Phoenix Court Pty Ltd & Ors v Melbourne Central Pty Ltd [1997] FCA 1101

FEDERAL COURT OF AUSTRALIA

TRADE PRACTICES - misleading and deceptive conduct - representation as to future matters - whether statement of claim should be struck out - whether sufficient to plead that representation was made and that it proved to be false - effect of s 51A of Trade Practices Act 1974 (Cth). CONTRACT - representations alleged to constitute collateral warranties - whether capable of having a promissory effect - whether claim should be struck out. Trade Practices Act 1974 (Cth) s 51A Federal Court Rules O11 r5 Western Australia v Bond Corporation Holdings Ltd (1990) 99 ALR 125 considered Cummings v Lewis (1993) 41 FCR 559 considered Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217 considered J J Savage & Son Pty Ltd v Blakney (1970) 119 CLR 435 considered Hospital Products Ltd v United States Surgical Co (1984) 156 CLR 41 considered Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 193 applied Adelaide Petroleum NL v Poseidon Limited (1988) ATPR ¶40‑901 considered Banque Commerciale SA En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 considered Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd (1996) ATPR ¶41‑522 considered Wickstead v Browne (1992) 30 NSWLR 1 considered PHOENIX COURT PTY LTD & ORS v MELBOURNE CENTRAL PTY LTD VG 234 of 1996 GOLDBERG J MELBOURNE 22 OCTOBER 1997

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY VG 234 of 1996

BETWEEN: PHOENIX COURT PTY LTD

(ACN 007 410 899)

AND

DAVID ANTHONY ROGALSKY

ApplicantS

AND: melbourne central pty ltd

(acn 006 470 560)

respondent

and between: melbourne central pty ltd

(acn 006 470 560)

cross claimant

AND: PHOENIX COURT PTY LTD

(ACN 007 410 899)

and

DAVID ANTHONY ROGALSKY

and

knight frank (vic) pty ltd

(acn 004 428 737)

cross respondents

JUDGE: GOLDBERG J

DATE OF ORDER: 22 OCTOBER 1997

WHERE MADE: MELBOURNE

THE COURT ORDERS THAT: 1. The applicants have leave to file and serve an amended application and a further amended statement of claim generally in the form annexed to the applicants' notice of motion filed on 23 September 1997 on or before 5 November 1997. 2. The respondent file and serve a defence to such further amended statement of claim and any cross‑claim on or before 19 November 1997. 3. The respondent make discovery by 19 November 1997. 4. The applicants pay the respondent's costs of the said motion filed on 23 September 1997 including the costs thrown away by the amendment to the statement of claim, but not including any reserved costs. 5. The directions hearing be further adjourned to 6 February 1998. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY VG 234 of 1996

BETWEEN: PHOENIX COURT PTY LTD

(ACN 007 410 899)

and

DAVID ANTHONY ROGALSKY

ApplicantS

and: MELBOURNE CENTRAL PTY LTD

(ACN 006 470 560)

Respondent

AND between: MELBOURNE CENTRAL PTY LTD

(ACN 006 470 560)

CROSS CLAIMANT

AND: PHOENIX COURT PTY LTD

(ACN 007 410 899)

and

DAVID ANTHONY ROGALSKY

and

KNIGHT FRANK (VIC) PTY LTD

(ACN 004 428 737)

