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  • Unreported Judgment

Papale v Sucrogen Ltd

 

[2015] QSC 21

 

SUPREME COURT OF QUEENSLAND

  

CITATION:

Papale & Ors v Sucrogen Ltd & Anor [2015] QSC 21

PARTIES:

R PAPALE & VJ PAPALE (TRADING AS VJ & R PAPALE); GK & MR STOCKHAM; JORDAN FARMING (QLD) PTY LTD ACN 126 223 532 AS TRUSTEE FOR THE JORDAN FARMING TURST; PHILIP MARK MARANO AS TRUSTEE FOR THE G MARANO FAMILY TRUST (TRADING AS PJ & G MARANO) and others

(plaintiffs)

and

SUCROGEN LIMITED ACN 098 999 985

(defendant)

AND

GK & MR STOCKHAM and others

(defendants by counterclaim)

FILE NO/S:

S11630 of 2012

DIVISION:

Trial Division

PROCEEDING:

Application for leave to amend originating application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

10 February 2015

DELIVERED AT:

Brisbane 

HEARING DATE:

25 September 2014

JUDGE:

Peter Lyons J

ORDER:

The plaintiffs are granted leave to amend their statement of claim, generally in accordance with version 7, save for paragraphs 17 and 18; and the reference to those paragraphs in paragraph 19.

CATCHWORDS:

PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS – AMENDMENT – where the plaintiffs are growers of sugarcane and supplied their sugarcane to the defendant miller pursuant to an agreement – where the defendant then sold the processed sugarcane to Queensland Sugar Limited pursuant to an agreement – where the plaintiffs claim that the defendant asked Queensland Sugar Limited to categorise a loss suffered by them a certain way, which consequently meant that money was withheld from the plaintiffs – where the plaintiffs allege that this constituted unconscionable conduct – where the plaintiffs allege that not disclosing this arrangement was misleading and deceptive conduct by omission – whether part of the unconscionable conduct claim falls within the statutory exception in s 21(3) of Schedule 2 of the Competition and Consumer Act 2010 (Cth) – whether the proposed amended statement of claim pleads a causal link between the alleged misleading and deceptive conduct and the loss suffered by the plaintiffs – whether the plaintiffs should be granted leave to amend the claim and statement of claim to include claims of unconscionable conduct and/or misleading and deceptive conduct

PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS – AMENDMENT – where the plaintiffs are growers of sugarcane and supplied their sugarcane to the defendant miller pursuant to an agreement – where the defendant then sold the processed sugarcane to Queensland Sugar Limited pursuant to an agreement – where the plaintiffs claim that the defendant asked Queensland Sugar Limited to categorise a loss suffered by them a certain way, which consequently meant that money was withheld from the plaintiffs – where the plaintiffs allege that this constituted unconscionable conduct – where the plaintiffs allege that not disclosing this arrangement was misleading and deceptive conduct by omission – where the plaintiff’s delay in bringing the present application to amend the statement of claim was relatively substantial – whether the delay caused the defendant to suffer any real prejudice – whether leave to amend the statement of claim should be denied to facilitate the expeditious resolution of the case – whether leave to amend the statement of claim should be granted to facilitate the just resolution of the real issues in the case

Competition and Consumer Act 2010 (Cth), Schedule 2, s 18 and s 21

Trade Practices Act 1974 (Cth), s 51AC and s 52

Uniform Civil Procedure Rules 1999 (Qld), r 5 

Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27, cited

Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90; [2013] ATPR 42-447, cited

Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279; [1990] HCA 11, cited

Canon Australia v Patton (2007) 244 ALR 759; [2007] NSWCA 246, followed

Concrete Construction NSW Pty Ltd v Nelson (1990) 169 CLR 594; [1990] HCA 17, considered

Demagogue v Ramensky (1992) 39 FCR 31, considered

Esso Petroleum Co Ltd v Southport Corporation [1956] AC 218, cited

Gould v Mt Oxide Mines Ltd (in liq) (1916) 22 CLR 490; [1916] HCA 81, cited

Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564; [2000] FCA 1572, cited

Kernel Holdings Pty Ltd v Rothmans of Pall Mall (Australia) Pty Ltd (1991) 217 ALR 171; [1991] FCA 557, followed

McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409; [1999] FCA 1101, followed

PT Ltd v Spuds Surf Chatswood Pty Ltd [2013] NSWCA 446, cited

COUNSEL:

G A Thompson QC, for the plaintiffs and for the defendants by counterclaim

S L Doyle QC, for the defendant

SOLICITORS:

Clayton Utz, for the plaintiffs and for the defendants by counterclaim

Russells, for the defendant

  1. By order of 6 June 2014, the plaintiffs were required to apply for leave if objection was taken to proposed amendments to their originating application and statement of claim. That has resulted in the present application.

