FEDERAL COURT OF AUSTRALIA

Jarraman Arts Aboriginal Corporation v Tourism Australia

[2004] FCA 1536

Trade Practices Act 1974 (Cth) ss 51AC, 51A, 52, 53, 59(2), 82, 87

Aboriginal Councils and Associations Act 1976 (Cth) s 48

Federal Court Rules(Cth) O 11 r 16, O 12 r 3, O 15A

Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261 cited

Fencott v Muller (1983) 152 CLR 570 cited

Yorke v Lucas (1985) 158 CLR 661 cited

JARRAMAN ARTS ABORIGINAL CORPORATION & SHIRLEY ANNE COLLINS v TOURISM AUSTRALIA (AS SUCCESSOR IN TITLE TO THE AUSTRALIAN TOURIST COMMISSION) & ABORIGINAL AND TORRES STRAIT ISLANDER COMMISSION

NTD 11 of 2004

MANSFIELD J

29 NOVEMBER 2004

ADELAIDE (HEARD IN DARWIN)

THE COURT ORDERS THAT:

1.         The statement of claim filed on 30 June 2004 is struck out.

2.         The applicants are given leave to file and serve an amended statement of claim by 23 December 2004.

3.         The matter is referred to the Registrar, Northern Territory District Registry, or her nominee for mediation under O 72 of the Federal Court Rules to the intent that the mediation commence at a time fixed by the Registrar in accordance with O 72 r 6 but that the mediation not be completed until after the filing and service of any amended statement of claim in accordance with Order 2 hereof unless the mediation successfully resolves the proceeding before that date.

4.         The mediation be completed by 28 January 2005.

5.         The mediator report to the Court as to the outcome of the mediation by 31 January 2005.

6.         The notice of motion of the first respondent of 11 October 2004 and the notice of motion of the second respondent of 11 October 2004 to the extent it seeks an order for security for costs are each adjourned to 9 am 1 February 2005 for judgment.

7.         The directions hearing is adjourned to 9 am 1 February 2005.

8.         The costs of the respondents’ notices of motion of 11 October 2004 are reserved.

9.         Liberty to apply.

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

REASONS FOR JUDGMENT

1                     This application claims damages under ss 82 and 87 of the Trade Practices Act 1974 (Cth) (the TP Act) on the basis of alleged unconscionable conduct on the part of each of the respondents within the meaning of s 51AC of the TP Act, and for engaging in misleading and deceptive conduct contrary to ss 52, 53 and 59(2) of the TP Act.  The second applicant also seeks orders under s 87 of the TP Act declaring that mortgage 450525 granted by her over her home in Palmerston (the mortgage) to the second respondent is void or voidable by virtue of those contraventions of the TP Act and also by virtue of s 48 of the Aboriginal Councils and Associations Act 1976 (Cth).  She further seeks a declaration that a certain deed dated 6 February 2004 between the second applicant and the second respondent (the deed) by which, at least on its face, the ongoing disputes between those parties was resolved, is void or voidable for contravention of the same provisions of the TP Act.

2                     By notice of motion of 11 October 2004 the second respondent seeks orders striking out the statement of claim under O 11 r 16 of the Federal Court Rules, or alternatively for further and better particulars of the statement of claim.  It also seeks security for costs against the applicants in the sum of $61,500.  The first respondent by a separate notice of motion also dated 11 October 2004 seeks itself security for costs against the applicants in an amount unspecified in the notice of motion.

3                     These reasons for decision deal with the application to strike out the statement of claim.  I propose otherwise to adjourn that part of the second respondent’s notice of motion seeking security for costs, and the first respondent’s notice of motion seeking security for costs to a date to be fixed, pending the exploration of the prospects of resolution of the claim by mediation in the circumstances dealt with below.  If the mediation is unsuccessful, I will give a decision on the respective orders for security for costs.  I have heard evidence and submissions on those applications, and there will be no need for any further hearing of the motions if the mediation is not successful.

the statement of claim

4                     Apart from noting that the second applicant is the chairperson of the first applicant, it is not necessary to refer to the introductory paragraphs of the statement of claim dealing with the status of the respective parties.

