DISTRICT COURT OF QUEENSLAND

1. [1]
   This is an application by the seventh defendant (“IOOF”) brought under rule 171 of the Uniform Civil Procedure Rules (“UCPR”) to strike out the plaintiff’s claim against IOOF.  At this stage of the action, while a statement of claim has been filed, no defence has been filed and no disclosure by any party has occurred.

Facts as Pleaded in Statement of Claim

2. [2]
   IOOF was the owner of land comprising a unit development near Cairns and on or about 9 September 1994 contracted to sell one of those units to the plaintiffs. The first and second defendants are financial advisors; the fourth and fifth defendants are real estate agents and (to use a loose term.) all were “engaged” in the marketing of the units. The sixth defendant, (“Firecroft”) was a company which, under a leaseback agreement, agreed to lease units from purchasers for ten years. Firecroft proved to be unable to honour its commitment, first defaulting on its agreement on 31 March 1998.

3. [3]
   The statement of claim alleges that in or about August 1994 the investment advisors made representations at a seminar to the plaintiffs including advice which recommended, on economic grounds, the purchase of a unit in the development. In giving this advice, they acted as agents for IOOF. Acting on those representations the plaintiffs bought a unit.

4. [4]
   The statement of claim also alleges that the real estate agents also made similar representations to the plaintiffs, and did so as the agents of IOOF.

The Claim

5. [5]
   The claim against IOOF is for damages under s. 82 of the Trade Practices Act 1974 (Commonwealth) (“TPA”) and for interest and costs.  The statement of claim alleges that the representation made by the financial advisors and the real estate agents were actionable under s. 52 of the TPA and caused financial detriment to the plaintiffs.

6. [6]
   Similar circumstances are alleged to exist in relation to twenty five other purchasers of units, each of whom has brought a similar action against the seven defendants. IOOF has brought a similar application against each of those plaintiffs, all of which await the outcome of this application.

The Contract

7. [7]
   Relevantly, the “Item Schedule” at the commencement of the contract lists the vendor as IOOF and the selling agents as “Raine and Horne” (that is the fourth and fifth defendants). Clause 32 is as follows:

“32 Appointment of Agent

32.1 The Vendor notifies the Purchaser and the Purchaser confirms that the Vendor has not appointed an agent to introduce a buyer.  The Selling Agent has been appointed by Firecroft as the agent of Firecroft to introduce a buyer and Firecroft is liable for the payment of any commission or fees payable to the Selling Agent.”

The Application – Want of Particulars

8. [8]
   The first limb of IOOF’s application is based on the plaintiffs’ alleged failure to comply with rule 149(2) of UCPR which is:

1. “149(2)

   In a pleading, a party may plead a conclusion of law or raise a point of law if the party also pleads the material facts in support of the conclusion or point.”

9. [9]
   The statement of claim in para. 1.4 alleges (in respect of representations allegedly made by the investment advisors to the plaintiff at the seminar in or about August 1994):-

1. “1.4

   In making the representations referred to in paragraph 5 herein the (investment advisors) were acting as agents for (IOOF) or were otherwise authorised by (IOOF) to make the representations.”

and para. 56 of the statement of claim alleges:-

1. “56.

   At all material times the (investment advisors and the real estate agents) acted as agents for (IOOF) in making the representations referred to herein.”

10. [10]
    IOOF has sought further and better particulars of the allegations. The response has been that at this stage of the action no such particulars can be given and that it is premature to seek them until after disclosure of documents and, perhaps, interrogation has taken place.

11. [11]
    For IOOF Mr Bell QC has submitted that a mere allegation of agency, unsupported by allegations of material facts supporting either an actual agency or an apparent agency, is in breach of rule 149(2) of UCPR. Without the necessary particulars, he submits, the allegation of agency cannot stand and therefore there is no disclosed cause of action against IOOF.

12. [12]
    An application to strike out an action for want of disclosure of cause of action is tantamount to an application for summary judgment. In such an application the applicant bears a high onus. The power to strike out is exercised sparingly and in exceptional cases. Phrases used to describe the necessary circumstances include “manifestly groundless” or “so manifestly faulty that it does not admit of argument” (General Steel Industries Inc. v Commissioner for Railways (1964) 112 CLR 125 at 129 per Barwick CJ.

13. [13]
    The authority of an agent may be actual where it results from a manifestation of consent that he should represent or act for the principal expressly or impliedly made by the principal to the agent himself; or it may be apparent, where it results from such a manifestation made by the principal to third parties. See Bowstead & Reynolds and Agency  17^th ed. para 3-001.

14. [14]
    The plaintiffs have said that they are unable at this stage to particularise any fact supporting the allegation of agency of either the investment advisors or the real estate agents. That is hardly surprising so far as actual authority is concerned. The plaintiff would be most unlikely to be in possession of any documentary evidence of the actual appointment of either of them by IOOF. They would be equally unlikely to be privy to any oral arrangement between them.

15. [15]
    Nor have the plaintiffs listed (at least formally) any particulars of facts on which any apparent agency could be based. Yet to my mind Mr Maher, counsel for the plaintiffs, did so in his oral submissions to me.

16. [16]
    So far as the alleged agency of the investment advisors is concerned he pointed to the fact that it is pleaded that at the August seminar they made representations which were clearly designed to cause the plaintiff to enter into a contract to purchase a unit from IOOF. It would be a reasonable inference that IOOF knew of the seminar and its purpose and a further reasonable inference would be that the holding of the seminar for the purpose of achieving sales of units received the approval (even if only tacit) of IOOF. These facts would tend to support the apparent authority of the investment agents.