CROSS RespondentS

JUDGE: GOLDBERG J

DATE: 22 OCTOBER 1997

PLACE: MELBOURNE

REASONS FOR JUDGMENT The applicants apply by notice of motion filed 23 September 1997 for leave pursuant to O 13 r2 of the Federal Court Rules to file and serve an amended application and a further amended statement of claim. The respondent opposes the application on the grounds, in substance, that the proposed further amended statement of claim contains deficiencies in relation to pleading material facts and is embarrassing. This is not the first time that the applicants have sought to amend their statement of claim. The originating application and statement of claim were filed on 24 April 1996, a defence was filed on 21 June 1996 and further particulars of the statement of claim were filed on 29 August 1996 and 29 May 1997. On 29 May 1997 the applicants also filed answers to interrogatories (the respondent having been given leave to interrogate on 25 March 1997). The first applicant leased two shops from the respondent in the Melbourne Central Shopping Complex and the second applicant guaranteed the first applicant's obligations under the leases. The businesses were not successful, the leases were terminated by the respondent and the applicants allege that they were induced to enter into the leases and guarantees as a result of false representations made by and on behalf of the respondent. They seek declarations that the leases and guarantees are void ab initio and damages. At a directions hearing on 25 June 1997 a number of issues were raised by the respondent in relation to the statement of claim. In particular, the respondent criticised the manner in which the representations as to future events were pleaded. Counsel for the applicants accepted that there were problems with the statement of claim and sought and was granted leave to file and serve an amended statement of claim by 16 July 1997. An amended statement of claim was filed which deleted a number of the representations pleaded in para 10. There was also added a new para 12A which pleaded that: "The representations in paragraph 10 hereof were represented with respect to future matters". Paragraph 15 was also amended to plead: "Insofar as the representations were made with respect to future matters the Respondent did not have reasonable grounds for making the same and the facts known to it did not warrant or justify the making of the representations and the same were therefore misleading within the meaning of Section 51A of the Trade Practices Act (C'wth) and/or Sections 10A of the Fair Trading Act 1985 (Vic) and the conduct was thereby misleading conduct for the purposes of each of the said Acts." The allegation that the representations were made negligently in para 16 was also expanded. By letter dated 30 July 1997 the respondent's solicitors raised with the applicants' solicitors what they saw as problems with the amended statement of claim and they gave the applicants the opportunity to amend the statement of claim further. That amendment is sought by the notice of motion. Paragraph 10 of the proposed further amended statement of claim is in the following terms: "10. Prior to the First Applicant entering into the first Agreement to Lease, the second Agreement to Lease, the first Lease and the second Lease and prior to the Second Applicant agreeing to guarantee the obligations of the First Applicant under the agreements to lease and the leases and in order to induce the Applicants to do so, the Respondent by its agents David Boesley, Phillip Pathe and John Barron represented ('the representations') to the Applicants with the intention that the Applicants should rely thereon, (as in fact they did so rely), that: (i) Melbourne Central when developed, would be the most successful shopping complex in the southern hemisphere; (j) Melbourne Central would be a retail shopping centre of the highest prestige and reputation in the Australian business community; (k) Melbourne Central would change the pattern of shopping in Melbourne and would attract shoppers from the suburban shopping centres to the central business district; (l) Melbourne Central would be an up‑market Shopping Centre; (m) Melbourne Central would emphasise its historic importance with appropriate identified attractions to entertain shoppers; (n) Melbourne Central would continuously have activities on its permanent stage to attract shoppers; (o) Melbourne Central would adequately market and advertise its Time and Motion Machine; (p) Melbourne Central would operate its Panasonic Superscreen ('the Big Screen') continuously and broadcast international events at all times and that tenants could link their television sets to this Big Screen; (q) Melbourne Central would provide adequate and financially competitive car parking; (r) the number of shoppers entering Melbourne Central would exceed the number of shoppers who entered other leading shopping complexes throughout Australia; (s) Melbourne Central would provide adequate and a brightly visible security profile at all relevant times to provide security and comfort to shoppers, tenants and staff; (t) Melbourne Central would be fully leased at the time the First Applicant became a tenant; (u) detailed research work had been carried out by Jebb and Associates for the Respondent which showed that 24.5 million shoppers per annum would attend at Melbourne Central and that such number of shoppers would in fact attend at Melbourne Central; (v) Melbourne Central would ensure that the Museum Station would be used to its full potential; (w) David Rogalsky would become a wealthy young man by leasing two shops at Melbourne Central; and (x) Shop 102 and Shop 306/307 would have annual takings of $600,000.00 each. PARTICULARS The representations were oral, visual and in writing. Particulars of the representations are contained in the Applicants' Further and Better Particulars of Statement of Claim dated 23 August 1996 and 18 March 1997." It is then alleged in para 11 that: "11. Further, each of the representations referred to in paragraph 10 constituted a collateral warranty in consideration of which: (a) the First Applicant entered into the first Agreement to Lease, the second Agreement to Lease, the first Lease and the second Lease; and (b) the Second Applicant agreed to guarantee the obligations of the First Applicant under the agreements to lease and the leases." Paragraph 13 then alleges that the representations were false and the warranties breached in that the matters as to the future or predicted in para 10 did not eventuate. The following allegations are then made: "14. Each of the representations was a representation made by the Respondent with respect to a future matter and the Applicants rely on section 51A of the Act, by reason of which the representations are misleading. 15. In the premises, the conduct of the Respondent alleged in paragraphs 10 to 14 is conduct engaged in by the Respondent in trade or commerce that is misleading or deceptive or is likely to mislead or deceive in contravention of section 52 of the Act."

