Beaumont v Chang

Supreme Court of NSW|2015-04-06

Judgment

HER HONOUR: This notice of motion involves a review of the Registrar's decision in allowing two amendments to a pleading. It is of short compass.
By notice of motion filed 12 September 2014, the defendants seek an order that pursuant to Rule 49.20 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") the decision of Registrar Kenna made on 25 August 2014 be set aside on review, and that there be substituted in lieu of that decision that the plaintiffs be granted leave to file the further amended statement of claim ("FASC") in the form as sought by the plaintiffs in the affidavit of their solicitor, Mr Agosta, made on 26 June 2014 (being part of annexure C to that affidavit) but excluding lines 2 and 3 of subpara 23B(a)(xiii); or alternatively, in the event that the further amended statement of claim has been filed then lines 2 and 3 of subpara 23B(a)(xiii) be struck out. On 25 August 2014, the Registrar granted leave to the plaintiffs to file and serve a FASC.
The first plaintiff is an ophthalmic surgeon Paul Ernest Beaumont ("Dr Beaumont") and the second plaintiff is Dr Beaumont's family corporate trustee, Brimbella Pty Ltd atf Judith Beaumont Settlement Trust ("Brimbella"). The first defendant is also an ophthalmic surgeon, Andrew Alexander Chang ("Dr Chang") and the second defendant is a corporate trustee associated with Dr Chang, Jaza Pty Ltd ACN 096 790 402 ("Jaza"). For convenience, I shall refer to the plaintiffs as "Dr Beaumont" and the defendants as "Dr Chang" except where the identity of the separate entities is required.
A bundle of documents that were before the Registrar (and in the Registrar's decision) was handed up. Dr Beaumont relied upon a further affidavit of Peter Zipkis dated 5 May 2015.

Background

Drs Beaumont and Chang are ophthalmic surgeons who formerly shared surgery and office space ("the surgery") in Macquarie Street, Sydney. Brimbella is the alleged assignee of causes of action said to have been held by Dr Beaumont's former service company PBPL. Jaza is Dr Chang's service company.
On 31 July 2006, Dr Beaumont alleges he was refused entry to the premises and as a consequence has sustained loss. Dr Beaumont claims damages under the Trade Practices Act 1974 (Cth), as it was at the time the alleged causes of action arose, for unconscionable conduct in connection with the supply of services in trade and commerce. Dr Beaumont also claims damages for breach of contract between Dr Beaumont and PBPL. It is only the unconscionable conduct issue that is relevant to this application.

The pleadings of the FASC

On 10 August 2011, Dr Beaumont filed a statement of claim. On 12 June 2012, an amended statement of claim was filed. These pleadings concerned whether or not Dr Beaumont is entitled to damages for breach of contract, since Dr Chang's conduct represented a repudiation of the contract between them.
On 27 June 2014, Dr Beaumont filed a notice of motion seeking leave to file a FASC (the motion before the Registrar). This pleading proposed to add the issue of whether or not Dr Beaumont is entitled to damages as a result of unconscionable conduct by Dr Chang that is in breach of s 51AC of the Trade Practices Act.
The conduct said to be unconscionable ("the Conduct") is pleaded at paragraphs 9-17 and 21-22 of the FASC. It can be summarised as follows: (i) During the period 2001 to mid 2006, Dr Chang breached an agreement by issuing erroneous invoices (FASC [9]). (ii) On 22 March 2006 and 5 April 2006, Dr Chang made demands that Dr Beaumont and PBPL sign a certain deed and thereby repudiated an agreement between them (FASC [10] and [12]. (iii) On 22 March 2006 and 5 April 2006, Dr Chang repudiated an agreement that Dr Beaumont and PBPL would not have to pay any more for accommodation than that they had paid for accommodation in the previous premises of defendant (FASC [10], [11], [12], [13], [14], [15], [16] and [17]). (iv) On 28 July 2006, Dr Chang demanded that Dr Beaumont and PBPL vacate Dr Chang's premises (FASC [21]). (v) On 31 July 2006, Dr Chang prevented Dr Beaumont from entering those premises (FASC [22]).

