FEDERAL COURT OF AUSTRALIA

Plastec Australia Pty Ltd ACN 093 513 467 v Plumbing Solutions and Services Pty Ltd ACN 128 873 629 [2010] FCA 327

THE COURT ORDERS THAT:

1.                  The notice of motion of the first and second respondents filed 30 March 2010 is dismissed.

2.                  The first and second respondents shall pay the costs of the applicant, as respondent to the motion, of and incidental to the motion.   

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1                     By a notice of motion filed 30 March 2010 the first and second respondents (“Plumbing Solutions and Purdon”) seek an order that the following parts of the statement of claim of the applicant (“Plastec Australia”) be struck out as disclosing no reasonable cause of action, namely:

(a)        Paragraph 12;

(b)        Paragraph 13;

(c)        In paragraph 14, the words “and the 15 September Representation”;

(d)        In paragraph 23, the words “the 15 September representations”;

(e)        In paragraph 27, the words “the 15 September representations”;

(f)        In the prayer for relief, the words “the ’15 September email’ as that term is defined in paragraph 12 of this Statement of Claim” and the words “the 15 September email” where they appear.

2                     The applicant relies upon Order 11, rule 16(a) of the Federal Court Rules which provides, relevantly, that where a pleading discloses no reasonable cause of action or other case appropriate to the nature of the pleading, the Court may at any stage of the proceeding order that any part of the pleading be struck out. 

3                     Plastec Australia filed and served a statement of claim in the principal proceeding on 13 November 2009.  However, it then formulated an amended statement of claim and provided it to the respondents.  Plastec Australia required leave to file and serve the amended pleading.  Leave was given unopposed on Thursday, 1 April 2010 on the hearing of the present motion, subject to the outcome of this application as to that part of the amended statement of claim now under challenge. 

4                     A further notice of motion filed by the third respondent, Mr Martin, was also listed for hearing on Thursday, 1 April 2010.  By that motion, Mr Martin sought orders that the statement of claim be struck out in whole or in part as against him; that the action be dismissed and judgment be entered in Mr Martin’s favour; and, in the alternative, that the interim orders of 21 December 2009 as against him be discharged.  Mr Martin’s motion was not pressed on the morning of the hearing.  It was dismissed with an order for costs. 

5                     In the principal proceeding, Plastec Australia contends, put simply, that Plumbing Solutions through its sole director and secretary, Mr Purdon, engaged in misleading or deceptive conduct in contravention of s 52(1) of the Trade Practices Act 1974 (Cth) by publishing and distributing representations contained within two emails described as the “first 9 September email” and the “second 9 September email”, and a document described as the “Purdon report” consisting of a 58 page letter dated 22 September 2009 addressed to SAI Global Pty Ltd, Standards Australia and the National Plumbing Regulatory Forum, among others. 

6                     Plastec Australia contends that Mr Purdon was knowingly concerned in that conduct. 

7                     The amended statement of claim pleads these contentions.

8                     Plumbing Solutions is a corporation carrying on the business of supplying plumbing inspection and certification services to local governments in Queensland and conducts its business through Mr Purdon. 

9                     In the course of conducting its business in Australia, Plumbing Australia has in the last two years supplied four particular plumbing fittings called “swivel and expansion joint fittings” (the “fittings”) manufactured from Acrylonitrile‑Butadiene‑Styrene (“ABS”) Acrylonitrile‑Styrene‑Acylate (“ASA”).

10                  They are designed for connection to pipes laid underground to provide drainage for sewerage and other waste water.  They are also designed to enable underground pipes laid in unstable soil to move with the soil without causing a break in the fitting or the pipe.

11                  All plumbing fittings installed in a drainage or plumbing system including the four identified fittings are required by law to be manufactured to any applicable Australian standard as produced from time to time by Standards Australia Ltd (“SAL”) and where a standard does apply, plumbing fittings are required to be subjected to a manufacturing certification process pursuant to the “Watermark Certification Scheme”, so as to ensure plumbing fittings meet the applicable standard.  Certified plumbing fittings must bear the watermark certification and thereafter the fitting is authorised for use in a plumbing or drainage installation, for the purposes of the Plumbing Code of Australia. 

12                  Plastec Australia says each of its four fittings in manufactured in accordance with applicable standards determined by SAL; is watermark certified; is certified as compliant with a particular standard described as AS2887:1993 and was certified on 24 July 2009 as being compliant with a particular technical specification entitled “Technical Procedures for Plumbing and Drainage Product Certification” prepared by an SAL working committee. 

