FEDERAL COURT OF AUSTRALIA

Dunn v Australian Society of Certified Practising Accountants

[1999] FCA 651

PRACTICE AND PROCEDURE – pleadings and particulars – statement of claim – application to strike out – application for leave to file further amended statement of claim – whether action based on Trade Practices Act 1974 (Cth) Pt V sufficiently pleaded

REMEDIES – injunction – whether serious question to be tried

WORDS AND PHRASES – “new matter”

Trade Practices Act 1974 (Cth) s 52 and s 75B

Federal Court Rules O 11 r 7 and O12 r 2

Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Ltd (1988) ATPR 41‑633 applied

Baldry v Jackson [1976] 2 NSWLR 415 cited

STEPHEN FRASER DUNN v AUSTRALIAN SOCIETY OF CERTIFIED PRACTISING ACCOUNTANTS

NG 781 OF 1998

LEHANE J

14 MAY 1999

SYDNEY

THE COURT ORDERS THAT:

1.         The proceeding, so far as relief is claimed on the footing of alleged breaches of Pt IV of the Trade Practices Act 1974, be dismissed.

2.         The further amended statement of claim be struck out.

3.         Leave to file the documents entitled second further amended application and second further amended statement of claim be refused.

4.         The applicant have leave to file and serve, not later than 15 June 1999, a further amended application and a further amended statement of claim in which he seeks relief based on allegations of infringement, or involvement in infringement, of Pt V of the Trade Practices Act 1974.

5.         The applicant pay the respondent’s costs of each of the motions the subject of these reasons for judgment, the respondent’s motion, notice of which was filed on 12 October 1998 and the respondent’s motion, notice of which was filed on 18 March 1999.

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

REASONS FOR JUDGMENT

1                     There are before the Court a number of motions.  By a notice of motion filed on 17 December 1998 the respondent (the Society) seeks orders striking out the further amended statement of claim or, alternatively, staying or dismissing the proceedings generally in whole or in part.  The applicant, Mr Dunn, by notice of motion filed on 18 January 1999, seeks interlocutory relief by way of certain prohibitory injunctions, a declaration and a mandatory injunction requiring the publication of “immediate remedial Advertising”.  Mr Dunn also, by the notice of motion, seeks “leave to replead the case under s 46 of the Trade Practices Act 1974”.  Apart from the application for interlocutory relief, the substance of Mr Dunn’s motion is that he seeks leave to file a second further amended application and a second further amended statement of claim.  He accepts that if, because of deficiencies in those documents, leave to file them were refused, it would follow that the (filed) further amended statement of claim would, on the Society’s motion, be struck out.

Background and interlocutory history

2                     This proceeding is the latest in a series commenced by Mr Dunn against the Society.  Mr Dunn is a practising accountant and a registered tax agent.  He is not a member of the Society.  Members of the Society are also accountants.  Certain of its members are entitled, under its by‑laws, to the designation Certified Practising Accountant, or CPA.  The essence of Mr Dunn’s complaint against the Society is that the Society (he says) seeks, by advertising and promotional activities directed to members of the public, to suggest that CPAs have qualities and qualifications not shared by other accountants and in doing so has engaged in conduct which infringes s 52 of the Trade Practices Act 1974 (Cth).  An earlier claim to that effect, based on particular representations said to have been made in certain advertisements published by the Society, was pursued in this Court.  That claim failed: Dunn v Australian Society of Certified Practising Accountants (Federal Court of Australia, Wilcox J, 2 February 1996, unreported); upheld on appeal by the Full Court in its unreported decision of 29 November 1996 .  A further proceeding commenced by Mr Dunn, in which he claimed (but on the basis of substantially the same grievance) that the Society had infringed the objects clause in its memorandum of association, was dismissed by Burchett J: Dunn v Australian Society of Certified Practising Accountants (1998) 29 ACSR 1.