Background to application

  1. The plaintiffs are growers of sugar cane who, in 2010, supplied their cane to the defendant under an agreement called "CBL – 3 year Collective Cane Supply Agreement" (CSA).  The defendant was a miller of sugar cane.  Along with other such millers (the other QSL millers) it sold raw sugar to Queensland Sugar Limited (QSL).  The agreement under which the defendant sold sugar to QSL is called the Raw Sugar Supply Agreement (RSSA).  QSL then sold the sugar on various markets. 
  1. In late 2010, QSL claimed that it suffered losses as a result of futures and foreign exchange hedging (QSL trading losses), and asserted that it was entitled to recover those trading losses from the defendant and the other QSL millers.  The plaintiffs allege that as a result, the defendant withheld a sum representing $42.50 per tonne IPS sugar (the reference to IPS appears to represent some adjustment based on the polarisation characteristics of sugar supplied) from the amounts to which the plaintiffs would otherwise have been entitled under the CSA.  They claim that the defendant thereby breached the agreement, and seek recovery of the amounts withheld.
  1. The defendant contests that it is in breach of the CSA. The defendant has also made a counter-claim against some of the plaintiffs and some other cane growers. It alleges that it made payments for cane supplied in 2010 on the basis that it was entitled to deduct the amount of $42.50 per tonne IPS from amounts payable to the plaintiffs; and that if it was mistaken in doing so, then under the CSA it was entitled to retain other amounts from the payments made to the defendants by counterclaim, and that clause 7.10 of that agreement entitles it to recover amounts which it overpaid.
  1. In May 2014, the plaintiffs applied for leave to amend their originating application and statement of claim, alleging that the conduct of the defendant in withholding the amounts the subject of their claim, and in bringing the counterclaim, was unconscionable conduct for the purposes of the Competition and Consumer Act 2010 (Cth) (CCA) and the Trade Practices Act 1974 (Cth) (TPA).  That application was refused.  The order mentioned at the commencement of these reasons was subsequently made.  The plaintiffs then provided a draft of the proposed amended claim and statement of claim (version 6) and subsequently a revised draft of these documents (version 7).  The application was conducted in relation to version 7.

