FEDERAL COURT OF AUSTRALIA

PRACTICE AND PROCEDURE and PLEADING – guillotine or self-executing order – order made by consent – discretion of court to extend time so as to avoid the effect of the self-executing order – relevance of the fact that the order was made by consent – defective pleading – pleading of conclusions without the facts warranting those conclusions – pleading lacking reasonable particularity – pleading embarrassing – pleading of fraud.

Federal Court Rules, Order 3 r 3

FAI General Insurance Company Limited v Southern Cross Exploration N.L. (1988) 165 CLR 268, applied

Fisher v Rural Adjustment & Finance Corporation of Western Australia (1995) 57 FCR 1, applied

Caledonian Collieries Limited v Speirs (1957) 97 CLR 202, referred to

X (Minors) v Bedfordshire County Council [1995] 2 AC 633, referred to

Northern Territory of Australia v Mengel (1995) 185 CLR 307, applied

Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151, referred to

Pratt Contractors Ltd v Palmerston North City Council [1995] 1 NZLR 469, referred to

Banque Commerciale S.A., En Liquidation v Akhil Holdings Limited (1990) 169 CLR 279, applied

Pancontinental Mining Ltd v Posgold Investments Pty Ltd (1994) 121 ALR 405, applied

Johnstone v Casual Life Furniture Pty Ltd (Tamberlin J, unreported, 24 November 1997), applied

H 1976 Nominees Pty Ltd v Galli (1979) 30 ALR 181, applied

Multigroup Distribution Services Pty Limited v TNT Australia Pty Limited [1996] ATPR 42,677, applied

Mitanis v Pioneer Concrete (Vic) Pty Ltd [1997] ATPR 44,147, applied

E I Du Pont de Nemours & Co v Commissioner of Patents (1987) 16 FCR 423, discussed

J L Holdings Pty Ltd v State of Queensland (1996) 71 FCR 545, discussed

Chanel Ltd v F W Woolworth & Co Ltd [1981] 1 WLR 485, discussed

R D Werner & Co Inc v Bailey Aluminium Products Pty Ltd (1988) 18 FCR 389, discussed

AUST-POL ENGINEERING PTY LIMITED v AUSTRALIAN MARITIME SAFETY AUTHORITY & ors

NG 418 of 1996

Burchett J

Sydney

24 September 1998

THE COURT ORDERS THAT:

1.         The motion of the applicant for extension of the times fixed by the orders of the court made by consent on 23 May 1997 be dismissed;

2.         The amended statement of claim filed in purported compliance with the orders made by consent on 23 May 1997 be struck out, and leave be refused to file the applicant’s proposed Fourth Further Amended Statement of Claim;

3.         The principal application of the applicant stand struck out with costs in accordance with the order in that regard made on 23 May 1997;

4.         The applicant pay the respondents’ costs of the motion.

Note:                Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

From its institution, this proceeding was dogged by a number of delays, and by serious deficiencies in the applicant’s compliance with the court’s directions.  Just one year after the filing, on 23 May 1996, of the statement of claim, the applicant consented, on 23 May 1997, to orders which the court then made setting dates for the filing and service, on behalf of the applicant, of an amended application and statement of claim, and any further affidavits.  These orders were required by the grossly inadequate and embarrassing form of the statement of claim, and the paucity of the affidavit evidence.  The amended application and statement of claim were to be filed and served on or before 9 June 1997, and the affidavits on or before 7 July 1997.  It was also ordered that the applicant provide copies of its documents to the respondents by 30 May 1997.  The consent orders continued as follows:

“In the event that the Applicant fails to comply with any of these orders:

            (i)         the matter be forthwith struck out; and

            (ii)        the Applicant pay the costs of the Respondents in the matter.”