3                     This proceeding is based principally on claims that the Society has infringed s 52 and s 53 of the Trade Practices Act.  Mr Dunn has also sought to include claims based on Pt IV of the Trade Practices Act, principally s 46 but also, perhaps, s 47.  On a previous motion by the Society I made, on 27 October 1998, orders in relation to Mr Dunn’s then current pleading, an amended statement of claim. One of the orders was that the paragraphs of that pleading in which claims were made based upon Pt IV be struck out and that, unless a further amended statement of claim together with a further amended application was filed and served not later than 17 November 1998 upon which leave was granted, with or without further amendment, to proceed in relation to a claim under s 46 of the Trade Practices Act, the proceeding in that respect was to stand dismissed.  I ordered also that the paragraphs of the amended statement of claim by which Mr Dunn pleaded a case based on Pt V of the Trade Practices Act be struck out, but with liberty to replead.  The question of costs was stood over.  Mr Dunn filed a further amended statement of claim (the subject of the Society’s present motion) and a further amended application and has subsequently served the second further amended application and statement of claim which he now seeks leave to file.

4                     During the hearing of the motions Mr Dunn informed me that he did not press the claim under Pt IV of the Trade Practices Act.  In that respect, therefore, the appropriate order, consistent with my earlier interlocutory orders, is that the proceeding, so far as it is based on alleged infringements of Pt IV of the Trade Practices Act, be dismissed.  The substantial question, therefore, apart from the claim for interlocutory relief, is whether the second further amended statement of claim sufficiently pleads a cause of action based on Pt V of the Trade Practices Act.  I indicated at the conclusion of the hearing of the motions that, in my view, it did not; I reserved my decision as to the orders which should be made on the motions.

The second further amended statement of claim

5                     There is no doubt about the principles to be applied.  They were recently considered by Foster J in Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Ltd (1998) ATPR 41‑633.  Having cited earlier authority, his Honour said at 40, 977:

“It necessarily follows that when [s 52] is sought to be used in litigation as the foundation of a cause of action or claim for some specific form of relief, it is imperative that the factual basis upon which the section is alleged to be brought into play must be stated with appropriate clarity in a statement of claim.  This is, of course, a fundamental principle of pleading.”

6                     After referring to examples of difficulties that may occur, including on appeal, where a claim is not adequately pleaded, Foster J continued at 40,978:

“Experience is showing that the Court must be astute in the prevention of this type of situation by requiring, in the early stages of litigation, that claims based on s 52 be pleaded with appropriate precision and in a manner that enables the factual issues for trial to emerge with clarity.”

7                     Even where, as here, an applicant is not legally represented, the Court, in the end, does no service to either party by failing to insist that the factual basis on which claims of infringement of s 52 are made be sufficiently stated in a pleading.  That is so particularly in the present case, where it may well be important to know, for example, whether and to what extent conduct relied on is the same conduct which formed the basis of Mr Dunn’s claims in the earlier proceedings (or, perhaps, should have been raised, if at all, in those proceedings).  And, where facts are pleaded which occurred after the commencement of the proceeding, it will be necessary to determine whether they amount merely to “a new matter” which may be pleaded under O 11 r 7 of the Federal Court Rules or whether, on the other hand, the facts pleaded are relied upon for the purpose of establishing a cause of action which arose after the proceeding was commenced: Baldry v Jackson [1976] 2 NSWLR 415 at 419.

8                     It is now necessary to consider in some detail those paragraphs of the second further amended statement of claim which are intended to plead the factual foundation of Mr Dunn’s claim under s 52 and s 53.  It is convenient to begin with pars 4 and 5 of the pleading:

“4.       The Respondent, from 1989 to the present date, [canvassed] for memberships, representing itself and its CPA Members by issuing Advertising and Promotional material in the Print media, Television and the distribution of pamphlets to the General Public and students.

 5.        Professor Scott Henderson, as President of the Respondent has admitted in the Respondent’s March 1997 edition of [its] Journal and internet site that through [its] advertising and lobbying the Respondent has created, and will continue to create the perception that CPA’s have more competence and integrity than others when this is not true at all for the following reasons;

a)         the Respondent has no reasonable grounds at all to make such comparisons with non member Accountants and the Representation is misleading under s 51A(1) of the Trade Practices Act 1974 ….”