The amendments

  1. The amendments are to be found in paragraphs 16 to 19 of version 7, together with the addition of prayers for relief. In essence, they allege that conduct pleaded elsewhere in the statement of claim, and the assertion of the right to recover the sums claimed in the counterclaim, was conduct in trade or commerce, and in connection with the acquisition of sugarcane, which constituted unconscionable conduct within what is now s 21(1)(b) of Part 2-2 of Schedule 2 to the CCA, or alternatively under s 51AC of the TPA. This conduct was said to have resulted in loss or damage, being the sums withheld; and, if the counterclaim succeeds, the amount of any judgment against the defendants by counterclaim.
  1. These paragraphs also include an allegation that conduct alleged elsewhere in the statement of claim was misleading or deceptive or likely to mislead or deceive for the purposes of s 18 of Part 2-1 of Schedule 2 of the CCA and s 52 of the TPA, and that it caused the same loss or damage as was alleged to have been the result of the unconscionable conduct.
  1. It is sufficient at this point to provide only a broad description of the conduct pleaded elsewhere in the statement of claim, relied on in support of the claims sought to be raised by the amendments. The statement of claim alleges that when QSL asserted that it was entitled to recover the QSL trading losses from the defendant and the other QSL millers under the RSSA, the defendant and the other QSL millers negotiated about alternative methods of allocating the QSL trading losses. The defendant asserted it had legal advice that the clause of the RSSA on which QSL relied did not apply to the QSL trading losses. The defendant promoted an alternative method of allocating those losses, so that they would be treated as costs accounted for in the Shared Pool under the RSSA, intending as a consequence to assert to the plaintiffs that these losses were to reduce the price to be paid to the plaintiffs under the CSA. The statement of claim alleges that payments were due to be made by QSL to the defendant in March 2011 which the defendant would have been obliged to pass on directly to the plaintiffs; but the defendant asked QSL not to make those payments, pending agreement about the allocation of the QSL trading losses. It alleges that, on 11 March 2011, the defendant sent to the plaintiffs a letter stating that QSL had not made an advance to the defendant in March 2011, and for that reason the plaintiffs would not receive payments under the CSA in that month; without revealing that the defendant had requested QSL not to make the payment which it would then otherwise have made.[1]
  1. The statement of claim then alleges that on about 28 March 2011, QSL, the defendant and the other QSL millers agreed that the trading losses would be treated "as costs residing in the Shared Pool under the RSSA and in general would be spread over all pools in the RSSA".[2]  Payments made by QSL to the defendant were reduced accordingly; which affected the amounts paid to the plaintiffs.  The statement of claim alleges that the defendant kept secret from the plaintiffs, matters alleged to have occurred between it, QSL and the other QSL millers.  It also alleges that the defendant asserted the plaintiffs had a liability to contribute to the amount of the QSL trading losses, which losses QSL was passing on to the defendant.  These things resulted in the non-payment of the sum of $42.50 per tonne IPS sugar to the plaintiffs for the 2010 season.

Contentions

  1. As the application was conducted, the defendant's submissions relating to the allegations of unconscionable conduct were confined to matters relating to the assertion of a right to recover overpayments, raised in the counterclaim. It was submitted that this conduct was not conduct in trade or commerce and in connection with the acquisition of goods or services (as I understood the submission, it focused on whether the conduct was conduct “in trade or commerce”). It was also submitted that this conduct was expressly excluded from the proscription in the legislation.[3]  It was submitted that the pleading did not put the defendant on notice as to how, in relying on contractual rights in this context, it was said to have engaged in unconscionable conduct.  It was also submitted that the proposed pleading failed to distinguish between those plaintiffs against whom a counterclaim was made, and the other plaintiffs.
  1. With respect to the claim based on misleading conduct, it was submitted that the proposed pleading does not identify the respects in which the conduct alleged in it is said to be misleading (an expression I shall generally use to refer to conduct said to be misleading or deceptive, or likely to mislead or deceive); nor what gives it this character. Nor does it identify the party or parties to whom the conduct is alleged to have been directed. Nor does it properly identify any causal connection between the pleaded conduct, and the alleged loss.
  1. Finally, it was submitted that the application should be refused on discretionary grounds. The proceedings have been on foot since December 2012. The plaintiffs have had numerous opportunities to plead their case. Speed and efficiency have been recognised as essential to the just resolution of proceedings; and the grant of leave will necessarily delay their conclusion. Other litigants would also be delayed.
  1. Nevertheless, notwithstanding the form of these proceedings, the defendant accepted that the inadequacy of the proposed pleading should be tested in the same way as would occur on an application to strike out a pleading delivered under the Uniform Civil Procedure Rules 1999 (Qld).
  1. The plaintiffs submitted that the proposed statement of claim does not plead the counterclaim, in isolation, to be unconscionable conduct. Rather, it is one element of a course of conduct said to be unconscionable. In any event, it was submitted that the proposed pleading alleges that the assertion of a right of recovery was unconscionable, which was not the same as the institution of the counterclaim; and accordingly the conduct on which the pleading would rely was not excluded from the operation of s 21 of the CCA and s 51 AC of the TPA. It was submitted that the statement of claim adequately alleges the respects in which the conduct was unconscionable; and so far as it relied upon the assertion of the right of recovery, it made clear that the claim was made only on behalf of those plaintiffs who were defendants to the counterclaim.
  1. With regard to the claim for misleading conduct, it was submitted that there was no requirement that the conduct be "representational". It was sufficient that the conduct was capable of inducing error. It was submitted that it is not necessary to establish (and, presumably, therefore to allege) reliance. It was submitted that the claim might be put in two ways. One was that if the defendant had not engaged in the alleged conduct, QSL would have made the payment in March 2011, resulting in payments to the plaintiffs. The other was that the defendant had represented that QSL had not made a payment in March 2011, without revealing that the defendant had requested QSL not to make the payment; and it had represented that the plaintiffs had a liability to contribute to the QSL trading losses. These representations were misleading. It was sufficient that the plaintiffs alleged that they had suffered loss or damage "because of" the misleading conduct.

