Pleading a Statement of Claim for Breach of Contract: Material Facts and Requirements, Study notes of Civil procedure

Download Pleading a Statement of Claim for Breach of Contract: Material Facts and Requirements and more Study notes Civil procedure in PDF only on Docsity! 1 PLEADING A BREACH OF CONTRACT CLAIM A. Introduction 1. This paper is concerned with drafting a statement of claim where the cause of action relied upon is breach of contract and the remedy sought is damages.1 Damages are the most common form of remedy sought for breach of contract.2 Of course, there are other remedies available and other sources of liability arising from contractual transactions.3 However, these are beyond the scope of this paper. 2. In this paper I aim to: (a) provide an explanation of what must be included in a statement of claim generally; (b) provide an explanation of how a properly drafted statement of claim assists a practitioner to meet their obligations under the Civil Procedure Act 2010 (Vic); (c) identify the material facts which must be pleaded in a claim for damages for breach of contract; and (d) provide some practical tips about pleading a statement of claim. 1 For example, the elements of the cause of action for anticipatory breach (see Foran v Wight [1989] HCA 51 at [43] (Mason CJ); at [28] (Brennan J)) or loss of bargain damages are not discussed. 2 Seddon & Bigwood (2017) Cheshire & Fifoot Law of Contract (11th Australian edition) Lexis Nexis Butterworths, New South Wales at [1.5] 3 For example, the remedy of specific performance and liability arising from the contractual transaction for misleading and deceptive conduct. 2 B. The purpose of pleadings 3. Firstly, it is necessary to identify the function of pleadings. Pleadings are critical to the proper conduct of a civil proceeding. As observed by Cairns in Australian Civil Procedure (9th edition): (a) “Pleadings influence the entire proceeding. They limit the scope of particulars, discovery of documents and interrogatories...”4; (b) “If pleadings comply with the precepts of the pleading system, they show what facts are in dispute and what issues the court will have to determine.”5; (c) “The course of events at the trial depends on the pleadings. The burden of proof rests on the party who asserts affirmative propositions of fact. Pleadings determine where the burden of proof lies and govern the range of relevant evidence.”6; (d) “Pleadings record the issues that are decided by, and merge in, the judgement. The court record consists of the pleadings, the findings of fact and the judgement. Judgement depends on the pleadings and the findings of fact. This record provides the basis for the plea of estoppel in any later proceeding that involves the same issues between the same parties.”7 4 Cairns (2011) Australian Civil Procedure (9th edition) Thomson Reuters, New South Wales at [6.10] 5 Cairns (2011) Australian Civil Procedure (9th edition) Thomson Reuters, New South Wales at [6.10] 6 Cairns (2011) Australian Civil Procedure (9th edition) Thomson Reuters, New South Wales at [6.10] 7 Cairns (2011) Australian Civil Procedure (9th edition) Thomson Reuters, New South Wales at [6.130] 5 (i) every pleading must contain in a summary form a statement of all material facts upon which the party relies, but not the evidence by which the facts are to be proved (r 13.02(1)(a)); (j) the effect of any document or purport of any conversation, if material, must be pleaded as briefly as possible, and the precise words of the document or the conversation must not be pleaded unless the words are themselves material (r 13.03); (k) particulars are not intended to fill gaps in a deficient pleading. Rather, they are intended to meet a separate requirement – namely, to fill in the picture of the plaintiff’s cause of action (or defendant’s defence) with information sufficiently detailed to put the other party on guard as to the case that must be met. An object and function of particulars is to limit the generality of a pleading and thereby limit and define the issues to be tried; (l) a pleading should not be so prolix that the opposite party is unable to ascertain with precision the causes of action and the material facts that are alleged against it; (m) extensive cross-referencing of facts in a pleading may render parts of the pleading unintelligible; (n) in an application under r 23.02, the court will only look at the pleading itself and the documents referred to in the pleading; (o) the power to strike out a pleading is discretionary. As a rule, the power will be exercised only when there is some substantial objection 6 to the pleading complained of or some real embarrassment is shown; and (p) if the objectionable part of the pleading is so intertwined with the rest of the pleading so as to make separation difficult, the appropriate course is to strike out the whole of the pleading. 