The hearing of the motion before the Registrar

On 25 August 2014, the Registrar heard this motion and gave ex tempore reasons for her judgment.
After much discussion between the parties concerning the amendments, all amendments were consented to, except for lines (2) and (3) of subpara 23B(a)(xiii). They read: "23B. The plaintiffs repeat paragraph 6A-6D and 7A above and say that in the premises: (a) it was unfair and unconscionable for the second defendant to have engaged in the conduct referred to at paragraphs 9-17 and 21-22 above ('Conduct') because: … (xiii) the defendants failed to act in good faith by reason of: … (2) the defendants informed some of the former patients of the first plaintiff that the first plaintiff had retired or was ill; (3) the defendants informed some of the former referring doctors of the first plaintiff that the first plaintiff had retired." (My emphasis is placed on the pleading in dispute before the Registrar and before me)
In other words, Dr Beaumont alleged that Dr Chang informed former patients that he [Dr Beaumont] had retired or was ill and also informed former referring Doctors that Dr Beaumont had retired.
Mr Freeman of counsel appeared for Dr Beaumont and Mr Tregenza of counsel appeared for Dr Chang. [The same counsel appeared before me on the review application].
What was left for the Registrar to determine was whether the amendments in lines (2) and (3) in subpara 23B(a)(xiii) should be permitted. Counsel for Dr Chang objected to these amendments on the basis that firstly, they pleaded evidence rather than material facts in breach of UCPR 14.7 (the evidence issue); and secondly, that they provided insufficient particulars in breach of UCPR 15.3 (the particulars issue).

The relevant pleading rules

UCPR 14.7 reads: "14.7 Pleadings to contain facts, not evidence Subject to this Part, Part 6 and Part 15, a party's pleading must contain only a summary of the material facts on which the party relies, and not the evidence by which those facts are to be proved."
UCPR 15.3 relevantly reads: "15.3 Allegations of behaviour in the nature of fraud A pleading must give particulars of any fraud, misrepresentation, breach of trust, wilful default or undue influence on which the party relies"
Overall, the parties made the same submissions before the Registrar as they made on review. For convenience, I shall summarise them later in this judgment.
Before I examine the Registrar's decision, I should briefly set out the law on the topic of unconscionable conduct.