Unconscionable conduct claim

  1. In support of its submission that the institution of the counterclaim was not conduct in which it had engaged in trade or commerce for the purposes of s 21, the defendant referred to Concrete Constructions NSW Pty Ltd v Nelson[4].  The judgment of four judges of the High Court considered whether the similar expression in s 52 of the TPA was to be given a narrower or wider meaning.  The wider meaning was said to extend to conduct "in the course of the myriad of activities which are not, of their nature, of a trading or commercial character but which are undertaken in the course of, or as incidental to, the carrying on of an overall trading or commercial business"[5].  An example was given, being the failure of a driver to give the correct hand signal when driving a truck in the course of a corporation's haulage business.
  1. The alternative, narrower, construction of the expression would refer "only to conduct which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character"[6].  The narrower view was preferred.  Their Honours said[7]:

"What the section is concerned with is the conduct of a corporation towards persons, be they consumers or not, with whom it (or those whose interests it represents or is seeking to promote) has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character."

  1. It was not suggested, and there is no reason to think, that the relationship established between the defendant and the plaintiffs under the CSA for the supply by them to it of sugarcane for reward did not itself come within the expression "trade or commerce". It seems to me that an attempt to give effect to the relative rights of the parties resulting from that relationship, and in particular, the adjustment of their relevant financial positions by reference to the CSA, as a consequence of the supply of sugar cane by the plaintiffs to the defendant, may well be found to be conduct within trade or commerce. The defendant accepted that the issue of an invoice to a customer by a supplier of goods or services would be conduct within trade or commerce. That is no more than the making of a demand, which seeks to give effect to the right to payment created by a contract for the supply of goods or services. It does not seem that proceedings to enforce a right to payment arising from such a contract, or as a result of something done by reference to it, is materially different in character. I therefore do not accept the submission made on behalf of the defendant that the conduct should be found not to be conduct within trade or commerce, for the purposes of the statutory provisions.
  1. It might perhaps be suggested that the express exclusion of the institution of legal proceedings in relation to the supply of goods or services might confirm this conclusion[8].  However, the plaintiffs did not advance that submission; and there is the prospect that one reason for the inclusion of this provision was to clarify potential uncertainty about the scope of the section.  Accordingly, I have not relied on it in forming my view.
  1. The question remains whether s 21(2) of the CCA and s 57AC(5) of the TPA preclude reliance by the plaintiffs on this aspect of the defendant's conduct. In part, that depends upon the proper construction of the exclusion. For the plaintiffs it was submitted that there was a relevant distinction between the assertion of a right, and the institution of proceedings; and that this aspect of the claim was directed at the former and thus not precluded. For the defendant it was submitted that the only relevant conduct identified by the plaintiffs was the institution of the counterclaim, clearly precluded by the statutory provision. It might be observed that the defendant's submission was based on the proposition that the allegations relating to the matters raised in the counterclaim should be looked at in isolation.
  1. The submissions of the parties were framed by reference only to the relevant provision of the CCA. It is sufficient to discuss only that provision. The exclusion created by s 21(2)(a) applies to “conduct that is engaged in only because the person engaging in the conduct…institutes legal proceedings in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition…”. It can be seen from s 21(1) that the relevant supply or acquisition is the supply or acquisition of goods or services.