6. A precise definition of the term “cause of action” can be elusive, but the following explanation is helpful for present purposes: The meaning of the term “cause of action” is ambiguous. It varies according to its context. For pleadings, a cause of action is most usefully viewed as the facts that constitute the plaintiff’s right to sue to enforce a remedy.10 7. As described by John Dixon J in paragraph 5(c) above, “material facts” are those relied on to establish the essential elements of the cause of action. In some circumstances, the material facts will include facts which may not strictly form part of the claim for breach of contract but are relevant to the relief sought from the court. For example, if, in addition to damages, the plaintiff seeks by way of relief penalty interest on the award of damages pursuant to contract (rather than pursuant to s 58 of the Supreme Court Act 1986 (Vic)) then it would be appropriate to plead in the statement of claim, in addition to the essential facts for a breach of contract claim, the contractual term regarding penalty interest. 10 Cairns (2011) Australian Civil Procedure (9th edition) Thomson Reuters, New South Wales at [6.180] 7 8. “Particulars” are probably best defined according to their objective. As Goldberg J noted in Angelo Mitanis v Pioneer Concrete (Vic) Pty Ltd 11: [Particulars] are not to be used in order to fill material gaps in a demurrable statement of claim – gaps which ought to have been filled by appropriate statements of the various material facts which together constitute the plaintiff’s cause of action. The use of particulars is intended to meet a further and quite separate requirement of pleading, imposed in fairness and justice to the defendant. Their function is to fill in the picture of the plaintiff’s cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial. Consequently in strictness particulars cannot cure a bad statement of claim. But in practice it is often difficult to distinguish a ‘material fact’ and a ‘particular’ piece of information which it is reasonable to give the defendant in order to tell him the case he has to meet; hence in the nature of things there is often overlapping. 9. In practice, if one properly identifies the elements of the cause of action and pleads them as the material facts in the statement of claim, then there should not be any issues. But if concerned about whether a fact is a material fact or a particular of a material fact, it is worth remembering that: (a) often there is no criticism if particulars are incorporated into the material facts pleaded as long as each paragraph 11 [1997] FCA 1040, quoting and adopting the statement of Scott J in Bruce v Odhams Press Limited [1936] 1 KB 697 at 711 - 713 10 and obligations and the overarching obligations can operate consistently. (2) Despite subsection (1), a legal practitioner or a law practice engaged by, or on behalf of, a client in connection with a civil proceeding must comply with the overarching obligations despite any obligation the legal practitioner or the law practice has to act in accordance with the instructions or wishes of the client. (3) In the case of any inconsistency between any overarching obligation and a duty or obligation referred to in subsection (1) or an instruction or a wish referred to in subsection (2) – (a) the overarching obligation prevails to the extent of that inconsistency; and (b) in the case of the instruction or wish of a client, the legal practitioner is not required to comply with any instruction or wish of the client which is inconsistent with the overarching obligation. 15. Pursuant to s 16 of the Civil Procedure Act, legal practitioners have a “paramount duty to the court to further the administration of justice in relation to any civil proceeding in which that legal practitioner is involved.” 16. Arguably, a properly drafted statement of claim also furthers the following overarching obligations: (a) to act honestly (s 17); (b) only take steps to resolve or determine the dispute (s 19); 11 (c) to not mislead or deceive (s 21); (d) narrow the issues in dispute (s 23); (e) ensure costs are reasonable and proportionate (s 24); (f) minimise delay (s 25); and (g) disclose the existence of documents (s 26). D. The Court Rules 17. Many of the rules governing pleadings are codified in r 13 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic)14(the rules). 