Unconscionable conduct

The Trade Practices Act has been repealed and unconscionable conduct is now covered in ss 20 and 21 of the Australian Consumer Law. However, ss 51AB and 51AC of the Trade Practices Act apply to conduct that took place up to and including 31 December 2010, so are the relevant provisions here as the alleged conduct had occurred by 2006.
Sections 51AB and 51AC relevantly read: "51AB Unconscionable conduct (1) A corporation shall not, in trade or commerce, in connection with the supply or possible supply of goods or services to a person, engage in conduct that is, in all the circumstances, unconscionable. … 51AC Unconscionable conduct in business transactions (1) A corporation must not, in trade or commerce, in connection with: (a) the supply or possible supply of goods or services to a person (other than a listed public company); or … engage in conduct that is, in all the circumstances, unconscionable (2) A person must not, in trade or commerce, in connection with: (a) the supply or possible supply of goods or services to a corporation (other than a listed public company); or ... engage in conduct that is, in all the circumstances, unconscionable. …"
In Hurley v McDonalds Australia Ltd [1999] FCA 1728; (2000) ATPR 41-741, Heerey, Drummond & Emmett JJ stated (at [22]) in respect of ss 51AB and 51AC of the Trade Practices Act: "[22] For conduct to be regarded as unconscionable, serious misconduct or something clearly unfair or unreasonable, must be demonstrated - Cameron v Qantas Airways Ltd (1994) 55 FCR 147 at 179. Whatever 'unconscionable' means in s 51AB and s 51AC, the term carries the meaning given by the Shorter Oxford English Dictionary, namely, actions showing no regard for conscience, or that are irreconcilable with what is right or reasonable - Qantas Airways Ltd v Cameron (1996) 66 FCR 246 at 262. The various synonyms used in relation to the term 'unconscionable' import a pejorative moral judgment - Qantas Airways Ltd v Cameron at 283-4 and 298."
In Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389, Allsop P said at [291]: "[291] … It is neither possible nor desirable to provide a comprehensive definition [of unconscionable conduct]. The range of conduct is wide and can include bullying and thuggish behaviour, undue pressure and unfair tactics, taking advantage of vulnerability or lack of understanding, trickery or misleading conduct. A finding requires an examination of all the circumstances."
In Fairlight AU Pty Ltd v Peter Vogel Instruments Pty Ltd [2013] FCA 1280, Edmonds J held at [16]: "[16] …Ultimately, each of ss 51AB and 51AC prescribes a standard rather than a rule. The boundaries of its application are normative rather than logical. There is a qualitative difference between their operation and that of the prohibition on misleading or deceptive conduct imposed by s 52 of the Act even allowing for normative controls on the application of that section within its logical boundary. The categories of unconscionable conduct for the purposes of ss 51AB and 51AC will never be closed albeit the circumstances of the application of the standard prescribed in each of them is confined by the language of each section."
Finally, in Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90 stated at [23]: "[23] The task of the court is the evaluation of the facts by reference to a normative standard of conscience. That normative standard is permeated with accepted and acceptable community values. In some contexts, such values are contestable… Values, norms and community expectations can develop and change over time… These considerations are central to the evaluation of the facts by reference to the operative norm of required conscionable conduct."

The decision of the Registrar

On 25 August 2014, after outlining the facts and considering the submissions of the parties, the Registrar in her ex tempore reasons for judgment stated: "The Court in determining whether or not leave should be granted for a party to amend its pleadings must first of all look at s 64 of the Civil Procedure Act. The Court must be satisfied that the amendment is necessary to determine the real questions raised in the proceedings and in doing so the Court must have regard to the overriding purpose of the Civil Procedure Act and in doing so that would require consideration of the nature of the proposed amendment, its consequences for the opposing party and the overall expeditious conduct of the proceedings. It has been said on the case law that a party should be granted leave to amend if an application is made in a timely manner and is made for a proper purpose. So the first question for the Court to determine today is whether or not the pleading as set out in the Agosta affidavit is going to determine a real issue in dispute between the parties. It is clear from the pleadings that the plaintiff has sought to bring a claim where it is said that the defendants acted unconscionably within the meaning of s 51AC of the Trade Practices Act. From the litigation that has flown between the parties going back to the appearances before Justice Adams where the parties were dealing with issues of particulars and subpoenas, it is clear that the parties have been aware for a long period of time that the unconscionability issue has been in play. There is also a question if the Court refuses the plaintiff leave on the basis that the pleading as currently drafted is borderline evidence as opposed to a material fact, whether or not the plaintiff will be locked out from being able to bring any further evidence of that fact at a later point in time and whether or not by allowing the pleading it would remove any element of surprise for the defendants. Ultimately it will be a question of fairness and whether or not the dictates of justice warrant the amendment. I take the view that the two paras located at subpara 2 and 3 appear to be indicia of unconscionability. As I have taken the view that they are an indicia of unconscionability, it can only flow that they would be a material fact for the purpose of these proceedings. There is an issue however as to the particularisation of those pleadings and whether or not they have been properly particularised and it is or it can be said that they have not. The plaintiff should give full and proper particulars as to those pleadings. However I accept the plaintiff's argument that for the purpose of an amendment application that issue does not need to be necessarily determined today and that the defendant can make a request for particulars. As I have taken the view that the two subparas are an indicia of unconscionability, it is only natural that the plaintiff should be granted leave to amend the statement of claim …"
In summary, the Registrar allowed the amendments contained in lines (2) and (3) because the allegations of the representations: • Are indicia of unconscionable conduct; and • Did not need to be fully particularised at that time and could be subject of a request for particulars.