  1. The plaintiffs submitted that the statement of claim alleges a course of conduct, not limited to the asserted right of recovery found in the counterclaim. This submission reflects the form of the pleading[9].  The submission then relies on the presence of the word “only” in s 21(2)(a).  While it may ultimately become apparent from evidence at the trial that the proposed pleading “rolls up” into the one paragraph elements of several distinct causes of action, for one of which the only relevant conduct is the institution of the counter-claim, that is not a finding which, it seems to me, is appropriately made solely on the basis of the proposed pleading.  Accordingly I would not refuse leave because the pleading includes the allegation relating to the counter-claim.
  1. No argument was raised about the qualifications introduced by the expression “in relation to” in s 21(2)(a). While I would have some reservation about whether the counterclaim was sufficiently connected to a relevant supply or acquisition to come within the provision, it is unnecessary to reach a conclusion abut this.
  1. The defendant's submissions refer to the fact that the counterclaim was premised on the Court determining that the plaintiffs' construction of the CSA is correct. It then contends that the proposed statement of claim does not put it on notice as to how, in relying on its contractual rights which only arise consequent on that determination, it is said to have engaged in unconscionable conduct.
  1. The written submissions for the plaintiffs reproduced passages from cases discussing the provisions of the TPA and the CCA which proscribe unconscionable conduct. Those passages include a statement by Basten JA in Canon Australia v Patton[10] where his Honour emphasised the need to pay attention to the "statutory term".  His Honour also observed that the scope of the corresponding provision of the TPA would in due course be established as a matter of statutory construction.  The relevant passages of his Honour’s judgment were cited with approval in PT Ltd v Spuds Surf Chatswood Pty Ltd[11].  It seems to me that these observations highlight the difficulty in identifying and pleading the material facts of a cause of action based on s 21 of the CCA.  The difficulty is inevitably increased by the statement in s 21 that it is the intention of the Parliament that the section not be limited "by the unwritten law relating to unconscionable conduct"[12].  Nevertheless, it seems to me, analogous with a pleading alleging misleading conduct under the TPA or the CCA[13], the pleading must allege the circumstances said to make the conduct unconscionable. 
  1. It will be apparent from what has just been set out that s 21 does not identify clear criteria for determining whether conduct is unconscionable. In Australian Competition and Consumer Commission v Lux Distributors Pty Ltd[14] the court identified unconscionable conduct as "something not done in good conscience".  The proposed statement of claim identifies matters alleged to make the conduct of the defendant unconscionable[15].  They include both allegations of fact, and characterisations of that conduct.  It seems to me that these matters are potentially relevant in determining whether conduct is unconscionable.  Nor, it seems to me, am I in a position to form a clear view that the allegations will not be made out; or, if made out, will not satisfy the statutory description.  Notwithstanding the defendant’s submission, it seems to me that the proposed statement of claim adequately identifies why the plaintiffs contend that it has engaged in unconscionable conduct.  Accordingly, I am not prepared to refuse leave on this basis. 
  1. The defendant submitted that the allegations, so far as they refer to the counterclaim, cannot be made by the plaintiffs who are not defendants to the counterclaim. The plaintiffs submitted that it was sufficiently clear from the pleading that, so far as the allegations related to an assertion of a right of recovery against the defendants by counterclaim, it was only those plaintiffs who were defendants to the counterclaim who relied upon them. In particular they drew attention to the fact that relief in respect of the assertion of the right of recovery was plainly only sought by those plaintiffs.
  1. It is self-evident that the pleading could have been cast in a way which clearly limited those plaintiffs relying on the assertion of a right of recovery to the defendants to the counterclaim; but otherwise repeated the allegations as constituting unconscionable conduct against the other plaintiffs. However, the defendant did not suggest that it was placed at any real disadvantage because of the form of the proposed pleading. I would not be prepared to refuse leave on this ground.