9                     There follows a series of paragraphs which appears to be intended, mainly at least, to provide particulars of falsity, for example:

“…      d)         many CPA’s have no tertiary qualifications at all;

            e)         many CPA’s have not done any ‘CPA programme’ at all;

f)          the ‘CPA’ units do not represent ‘relevant experience’ in any Accounting activity and are not a prerequisite of any Government Registration. …”

10                  Mr Dunn relied on the matter pleaded in par 5 as an admission about the content of the material referred to in par 4.  But pars 4 and 5 do not allege any particular representation made by the Society, or by anyone on its behalf, or any other conduct of the Society, or of anyone acting with its authority, except in the most general terms.  It may be that Mr Dunn is seeking to allege that particular representations were made by or on behalf of the Society; but it is not said what precisely was represented and, of course, there are no particulars as to how or by whom any representations were made on behalf of the Society, or when they were made.  It is plainly not sufficient simply to allege in general terms that the Society has over a long period issued advertising and promotional material and that the president of the Society has said, in an internal Society publication, that the purpose of the Society’s advertising and other activities is to create a particular perception.  In short, a pleading of conduct contravening s 52 is sufficient only if it alleges the facts said to constitute the particular conduct relied on.

11                  Paragraph 6, apparently, is intended to plead particular representations and paragraphs 6a to 6f inclusive again fall generally into the category of particulars of falsity (though the relevance of the speculatively expressed 6f is far from obvious in that context (“This [alleged incompetence on the part of some members of the Society] may be due to overwork and greedyness, due to the overload of client business drummed up for the members by the Respondents Advertising”).  The document referred to in par 6 is in evidence on the Society’s motion.  It is by no means obvious that it says what is alleged of it, and Mr Dunn did not, in the course of argument, provide any further enlightenment about that.  If it is said that the Society, in the publication, makes a particular representation, and that representation is relied on as conduct contravening s 52, then the pleader must state with precision what the representation is said to be.  A similar, but more general, claim is made in par 7, which is objectionable for the same reason:

“7.       The Respondent, in pamphlets such as ‘Achieve (circa 1998)’ has told Accounting students that they can obtain more skills than a ‘general practitioner’ and apply for ‘specialist CPA designation’.”

12                  Paragraph 8a is apparently intended to allege involvement of the Society (Trade Practices Act s 75B) in infringing conduct of certain of its members:

“8a      The Respondent members, with approval of the Respondent have published Advertisements in the Sydney Yellow page Telephone Directory, 1997 and 1998 years representing that ‘A CPA is qualified to provide advice on more than just tax’.”

Paragraphs 8b and 8c may be taken, broadly, as particulars of falsity in respect of that representation.  But even if it were established that certain members of the respondent had published such an advertisement and that the representation was untrue, it would not without more follow that s 52 had been infringed.  Nor, if it were established that s 52 were infringed, would “approval” of the Society, pleaded in the most general terms, if established, make out a case of “involvement” within s 75B.

13                  Paragraph 8d alleges an increase in the membership of the respondent so that it has rapidly become the third largest “Accounting Organisation” in the world: it is not obvious why that is relevant to any cause of action pleaded.

14                  The next group of paragraphs, down to and including par 17, relate to the claim under Pt IV and need not be discussed further.

15                  Paragraph 18 is in the following terms:

“In a recent issue of the ‘Australian CPA’ the Respondent’s NSW Divisional Director has informed the readership of over 94,727 that the NSW State Government has made it [mandatory] for Senior State Government Employee Financial Managers to be Degree qualified and Members of either the ASCPA or the Chartered Institute.”

This is a case where the date of the representation may be very important: I was told that the publication concerned post‑dated the commencement of the proceedings.  In any case, the representation complained of is not pleaded with any particularity: see Federal Court Rules O 12 r 2.  Paragraph 19 explains why it is said that the representation referred to in par 18 was misleading; and pars 20, 21 and 22 allege consequences which will follow unless the Society is restrained from making representations of the kind complained of.

