Kewlands Pty Ltd v Armstrong Corporate Capital Limited
[2015] QDC 164
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- Unreported Judgment
- Kewlands Pty Ltd v Armstrong Corporate Capital Limited[2015] QDC 164
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Kewlands Pty Ltd v Armstrong Corporate Capital Limited[2015] QDC 164
Kewlands Pty Ltd v Armstrong Corporate Capital Limited[2015] QDC 164
DISTRICT COURT OF QUEENSLAND
CITATION: | Kewlands Pty Ltd v Armstrong Corporate Capital Limited & Anor [2015] QDC 164 |
PARTIES: | KEWLANDS PTY LTD ACN 010 798 064 (Applicant) and ARMSTRONG CORPORATE CAPITAL LIMITED ABN 12 330 949 10 (First Defendant) and FRANCIS JOHN ARMSTRONG (Second Defendant) |
FILE NO: | D61/13 |
DIVISION: | Civil |
PROCEEDING: | Application |
HEARING DATE: | 19 June 2015 |
DELIVERED AT: | Southport |
DELIVERED ON: | 25 June 2015 |
JUDGE: | Judge C F Wall QC |
ORDER: |
|
LEGISLATION: | Australian Securities and Investments Commission Act 2001, Section 12 |
CASES: | Brookfield Multiplex Ltd v The Owners – Strata Plan No. 61288 (2014) 88 ALJR 911 Ashton v Dorante [2012] QCA 175 |
CATCHWORDS: | PRACTICE – PLEADING – STATEMENT OF CLAIM – application to strike out cause of action in negligence claiming economic loss – whether cause of action sufficiently pleaded |
COUNSEL: | Mr P Hackett for the Plaintiff Mr R Ashton for the Defendants |
SOLICITORS: | Qld Law Group for the Plaintiff Moray & Agnew for the Defendants |
- [1]The defendants have applied to strike out those parts of the amended statement of claim which plead a cause of action in negligence.
- [2]The plaintiff is a moneylender and its claim is for economic or financial loss.
- [3]Just as the plaintiff has pleaded[1]that the defendants owed the plaintiff a duty of care in the provision of advice and information because of
- the first defendant’s business as a finance broker[2]
- the personal working relationship between the director and shareholder of the plaintiff (Baker) and the first defendant’s servant or agent (the second defendant) which included open and frank dealings whereby Baker would accept as true matters conveyed to him by the second defendant[3]
- the fact that the first defendant knew that Baker lent money through companies controlled by him[4]
- the duties imposed by s 12DA(1) and s 12DB(1)(a) of the Australian Securities and Investments Commission Act 2001 on the defendants not to engage in conduct in relation to financial services that is misleading or deceptive or is likely to mislead or deceive and not to make a false or misleading representation that services are of a particular standard, quality, value or grade[5]
- the fact that the first defendant, by the second defendant, knew or ought to have known, as did the second defendant himself, that the plaintiff
- (a)had no knowledge of the financial affairs of the defendants’ clients; and
- (b)would rely on the representations pleaded in para 4 because of the matters in paras 2d i to iii[6] and
- the fact that in reliance upon the representations the plaintiff loaned the money to the first defendant’s client[7]
the pleading should also, in my view, address the issue of the plaintiff’s vulnerability and the facts relied upon to establish that. At the moment all of the facts necessary to establish the relevant duty of care have not been pleaded. Facts sufficient to demonstrate vulnerability must be pleaded. Such facts should include the fact that the plaintiff could not, in the circumstances, have protected itself against the loss which it suffered. Salient features of the relationship between the parties are also relevant to the determination of the duty of care relied upon.[8]These could clearly include some of the matters referred to in para 21 of Mr Ashton’s Outline of Submissions and also the facts pleaded in para 12 of the amended statement of claim.
- [4]Mr Hackett submitted that the statements (representations) made by the second defendant pleaded in para 5 encompassed vulnerability but that is not how the matter is pleaded. They may very well be “salient features of the relationship” which support a pleading of vulnerability but that is not pleaded. What is pleaded only is that it was known that the plaintiff would rely on those representations and did so.[9]
- [5]In Brookfield, Hayne and Kiefel JJ said
“Reliance may be a necessary element in demonstrating vulnerability but it is not a sufficient element…. (V)ulnerability is concerned with a plaintiff’s inability to protect itself from the defendant’s want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant”[10]
- [6]Crennan, Bell and Keane JJ referred to the concept being
“concerned with the inability of the plaintiff to take steps to protect itself from the risk of the loss”[11]
that is, with whether the plaintiff could not have protected itself against the economic loss it alleges it has suffered.
- [7]The omission of a material fact necessary to sustain the particular cause of action relied upon renders that part of the statement of claim liable to be struck out.[12]The absence of vulnerability is fatal to the existence of the duty of care.[13]What is pleaded here is not sufficient to establish the duty of care relied upon.
- [8]Paragraphs 2d, 3c and 22-27 of the amended statement of claim will be struck out and the plaintiff’s application to further amend the amended statement of claim will be dismissed. The plaintiff will be given leave to re-plead its cause of action in negligence and for that purpose any further amended statement of claim is to be filed and served by 4.30pm on 16 July 2015. I further order that the plaintiff pay the defendants’ costs of each application to be assessed on the standard basis unless agreed.
Footnotes
[1] paras 2d & 3c
[2] para d i
[3] para d ii
[4] para d ii
[5] para d iii
[6] para 5
[7] paras 6, 7, 22 and 24A (there is no alternative allegation of assumption of responsibility by the defendants in favour of the plaintiff)
[8] Brookfield Multiplex Ltd v The Owners – Strata Plan No. 61288 (2014) 88 ALJR 911 at paras [29] and [30]
[9] paras 5b and 6
[10] para [57]
[11] para [130]
[12] Ashton v Dorante [2012] QCA 175 at [69]
[13] Brookfield at para [59]