5                     The claim arises from the involvement of the first applicant in an activity arranged by the first respondent in the period leading up to the Sydney Olympics in September 2000.  The first respondent is alleged to have sponsored an event called ‘Bank of America Down Under Tour’ (the tour) to promote Australia in the period of 12 months leading up to the Sydney Olympics.  The first respondent’s sponsorship is alleged to have obliged it, inter alia, to provide entertainment and education so as to develop an understanding of indigenous Australians.  The first applicant participated in the tour at the invitation of the first respondent (wrongly described in the statement of claim as the second respondent, but corrected in the course of providing further and better particulars of the statement of claim).  The tour was to take place from September 1999 to September 2000.  The nature of the tour is set out in par 11 of the statement of claim, described as ‘terms of the offer’.  It will be necessary to return to them in due course.  As the particulars provided by the applicants indicated, the tour commenced on 23 September 1999.  The first applicant withdrew from the tour on 4 October 1999.

6                     The first applicant alleges it withdrew from the tour to avoid significant losses as a result of the unconscionable conduct and the false or misleading and deceptive conduct of the first respondent.  In the statement of claim, the conduct of the first respondent upon which it relied to participate in the tour is said to be the representations made by the first respondent ‘particularised in paragraph 11 of this Statement of Claim’ (par 18) and apparently by representations made by the first respondent in writing on 26 April 1999 and on 12 July 1999 (pars 31 and 32).  Paragraphs 31 and 32 of the statement of claim read:

’31.      On 26^th April, 1999 the First Respondent wrote to the First Applicant acknowledging their acceptance of the invitation to participate in “the tour”, representing it as one of the most exciting opportunities ever made available to the promotion and marketing off [sic] Aboriginal art in the U.S.

32.       On 12^th July, 1999 the First Respondent wrote to the First Applicant stating that the promotion of “the tour” was the largest consumer protection ever undertaken by the First Respondent and thereafter represented to the First Applicant that;

(a)               the First Applicant’s part in the exhibits was to have two components, one permanent 30 piece exhibit, which would remain in place until the completion of the tour, and a “secondary commercial exhibit”;

(b)               the First Applicant would be permitted to sell its’ [sic] goods, namely aboriginal art, at each off [sic] the 47 exhibitions;

(c)               the First Applicant would be afforded a reasonable opportunity of commercial gain from being permitted to sell its goods, namely aboriginal art, at each of the 47 exhibitions;

(d)               the First Respondent would ensure that the First Applicant got strong exposure for its “second commercial component”.’

7                     There is no separate claim for damages for breach of contract against the first respondent, although certain paragraphs of the statement of claim hint at a claim on that ground.  Paragraph 28 asserts that the first applicant withdrew from the tour to mitigate its losses as particular terms of the offer were not provided:  those terms related to the tour having exhibits at 47 of the 50 cities to be visited; that at each exhibit the first applicant would have the opportunity to sell commercially Aboriginal art, as each exhibit would be comprised of a permanent 30 piece exhibit to remain in place during the tour, and a secondary commercial exhibit which the first applicant could utilise to sell works of Aboriginal artists; and that the first respondent would ensure that the first applicant got strong exposure for its secondary commercial component, and was afforded a reasonable opportunity of commercial gain by selling Aboriginal art at each of the 47 exhibitions.  It is elsewhere alleged that the first respondent did not comply with those provisions (par 33) as well as misrepresenting those matters referred to in pars 31 and 32 of the statement of claim by that conduct.  Any claim for damages for breach of contract in the circumstances would fall within the associated jurisdiction of the Court, as the Court would be possessed of the matter in which that claim arises:  see e.g. Stack v Coast Securities (No 9) Pty Ltd (1983) 154 CLR 261; Fencott v Muller (1983) 152 CLR 570. 