Mr Walker, who appeared for the respondent, submitted that it was not clear from the pleading whether the applicants were seeking to make a case based on the respondent's state of mind, which they had foreshadowed earlier or whether they were relying on statements as to future matters. He submitted that if they were relying on the latter basis then the reversal of the evidentiary burden created by s 51A of the Trade Practices Act 1974 (Cth) ("the Act") did not absolve the applicants from pleading material facts giving rise to the application of s 51A, namely the absence of reasonable grounds for making the representations. The respondent submitted that the representations relied upon are promissory or predictive in nature and that a representation as to a future matter, without more, does not constitute misleading or deceptive conduct because the promise was not fulfilled or the predicted event did not come to pass. The respondent relies upon such authorities as James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 647; Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82; Bill Acceptance Corporation Ltd v GWA Ltd (1983) 50 ALR 242, 250; Wright v TNT Management Pty Ltd (1989) 15 NSWLR 679; Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217, 238 ‑ 239. It is then submitted by the respondent that nothing more than a non‑fulfilment of the promise or the non‑occurrence of the predicted event is pleaded and that no case of misrepresentation as to an existing fact is properly set out in the proposed pleading. Mr Cawthorn, who appeared with Mr Nixon for the applicants, submitted that the applicants were not propounding a state of mind case but rather were invoking s 51A. He submitted that the pleading achieved this purpose and that the cases supported the pleading. The respondent's submission does not pay sufficient regard to para 14 which alleges that the representations were as to a future matter and that reliance is placed on s 51A. However the respondent says that asserting reliance on s 51A is not pleading a material fact and that reliance upon an evidentiary provision cannot take the place of pleading material facts. The pleading in relation to future events and reliance of s 51A of the Act raises the issue as to precisely what has to be pleaded in order to raise a cause of action under s 52 of the Act which depends upon the provisions of s 51A of the Act for its success. Prior to the enactment of s 51A it was well settled that an applicant could not adequately plead misleading and deceptive conduct invoking s 52 simply by asserting a representation as to future conduct or as to a future event and then asserting that the subject‑matter had not come to pass: Bill Acceptance Corporation Ltd v GWA Ltd (supra, 250); Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (supra, 88). Although the mere fact that a representation as to future conduct or the happening of a future event does not occur does not make the representation misleading or deceptive, such a representation can ripen into misleading or deceptive conduct for the purposes of s 52 in a number of circumstances; namely, if there is an implied statement in the representation as to a present or past fact; if the representation represents impliedly that the representor has a present intention to make good the promise or has the means or ability to do so; if the representation involves a representation that the representor has a present state of mind; or if a representation is made, which having regard to relevant circumstances at the time, requires a qualification because of the possibility of its non‑fulfilment (see James v Australia and New Zealand Banking Group Ltd (supra); Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (supra); Wheeler Grace & Pierucci Pty Ltd v Wright (1989) ATPR ¶40‑940). In any of these circumstances it is necessary to plead more than simply the fact of the representation as to the future matter and the fact that it does not occur. One has to plead material facts in relation to the implication in the statement of the present or past fact, the present intention and the means to carry it out, the relevant state of mind and the fact that there was no basis for it, and the relevant circumstance giving rise to the qualification. Without pleading such matters all the material facts necessary to complete the cause of action have not been stated and the respondent does not know what case it has to meet. However, as a result of the enactment of s 51A the situation has altered because that section makes it clear that a representation with respect to a future matter is misleading unless the representor had reasonable grounds for making it. Section 51A(2) makes it clear that an applicant does not have to establish as an ingredient of its cause of action that the representor did not have reasonable grounds for making the representation. That sub‑section rather throws the evidentiary burden on a respondent to establish that reasonable grounds for making the representation existed and in the absence of such evidence the deeming provision has the consequence that the representation is taken to be misleading. Section 51A does not create an independent cause of action separate from s 52 and other sections in Pt V of the Act but rather casts the burden of proof on the respondent and if that burden is not discharged then a breach of s 52 is established by the applicant proving the representation as to the future matter and the fact that it did not come to pass (cf Ting v Blanche (1993) 118 ALR 543, 552). In Adelaide Petroleum NL v Poseidon Limited (1988) ATPR ¶40‑901 French J had to consider, inter alia, the sufficiency of a pleading of representations as to future matters. It was pleaded that in making those representations the respondent contravened s 52 because at the time they were made "Poseidon did not have reasonable grounds for making them". French J noted that this pleading attracted the application of s 51A and said at 49,700: "Prima facie the effect of that section is that every representation with respect to any future matter is misleading or deceptive unless there are reasonable grounds for making it at the time that it is made. The burden of establishing the existence of reasonable grounds is on the party making the representation. It was submitted by the respondents that the applicants should be obliged to plead as material facts the reasonable grounds said to be lacking. In my opinion that is not a requirement of a viable plea in reliance upon sec. 51A. It may be however, that to avoid the abuse of the section by persons making the bald assertion that promises or predictions lack reasonable grounds, particulars may be ordered. But that consideration does not go to the viability of para. 12."