An order in this form may fairly be described as a guillotine or self-executing order.  The applicant did file and serve a document entitled “AMENDED STATEMENT OF CLAIM” (on 10 June 1997, but 9 June 1997 was the official Queen’s Birthday – a public holiday in New South Wales), and a further affidavit.  However, the affidavit was filed two days outside the time specified in the orders of 23 May 1997.  This delay in the filing of the affidavit was not, of course, great; but the amended statement of claim, as filed, was again a seriously deficient pleading.  Indeed, the amendments (which were almost confined to the particulars) were so slight as to be derisory, and were certainly far from what was contemplated by the order for the filing of an amended application and statement of claim in a case where the original pleading was plainly liable to be struck out.  In addition to that, the further affidavit, as well as being late, left the applicant’s evidence still quite incomplete.  On 25 July 1997, the applicant moved orally for an extension of time under Order 3 rule 3 in order to avoid the effect of the guillotine order.  At the same time, counsel indicated that the applicant was seeking some form of legal aid.  After lengthy debate, the motion was adjourned to enable the application for legal aid to be pursued.  The matter came back before the court on eight further occasions during 1997 and finally on 11 February 1998, when I reserved my decision.  On 11 December 1997, 17 December 1997, 18 December 1997 and 28 January 1998, a series of proposed further amended statements of claim were produced, and the matter concluded on 11 February 1998 on the basis that an extension of time was then sought in order to permit the applicant to proceed, not upon the amended statement of claim filed 10 June 1997 which counsel rightly accepted was a pleading that could not be supported, but upon a proposed fourth further amended statement of claim.  There is no doubt that, if leave were granted to enable this new version of the pleading to be filed, a markedly different case would be presented, that would require the reopening of discovery and an extension of time for the filing of further evidence.

Counsel for the respondents, in opposing the motion, accepts that, despite the terms of the guillotine or self-executing order, I have a discretion to extend time so as to allow the applicant to pursue its action.  That concession was rightly made:  FAI General Insurance Company Limited v Southern Cross Exploration N.L. (1988) 165 CLR 268.  There, the High Court interpreted a rule which is not relevantly distinguishable from Order 3 rule 3 of the rules of this court as permitting time to be extended, even after the dismissal of a proceeding pursuant to a self-executing order.  Wilson J (with whom Brennan, Deane and Dawson JJ agreed) said of the power to extend time (at 283-284):

“The discretion so conferred is not readily to be limited by judicial fiat.  The fact that it manifestly is a power to be exercised with caution and, in the case of conditional orders, with due regard to the public policy centred in the finality of litigation does not warrant an arbitrary limitation of the power itself, not expressed in the words of the rule, so as to deny its capacity to apply to circumstances such as those which are to be found in the present case.  It would be wrong to so read the rule as to deny to a court power to prevent injustice in circumstances where the party subject to a conditional order ought to be excused from non-compliance.”

Gaudron J said (at 290):

“Where a power or discretion is conferred upon a court it is inappropriate that such power or discretion be treated as subject to limitations not contained in the grant of that power or discretion.”

At the same time, the very breadth of the discretion affirmed by the High Court entitles and requires the court to look at the whole of the circumstances in order to determine whether or not it would be in accordance with the justice of the case to extend time.  Those circumstances include the history of the matter, and such indications as it gives that the applicant is unable or unwilling to cooperate with the court and the respondents to place the pleadings in proper order and have the matter ready for trial within an acceptable period:  Fisher v Rural Adjustment & Finance Corporation of Western Australia (1995) 57 FCR 1 at 19.  The circumstances of the present case include one that was not present in Fisher, namely, the fact that the self-executing order the effect of which the applicant now seeks to avoid was made by consent.  Otherwise, there is considerable similarity.  Just as a deficient amended statement of claim was filed here in purported compliance with the guillotine order, so, in Fisher, there was purported compliance with a guillotine order requiring the supply of particulars, the particulars being such as the Full Court held (at 18) “did not comply” with the order.

Notwithstanding that the guillotine order was made by consent, had the applicant been able to demonstrate within a reasonable time that it was able and ready to proceed, in an appropriate and timely fashion, to present a case of which the respondents could not justly complain that it was embarrassing, I would have been disposed to exercise my discretion in the applicant’s favour.  Also, I took the view that the applicant’s apparent need of legal aid was a reason to adjourn the motion so as to give it a full opportunity to show that it could, as an essential starting point, put its pleading in proper order.  However, it seems to me that even the proposed fourth further amended statement of claim is an unacceptable pleading.