13                  As to the conduct of Plumbing Solutions and Purdon on 9 September 2009, Plumbing Australia pleads the first email of 9 September 2009 at para 12 of the amended statement of claim and the representations said to be contained within it at para 13, in these terms:

12.       On or about 915 September 2009, Plumbing Solutions, through Mr Purdon, at about 11.27pm, caused an email with the subject “ABS to PVC” (“15First 9 September email”) to be sent to, among others, persons employed in the area of plumbing inspection and/or compliance in the Brisbane City Council and various other councils in Queensland whose areas of authority include the Lockyer Valley, Fraser Coast; Ipswich; Southern Downs; Moreton Bay, Cairns, Toowoomba, Bundaberg, South Burnett, which said:

            “Afternoon everyone – new standard has come out regarding the above‑mentioned subject.  How I read this clause 4.8 between the uPVC piping and ABS fitting do I need to put in some sort of connection e.g. Fernco adaptor?  I have phoned Bostick the glue manufacture which they advised me that type N glue is not permitted to be used when joining two dissimilar materials.  I have done a QA on one of my jobs for my client where ABS fittings has been used to uPVC piping using type N glue – hence had no choice but to defect this.

Just need your thoughts whether I’m reading the standards correctly.

Tony Purdon

Plumbing Solutions & Services Pty Ltd”

13.       In sending the 15First 9 September email, Plumbing Solutions and Mr Purdon represented (“15First 9 September Representation”) that the effect of Australian/New Zealand Standard 3690:  2009 is not to permit the joining of to join a plumbing fitting made from uPVC to a plumbing fitting made from ABS. 

14                  The reference to “uPVC” is a reference to Polyvinyl‑Chloride:  16(b) of the amended statement of claim. 

15                  The second email of 9 September 2009 is pleaded at para 10 and the representation contained within it is pleaded at para 11.  The notice of motion is concerned solely with the email pleaded at para 12 and the contended representation pleaded at para 13.  There seems to be some remaining confusion in the amended statement of claim as both 9 September emails are pleaded as having been sent by Mr Purdon on 9 September 2009 at 11.27pm.  The email pleaded at para 12 was sent, according to the copy annexed at “SH7” to the affidavit of Sidney Hawthorne filed 13 November 2009 at 2.42pm thus making it the first email that day and the email pleaded at para 10 was sent at 11.27pm making it the second. 

16                  By para 14 of the amended statement of claim, Plastec Australia contends that the publication and distribution of the first 9 September email was misleading or deceptive or likely to mislead or deceive as the effect of Standard 3690:  2009 “is not that it is not permissible to join a plumbing fitting made from uPVC to a plumbing fitting made from ABS because Australian/New Zealand Standard 3690:  2009 is an installation code for ABS pipelines.  Particulars are then given. 

17                  The notice of motion is only concerned with the email sent at 2.42pm and the contention at para 13 that the email contains a representation that the effect of Australian/New Zealand Standard 3690:  2009 (“Standard 3690”) is not to permit the joining of a plumbing fitting made from uPVC to a plumbing fitting made from ABS. 

18                  The central contention of Plumbing Solutions and Purdon is that a reasonable and objective reading of the email as a whole taking account of the addressees to whom it was sent makes it transparently plain that Mr Purdon was expressing a provisional or preliminary opinion as to the operation of the new standard, commencing his observations with a question emphasised by the use of a question mark and concluding with a request for the thoughts of the addressees as to whether Mr Purdon was “reading the standards correctly”. 

19                  Plumbing Solutions and Purdon contend that since the email proffers a qualified or tentative view of how the new standard should be read and the view is framed by the two questions, it follows that the collection of words contained in the email can only amount, as a question of law, to the expression of an opinion and, as a question of fact, no representation was made by Plumbing Solutions by the first email of 9 September 2009.  It follows, it is said, that a cause of action reliant upon the representation pleaded at para 13 of the amended statement of claim discloses no reasonable cause of action and thus that part of the amended statement of claim ought to be struck out. 

20                  It also follows, it is said, that an objective reading of the first 9 September email as a whole having regard to its addressees, so inescapably leads to the conclusion that Mr Purdon was expressing a qualified or provisional opinion rather than making the pleaded representation, that the discretion to strike out that part of the statement of claim ought to be exercised now, at the interlocutory stage, thus depriving Plastec Australia of any opportunity to adduce evidence in support of the pleaded cause of action, as no reasonable cause of action, reliant on the email, is disclosed on the face of the pleading. 

21                  By para 14A of the amended statement of claim, Plastec Australia pleads an alternative position to that pleaded at paras 12, 13 and 14 so far as it relates to the first 9 September email and the contended representation.  Plastec Australia says by para 14A that if the first 9 September representation is an expression of opinion, the opinion purported to be that of an expert; the opinion carried with it a representation that the opinion was based upon reasonable grounds and/or was honestly held upon rational grounds involving an application of the relevant expertise; and the opinion was neither based upon reasonable grounds nor honestly held upon rational grounds involving an application of the relevant expertise.  Thus, the expression of the opinion, carrying with it the contended representations, is said to constitute misleading or deceptive conduct in contravention of s 52(1) of the Trade Practices Act. 