In Western Australia v Bond Corporation Holdings Ltd (1990) 99 ALR 125 it was submitted in relation to a plea of a representation as to future conduct that it was not necessary to plead expressly the basis on which the representation was said to be false because it was deemed by virtue of s 51A to be misleading unless the representor had reasonable grounds for making it and that it was not necessary for the applicant to plead absence of reasonable grounds but for the respondent to plead such grounds in its defence. There was no reference to s 51A in the pleading. French J repeated the passage which I have cited from Adelaide Petroleum (supra) and continued at 129: "In my opinion a party invoking the application of section 51A to a representation as to a future matter should make clear that it is doing so. In that way the respondent will know that, if the representation was made, it has the burden of showing, and must plead, that it had reasonable grounds for making it. The duty of the applicant to make clear that it invokes section 51A is discharged if it pleads that the respondent did not have reasonable grounds for making the representation and that it was thereby misleading or deceptive. Alternatively, the applicant can plead the misrepresentation and say simply that it was misleading by virtue of section 51A. This approach is probably logically more consistent with the structure of the section. The statement of claim in this case fails to invoke section 51A in relation to the representation in para 15(b) and it should do so if that be the applicant's case." For that and another reason his Honour struck out the relevant paragraph. This issue was raised but did not have to be decided in Cummings v Lewis (1993) 41 FCR 559 where the majority of the Full Federal Court, Sheppard and Neaves JJ, found that the respondents had reasonable grounds for the making of the relevant statements. However, at 567 their Honours went on to say: "The discussion into which we have entered has saved us the need to express a view in relation to the question whether s 41 of the Fair Trading Act (or s 51A of the Trade Practices Act) needs to be specifically pleaded or raised in order for it to be relied upon. In Western Australia v Bond Corporation Holdings Ltd [1991] ATPR 52,276 French J said (at 52,279) that a party invoking s 51A should make it clear that it is doing so. In that way a respondent will know that, if the representation was made, it will have the burden of showing and must plead, that it had reasonable grounds for making it. His Honour said that the duty of an applicant to make it clear that s 51A was invoked was discharged if it pleaded that the respondent did not have reasonable grounds for making the representation and that it was thereby misleading or deceptive. We would wish to leave open, until the question more directly arises, the correctness of these views. Our provisional view is that s 51A of the Trade Practices Act and its counterparts such as s 41 of the Fair Trading Act, are evidentiary provisions, not directed at what a party must plead. The rules of the court in relation to pleading require the pleading to contain, and only contain, a statement in a summary form of the material facts on which a party relies: see O 11, r2. The cause of action which is relied upon is a cause of action for breach of s 52 (or s 42). Sections such as s 51A are designed to facilitate proof. They affect the onus of proof but they are not part of the law which provides for the cause of action for which sections such as s 52 provide. We think there is a real question whether there is any requirement that there needs to be specific reference to the section in a pleading or the adoption of words which it uses. However, the matter does not in our opinion arise for consideration here and we express no concluded view about it."

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

Associate: Dated: 22 October 1997

Counsel for the Applicant: Mr P Cawthorn and Mr J Nixon

Solicitor for the Applicant: Taylor, Splatt & Partners

Counsel for the Respondent: Mr T Walker

Solicitor for the Respondent: Freehill, Hollingdale & Page

Date of Hearing: 15 October 1997

Date of Judgment: 22 October 1997