The pleading commences by referring to the applicant’s business of the production and supply of oil pollution control equipment and to the existence, as part of the Department of Transport and Communications of the Commonwealth, and until 1 January 1991, of a Marine Pollution Prevention Section which, after that date and upon the incorporation of the first respondent, the Australian Maritime Safety Authority, fell within that corporation’s purview.  The pleading alleges that the third respondent was initially an officer of the second respondent, the Commonwealth, and later also of the first respondent.  There is then a broad assertion, which does not distinguish between public and private law, that the Australian Maritime Safety Authority and the Commonwealth, “by reason of their status as public authorities, were required to comply with the rules of procedural fairness known as the rules of natural justice”.  This is followed by an allegation that, from 1985 to 1995, these authorities invited the applicant and other corporations to submit various tenders for the supply of marine pollution control equipment.  It is pleaded that the authorities “were subject to certain duties … to procure goods in a specified manner in accordance with” the Preference to Australian Goods (Commonwealth Authorities) Act 1980 (but this Act, the name of which was changed by the Commonwealth Functions (Statutes Review) Act 1981 to the Procurement of Goods, Works and Services Act 1981, was repealed on 23 October 1990) or the Audit Act 1901 and the Finance Regulations under it (including the Commonwealth Procurement Guidelines issued pursuant to reg 42), or “acted in a manner in relation to the conduct of tenders as if they were subject to the duties and obligations imposed by various Federal legislation and regulations including that referred to”, or “acted in a manner in relation to the conduct of tenders as if they were subject to their own procurement guidelines which were published and included the ‘Commonwealth Purchasing Manual’”.  Duties are also pleaded as arising under s 51(xxxi) and 61 of the Constitution of the Commonwealth of Australia.  The pleading continues that the authorities maintained a list of thirty pollution control equipment suppliers, including the applicant, to which invitations to tender were sent “where a Registered Tenderer [ie company on the list] was known to be capable of supplying the goods and/or services required”, and that the applicant was so known in respect of the goods and services in question.  It is pleaded that the applicant responded to invitations to tender, at unspecified cost to itself, in reliance upon the authorities “complying with their statutory obligations and legal duties set out in the Act [the Preference to Australian Goods (Commonwealth Authorities) Act 1980] or the Finance Regulations and the Guidelines” and in reliance upon “its likely inclusion in future tenders”, its membership of the class of registered tenderers, and “the existence of a fair system of procurement practices”.  The authorities, the pleading alleges, knew or ought to have known of this reliance; that it was foreseeable the applicant would incur loss if not included “in a tender for oil pollution control equipment”; and that all respondents “were subject to duties imposed by the Public Service Act 1922, including s 91 of that legislation.” 

All this, and particularly the various references to duties pursuant to statutes and regulations, did not presage a count of breach of statutory duty, but constituted, counsel assured me in argument, the basis of a count in negligence.  What was being alleged, counsel said, was “one of the conditions that give rise to what we say is a relationship of proximity, … and expectation and a reliance, both actual and general that the government … would follow a set of tendering procedures or procurement practices”.  Counsel reiterated:  “[W]e are not claiming that there is a statutory duty that has been breached”.  He specified the duty of care as “a duty … to offer for tender the procurement of goods where there is a system known and relied on by parties and an expectation that goods procured will be [the subject of tenders] … a duty to tender [scil. to call for tenders] in accordance with known procedures”.  Counsel conceded he could find no case where a duty of care had been stated in these terms.  Alternatively, he relied on Caledonian Collieries Limited v Speirs (1957) 97 CLR 202 at 220, where it was held to be “well-settled” that “when statutory powers are conferred they must be exercised with reasonable care”.  But that was in the context of a statutory power to construct and maintain a railway line, the dangerous potentiality of which led to a fatal injury.  See X (Minors) v Bedfordshire County Council [1995] 2 AC 633 at 728-729, 730 et seq.

However, the pleading gives little indication of the basis on which, or respects in which, the particular procurements complained of fell within any precise expectation or expectations, or just how those expectations were negligently denied.  It is alleged that, in two cases, equipment was procured without tenders being called, and in general language that is said to have been “in contravention of the Act, and/or the Finance Regulations and the Guidelines”.  The pleading does not condescend to any detail of either the duty or the breach alleged, and the factual allegations regarding the manner and circumstances of the alleged procurement, without calling for tenders, are left almost entirely unstated.

Of course, if claims were held to have arisen out of the two failures to call for tenders which are alleged, those claims would be for the loss of the chance that the applicant, rather than some other of the thirty registered tenderers, would have been successful in obtaining a contract, and at a price that would have yielded some profit.  The pleading makes only the most general allegations about this. 

Another difficulty, in the case of the first of the alleged procurements, is that its date is so vaguely alleged.  The pleading says:

“On or before September 1990 the Second Respondent purchased ….”