Misleading conduct claim

  1. In support of the submissions summarised earlier in these reasons, the defendant referred to Johnson Tiles Pty Ltd v Esso Australia Pty Ltd[16] for the proposition that a defendant is entitled to know precisely the respects in which conduct is said to be misleading[17].  The submission is consistent with the general principle that a party is entitled to know the nature of the case it is to meet[18].
  1. The proposed pleading alleges the conduct which I have earlier summarised, involving the defendant, QSL and the other QSL millers. It alleges the communications in the early part of 2011[19].  No doubt these allegations should be read, bearing in mind the allegation that the conduct involving the defendant, QSL and the other QSL millers, was alleged to have been kept secret[20].  There is then a broad allegation that the conduct was misleading. 
  1. In Johnson Tiles, French J (as his Honour then was) with the agreement of the other members of the court said[21], with respect to misleading conduct, that the conduct is to be characterised by reference to its actual or possible consequences, and that there must be “a capacity to mislead or deceive attributable to the conduct in question”.  No doubt a pleading claiming relief based on such conduct must sufficiently identify the conduct, and sufficiently identify why the claimant contends that the conduct satisfies the statutory description.
  1. In McKellar Weinberg J[22] considered that "[a] cause of action for misleading and deceptive conduct is not established unless the statement of claim sets out the circumstances which gave the representation its deceptive and misleading character at the time it was made”.
  1. In Kernel Holdings Pty Ltd v Rothmans of Pall Mall (Australia) Pty Ltd[23] French J (as his Honour then was) had to determine an application to strike out a statement of claim based on allegations of exclusive dealing in contravention of s 47(3)(f) of the TPA and in the alternative, abuse of market power in contravention of s 46 of that Act.  His Honour described the pleading as "a Delphic announcement of Kernel's case"[24].  His Honour was required to deal with a submission that the statement of claim had pleaded only conclusions, and not the material facts upon which they were based.  His Honour said[25]:

"I do not accept that the pleading of something which can be described as a conclusion cannot also be a pleading of a material fact.  The real issue in a case where such an objection is raised is whether the facts are pleaded at too great a level of generality.  In my opinion, the level of generality of the statement of claim in this case is too great for Rothmans to know with any precision what case it has to meet.  The facts relied upon to support the conclusion about Rothmans' alleged purpose in refusing supply should be spelt out.  So too should the facts relied upon to support the conclusion that the refusal has or is likely to have the effect of substantially lessening the competition of the relevant market."