17. [17]
    Similar points were made in respect of the alleged agency of the real estate agents.

18. [18]
    While no reference was made to it at the hearing, it is clear that the statement of claim is verbally defective in relation to the allegations against the real estate agents. Paragraph 41 refers to “representations referred to in paragraph 39” yet paragraph 39 sets out no representations. Furthermore the terms of paragraph 41 suggest that the terms of some alleged representations as well as details of time and place have been omitted. Nor is there an express allegation in the statement of claim that the real estate agents were the selling agents of the unit.

19. [19]
    However as I understood the arguments, both sides proceeded on the assumption that the real estate agents are alleged to have made representations to the plaintiffs similar to those alleged against the investment advisors and at or about the same time and place.

20. [20]
    In Hely-Hutchinson v Brayhead Ltd (1968) 1 QB 549 at 583 Lord Denning M.R. said:

“I need not consider at length the law on the authority of an agent, actual, apparent, or ostensible.  That has been done in the judgements of this court in Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd.  It is there shown that actual authority may be express or implied.  It is express when it is given by express words, such as when a board of directors pass a resolution which authorises two of their number to sign cheques.  It is implied  when it is inferred from the conduct of the parties and the circumstances of the case, such as when the board of directors appoint one of their number to be managing director.  They thereby impliedly authorise him to do all such things as fall within the usual scope of that office.  Actual authority, express or implied, is binding as between the company and the agent, and also as between the company and others, whether they are within the company or outside it.

Ostensible or apparent authority is the authority of an agent as it appears to others.  It often coincides with actual authority.  Thus, when the board appoint one of their number to be managing director, they invest him not only with implied authority,  but also with ostensible authority to do all such things as fall within the usual scope of that office.  Other people who see him acting as managing director are entitled to assume that he has the usual authority of a managing director.”

21. [21]
    In my view the representations made by the investment advisors and by the real estate agents are clearly the sorts of representations regularly made by such parties for the benefit of a vendor of land and are seen as falling within the usual scope of their offices. So the pleading clearly enough makes allegations which would give rise to a prima facie case of  their apparent authority to make those representations.

22. [22]
    I agree with the submission of Mr Maher that clause 32.1 of the contract (on para 7 above) is not determinative of the authority of the real estate agents. That clause is concerned with liability for agents’ commission and fees and it defines the status of the real estate agents as at the date of the contract, that is, at a time after the making of the alleged representations. Furthermore it is not part of the plaintiffs’ pleading and is merely evidence which may or may not prove to be important.

23. [23]
    I am unable to see that the provisions of s. 84 (2) of the TPA bear on the question before me. It is, as Lockhart J said in Walplan Pty Ltd v Wallace (1986) ATPR 40-650 at 47, 252, an evidentiary provision which facilitates proof of the responsibility of a corporation for the acts of its agents and others.  If anything, it may one day assist the plaintiffs.

24. [24]
    I would add that, despite the wording of rule 149(2), of UCPR, in circumstances such as these it would be very hard law to strike out the claim. The plaintiffs say they cannot now give further particulars and that is not surprising. Yet the acts of the alleged agents which sufficiently appear in the pleading are not beyond what one might expect of such agents and so it cannot be said that the action seems to be frivolous. It would be a proper case to decline to order particulars until after disclosure and, possibly, interrogatories. Such a course is not unusual. See for example Millar v. Harper, 38 Ch.D. 110;  Leitch v Abbot 31 Ch.D. 374; Maxim Nordenfeldt Guns and Ammunition Company v. Nordenfeldt (1893) 3 Ch.122.

25. [25]
    This is an application to strike out, not an application for particulars. I have decided that it is not a proper case to strike out for breach of rule 149(2) but it seems to me that it would be proper for the plaintiffs to seek leave to amend the statement of claim to correct the apparent verbal defects in it to which I have referred in para. [18] above and it may be that at the same time it may be possible to particularise allegations of fact to support the allegations of apparent agency. In any event, it would be proper for the plaintiffs to advise IOOF that they reserve the right to supply further particulars after disclosure has been had.

Application – Damages

26. [26]
    Mr Bell made a submission which (unless I misunderstood the subtlety of it) was that I should strike out the statement of claim on a further basis, namely the inevitability of a successful plea of the limitation period. The operative provision of TPA (s. 82(2)) lay down a period of three years within which to bring an action. My recollection, supported by reference to the transcript, is that this aspect of the application was put somewhat diffidently (T23/30-50). It revolved around the correct approach to the assessment of damages and relied upon authorities such as Manwelland Pty Ltd v Dames and Moore Pty Ltd CA No 470 of 2001 to establish that in a case such as this the proper measure of damages is the difference between the position the plaintiffs would have been in had the representations not been made and their position attained because of the representations.  That involves, it was submitted, assessment of the loss calculated as at the date of the contract, a date well beyond three years before the filing of the claim.

27. [27]
    While accepting for present purposes the validity of the submission, it seems to me to overlook the point that the alleged representations could not be shown to have been materially false (or otherwise actionable) until Firecroft defaulted. At that time the cause of action accrued. The statement of claim alleges the default to have occurred on or about 31 March 1998. The claim was filed on 30 March 2001.

Conclusion

28. [28]
    The application is dismissed.