Since the proceeding was commenced in 1996, this leaves open the question whether any claim in respect of that procurement would be statute barred.  Certainly, if the present application were a mere strike-out application, the onus would be on the respondents to show that the claim is barred, but in the circumstances of this case, the applicant, which seeks an indulgence, might be expected to show that the indulgence would not be a futility.  Also, this claim appears to be entirely new, so that it ought not to be permitted to relate back to the institution of the proceedings, and is barred in any case.

Next, the pleading contains several counts of misfeasance in office against the Commonwealth and the third respondent.  In a plainly embarrassing manner, the allegation of misfeasance is mixed up with an allegation of a breach of “a duty of care by being guilty of misfeasance in a public office”, thus reintroducing the concept of negligence.  One such count appears (in part) in paragraph 30A, the embarrassing nature of which is compounded by the addition, in the guise of particulars of misfeasance in office, of an allegation of the making by the third respondent of representations “which he should have reasonably known were untrue”, and by further particulars, again mixing negligence with misfeasance in office, alleging lack of “adequate supervision or enquiry”. 

So far as the third respondent is concerned, he is the subject of a bare assertion of “the intention of causing harm to the Applicant”, made without any particulars at all, and of an allegation that he made representations “which he knew to be untrue”, this allegation being put embarrassingly in the alternative to an irrelevant allegation that he should have known the representations to be untrue.  Misfeasance in office is a quite special tort, the essence of which was stated in Northern Territory of Australia v Mengel (1995) 185 CLR 307 at 345 as being that “it is a deliberate tort in the sense that there is no liability unless either there is an intention to cause harm or the officer concerned knowingly acts in excess of his or her power.”  It has nothing to do with what the officer should have known.

So far as the pleading alleges misfeasance in office against the Commonwealth, it suffers from yet another difficulty.  That allegation is made on the footing of vicarious liability.  But the pleading gives no indication of the de facto authority to cause intentional harm or to act in excess of power which would generally be required for the incurring by the Commonwealth of vicarious liability for a misfeasance committed by an officer.  As was said in Northern Territory v Mengel at 347, “although the tort is a tort of a public officer, he or she is liable personally and, unless there is de facto authority, there will ordinarily only be personal liability”. 

I turn to the three counts in contract against the first respondent.  These counts are said to be based on the law as stated by Finn J in Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151, where his Honour accepted that participation in the tender process involved, in the circumstances of that case, a pre-award contract.  But he also accepted (at 185) the correctness of a statement of the law made by Gallen J in Pratt Contractors Ltd v Palmerston North City Council [1995] 1 NZLR 469 at 478-479:

“Authority makes it clear that the starting point is that a simple uncomplicated request for bids will generally be no more than an invitation to treat, not giving rise to contractual obligations, although it may give rise to obligations to act fairly.  On the other hand, it is obviously open to persons to enter into a preliminary contract with the expectation that it will lead in defined circumstances to a second or principal contract … Whether or not the particular case falls into one category or the other will depend upon a consideration of the circumstances and the obligations expressly or impliedly accepted.”

That statement of the law raises immediately the question whether the circumstances and the obligations expressly or impliedly accepted in the present case went beyond a mere invitation to treat, and, if so, what term or terms could be implied.  Counsel for the applicant argued that the pleading should be taken to assert, and to assert correctly, an implied term of fair dealing. 

If the pleading is to be interpreted in that way, it should contain a clear statement of the facts which allegedly constituted a breach of the implied term of fair dealing.  It could not be sufficient to say that there was not fair dealing.  But this pleading makes (in paragraphs 44, 53 and 66) a series of allegations which, although lengthy, amount to very little more than general statements that things were not done in the way fair dealing would have required them to be done.  It is true that some particulars are supplied, but these are also mostly expressed in general terms, and are far from satisfactory.  In the case of the first of the contracts alleged, the particulars include quite broad allegations suggesting fraudulent conduct on the part of the third respondent.  Whether the first respondent would be guilty of a breach of an obligation to deal fairly if it acted under a misapprehension induced by the third respondent, is open to question.  None of the cases on tenders suggests that a party calling for tenders generally assumes an obligation to give the correct decision upon the tenders received.  That would involve becoming an insurer of the tenderer.  At most, an implied term of fair dealing would require honesty, and perhaps care.  But, in any case, it is a fundamental rule of pleading that allegations of fraudulent conduct should be made in specific terms; here, an allegation suggesting fraud in relation to the technical specifications for the tender is made in particular (v) of paragraph 44 in the most general terms, and an allegation of misrepresentation is also made in paragraph (viii) in general terms, one such misrepresentation only being specified, without any indication of the basis on which it is claimed that what was represented was known to be untrue.