8                     There are significant inadequacies in the way in which the applicants have pleaded their claim against the first respondent.  They acknowledge that the statement of claim needs amendment to some extent, if only to make it clear that the agreement was between the first applicant and the first respondent for the applicant to participate in the tour.  Despite elsewhere in the document pleading that the ‘offer’ was made between 13 April 1999 and September 1999, they assert also that the agreement to participate in the tour was arrived at on 26 April 1999.  In addition, as it appears that the representations alleged were largely if not entirely as to future matters, consideration needs to be given to pleading or invoking s 51A of the TP Act in relation to those claims.  The applicants may also be wise to address the sufficiency of the pleading identifying the conduct or matters by reason of which the first respondent’s conduct was, in the circumstances, said to be unconscionable.  The conduct of the first respondent referred to is alleged not simply to have been misleading and deceptive so as to contravene ss 52, 53 and 59(2) of the TP Act, but also to have been unconscionable in contravention of s 51AC of the TP Act.

9                     The second applicant’s claim is clear enough from the statement of claim.  It is derivative from, or cumulative upon, the claim of the first applicant.  The second applicant is the chairperson of the first applicant, and (at least by inference) was the person on behalf of the first applicant who undertook the communications with the respondents.  She claims to have given up particular employment to operate the tour for the second applicant in reliance upon the same conduct, so that by reason of the causes of action alleged, she suffered economic loss until she was able to re-establish herself at the same level of earnings.  The inadequacies in the pleading in relation to that aspect of her claim are relatively easily accommodated by the provision of particulars.  There is no information held peculiarly by the respondents which is relevant to the quantification of her claim, so there is no reason why it cannot be properly pleaded in the statement of claim.

10                  The second aspect of the second applicant’s claims for losses is said to result from the conduct of both the first and the second respondents, in relation to granting the mortgage.  As that is dependent upon the claims as expressed against the second respondent, I shall refer to that further later in these reasons.

11                  As is to be expected, because the application to strike out the statement of claim is made by the second respondent, it is that part of the pleading which concerns the second respondent which requires particular focus.

12                  The statement of claim alleges that between 13 April 1999 and September 1999 the second respondent entered into arrangements with the first applicant to provide finance for the first applicant to participate in the tour.  It approved a loan of $160,000 on 16 August 1999, subject to the second applicant granting a mortgage in favour of the second respondent over the second applicant’s home in Palmerston.  That offer was accepted.  The mortgage was executed on 30 August 1999.  So much is sufficiently pleaded as to disclose the case which the second respondent is required to meet, at least at its primary level.

13                  The statement of claim then alleges that the second respondent, by its agents, procured two documents in the course of determining to finance the first applicant’s participation in the tour.  The first is a project plan of about 9 August 1999 prepared by Auslink, allegedly as agent of the second respondent, and provided to Deloitte Touche Tohmatsu for the second respondent (the project plan).  The second is a report of 10 August 1999 on the ‘feasibility’ of the first applicant’s participation in the tour and on the ‘viability of lending’ funds to the first applicant to do so and ‘security of the loan based on expected profits’ (the finance report).  Both the project plan and the finance report, obliquely, are said to have been used by the second respondent to approve a ‘Business Development Program loan’ of $160,000 to the first applicant, to be secured by the mortgage from the second applicant, so that the first applicant might participate in the tour.

14                  Paragraph 16 of the statement of claim then asserts that the project report and the finance report ‘grossly exaggerated the anticipated profit’ for the first applicant from its participation in the tour.

15                  The statement of claim asserts that the first applicant accepted the ‘Business Development Program Application funding’ for the tour in reliance upon representations by the second respondent through its agents (I assume that is to be read as by its agents, as the alleged agents are not parties to the action) in the project report and in the finance report.