22                  As to paras 12, 13 and 14 of the amended statement of claim, the question of whether the first 9 September email contains the pleaded representation is one of the ultimate questions of fact to be determined in the principal proceeding.  Although a construction of the collection of words contained in the first 9 September email that suggests that Mr Purdon was testing possible approaches to the operation of the new standard in particular circumstances and expressing a qualified opinion on the working application of the standard in those circumstances might be open simply on a reading of the email as pleaded, it is, however, important not to immediately move to a view of the ultimate question, at the interlocutory stage, if probative evidence might be called in aid of the contended representation central to the cause of action.  In other words, as the authorities make plain, caution must be exercised before depriving Plastec Australia of a trial on that part of its case. 

23                  That degree of caution is conventionally understood in terms of the observations of Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at p 129 as “exceptional caution” in exercising the power to summarily strike out the cause of action.  Moreover, the power should be “sparingly employed” and is not to be used “except in a clear case where the Court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion”:  Barwick CJ at p 129. 

24                  The reference of the Chief Justice to “exceptional caution” in the exercise of the power was grounded on an acceptance of the test to be applied expressed in various formulations of emphatic language in the authorities, including “so obviously untenable that it cannot possibly succeed” and “manifestly groundless”.  The formulation adopted in General Steel Industries reflects the approach of Dixon J in Dey v Victorian Railways Commissioners (1949) 78 CLR 62 and that of the plurality in Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99 and has been approved in Webster v Lampard (1993) 177 CLR 598 per Mason CJ, Deane and Dawson JJ at pp 602 and 603.  The test has been repeatedly applied by Australian courts:  Murex Diagnostics v Chiron Corp (1995) 55 FCR 194 per Burchett J at 203; Re Elders Australia Ltd (No 2) [1997] FCA 1501 per Foster J; Re Mark Turner v Kinian Pty Ltd [1992] FCA 396 per French J; Kowalski v NMAL Staff Superannuation Fund Pty Ltd [2009] FCAFC 117; 178 FCR 401, to simply mention a few of the authorities. 

25                  Plastec Australia says that the proposition that the first 9 September email contains a representation that Standard 3690 does not permit the joining of a plumbing fitting made from uPVC to a plumbing fitting made from ABS is not manifestly groundless nor so obviously untenable that it cannot possibly be made out at trial.  That is said to follow for these reasons.

26                  First, by telling the addressees of the email that in undertaking a “QA” (quality assurance examination) on one of the jobs on which he was acting as an inspector for his “client” (said to be a Council), that he “had no choice” but to “defect” the joining of ABS fittings to uPVC piping using type N glue, Mr Purdon is said to have made a representation to the addressees that the new standard had that effect.  A finding on the ultimate question would thus require, it is said, evidence of contextual matters such as the reference to the “new standard”; the capacity in which Mr Purdon was acting when he had no choice but to find the joining of the fittings non‑compliant; the “QA” role he was performing; and the client for whom Mr Purdon was acting. 

27                  Therefore, it is said, in effect, that not all of the “requisite material” is before the Court in order to properly invoke the exercise of the power to strike out that part of the statement of claim, summarily. 

28                  Secondly, in determining whether the first 9 September email contains the pleaded representation, the Court will determine that question of fact by considering all of the relevant contextual and surrounding circumstances including the persons to whom the email is addressed and whether any member of the class of addressees could reasonably have understood the collection of words in the email to be a representation of fact or the expression of an opinion.  Plastec Australia contends that evidence of the perception of one or more of the addressees is admissible as to whether or not the statement contained a representation of fact or involved the expression of an opinion. 

29                  It follows, it is said, that in order to succeed on an application to summarily strike out that part of the statement of claim pleading a cause of action reliant upon the publication of a representation of fact in the first 9 September email, Plumbing Solutions and Purdon must demonstrate that there was no possibility of any of the addressees perceiving the email, in all the surrounding circumstances, as a statement that the new standard prevented the joining of ABS fittings to uPVC piping. 