18. Relevantly, the rules require a statement of claim to: (a) bear on its face a description of the pleading and the date on which it is served15; (b) be divided into paragraphs numbered consecutively, and each allegation, so far as practicable, shall be contained in a separate paragraph16; (c) if settled by counsel, be signed by that counsel, and if not settled by counsel, signed by the solicitor or self-represented litigant17; 14 Each of the court rules in Victoria contain almost identical rules for pleadings. 15 r 13.01(1)(a) & (b) Supreme Court (General Civil Procedure) Rules 2015 (Vic) 16 r 13.01(2) Supreme Court (General Civil Procedure) Rules 2015 (Vic) 17 r 13.01(3) Supreme Court (General Civil Procedure) Rules 2015 (Vic) 12 (d) contain, in a summary form, a statement of all the material facts on which the party relies, but not the evidence by which those facts are to be proved18; (e) if the claim arises by or under any Act, identify the specific provision relied on19; (f) state specifically any relief or remedy claimed20; (g) plead the effect of any document or the purport of any conversation, if material, and the precise words of the document or conversation must not be pleaded unless the words themselves are material21; (h) specifically plead a claim for exemplary damages (if they are sought) together with the facts on which the party pleading relies22; (i) contain the necessary particulars of any fact or matter pleaded.23 For example they may be necessary: to enable the opposite party to plead; to define the questions for trial; or to avoid surprise at trial24; and (j) , if particulars of debt, damages or expenses exceed three folios, set out those particulars in a separate document referred to in 18 r 13.02(1)(a) Supreme Court (General Civil Procedure) Rules 2015 (Vic) 19 r 13.02(1)(b) Supreme Court (General Civil Procedure) Rules 2015 (Vic) 20 r 13.02(1)(c) Supreme Court (General Civil Procedure) Rules 2015 (Vic) 21 r 13.03 Supreme Court (General Civil Procedure) Rules 2015 (Vic) 22 r 13.07(3) Supreme Court (General Civil Procedure) Rules 2015 (Vic) 23 r 13.10(1) Supreme Court (General Civil Procedure) Rules 2015 (Vic) 24 r 13.10(2) Supreme Court (General Civil Procedure) Rules 2015 (Vic) 15 2. that party has breached the contract as correctly construed; and 3. performance was not excused by an exempting provision or invalidating or vitiating factor; and 4. the contract was not terminated before the breach; and 5. a remedy is available; and 6. it is not unconscionable to make the claim.35 24. It is apparent that, in creating this checklist of elements, Seddon and Bigwood have included some of the defences available to a claim for breach of contact within the elements. The authors, in fact, go on to state36: Conversely, a claim of liability for breach of contract will not succeed if: 1. no contract was formed; or 2. no breach of the contract as correctly construed occurred; or 3. performance is excused; or 4. the contract was terminated before the breach; or 5. a remedy is not available; or 6. it is unconscionable to make the claim. 25. It is convenient to make two initial points regarding Seddon and Bigwood’s checklist in the context of pleading a statement of claim. Firstly, it is improper for a statement of claim to anticipate the defence or defences which may be pleaded. Secondly, entitlement to a remedy is an essential element of a 35 Seddon & Bigwood (2017) Cheshire & Fifoot Law of Contract (11th Australian edition) Lexis Nexis Butterworths, New South Wales at [1.7] 36 Seddon & Bigwood (2017) Cheshire & Fifoot Law of Contract (11th Australian Edition) Lexis Nexis Butterworths, New South Wales at [1.8] 16 successful claim for breach of contract and “[a] claimant who fails to obtain a remedy goes away as empty-handed as if no obligation or breach had been proved.”37 26. Generally, in order to be entitled to more than nominal damages for breach of contract, a plaintiff needs to prove: a compensable and measurable loss was caused by the defendant’s breach of contract; that this loss is not too remote; and it could not have been avoided by reasonable mitigating action.38 It follows that, as a necessary element of the cause of action for breach of contract, and the recovery of damages beyond nominal damages, a plaintiff must prove (and plead) loss and damage caused by the defendant’s breach of contract. Remoteness39 and failure to mitigate could be described as matters which disentitle a plaintiff to the damages for breach of contract and are therefore for the defendant to raise. 