As Mason CJ and Gaudron J stated in Banque Commerciale S.A., En Liquidation v Akhil Holdings Limited (1990) 169 CLR 279 at 286, in an often cited passage, “[t]he function of pleadings is to state with sufficient clarity the case that must be met”, so as “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.”  In Pancontinental Mining Ltd v PosGold Investments Pty Ltd (1994) 121 ALR 405 at 413, Beaumont J, referring to this passage, said:

“As a corollary of this principle, it is settled that a pleading must be framed with reasonable particularity”.

In a number of authorities, it has been emphasized that this reasonable particularity must be found in the pleading itself, and cannot be supplied, where the pleading is deficient, by appended particulars.  As Tamberlin J said in Johnstone v Casual Life Furniture Pty Ltd (unreported, 24 November 1997):

“The purpose of pleading is to define the issue with sufficient specificity to inform the other parties in advance of the case they have to meet.  The pleading is intended to identify the material relied on as constituting the cause or causes of action which are said to constitute the case for the relief sought.  Particulars and statements of evidence are no substitute for proper pleadings.  The pleading must disclose facts which can reasonably give rise to the cause of action asserted.”

Similarly, in Mitanis v Pioneer Concrete (Vic) Pty Ltd [1997] ATPR 44,147, Goldberg J said (at 44,153):

“[A] deficient pleading, namely one that does not plead any material facts cannot be saved by particulars”.

He referred to the rejection by Northrop J, in H 1976 Nominees Pty Ltd v Galli (1979) 30 ALR 181, of a statement of claim in which the pleader attempted to utilize particulars as a substitute for the pleading of material facts, and to his Honour’s rejection (at 186-187) of the pleading of a conclusion drawn from facts that were not stated.  Goldberg J also referred to my own decision in Multigroup Distribution Services Pty Limited v TNT Australia Pty Limited [1996] ATPR 42,677, where I said (at 42,679):

“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”.

In the present case, the pleading lacks reasonable particularity, as well as having the other deficiencies to which I have referred, and the history of the matter clearly illustrates my comment about misdirected, wasteful and unproductive interlocutory procedures where a statement of claim is inadequate.  In Multigroup (ubi supra), I also cited a number of other decisions which support the proposition that it is insufficient to state an ingredient of a cause of action as a conclusion without specifying the facts which warrant that conclusion.  But this is what the various broad and indefinite allegations made in the applicant’s proposed pleading amount to.

As I have indicated, I accept that the guillotine or self-executing order does not deprive me of the discretionary power to extend time so as to avoid its effect.  I am also satisfied (and counsel for the respondents did not argue to the contrary) that the consensual nature of the order does not deprive the court of its discretion, although it is a factor to be taken into account.  While consent orders have been regarded as contractual in nature, they are exercises of the jurisdiction of the court, and thus subject to the powers and discretions which the court has in respect of orders of the kind in question.  See E I Du Pont de Nemours & Co v Commissioner of Patents (1987) 16 FCR 423 at 424, 432, 434-436; J L Holdings Pty Ltd v State of Queensland (1996) 71 FCR 545 at 548; R D Werner & Co Inc v Bailey Aluminium Products Pty Ltd (1988) 18 FCR 389 at 393.  A similar view has been taken in England, on the basis that where consent is given to an interlocutory order, the order remains interlocutory, and therefore amenable to the power of the court to modify it:  Chanel Ltd v F W Woolworth & Co Ltd [1981] 1 WLR 485 at 492, per Buckley LJ (with whom Shaw and Oliver LJJ agreed).  But, in the present case, I do not think it would be a correct exercise of my discretion to extend the time and give leave, as sought by the applicant, to enable the proposed fourth further amended statement of claim to be filed.  The history of this matter, and the defective and embarrassing nature of this pleading by which it is still sought to be pursued, require me to conclude that the applicant is incapable of adequate compliance with the rules and procedures of the court, and that I should, in the interests of justice, exercise my discretion against the applicant and in favour of the respondents.

The motion for extension of the times fixed by the consent orders made on 23 May 1997 is therefore dismissed; the amended statement of claim filed in purported compliance with those orders is struck out, and leave to file the proposed fourth further amended statement of claim

is refused; and I order that the principal application stand struck out with costs in accordance with the order in that regard made on 23 May 1997.  The applicant must pay the respondents’ costs of the motion.

Associate:

Dated:              24 September 1998