Review of a decision of a registrar

UCPR 49.19 governs applications for review of a decision of a registrar. It reads: "49.19 Review of registrar's directions, certificates, orders, decisions and other acts If in any proceedings a registrar gives a direction or certificate, makes an order or decision or does any other act, the court may, on application by any party, review the direction, certificate, order, decision or other act and make such order, by way of confirmation, variation, discharge or otherwise, as the court thinks fit. …"
In Tomko v Palasty (No 2) (2007) 71 NSWLR 61; [2007] NSWCA 369 Hodgson JA (with whom Ipp JA agreed) stated (at [6]-[8]): "[6] I agree that a review of a decision of a registrar is not an appeal, subject to s 75A of the Supreme Court Act; and that in such a review a court must exercise its own discretion. [7] In my opinion, this discretion extends to a discretion as to whether, and if so how, to intervene; and in my opinion, there is an onus on a person seeking to have a court set aside or vary a registrar's decision to make out a case that the court, in the interests of justice, should exercise its discretion to do so. [8] In the case of a decision on practice or procedure, this will normally require at least demonstration of an error of law, or a House v R error, or a material change of circumstances, or evidence satisfying the strict requirements for fresh evidence. Even then, a court may not think that the interests of justice require intervention. This could be so, for example, if the error of law is a deficiency of reasons and the result is on its face not an unreasonable one." …"
Basten JA in Tomko at 52(a) stated: "a court may be less inclined to intervene in relation to a decision concerned with the management of an on-going proceeding, as opposed to one which terminates the proceeding or prevents its commencement."
Tomko was discussed in detail by Rein J in Noun v Pavey [2013] NSWSC 846. As this review concerns a decision about the ongoing management of these proceedings (not one that terminates it), I adopt the reasoning of his Honour at [18]: "[18] It follows that, in my view, the plaintiffs bear the onus of establishing that the court, in the interests of justice, should exercise its discretion to intervene and must demonstrate an error of law or an error of the kind referred to in House v R or a material change of circumstances or evidence. …"

The grounds for review

Dr Chang's grounds for review are that the two lines added are: (a) evidence and not material facts in breach of UCPR 14.7 (evidence and not material facts?); and (b) contain insufficient particulars in breach of UCPR 15.3 (insufficient particulars).
These are the same issues that were in dispute before the Registrar.

(a) Evidence not material facts?