27. In conclusion, on my analysis, and in my experience, generally the material facts which must be pleaded, in a statement of claim seeking damages for breach of contract, are: (a) An agreement between the plaintiff and the defendant; 37 Seddon & Bigwood (2017) Cheshire & Fifoot Law of Contract (11th Australian Edition) Lexis Nexis Butterworths, New South Wales at [1.129] 38 Seddon & Bigwood (2017) Cheshire & Fifoot Law of Contract (11th Australian Edition) Lexis Nexis Butterworths, New South Wales at [23.2] 39 The plaintiff does ultimately bear the onus of proving that the loss and damage was not too remote: Carter (2018) Contract Law in Australia (7th edition) Lexis Nexis Butterworths, Sydney at [35-05] 17 (b) The relevant term/s of the agreement (the relevant term or terms are only those which it will be alleged were breached); (c) An allegation that the defendant breached the relevant term/s of the agreement; and (d) An allegation that the plaintiff has suffered loss and damage as a result of the defendant’s breach/es of the term or terms. 28. Surprisingly, there are few cases which specifically discuss the requisite material facts for a breach of contract claim for damages. However, in JM Kelly Builders Pty Ltd (in liq) v Milton40, Flanagan J held that the essential elements of breach of contract which needed to be pleaded in a statement of claim were: an agreement between the parties; the relevant term; the breach of the relevant term; and the consequences of the breach. F. Practical tips 29. The following, in no particular order, are some things to remember when pleading a statement of claim: (a) plead assertions of fact; (b) don’t put multiple assertions of material facts in the same paragraph; 40 [2021] QSC 59 at [60] 20 17 March 2022 Adam Coote Barrister Green’s List SCHEDULE MATERIAL FACTS - BREACH OF CONTRACT SEEKING DAMAGES 1. An agreement between the plaintiff and the defendant. 2. The relevant term/s of the agreement (the relevant term or terms are only those which it will be alleged were breached). 3. An allegation that the defendant breached the relevant term/s of the agreement. 4. An allegation that the plaintiff has suffered loss and damage as a result of the defendant’s breach/es. 21 AUTHORITY RE THE MATERIAL FACTS OF BREACH OF CONTRACT 1. Bullen & Leake & Jacob’s Precedents of Pleadings (13th Edition) Sweet & Maxwell, London, p. 268 2. Covell & Lupton, Principles of Remedies (4th Ed) Lexis Nexis Butterworths, Sydney at [3.6] 3. Seddon and Bigwood (2017) Cheshire & Fifoot Law of Contract (11th Australian edition) Lexis Nexis Butterworths, Sydney at [1.5] & [1.7] 4. JM Kelly Builders Pty Ltd (in liq) v Milton [2021] QSC 59 at [60] EXAMPLE STATEMENT OF CLAIM – BREACH OF CONTRACT 1. The plaintiff is and was at all relevant times incorporated pursuant to the Corporations Act 2001 (Cth) and able to sue. 2. The defendant is and was at all relevant times incorporated pursuant to the Corporations Act 2001 (Cth) and able to be sued. 3. By an agreement made on or about 15 July 2011 between the plaintiff and the defendant, the defendant agreed to paint the plaintiff’s house green for remuneration. PARTICULARS The agreement was partly oral, partly written and partly implied. 22 Insofar as the agreement was oral, it is comprised of conversations between Mr Paul White on behalf of the plaintiff and Mr Brian Black on behalf of the defendant in early July 2011 to the effect alleged. Insofar as the agreement was written, it is comprised of the plaintiff’s written service requests dated 15 July 2011, copies of which will be provided on request. Insofar as the agreement was implied, it was to be implied from the matters referred to above and the fact that the defendant accepted the plaintiff’s service requests and payment in the amount of $1,000 from the plaintiff. 4. There were terms of the agreement, inter alia, that the defendant would: (a) paint the plaintiff’s house green; and (b) carry out the painting with reasonable care, diligence and skill. PARTICULARS The terms were partly in writing and partly to be implied. Insofar as they were in writing they are contained in the plaintiff’s service requests. Insofar as they were implied, the agreement was for professional services, and the implied term of reasonable care, diligence and skill arises by operation of law.