30                  The position seems to me to be this. 

31                  Plastec Australia pleads that the first 9 September email was sent to a class of persons engaged in either plumbing inspection activities or the administration of compliance with applicable codes relating to plumbing work, employed within a number of local government authorities including the Brisbane City Council and other Councils whose areas of authority include the Lockyer Valley, Fraser Coast, Ipswich, Southern Downs, Moreton Bay, Cairns, Toowoomba, Bundaberg and South Burnett.  Whether conduct, in this case distributing the first 9 September email, contains a representation is a question of fact to be decided by considering what was said against the background of all the surrounding circumstances:  Taco Co of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177.  Although the circumstances of the conduct in Butcher v Lachlan Realty Pty Ltd (2004) 218 CLR 592 is quite different, the High Court emphasises at [39] per Gleeson CJ, Hayne and Heydon JJ that everything relevant must be taken into account as a whole.  The test is whether an ordinary or reasonable person from the class of persons to whom the representation is made is likely to be misled or deceived.  The test is an objective one for the Court to determine itself upon the whole of the evidence:  Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82; Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 at [103] – [105]; Australian Competition and Consumer Commission v Dukemaster [2009] FCA 682; Australian Competition and Consumer Commission v Australian Dreamtime Creations Pty Ltd (2010) 263 ALR 487 per Mansfield J at [14] to [16].

32                  In deciding the question of whether the collection of words contains a misrepresentation, the Court is aided by looking to the persons to whom the statement was directed and asking whether any members of that class of persons would reasonably understand the statement to be one of fact or of opinion:  Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1 (Tobacco Institute v AFCO) per Hill J at 46. 

33                  The addressees of the first 9 September email perform roles that require them to engage the question of whether a particular code or standard mandates or prohibits particular actions or steps.  They received a communication from Mr Purdon who is said to be a person who as sole director of Plumbing Solutions is a person who supplies plumbing inspection and certification services to local authorities and City Councils.  In seeking to prove that the first 9 September email contained the pleaded representation, Plastec Australia is entitled to lead evidence that if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding:  s 55, Evidence Act 1995 (Cth).  That evidence includes the reader’s perception of the email and involves asking the question whether members of the class of addressees would reasonably regard the collection of words contained within the email to communicate a representation or the expression of an opinion. 

34                  In this case, the email was not directed to the public at large.  It was directed to a class of addressees who had a particular and perhaps technical interest in the subject matter of the email.  In cases where a statement is directed to the public at large, the question will be whether a not insignificant class of persons within the public could reasonably be expected to perceive the statement as a statement of fact rather than the expression of an opinion:  Tobacco Institute v AFCO per Hill J at 46; Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191.  In this case, the class of addressees may not comprise the intelligent and less intelligent or the informed and less informed (that is, with respect to the subject matter).  It may be that the class comprises the intelligent, informed skilled addressee of the information.  That may mean that a discerning reader of the email charged with the relevant inspection or compliance duties would construe the email as postulating an opinion of the construction of the new standard rather than the assertion of the pleaded representation.  However, it may not.  It may mean that one or more of the addressees would regard the election by Mr Purdon to disqualify or “defect” the particular work, the subject of his inspection, in circumstances where he said he had no option but to do so, as a statement that the new standard mandated that outcome notwithstanding that he also invited addressees to express a view about the correct reading of the standards.  These considerations reinforce the notion that s 52(1) is concerned with the effect or likely effect of the email upon the mind of the addressee or, as Hill J observed in Tobacco Institute v AFCO at p 46, “It is the reader’s perception of the maker’s intention which will ordinarily be the significant matter”. 

35                  It follows that Plastec Australia is entitled to call evidence concerning whether any of the addressees would reasonably understand the statement to be one of fact, as pleaded.  That evidence is relevant by reason of s 55 of the Evidence Act and, consistent with the authorities, admissible on the question of whether the contended conduct is misleading or deceptive.  Evidence that individuals were actually misled about the relevant matter is plainly admissible although the question is ultimately an objective matter for the Court to determine. 

36                  It also follows, having regard to the admissibility of evidence on these questions, that not all of the “requisite material” in the sense contemplated by General Steel Industries is before the Court in order to properly invoke the exercise of the power to strike out that part of the statement of claim summarily.  It would not be appropriate to deprive Plastec Australia by an interlocutory decision of the opportunity to call evidence at trial in support of the cause of action reliant upon the first 9 September email.  In that sense, the applicant on the motion seeking orders to strike out the particular parts of the statement of claim as disclosing no reasonable cause of action has failed to satisfy the tests described at [23] and [24] of these reasons. 

37                  The second ground of attack relies upon the proposition that paras 12 and 13 do not plead the material facts necessary to establishing the content of terms referred to in the first 9 September email so as to establish the pleaded representation contained in para 13.  I am satisfied that the material fact is the pleading of the collection of words distributed to the addressees and the pleading of the fact that those words contain a particular representation.  The other matters such as the identification of particular references in the email is ultimately a question of evidence. 

38                  Having regard to these matters, the notice of motion is dismissed with costs. 

Associate:

Dated:         7 April 2010