  1. It seems to me that the approach of French J in Kernel is of assistance in determining whether a claim based on misleading conduct has been properly pleaded.  Like an allegation that conduct has, or is likely to have, the effect of substantially lessening competition in a relevant market, an allegation that conduct is misleading is an allegation of a conclusion about the character of the conduct.  For such a claim to succeed, the plaintiff must establish the conduct has that character.  However it seems to me that it is generally insufficient to identify the conduct, and then allege it has the character described in the relevant statutory provision.  It seems to me, therefore, that a party making a claim based upon alleged misleading conduct must also plead facts which, if proven, would be sufficient to support a rational inference that the conduct had that character.  I therefore accept that submission of the defendant that the pleading must “identify the element which falsifies the conduct”[26]; at least in the sense that the pleading must identify the circumstances by reason of which it is alleged that the conduct is misleading.
  1. With respect to the defendant’s submissions that the pleading must identify “the element which falsifies the conduct”; and, in relation to conduct said to be actually misleading or deceptive, “what is false”[27] the plaintiffs submitted that it is not necessary for “the conduct to be representational” to come within the statutory description[28].  As Gummow J pointed out in Demagogue v Ramensky[29]conduct which is, or is likely to be, misleading or deceptive, will not always involve a misrepresentation.  It may not be accurate therefore to say that the pleading must identify “what is false”.  Nevertheless, it seems to me that a party said to have engaged in misleading or deceptive conduct will generally not have had proper notice of the case made against it, unless the pleading adequately identifies how it is that the conduct is, or is likely to be, misleading or deceptive.  Sometimes, particularly where the conduct is the making of an untrue representation, that will be achieved by the allegation of the circumstances which render the representation untrue.
  1. One of the allegations made in paragraph 17 of version 7 is that the conduct of the defendant alleged in other specified paragraphs of the pleading was misleading or deceptive, or was likely to mislead or deceive. There are a number of difficulties with paragraph 17. One is that one of the specified paragraphs, paragraph 8I, does not plead conduct at all. Another is that some of the conduct referred to is unlikely to have been known to the plaintiffs (or any other relevant party) at any material time; and if it were, is inherently unlikely to have misled or deceived them: see for example, paragraph 8C (b),(c) and (d). One of the specified paragraphs (paragraph 10) appears to be an allegation relating to the causation of loss. It is difficult to see how it could properly be alleged to be misleading conduct. It may be that paragraph 17 was intended to allege that some of the conduct described in the specified paragraphs was misleading; and other matters set out in those paragraphs gave that conduct its misleading character; but that is not what the pleading says. In my view, version 7 does not identify in any satisfactory way why the conduct pleaded in paragraph 17 is said to be misleading. Accordingly, the plaintiffs should not be permitted to rely on it. Indeed, in its present form, it is embarrassing.
  1. Paragraph 18 is differently constructed. It identifies conduct, and separately identifies circumstances by reason of which the conduct is said to be misleading. The relevant conduct is that alleged in paragraphs 8G and 9. The circumstances are those alleged in paragraphs 8A to 8F, 8H and 8I. In essence, therefore, the paragraph alleges that keeping secret the matters alleged in paragraphs 8A, 8C, 8E and 8F, while asserting that the plaintiffs had a liability to contribute to the QSL trading losses, was, in the pleaded circumstances, misleading.
  1. Paragraph 18 does not identify in what respect the relevant conduct is alleged to be misleading. Nor is that apparent from an examination of the circumstances alleged to render it misleading. Although the plaintiffs’ submissions alleged that conduct is misleading if it induces or is likely to induce error[30], the pleading does not state what the error is.  Nor, in my view, does it otherwise identify in what respect the conduct alleged in paragraph 18 is said to be misleading.
  1. The balance of the defendant's submissions on the misleading conduct case may be dealt with together. Broadly speaking, they contended that the pleading did not satisfactorily plead that the alleged loss was caused by the misleading conduct.
  1. It should first be noted that this is a claim for damages. It is therefore necessary, in the present case, for the pleading to articulate a link between the conduct and the alleged loss. It is difficult to conceive what such a link might be, unless someone is misled. Yet, as the defendant's submissions pointed out, no "target" for the misleading conduct is identified in the statement of claim.
  1. One element of the damages claimed by the plaintiffs is the amount of $42.50 per tonne of IPS sugar, previously referred to. It is apparent from the plaintiffs’ submissions that this is the damage alleged to have been suffered by reason of the misleading conduct[31]
  1. The plaintiffs submitted that, had the defendant not engaged in the alleged conduct, QSL would have made the payments withheld in March 2010, and they would have been passed on to the plaintiffs[32].  Read sensibly, the conduct referred to is the negotiations between the millers, including the defendant, and QSL; and perhaps the agreement between those millers and QSL; referred to in paragraphs 8B, 8C and 8D.  It seems to me that a causal link between the loss and this conduct is sufficiently apparent from the pleading.   However, as I have indicated, the pleading does not satisfactorily allege this conduct to be misleading.
  1. Insofar as the statement of claim alleges that the conduct identified in paragraph 18 was misleading conduct, the pleading does not identify a causal link between that conduct and the alleged loss. Paragraph 10 of the statement of claim alleges that the defendant did not pay the amount of $42.50 per tonne IPS to the plaintiffs. The plaintiffs’ pleaded case appears, in broad terms, to be that the defendant and the other QSL millers persuaded QSL to treat the QSL trading losses in a way that permitted it to deduct the amount of those losses from its payments to the millers; with the result that payments to growers, including those made by the defendant to the plaintiffs, were reduced to reflect those losses. The conduct referred to in paragraph 18 was keeping secret what had occurred between QSL and the millers; and the defendant’s assertion that the growers were liable to contribute to the QSL trading losses. On the plaintiffs’ pleaded case, the loss was not caused by that conduct.
  1. In my view, therefore, version 7 does not adequately plead a case of loss resulting from misleading conduct.
  1. It follows that I would not be prepared to permit the plaintiffs to rely on the allegations of misleading conduct found in paragraphs 17 and 18, and the allegations of loss resulting from misleading conduct.

