Proper Pleading

In two tranches the Federal Court of Australia, in BCI Media Pty Ltd v CoreLogic Australia Pty Ltd [2022] FCA 1128 and BCI Media Group Pty Ltd v CoreLogic Australia Pty Ltd (No 2) [2023] FCA 664, by Yates J, provided useful instruction as to drafting of proper pleadings in a commercial matter involving multiple causes of action and the conduct of multiple parties.  In particular, his Honour underscored the need to plead material facts rather than merely particulars, the full suite of material facts in “involvement” in certain conduct, counterfactual pleading in causation and loss and damage and repudiated strongly the use of rolled up pleas and language such as “including”.

Yates J wrote in his first decision:

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THE GENERAL NATURE OF BCI’S ALLEGATIONS

[9]  The general nature of BCI’s allegations can be summarised as follows. BCI, on the one hand, and CoreLogic Australia, RP Data and Cordell (who BCI calls the CoreLogic Parties) on the other, are competitors. They offer competing products that provide customers with access to information in relation to building projects throughout Australia. The information is accessed through a secure Internet site or a phone application by subscribing (for a fee) to the respective products and accessing the information they provide using individualised login details. BCI’s product is called LeadManager. The CoreLogic Parties’ competing product is called Cordell Connect.

[10]  BCI alleges that, between 2016 and 2019, the CoreLogic respondents surreptitiously accessed LeadManager. BCI alleges that the access was surreptitious because the CoreLogic Parties paid third parties (namely, the Forum Group, Skill Tech, and Gingold Investments) to obtain subscriptions to LeadManager in their own names. The third parties then provided their login details to the CoreLogic Parties, after which the CoreLogic Parties accessed LeadManager and “scraped” content from it, including by using the services of Telus International and Artis.

[11]  BCI alleges that this was done by the CoreLogic Parties themselves or through agents or subcontractors they engaged. The “scraping” was undertaken using manual processes (humans logging in and performing the “scraping”) and automated processes (in the form of programs known as “bots”). BCI alleges that the CoreLogic Parties used what they “scraped” from LeadManager to make comparisons between the contents of LeadManager and the contents of Cordell Connect. BCI alleges that these comparisons were used by the CoreLogic Parties for internal purposes, to improve Cordell Connect, and to procure customers.

THE AMENDED STATEMENT OF CLAIM

[12]  The present proceeding was commenced by filing an originating application and statement of claim. It was commenced after BCI had obtained orders for preliminary discovery in proceeding NSD 529 of 2020 against parties that included CoreLogic Australia, RP Data, Cordell and Mr Colangelo but before the giving of preliminary discovery was completed. Some of the history of the matter is recorded in BCI Media Group Pty Ltd v CoreLogic Australia Pty Ltd (No 3) [2021] FCA 884 at [1] –[14] .

[13]  Following complaints made by the respondents about the drafting of the statement of claim as filed, but in the knowledge that it intended, in any event, to prepare a more complete pleading once preliminary discovery had been fully given, BCI prepared and served the amended statement of claim together with the amended originating application.

[14]  The amended statement of claim is a lengthy and complex pleading, comprising 90 pages. It is based, in part, on documents that were produced as part of preliminary discovery after the originating application and statement of claim were filed. It has been presented as a marked-up document which contains additions (shown by underlining) and deletions (shown by strike-through) to the statement of claim. The additions include added paragraphs, shown alphanumerically (for example, 25A and 25B).

[15]  The amended statement of claim pleads causes of action for:

(a) breach of contract (paras 89A–99) and related conduct (para 100);

(b) interference with contractual relations (paras 100A–104A) and related conduct (para 105);

(c) infringement of copyright (paras 106–111) and related conduct (para 112);

(d) breach of confidence (paras 113–117) and related conduct (paras 117A and 117B);

(e) misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law (Sch 2 to the Competition and Consumer Act 2010 (Cth)) (paras 118–123) and related conduct (paras 120(b), 120A(b), 120B, and 123A); and

(f) tortious interference with chattels (paras 124–126) and related conduct (para 127).