16                  It is further alleged that the second respondent knew or ought to have known that the first applicant had no assets with which to secure any loan other than by registered bill of sale over the property of the first applicant, in effect stock on hand for the tour, and that the second applicant had three existing mortgages over the Palmerston property.  The second applicant also alleges that she executed the mortgage in reliance upon representations of the second respondent through its agents contained in the funding report and the project report.  It is not clear whether the mortgage secured the whole of the loan or only $100,000 as allegedly recommended by the funding report.

17                  The statement of claim then alleges, as it had done in respect of the first respondent, that the second respondent’s conduct was unconscionable and was misleading or deceptive or likely to mislead or deceive contrary to ss 52, 53 and 59(2) of the TP Act. 

18                  The principal allegation of misconduct or conduct on the part of the second respondent alleged against it is in par 36 of the statement of claim.  It reads as follows:

‘The First and Second Applicants repeat and rely upon paragraphs 31, 32 and 33 of this Statement of Claim and state that the Second Respondent;

(a)               with reckless disregard to;

i)                    the First Applicant’s financial viability; and

ii)                  the Second Applicant’s financial security;

            during the “Down Under Tour”; and

(b)               knowing the falsehood of, or with reckless disregard as to the falsehood or truth of, the representations in paragraphs 31, 32 and 33 repeated those representations by adopting them as part of the “Deloittes Report” and the “Auslink Report”; and

(c)               aided and abetted the failure to establish, or satisfactorily attempt to establish, whether they were true or false.’

19                  The statement of claim then turns to the deed.  It asserts that the second respondent served a notice of demand for repayment of the loan on 19 May 2000, and to the deed entered into between the second applicant and the second respondent dated 6 February 2004 in relation to her liability under the mortgage.  However, rather than allege facts which (if proved) would or might entitle the second applicant to avoid the deed, it reverts to matters relating to the mortgage.  It alleges that the second respondent did not disclose to the second applicant prior to her executing the mortgage that the second applicant was placing herself at risk of losing her home, was exposing herself to the financial risk from the tour, and that the second applicant was relying upon the second respondent’s research and upon the accuracy of certain documents of the second respondent.  Those documents are the second respondent’s ‘business development plans’, the funding report and the project report (par 39(c) of the statement of claim).  It is clearly poorly drafted.  To assert that the second respondent did not disclose to the second applicant what she (the second applicant) was relying upon is self-evidently silly.  Either the second applicant relied upon certain information or she did not, but that is not a matter for the second respondent to know as relevant to her (the second applicant’s) cause of action.  There is no pleading that the second applicant did not otherwise know that, by executing the mortgage, if the first applicant did not repay the loan the mortgage might be called up.  It would be surprising if that were the case, but such an allegation of fact would need to be pleaded.  There is no pleading that the second applicant did not know that, by executing the mortgage, she did not realise that she was exposing herself to the financial risk (presumably the risk of a significant financial loss by the first applicant) in the conduct of the tour.  More importantly, if par 39(c) is intended from the second respondent to identify the allegedly misleading documents, it extends those documents beyond the project report and the funding report (and the communications ascribed to the second respondent in pars 31, 32 and 33 of the statement of claim, by par 36 of the statement of claim) to the second respondent’s ‘business development plans’.

20                  Finally, pars 40 to 48 allege in general terms only the asserted contravention of the TP Act and the loss and damage suffered by the applicants.  Those matters can be refined by further particulars to the extent necessary.

CONSIDERATION

21                  The statement of claim, at least so far as it concerns the second respondent, is in my judgment clearly inadequate.  It does not identify with adequate clarity the conduct which the second respondent is said to have engaged in.  It does not identify with adequate clarity what particular elements of any communications are said to be misleading or deceptive, or to comprise an element of unconscionable conduct.  It does not identify with adequate clarity how each of the particular communications referred to is misleading or deceptive.  In the case of the claim under s 51AC of the TP Act, it does not clearly identify the particular conduct relied upon or the combination of particular conduct relied upon.  In the case of the deed, it does not clearly identify any conduct at all which might justify the relief sought.  Counsel for the applicants acknowledged that in the course of submissions, and suggested that the agreement giving rise to the deed might more properly, or additionally, be sought to be set aside on a non est factum ground.  Moreover, the statement of claim does not clearly indicate to the second respondent the conduct in respect of which it is being sued as principal, and the conduct in respect of which it is being sued as an aider and abetter of conduct of the first respondent.  There are also other inadequacies in the statement of claim.