Delay

  1. The defendant pointed to the number of occasions on which versions of a statement of claim have been produced. It relied on the recognised need for speed and efficiency in the conduct of proceedings, calling in aid r 5 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR); as well as the principles stated in Aon Risk Services Australia Ltd v Australian National University[33].
  1. The submissions for the plaintiffs pointed out that there is no allegation that the defendant has suffered prejudice by the delay which has occurred to date, and any further delay which might be occasioned by the amendment. They referred to the history of the proceedings, noting that the amendments were in fact occasioned by the counterclaim delivered only in March 2014; while acknowledging that the amendments went beyond matters raised by the counterclaim. They also pointed out that the amendments were "within time", which I understood to mean that the proposed causes of action were within the relevant limitation period. They also referred to their written submissions, the most significant of which appeared to me to be that a party should have the opportunity properly to advance its case, and should not be shut out from litigating a case which is fairly arguable. Those submissions also referred to the fact that these are developing areas of the law, perhaps as providing some explanation for some of the changes in their pleading.
  1. In my view, while a relatively substantial period of time has elapsed since the commencement of the case, that does not seem to me to be a particularly significant consideration. The absence of any real prejudice to the defendant, is, however, significant. While r 5 identifies a purpose of the rules as being to facilitate the expeditious resolution of cases, another purpose is to facilitate the just resolution of the real issues in a case. To the extent that they are adequate, the amendments in my view are directed to the latter purpose. Indeed it seems to me that a court should not lightly preclude a party from pleading a case which is not obviously untenable, particularly when the limitation period has not expired. Accordingly, I would not be prepared to refuse leave on discretionary grounds.

Conclusion

  1. I indicated at the hearing that I might ultimately accept some, but not all, of the submissions made by the defendant and invited Mr Doyle QC to state what course I should then follow. He submitted that I should grant leave to amend, limited to those parts of the pleading which I consider adequately raise a cause of action. I propose to take that course. That will have the consequence that I will not permit the plaintiffs to include in the amended statement of claim those allegations which relate solely to its claim for misleading or deceptive conduct; but would otherwise grant the leave it seeks.
  1. Accordingly, I would be prepared to grant the plaintiffs leave to amend their statement of claim, generally in accordance with version 7, save for paragraphs 17 and 18; and the reference to those paragraphs in paragraph 19.

Footnotes

[1] See statement of claim para 8G(d).

[2] See statement of claim para 8D.

[3] See s 21(2)(a) of the CCA and s 51AC(5) of the TPA.

[4] (1990) 169 CLR 594.

[5] Concrete Constructions at pp 602-603.

[6] Concrete Constructions at p 603.

[7] At p 604.

[8] See s 21(2)(a).

[9] See version 7, para 16 (b), the introduction, and particular D.

[10] [2007] NSWCA 246 at [4].

[11] [2013] NSWCA 446 at [102].

[12] See s 21(4).

[13] Compare McKellar v Container Terminal Management Services Ltd (1999) 165 ALR 409 at [25].

[14] [2013] FCAFC 90 at [41].

[15] See the particulars to paragraph 16(b)(iii).

[16] [2000] FCA 15 72 at [64].

[17] That submission finds some support in McKellar, referred to earlier in these reasons.

[18] See for example Gould v Mt Oxide Mines Ltd (in liq) (1916) 22 CLR 490, 517; Esso Petroleum Co Ltd v Southport Corporation [1956] AC 218, 238; Banque Commerciale SA (in liq) v Akhil Holdings Ltd (1990) 169 CLR 279, 286; McKellar at [21]-[22].

[19] Version 7, para 8G(d) and para 9.

[20] See the balance of paragraph 8G.

[21] At [64].

[22] At [25]; see also Johnson Tiles at [63].

[23] (1991) 217 ALR 171.

[24] At [171].

[25] At [173]-[174].

[26] Deft’s subs para 27.

[27] Deft’s subs para 27.

[28] Pltf’s subs para 34.

[29] (1992) 39 FCR 31 at 40-41.

[30] Pltfs’ subs para 37.

[31] Pltfs’ subs paras 40, 42.

[32] Pltfs’ subs para 40.

[33] (2009) 239 CLR 175 at 213.

Close

Editorial Notes

  • Published Case Name:

    Papale & Ors v Sucrogen Ltd & Anor

  • Shortened Case Name:

    Papale v Sucrogen Ltd

  • MNC:

    [2015] QSC 21

  • Court:

    QSC

  • Judge(s):

    P Lyons J

  • Date:

    10 Feb 2015

Litigation History

No Litigation History

Appeal Status

No Status