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THE CORELOGIC RESPONDENTS’ OBJECTIONS

[18]  The CoreLogic respondents have raised a number of objections to the pleading of the statement of claim and to the pleading of the amended statement of claim. They have done so by reference to the following categories of objections.

Rolled-up and conclusory allegations

[19]  In paras 29A to 96 BCI pleads numerous, diverse allegations around the narrative that LeadManager was accessed through the instrumentalities of the Forum Group, Skill Tech, and Gingold Investments; that Artis and Telus International were engaged to “scrape”, and did “scrape”, data therefrom; and that the results of this activity, and of the other work that Artis and Telus International each undertook in that regard, were used by the CoreLogic Parties in various ways.

[20]  The CoreLogic respondents contend that many of these paragraphs contain broad, rolled-up allegations involving multiple respondents (and, in the case of the amended statement of claim, proposed respondents) without attempting to plead the material facts relied upon with respect to each respondent.

[21]  They contend that pleading in this way makes it impossible to know: how particular allegations relate to particular respondents; what material facts are alleged against each respondent; how each duty or obligation that is subsequently pleaded is alleged to have been breached by each respondent; the causal analysis said to flow from each breach; and the loss that is alleged to flow from each breach.

[22]  I accept the CoreLogic respondents’ contentions. The statement of claim and the amended statement of claim do not conform to the requirements of r 16.02 of the Rules and, in particular, rr 16.02(1)(b), (c) and (d) and 16.02(2)(c), (d), and (e) thereof.

[23]  A number of paragraphs plead rolled-up allegations in the sense that the allegations are made with respect to groups of individuals or entities, including groups of respondents. This does not enable one to tell, with clarity, the precise allegation that is made against a given individual/entity or a given respondent. On occasion, when various forms of conduct are pleaded, the conduct itself is “rolled-up”. These deficiencies are evident, in various forms of conduct, in, for example, paras 29G, 30, 30D, 30E, 31, 38A, 39, 49, 50B, 57, 62, 62B, 70A, 71–85, 88, 89, 91, 93, 95, and 100 of the amended statement of claim. The allegations must be “unrolled”.

[24]  As I later note, BCI’s habit of pleading rolled-up and conclusory allegations is repeated in later paragraphs of the amended statement of claim dealing with specific causes of action. A particular example is given by BCI’s pleading in respect of its allegations of interference with contractual relations (as to which see [38]–[45] below).

[25]  I would add that a number of paragraphs plead vague generalisations, when greater specificity is required to meet the requirement to plead material facts: see, for example, paras 29G, 30, 31, 41, 41A, 42, 46, 52A, 61A, 79, and 83.

[26]  The pleading of the amended statement of claim in particular lacks coherence and clarity. A number of allegations are pleaded as being premised on, or are particularised by reference to, a large number of other paragraphs in the amended statement of claim, many of which, themselves, have the defects or deficiencies to which I have referred.

[27]  In many paragraphs, the particulars given are said to be the particulars given in other paragraphs of the amended statement of claim which, in turn, refer to other particulars or other paragraphs in the pleading, and so on. When one tries to read the amended statement of claim with these incorporated references, one is sent on a chase backwards and forwards through the pleading in a fruitless effort to better understand the precise allegations that are sought to be made against specific respondents or other (non-party) individuals or entities. Many of the particulars have no apparent relevance to, or connection with, the allegation that is pleaded. To compound the difficulties of comprehension this causes, the particulars given in a number of paragraphs are simply references to paragraphs of affidavits, or blanket references to documents.

[28]  The amended statement of claim also uses expressions such as “including” and “and/or”. Use of these expressions promotes imprecision, uncertainty, and confusion. As the majority in Forrest v Australian Securities and Investments Commission [2012] HCA 486; 247 CLR 486 observed at [27], the task of pleading the facts of a cause of action might require facts or characterisations of facts to be pleaded in the alternative. But this does not extend to “planting a forest of forensic contingencies”. In Forrest, the plurality referred, with approval, to the observations of Keane CJ in the Full Court below (Australian Securities and Investments Commission v Fortescue Metals Group Ltd [2011] FCAFC 19; 190 FCR 364 at [16] ) that:

The presentation of a range of alternative arguments is not apt to aid comprehension or coherence of analysis and exposition; indeed, this approach may distract attention from the central issues.