22                  It is, in my view, necessary to refer only relatively briefly to particular paragraphs of the statement of claim to explain further why I have reached those views.

23                  The drafting of par 36 is unsatisfactory.  Apart from repeating pars 31, 32 and 33 of the statement of claim, it asserts in (a) an adjectival description of the state of mind of the second respondent but without any consequence.  Sub-paragraph (b) contains both an assertion of an adjectival state of mind, and an assertion of positive conduct, namely repeating representations in pars 31, 32 and 33.  That seems to suggest principal liability rather than accessory liability.  Subparagraph (c) does not allege anything as to a state of mind but alleges aiding and abetting in terms which are unclear but which presumably include aiding and abetting the ‘failure to establish, or satisfactorily attempt to establish’ whether certain representations (presumably those in pars 31, 32 and 33) were true or false.  It is speculative whether the word ‘they’ in subpar 36(c) refers to the representations in pars 31, 32 and 33 or those (unspecified) adopted in the project report and the finance report.  Moreover, the plea has two alternatives, namely:

·      aiding and abetting a failure to satisfactorily attempt to establish the truth or falsity of whatever representations are said to have been made, or

·      failing satisfactorily to attempt to establish their truth or falsity (presumably this is not a plea of aiding and abetting a failure by the first respondent to satisfactorily attempt to establish their truth or falsity, as that would on its face be an extraordinary allegation).

Indeed, the expressions in subpar 36(c) might more appropriately or additionally be ascribed to a cause of action in negligence rather than as misleading or deceptive conduct or aiding and abetting misleading or deceptive conduct.  Such a claim, if made, would also be likely to fall within the accrued jurisdiction of the Court as part of the overall matter.  If the pleading is intended to support the claim of unconscionable conduct, there are presently insufficient factual allegations to attract the failure to check on the accuracy of the first respondent’s alleged representations into the sphere of relevant facts:  there is little alleged about the nature of the relationship between the applicants and the second respondent beyond its sole end financier, and it would be surprising if a financier were to act unconscionably in terms of s 51AC of the TP Act if it did not verify the truth of the intentions or promises of the first respondent as expressed to the applicants.

24                  That clause of the statement of claim is clearly unsatisfactory.  It is simply not readily comprehensible as to what case the second respondent is required to meet.  Sub-paragraph 36(b) appears to assert liability as a principal for making certain representations as specified in pars 31, 32 and 33 of the statement of claim.  It highlights the need to identify the significance of the parts of the project report and of the funding report upon which it relies.  There is not a sufficient identification in the terms addressed.  As noted above, subpar 39(c) may add a further communication – the second respondent’s business development plans – as relevant, but the statement of claim does not explain how that is so.

25                  If the representations are essentially those of the first respondent, and they are as to its intentions in the future, s 51A should be invoked and then the issue would become not simply whether the first respondent had reasonable grounds for making that representation, but whether the second respondent had reasonable grounds for making the representation that the first respondent would provide those services.

26                  In any event, the form of pleading against the second respondent by adopting the representations in pars 31, 32 and 33 of the statement of claim as against the second respondent as if it were making those representations attracts attention to the quality of those pleadings.  Paragraphs 31 and 32 are set out above.  They contain inadequate pleadings as to representations.  Reference is made to two written communications, but sub pars (a) to (b) are said to have been made after the second of them, namely the letter of 12 July 1999.  How they were made is not specified.  By whom they were made is not specified.  Importantly how they came to be repeated and/or adopted by the second respondent is not clearly specified.  In addition, because the statement of claim asserts, for reasons which are unclear, that the second respondent knew or ought to have known of the falsehood of those representations by the first respondent, it is necessary to plead the facts upon which that state of mind is based:  see O 12 r 3 of the Federal Court Rules.