So far as this issue is concerned, Dr Chang submitted that the two lines do not give a statement of the intent that Dr Chang is alleged to have had in order to act unconscionably, but that rather, they merely show how Dr Beaumont seeks to prove that intent.
Dr Chang further submitted that in breach of UCPR 14.7, lines (2) and (3) are evidence, not material facts. Counsel for Dr Chang argued that no date or periods during which the representations were made are identified in the FASC. He said that Dr Beaumont alleged that Dr Chang had told the recipients of these representations that Dr Beaumont had retired, and that that makes it clear that the representations relied upon by Dr Beaumont occurred after Dr Beaumont's exclusion from the surgery on 31 July 2006. Dr Chang submitted that the representations are not material facts because they could only have been made after the alleged unconscionable conduct occurred.
By way of response to the lack of particularity with dates, Dr Beaumont has a fallback position. It is that if a date is required to be pleaded in [22] of the FASC, that paragraph should be amended to insert the words "On and after 31 July 2006".
As Dr Beaumont's counsel explained, as these representations were allegedly made by Dr Chang, investigations are continuing as to whom they were made and when. Even when this information is gathered, the recipients may not be prepared to provide affidavits. The dates "on or after 31 July 2006" may be able to be better particularised with an end date once this evidence is gathered.
Counsel for Dr Beaumont submitted that the paragraphs plead material facts and not the evidence to support the material facts.
Counsel for Dr Beaumont's approach was that regardless of whether or not sufficient particulars had been provided, that was not a basis upon which the Registrar was able to deny him the opportunity to amend his claim, and that rather, Dr Chang could make a request for further particulars after the amendments were granted. Dr Beaumont submitted that Dr Chang's position ignores the authorities on unconscionable conduct, which illustrate that the principles relating to unconscionable conduct are expressed in broad terms, and that unconscionable conduct is incapable of precise definition.
Counsel for Dr Beaumont submitted that a plaintiff is required to plead facts which meet the description of "misconduct", "unfair" or "unreasonable", and that that is why Dr Beaumont has pleaded the facts which are now disputed. Dr Beaumont highlighted that the cases he referred to demonstrate that unconscionable conduct is wide ranging and is incapable of precise definition. Dr Beaumont submitted that these decisions illustrate how the proposition of Dr Chang that Dr Beaumont cannot plead material facts, because it is said to be really "evidence" supporting the claim of unconscionable conduct, is without merit.
In Kirby v Sanderson Motors Pty Ltd (2001) 54 NSWLR 135; [2002] NSWCA 44, Hodgson JA (Mason P and Handley JA agreeing) said at [20]-[21], with respect to the requirement for a pleading to state material facts: "[20] It might appear that these rules [the Supreme Court Rules] do not require that causes of action be stated in pleadings: the requirement is to have a statement of material facts, and indeed to have only such a statement. However, in my opinion - (1) "Material" means material to the claim, that is, to the cause or causes of action which are relied on. (2) The requirement of a statement of material facts does not exclude the allegation of legal categories, such as duty of care, fiduciary duty, trust and contract. (3) The general requirement to avoid surprise means that material facts must be stated in such a way that the defendant can understand the materiality of the facts, that is, how they are material to a cause of action. [21] Accordingly, even on the basis of these rules which are common to the District Court and the Supreme Court, I do not take cases such as Konskier as establishing that there is never any requirement to do more than set out facts. Where there is a danger of surprise, which arises particularly where there is lack of precision and clarity in the pleading, it may well be appropriate to require a Plaintiff, either in a statement of claim or in particulars, to explicitly relate the facts it pleads to specific causes of action."
It is my view that lines (2) and (3) set out material facts. The range of unconscionable conduct is wide and can include bullying and thuggish behaviour, undue pressure and unfair tactics, taking advantage of vulnerability or lack of understanding, trickery or misleading conduct. These are the alleged actions of Dr Chang that form part of the unconscionable conduct. These lines are not a new cause of action. A finding of unconscionable conduct requires an examination of all the circumstances. These false representations are some of the circumstances that go towards making a finding of unconscionable conduct. The pleading in these lines are material facts. They are not evidence.

(b) Insufficient particulars?