[29]  Relatedly, the CoreLogic respondents contend that BCI’s pleading of agency throughout the amended statement of claim is unclear. The CoreLogic respondents contend that, where agency is relied on, the pleading does not articulate the basis for, and scope of, the agency. I also observe that para 29D introduces the description “Agent of the CoreLogic Parties” to refer to named individuals who are said to be “a number of employees and agents”, without distinguishing between those individuals who are employees and those individuals who are agents. The CoreLogic respondents contend that a number of paragraphs in the amended statement of claim plead acts by “Agents of the CoreLogic Parties” without sufficiently identifying the person or persons who are said to be the agents: see, for example, paras 30, 39, 41, 41A, 42, and 45.

[30]  I accept the CoreLogic respondents’ contentions. The term “agent” is one that can be used in different contexts with different meanings. If, in the amended statement of claim, the term “agent” is to be taken as a legal concept with legal incidents, as I assume it to be, then the basis for, and scope of, the agency must be properly pleaded. The pleading also needs to identify those individuals who are said to be “agents” in relation to particular pleaded acts and conduct. I observe that the particulars to the paragraphs which the CoreLogic respondents have identified refer to emails passing between named individuals. It may be that BCI was intending to particularise these individuals as agents. However, the pleading is not clear.

Breach of contract claims[31]  BCI pleads that the Forum Group, Skill Tech, and Gingold Investments entered into subscription agreements to access and use LeadManager. BCI pleads that the Forum Group, Skill Tech, and Gingold Investments breached their respective subscription agreements, and BCI’s fair usage policy, in various ways: paras 89A–89C; 90–92, and 93–96.

[32]  However, in para 96A BCI also pleads that each of the CoreLogic Parties were and are bound by its subscriber terms and conditions and its fair usage policy and, in paras 97 and 98, that the CoreLogic Parties breached the subscriber terms and conditions, and the fair usage policy, in various ways. (I note that, in the statement of claim, BCI did not plead that the CoreLogic Parties are and were bound by the subscriber terms and conditions and the fair usage policy, but did plead that the CoreLogic Parties breached the terms and conditions, and the fair usage policy.) BCI relies on paras 96A–98, amongst other paragraphs, to found an allegation that it has suffered, and continues to suffer, loss and damage: para 128.

[33]  The CoreLogic respondents contend that the pleading of breach by the CoreLogic Parties in the statement of claim is defective because there is no allegation of any agreement between BCI and the CoreLogic Parties by which the CoreLogic Parties could be bound by the subscriber terms and conditions and the fair usage policy. The CoreLogic respondents contend that the position is not made clearer by para 96A of the amended statement of claim because, apart from para 96A(b), there is no pleading of how the CoreLogic Parties are bound by the subscriber terms and conditions or the fair usage policy as a matter of contract (if that is the theory by which BCI says that the CoreLogic Parties were and are bound).

[34]  The CoreLogic respondents point out that para 96A(b) of the amended statement of claim pleads that the CoreLogic Parties subscribed to LeadManager through the agency of the Forum Group, Skill Tech, and Gingold Investments, without actually pleading that each of those entities contracted with BCI as agent for the CoreLogic Parties as undisclosed principals (so as to bind each of the CoreLogic Parties contractually to each subscription agreement). The CoreLogic respondents further point out that, if that is what BCI intends to plead, then para 119(a)(i) pleads, inconsistently, that the CoreLogic Parties were not subscribers to LeadManager.

[35]  I accept the CoreLogic respondents’ contentions. Neither the statement of claim, nor the amendment proposed by para 96A in the amended statement of claim, pleads with sufficient clarity the basis upon which it is alleged that the CoreLogic Parties were and are bound by the subscriber terms and conditions and the fair usage policy. Nor is the amended statement of claim clear as to how it is also said, apparently inconsistently, that the CoreLogic Parties were not subscribers to LeadManager. The pleading is confusing and embarrassing in this regard.