16                  Paragraphs 23, 24, 25, 26, 27 and 27a appear to be intended to allege a conflict of interest on the part of officers of the Society who are also academics.  Mr Dunn indicated in argument that he would not press a claim based on those allegations and it is unnecessary to consider them further.

17                  Finally, there is a group of allegations in pars 28, 29 and 30.  Paragraph 28 reads:

“In a document titled ‘Getting yourself a career boost’ (circa 1997) the Respondent has produced three ‘testimonials’ from employers attesting to alleged merits of the CPA programme and CPA class members.”

Paragraph 29 alleges that the “testimonials are presented dishonestly” because the persons giving them are not independent but are officers of the Society; and par 30 pleads that the testimonials relate to future matters “and cannot be supported on reasonable grounds”.  But, again, though there is a complaint about the content of the “testimonials”, there is no allegation as to what that content was.  Nor is there an allegation of facts underlying the conclusion that the circumstance that the writers of the testimonials are officers of the Society means that they were “presented dishonestly”: particularly, what precisely is said to have been represented which is claimed to have been false, misleading or deceptive.

18                  That discussion will indicate why, at the conclusion of the hearing of the motions, I expressed the view that the second further amended statement of claim was insufficient.  Leave to file it should not be given; and the filed further amended statement of claim should be struck out.

19                  In my view, however, it is not clear that Mr Dunn is not in a position to plead a case under Pt V of the Trade Practices Act nor, I think, has the stage been reached where it would be appropriate to preclude him from filing a further pleading.  Although the second further amended statement of claim is the fourth pleading Mr Dunn has propounded, it is only the second which the Court has considered.  I do not think it is necessary or appropriate, in this case, to make a “self executing” order.  It is sufficient, I think, to give Mr Dunn liberty to file and serve a further amended statement of claim, in relation to his allegations of infringement of Pt V, within a limited time: perhaps about one month from the delivery of these reasons.

Interlocutory application

20                  At the conclusion of the hearing of the motions I expressed the view that, given the deficiencies of the pleading, the uncertainty as to precisely what was the conduct relied on and the history of the allegations and the proceedings based on them, this was not an appropriate case for interlocutory relief.  On the current state of the pleading (both that which has been filed and that which Mr Dunn has sought to file) I cannot be satisfied that there is a serious question to be tried.  It follows that Mr Dunn’s application for interlocutory relief must be refused.  Mr Dunn has filed a further notice of motion seeking interlocutory relief on the basis of some further evidence; that notice of motion was stood over until the date on which this judgment is delivered.  If Mr Dunn wishes to proceed with that motion, directions can be made then for the filing of any evidence and submissions in relation to it.

Costs

21                  A number of questions of costs are outstanding.  They are the costs of the motion leading to the orders made on 27 October 1998; the costs of a motion (on which the Society was successful) to set aside a subpoena issued at the request of Mr Dunn to an officer of the Society; and the costs of the present motions.  The Society has been successful on all of those interlocutory matters.  In my view no discretionary considerations suggest that the Society should not have its costs of the earlier strike out motion, the present strike out motion and motion for leave to file the second amended application and statement of claim and the motion to set aside the subpoena.  Given the basis on which the motion for interlocutory relief was dismissed, in my view the Society should have its costs of that motion also; those costs, no doubt, will be relatively small.

22                  The orders of the Court are, therefore, that:

1.         The proceeding, so far as relief is claimed on the footing of alleged breaches of Pt IV of the Trade Practices Act 1974, be dismissed.

2.         The further amended statement of claim be struck out.

3.         Leave to file the documents entitled second further amended application and second further amended statement of claim be refused.

4.         The applicant have leave to file and serve, not later than 15 June 1999, a further amended application and a further amended statement of claim in which he seeks relief based on allegations of infringement, or involvement in infringement, of Pt V of the Trade Practices Act 1974.

5.         The applicant pay the respondent’s costs of each of the motions the subject of these reasons for judgment, the respondent’s motion, notice of which was filed on 12 October 1998 and the respondent’s motion, notice of which was filed on 18 March 1999.

Associate:

Dated:              14 May 1999