27                  Paragraph 33 of the statement of claim does not contain allegations of any representations.  As noted above, it contains allegations as to how the first respondent did not in fact fulfil the representations which it is alleged to have made.

28                  Given the nature of the allegations against the second respondent, in large measure but not entirely through the project report and the funding report, it is significant that there is no factual allegation, as distinct from assertion, as to the means by which or the circumstances in which the accountants and Auslink came to be or were the agents of the first respondent.  Alternatively, the case may be that the second respondent conveyed those documents to the applicants other than simply as a conduit.

29                  Paragraph 16 of the statement of claim contains the independent (that is, apparently unrelated) allegation that the funding report and the project report grossly exaggerated the anticipated profit from the tour.  It is unclear whether, and if so how, that allegation is to be developed.  It is not repeated nor adopted in that section of the statement of claim headed ‘Particulars of the Conduct by the Second Respondent’.  Some particulars subsequently given do, however, suggest that the allegation is also to be pursued.  That would be an allegation based upon principal rather than accessorial liability.  The particulars provided do not adequately elucidate the identification of each section or expression of each of the project report and the funding report which is said to contain a representation as to anticipated profit from the tour available to the first applicant.  It is then necessary to plead how and why each of those representations separately is misleading or deceptive.  As the representations are probably as to future conduct, the applicants would need also to address s 51A of the TP Act.  The particulars provided in response to the request for particulars presently refer generally to categories of discoverable documents.  That is not an adequate particular of the nature of that claim.

30                  As noted, it would appear likely (but it is a matter for the applicants) that such representations are as to future matters, and that the applicant’s mean to assert that there was an absence of reasonable grounds on the part of the second respondent to have made those representations, assuming in favour of the applicants that they were made by the second respondent.  Indeed, there is presently no allegation that the project report or the funding report were received by the applicants, and if they were, in what circumstances.

31                  That is important not simply as a primary fact to make out any cause of action against the second respondent, but also (if it be the case) to establish that in respect of the representations in pars 31 and 32 of the statement of claim, the second respondent adopted and presented those representations on its own behalf.  If it was a mere conduit for that information, it may not be liable for having made those representations:  see Yorke v Lucas (1985) 158 CLR 661 at 666.  Consequently, the precise conduct of the second respondent in ‘adopting’ those representations should be carefully pleaded.

32                  It is unclear what conduct is said to fall within s 53 of the TP Act.  Counsel for the applicants was unable clearly to identify that conduct in the course of submissions.  That is a matter which the applicants should address.  The statement of claim should indicate clearly which sub-clause of s 53 is said to be engaged and by virtue of what facts, if that claim is to be pursued.  It is also presently not apparent to me, by way of aside, that the pleading of s 53 enhances in any way the prospects of the applicants succeeding in their claim.  It may do so.

33                  The pleading also invokes s 59(2) of the Act.  It may be that s 59(2) is that provision which is sought to be enlivened, along with s 52, by the allegation that the project report and the funding report grossly exaggerated the potential profitability of the tour.  I have indicated why the pleading presently is unsatisfactory in that regard.  The pleading, if it is to be maintained, must assert clearly how the second respondent invited the first applicant’s participation in the tour. 

34                  I note further that the allegations in par 36(a) of the statement of claim, even if properly particularised, would not enhance the claim under s 52 of the Act.  Either misleading and deceptive conduct was engaged in or it was not.  It does not take its character from the financial circumstances of the applicants.  Presumably, therefore, that conduct or that stated knowledge may be relevant to the unconscionability claim only.  If that is intended, it is not clear.  It may also be relevant to a contractual or negligence claim, but neither is pleaded. 