[36]  I would add that it is not clear from para 96A whether BCI is also alleging that the CoreLogic Parties were and are bound by the subscriber terms and conditions and fair usage policy for some additional or other reason (ie, other than by contract). If some additional or other reason is to be advanced, then this should be identified and pleaded with precision.

[37]  I observe that, in para 99 of the amended statement of claim, BCI also adopts a similar pleading style to allege that Artis and Telus International are bound by the subscriber terms and conditions and the fair usage policy. However, how, why, and in what sense, Artis and Telus International are allegedly bound is not at all clear. This matter is important because, in para 102A, BCI pleads that various respondents induced or procured “Artis Group and/or Telus International” to breach various provisions of the subscriber terms and conditions and the fair usage policy. Leaving aside the rolled-up nature of this allegation, little sense can be made of the paragraph without BCI properly pleading the nature of the alleged legal relations between the relevant actors.

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In his second decision, Yates J wrote:

Misleading or deceptive conduct

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[65]  Paragraph 126 pleads that CoreLogic Australia, Cordell, and CoreLogic were involved in the misleading or deceptive conduct pleaded in paragraphs 100 to 125. In the case of CoreLogic Australia and Cordell, this is said to be by reason of the matters pleaded in paragraphs 2 to 4, 6 to 7, and 43A. In the case of CoreLogic, this is said to be by reason of the matters pleaded in paragraphs 8 to 10, and 44 to 48.

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[69]  The problem, as I see it, with paragraph 126 is that it deals with the question of “involvement” in RP Data’s alleged contravening conduct in a very truncated way that does not make clear either the existence of the alleged knowledge, or the acts constituting the alleged involvement, of each of CoreLogic Australia, Cordell, and CoreLogic in RP Data’s conduct (it being appreciated that mere knowledge of contravening conduct is necessary, but not sufficient, to sheet home liability). As to the last-mentioned matter, the CoreLogic parties correctly point out that, even though paragraph 126 refers generally to s 2 of the Australian Consumer Law, it does not specify which of the acts in paragraphs (a) to (d) of the definition of “involved” BCI relies on for the allegation as it concerns each of those respondents. This may be important because, as the Full Court accepted in EZY Accounting 123 Pty Ltd v Fair Work Ombudsman [2018] FCAFC 134; 360 ALR 261 (when dealing with the corresponding provision in the Fair Work Act 2009 (Cth)), there may be a “different emphasis” with respect to involvement depending on whether the involvement is aiding, abetting, counselling or procuring a contravention, or whether the involvement is being knowingly concerned in or party to a contravention: see Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365 at [176] –[179] .

[70]  I accept that the core allegations in paragraph 126 must be pleaded with greater specificity, with greater precision, and by reference to material allegations of fact.

[71]  I would add that BCI uses the same pleading device in paragraphs 105, 112, and 119 of the draft statement of claim when it alleges that RP Data was “involved” in the alleged contraventions by Forum Group, SkillTech, and Gingold. Although, in these paragraphs, BCI pleads particular conduct, including inducement, the precise involvement of RP Data, in terms of the definition of “involved”, is not specified. This should be made clear.

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[74]  Another complaint concerns the pleading of the SkillTech Subscription Representations and the Gingold Subscription Representations. The CoreLogic parties submit that certain material allegations of fact are not pleaded as such but are provided, impermissibly, as particulars. The CoreLogic parties point, specifically, to the allegations that Tanya George was an employee of or “acted under the direction or control of” RP Data, and that SkillTech or RP Data authorised or requested Ms George to make the SkillTech Subscription Representations, and that Gingold or RP Data authorised or requested Ms George to make the Gingold Subscription Representations.

[75]  I accept that these matters should be pleaded as material allegations of fact, not simply provided as particulars of a broader allegation that either SkillTech or RP Data, or Gingold or RP Data, made the relevant representations. If, as I apprehend, BCI seeks to rely upon matters of inference, the facts relied on for any inference must be pleaded.

