NAME] through the medium of the [NAME] respondent. In those circumstances, there is not necessarily a tension between the three paragraphs referred to in the pleadings. 7 The applicants assert that the [NAME] the subject of the advances never existed. They also assert that the statutory declarations were not signed by [NAME] [NAME]. They further assert the statutory declarations were not signed in the presence of the [NAME] respondent. It is pleaded in paragraphs 122 and 123 of the statement of claim: '122. The express and implied representations pleaded in relation to the Statutory Declarations were false and/or misleading or deceptive in that:- 122.1. Neither of the [NAME] the subject of the "sale and lease back" agreement existed, and hence were not owned by [NAME]. 122.2. The Statutory Declarations were not signed by [NAME] [NAME]. 122.3. The Statutory Declarations were not signed by [NAME] in the presence of [NAME]. 122.4. [NAME] nor [NAME] took any, or any adequate, steps to ensure that [NAME] signed the Statutory Declaration or to otherwise confirm the existence, ownership or location of the said [NAME], and therefore did not have any reasonable basis for believing, and did not believe, the said representations. 123. In making the representations it made in relation to the sighting and existence of the [NAME]:- 123.1. [NAME] engaged in false, or misleading or deceptive, conduct in contravention of Section 52 of the Trade Practices Act, Section 56 of the Fair Trading Act (SA) and/or Section 42 of the Fair Trading Act (NSW). 123.2. [NAME] and [NAME] engaged in false, or misleading or deceptive, conduct in contravention of Section 56 of the Fair Trading Act (SA) or Section 42 of the Fair Trading Act (NSW). 123.3. [NAME] and [NAME] were knowingly concerned in [NAME]'s contravention of the Trade Practices Act within the meaning of Section 75B of the Trade Practices Act.' 8 It can be seen from the plea in paragraph 123 that the applicants claim primary liability on the part of the [NAME] respondent, pursuant to s 56 of the Fair Trading Act 1987 (SA) and accessorial liability pursuant to s 75B of the Trade Practices Act 1974 (Cth). It is pleaded unambiguously in paragraph 122 that the express representations pleaded in paragraph 49 and the implied representations pleaded in paragraph 50 of the statement of claim were false. 9 The [NAME] respondent, who is a Justice of the Peace, has filed an affidavit in support of this application, in which he sets out his standard practice in witnessing a statutory declaration. He says he does not read the documents which he is about to witness. If he does not know the [NAME] he asks for witness identification. He asks all deponents whether the contents are true and correct before the [NAME] signs a document and he witnesses it. His standard practice is not to witness a statutory declaration which has not been signed in front of him. He says that he has no present independent recollection of witnessing [NAME] [NAME] signing the document referred to in the statement of claim, but says: '… however, in accordance with my standard practice I would not have witnessed that statutory declaration unless I had personally seen her affix her signature to it.' 10 Next Mr [NAME] deposes: 'Given that I took the statutory declarations in my capacity as a [NAME], I was not required, nor did I take any steps to ascertain that the contents of the statutory declaration were true. It is for this reason that I have not made any representations as alleged by the plaintiffs.' 11 In my opinion, whether or not the [NAME] respondent made the express representations pleaded in paragraph 49 or whether or not the implied representations in paragraph 50 can attach to the [NAME] respondent, is a matter of fact to be determined at trial. Primary liability and accessorial liability under the Trade Practices Act and the Fair Trading Act is a matter of fact: [NAME] v [NAME] (1985) 158 CLR 661. 12 The statement of claim does not fail to disclose a reasonable cause of action because the respondent asserts that the [NAME] will be unable to establish a material fact in that pleading. The pleading will only fail to disclose a reasonable cause of action if the material facts as pleaded, which are assumed to be capable of proof, do not by themselves disclose a reasonable cause of action. It is not appropriate on an application such as this to decide whether the applicants will be able to establish the express and implied representations and the facts which support those representations, or whether the [NAME] respondent's denial will prevail. 13 In any event, whatever else the respondent has deposed to, there are the further implied representations pleaded in paragraph 50; that the [NAME] to the statutory declarations signed the document in the presence of the [NAME] respondent; and by signing that document the [NAME] respondent implicitly represented that fact. It is asserted that that is untrue and, of course, if that is established, the [NAME] respondent must have known of the falsity of that implied representation. 14 It might be, as the [NAME] respondent presently deposes, that he has no memory whatever of signing this document. It might be, as he says, that his invariable practice is not to witness a statutory declaration unless signed in his presence. However, all of those matters are matters for the trial judge. It is enough to say that on the pleadings as they presently

stand, a cause of action is disclosed against the [NAME] respondent. The application, in my opinion, must be dismissed. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander.

Associate: Dated: 23 March 2005

[NAME]: [COUNSEL]

Solicitor for the Applicants: [redacted]

[NAME]: [RESPONDENT]

Solicitor for the [NAME] Respondent: [redacted]

Date of Judgment: 23 March 2005