35                  It is presently difficult also to discern what facts are pleaded to demonstrate unconscionable conduct on the part of the second applicant.  I am aware that particulars of alleged unconscionable conduct have been provided.  They are not, on their face, sufficient to make out that claim.

36                  In my judgment, it is necessary for the second respondent to know the nature of the case it must meet to have clearly identified for it those facts which are said to give rise to the claim of contraventions of ss 52, 53 (if it is pursued) and 59(2) (if it is pursued) of the TP Act, and to have clearly identified those facts which are said to amount to unconscionable conduct in contravention of s 51AC of the TP Act.  When those allegations are clearly identified, the question of whether they are capable in law of sustaining the claim or whether they should be struck out is a matter which the second respondent is then entitled to address.

37                  The above consideration is sufficient, in my judgment, to demonstrate that the present statement of claim has grave deficiencies.  I do not think it can be usefully amended whilst maintaining an adequate level of integrity.  Although there are parts of it which are clear enough, in my view the appropriate order is that the whole of the statement of claim should be struck out and that the applicants should be given leave to file and serve an amended statement of claim.  It is appropriate to observe that, in significant respects, I do not regard the pleading through the particulars provided by correspondence satisfactorily to identify those causes of action properly.

38                  Those matters were raised with counsel for the applicants in the course of the hearing.  It is necessary to make an order striking out the statement of claim because the applicants, through counsel, did not take up the opportunity of seeking leave to amend the statement of claim in the light of the submissions made to that point despite the invitation to do so.   Counsel for the applicants indicated that the applicants faced difficulties in pleading their case as clearly as they would like because they did not have full discovery from the respondents, and suggested that there should be an order for discovery before the pleadings are completed.  I do not think that is appropriate.  There has been no application for pre-action discovery (cf O 15A of the Federal Court Rules).  Moreover, as the above discussion indicates, the essential elements of the cause of action can readily be pleaded, provided instructions are clearly given by the applicants and the pleading identifies the nature of the case.  That is, the applicants know what was conveyed to them and know what was incorrect or misleading and deceptive about that, and what was the unconscionable conduct, because the first applicant apparently elected to treat the arrangement (I do not use the word contract because no contract was pleaded) with the first respondent as at an end within a week or two of the commencement of the tour.  The reasons for the first applicant’s conduct at that time are known to it.  The reasons which caused it to abandon the tour when it did should be the focus of its pleadings.  If the applicants suspect that other representations may not have been fulfilled, but those matters were not part of its reasons for abandoning the tour, there is little point in pleading those issues in the statement of claim because the necessary causal link will not be able to be established.

39                  I have not separately addressed the inadequacy of the statement of claim concerning the deed.  It is self-evident.  Counsel for the applicants acknowledge that.

40                  I accordingly propose to strike out the statement of claim and to give the applicants leave to file and serve an amended statement of claim.

41                  To accommodate a reasonable timetable, I make the following orders:

1.         The statement of claim filed on 30 June 2004 is struck out.

2.         The applicants are given leave to file and serve an amended statement of claim by 23 December 2004.

3.         The matter is referred to the Registrar, Northern Territory District Registry, or her nominee for mediation under O 72 of the Federal Court Rules to the intent that the mediation commence at a time fixed by the Registrar in accordance with O 72 r 6 but that the mediation not be completed until after the filing and service of any amended statement of claim in accordance with Order 2 hereof unless the mediation successfully resolves the proceeding before that date.

4.         The mediation be completed by 28 January 2005.

5.         The mediator report to the Court as to the outcome of the mediation by 31 January 2005.

6.         The notice of motion of the first respondent of 11 October 2004 and the notice of motion of the second respondent of 11 October 2004 to the extent it seeks an order for security for costs are each adjourned to 9 am 1 February 2005 for judgment.

7.         The directions hearing is adjourned to 9 am 1 February 2005.

8.         The costs of the respondents’ notices of motion of 11 October 2004 are reserved.

9.         Liberty to apply.

Associate:

Dated:              25 November 2004