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The pleading with respect to CoreLogic

[80]  The CoreLogic parties advance a number of criticisms of paragraphs 8, 9, and 10 of the draft statement of claim, largely on the basis that these paragraphs lack appropriate precision. I note, in particular, the allegations in paragraph 10(c) (that CoreLogic “approved, authorised or sanctioned the Robotics Programs used by CoreLogic Australia, RP Data and Cordell); in paragraph 10(d) (CoreLogic “approved the expenditure incurred by CoreLogic Australia, RP Data and Cordell in relation to the Robotics Programs”); and in paragraph 10(e) (CoreLogic “financially benefited from the increase in value of its ownership of CoreLogic Australia, RP Data and Cordell as a result of their use of the Robotics Programs”).

[81]  I accept that the pleading of paragraphs 10(c), (d), and (e) is deficient. These are, in substance, broad conclusions that are not supported by material allegations of fact. A further matter is whether the reference to CoreLogic Australia and Cordell in paragraphs 10(c) and (d) is apposite given that it is now alleged that it was RP Data who licensed the relevant software.

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The pleading of loss

[87]  The CoreLogic parties submit that BCI’s pleading of loss is generally deficient. They point to BCI’s allegation that RP Data’s conduct in accessing and copying data from LeadManager led to improvements in Cordell Connect (which competes with LeadManager) and to the creation of Comparative Documents which were to be presented to BCI’s actual or prospective customers, resulting in losses to BCI of various kinds. One identified loss is that BCI’s actual or prospective customers subscribed to Cordell Connect rather than LeadManager.

[88]  The CoreLogic parties submit that, in respect of this alleged loss:

Not a single such customer is pleaded (nor even general details which might reveal the number of characteristics of such customers — there could be as little as one or many thousands or hundreds of thousands — the pleading is silent).

[89]  With respect to BCI’s particulars, which say that this matter will be the subject of evidence, including expert evidence, the CoreLogic parties submit:

This is obviously insufficient particularly when the question of lost actual customers is entirely within BCI’s knowledge. One can test it in this way: how could the CoreLogic Parties possibly respond to such an allegation? How could they lead evidence or brief their own experts? Indeed how could BCI? An expert cannot give evidence of those material facts. The matter will need to be proved by reference to the customers themselves.

[90]  The CoreLogic parties also point to BCI’s allegations that the impugned conduct caused loss to BCI’s subscription revenue and damage to the value of its business. They submit that these allegations are similarly deficient as a matter of pleading because they are bare allegations, and form part of a series of rolled-up allegations. They also point to what they contend is possible “double counting” in BCI claiming both loss of subscription revenue and damage to the value of its business.

[91]  The CoreLogic parties submit, further, that BCI’s pleading of loss (in various places in the draft statement of claim) does not make “logical sense”. For example, how can it be that “prospective” customers of BCI “cease[d] subscribing to LeadManager”?

[92]  I accept that there are deficiencies in BCI’s pleading of loss or damage.

[93]  BCI’s pleading in this regard follows a common pattern in respect of its contract (paragraph 55(g)), copyright (paragraph 82(b)), breach of confidence (paragraph 99(h)), and Australian Consumer Law (paragraphs 127(e) and 128) claims. These parts of the pleading contain rolled-up allegations concerning the response of BCI’s and RP Data’s actual or prospective customers to two separate events — the improvements in Cordell Connect and the Comparative Documents. These allegations need to be disaggregated, commencing with the response to, firstly, the improvements to Cordell Connect and, secondly, the Comparative Documents. The allegations also need to be disaggregated in respect of BCI’s actual customers, BCI’s potential customers, RP Data’s actual customers, and RP Data’s potential customers.

[94]  BCI has supplemented the drafting of paragraphs 55, 82, 99, 127, and 128 of the draft statement of claim by a separate document titled “Applicant’s Further Particulars of Loss of (sic) Damage to Statement of Claim” in an endeavour to clarify the pleading. However, I do not think that this object has been achieved. It is not clear how paragraphs 55, 82, 99, 127, and 128 of the draft statement of claim (and the existing particulars of those paragraphs) are to be read with the further particulars that have been provided and, in any event, the further particulars do not rectify the rolled-up nature of the allegations. Moreover, the further particulars are very broad indeed and do not sufficiently perform the function of particulars. In other words, the further particulars are not “particular enough”.

[95]  If BCI properly pleads its alleged loss then it is likely that the allegations that do not make “logical sense” will be exposed and rectified.

[96]  In undertaking that task, BCI should also plead the material facts which support each chain of causation relied on. This has not been done, and must be done. At the present time, all that BCI has pleaded is that, without more, “the improvements to Cordell Connect” and “the Comparative Documents” caused the various permutations of actual and prospective customers to do certain things. Causation is merely asserted. How or why each of the various permutations of actual or prospective customers were caused to do those things, by reason of the conduct of each of the CoreLogic parties, is not apparent on the face of the draft pleading.

[97]  BCI should also provide particulars of the identities of the various actual customers of BCI, the actual customers of RP Data, the prospective customers of BCI, and the prospective customers of RP Data, known to it, who acted in the ways alleged.

The pleading of profits

[98]  As well as alleging loss, paragraphs 82(b)(vi) and 99(h)(vi) of the draft statement of claim allege that the improvements to Cordell Connect and the Comparative Documents increased the profits of each of the CoreLogic parties. In paragraph 131, BCI seeks an account of profits in respect of copyright infringement (against CoreLogic Australia, RP Data, Cordell, and CoreLogic) and in respect of breach of confidence (against CoreLogic Australia, RP Data, and Cordell).

[99]  The claims for relief in the draft amended originating application suggest that an account of profits is sought against each of the CoreLogic parties. As the CoreLogic parties correctly point out, BCI has not pleaded how each respondent’s profits were increased by the improvements to Cordell Connect or by the Comparative Documents.

[100]  To take one example (by reference to paragraph 82(b)(vi)), how is it that actual customers of BCI, or prospective customers of BCI, or actual customers of RP Data, or prospective customers of RP Data, who ceased subscribing to LeadManager (paragraph 82(b)(i)(B)), or who did not subscribe to LeadManager (paragraph 82(b)(i)(C)), for the particular reasons given in paragraph 82(b) (ie, the infringements of copyright that resulted in the improvements to Cordell Connect or the infringements in copyright that resulted in the Comparative Documents), result in an increase in profits of each of the CoreLogic parties? It is not apparent on the face of the draft pleading how this could be so in respect of any of the CoreLogic parties.

[101]  Once again, causation is merely asserted. But, as with the pleading of loss discussed above, paragraphs 82(b)(vi) and 99(h)(vi) require the pleading of facts that support a chain of causation.

The inclusive nature of the pleading

[102]  In BCI v CoreLogic at [28] , I referred (with disapproval) to the use in pleadings of expressions such as “including”, which tend to promote imprecision, uncertainty, and confusion. Unfortunately, the draft statement of claim continues to deploy this device, including use of the expression “such as”. These expressions should be removed: see, eg, paragraphs 10(f)(ii), 42(f), 42A(i), 42B(g), 46, 80(d), 81(d)(i), 80(d)(ii), 106(c), 113(c), 120(c), 123(c) and 134(vi). Alternatively, BCI must plead its allegations comprehensively, not simply by using exemplifications.

CONCLUSION

[103]  The draft statement of claim contains a number of pleading deficiencies. These deficiencies are capable of rectification. I will allow BCI the opportunity to address these deficiencies by bringing in a further draft of the statement of claim. BCI is to provide any further draft to the CoreLogic parties by 31 July 2023. By 21 August 2023, the CoreLogic parties are to inform BCI and the Court (through my Associate) whether there is any objection to the (then) draft statement of claim being filed.

(emphasis added)

Links to the cases can be found here.

BCI Media Pty Ltd v Corelogic Australia Pty Ltd [2022] FCA 1128

BCI Media Group Pty Ltd v CoreLogic Australia Pty Ltd (No 2) [2023] FCA 664