The thrust of Dr Chang's argument was that there are insufficient particulars provided to meet the requirements of UCPR 15.3, and that consequently, the Registrar erred by concluding that the sufficiency of particulars in the FASC did not have to be determined at the time of the hearing, but that Dr Chang could seek particulars of the representations. Dr Chang argued that by doing so, the Registrar did not have regard for the requirement that there must be a sufficient pleading of the representations.
Counsel for Dr Chang submitted that each representation alleged by Dr Beaumont forms part of the allegation that Dr Chang engaged in the alleged unconscionable conduct, and that because Dr Beaumont has not identified the recipient of the communication, a sufficient means of identifying the recipient or the date or approximate date of the representations, it has not pleaded a representation.
Dr Chang submitted that rather, Dr Beaumont merely alleges, in an open-ended fashion, that representations at large were made to former patients and referring doctors, without identifying them either in the pleading or in a separate document referred to in the pleading. Counsel for Dr Chang further argued that, contrary to UCPR 15.1, Dr Chang is left in a position where he does not know the case the pleading requires him to meet.
In support of this proposition counsel for Dr Beaumont replied upon Southern Cross Exploration NL v Fire & All Risks Insurance Co (1985) 2 NSWLR 340 at 349F to 351F: "Relationship between pleadings and particulars: … … there has been a good deal of debate on what are the proper respective roles of pleadings and particulars. The Supreme Court Rules 1970, Pt 15, r 7(1), requires that a pleading shall contain, and contain only, a statement in a summary form of the material facts relied upon. Part 16, r 1, requires that a party pleading shall give the necessary particulars. The plaintiffs submit that it is sometimes not easy to distinguish between facts which should be given as particulars and those which should be alleged as material facts in a statement of claim. It is said that the distinction is often blurred. It is also said that under the present system of pleading particulars should not be regarded merely as limiting the generality of the statement of material facts contained in a statement of claim but that it is open to the party giving particulars to enlarge the ambit of the statement of claim by adding in the particulars further material facts. The distinction between material facts and particulars is described in the well-known passage from the judgment of Scott LJ in the decision of the Court of Appeal in Bruce v Odhams Press Ltd [1936] 1 KB 697 at 712-713 as follows: "The cardinal provision in r 4 is that the statement of claim must state the material facts. The word 'material' means necessary for the purpose of formulating a complete cause of action; and if any one 'material' fact is omitted, the statement of claim is bad; ... The function of 'particulars' under r 6 is quite different. They 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 between 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. And the practice of sometimes putting particulars into the statement of claim and sometimes delivering them afterwards either voluntarily, or upon request or order, without any reflection as to the true legal ground upon which they are to be given has become so common that it has tended to obscure the very real distinction between them. …"
Dr Beaumont's position was that a failure to provide sufficient particulars is not a valid objection to an amendment. In a letter to Dr Chang's solicitors from Dr Beaumont's solicitors dated 20 May 2014, they advise as follows: "As concerns the second basis for the objection, we rare instructed to advise that we have obtained information from several sources with respect to the subject matter of the Paragraphs. That information will be the subject of lay evidence in due course. In the interim, and for immediate purposes, we are instructed to provide the following further particulars (which will be the subject of evidence at the hearing): Janice Bowen Ms Bowen became a patient of Dr Beaumont in approximately 1980 and remained a patient of Dr Beaumont up to and including the time at which he was refused access to your clients' business premises… Ms Bowen is prepared to provide a sworn affidavit to the effect that: • she received a letter from Dr Chang's practice informing her that Dr Beaumont had retired and that Dr Chang had taken over responsibility for his clients. The correspondence further invited Ms Bowen to contact Dr Chang's practice so as to make an appointment to see Dr Chang; and • sometime subsequent to receipt of the abovementioned letter, attended Dr Chang's practice for an appointment with Dr Chang, during the course of which she had a discussion with Dr Chang in words to the following effect: Bowen: 'What has happened to Dr Beaumont?' Chang: 'He has retired. I believe it was family issues.' Bowen: 'Well you have a very big pair of shoes to fill.' Dr Allan Ared Dr Ared has advised that he conducted a radio program entitled 'All about Eyes', and that each of Dr Beaumont and Dr Chang had appeared as guests on the program. Dr Ared recalls a conversation with Dr Chang prior to the commencement of the said radio program in words to the following effect: Ared: 'What has happened to Paul?' Chang: 'He just upped and left. He has left all his patients and hasn't told anyone where he has gone. It was Paul's decision to leave and no one knows where he is.' Dr Ared is likewise prepared to provide a sworn affidavit to the above effect."
The nature of the representation allegations that form part of the unconscionable conduct have been pleaded. As foreshadowed in the above letter, evidence by way of affidavits will be provided in due course. The representations were alleged to have been made by Dr Chang himself. It is my view that sufficient particulars have been provided so that Mr Chang knows the case he has to meet.
I agreed with the decision of the Registrar. The orders made by Registrar Kenna on 25 August 2014 are affirmed. The defendants' notice of motion filed 12 September 2014 is dismissed.
Costs are discretionary. Costs usually follow the event. The defendants are to pay the plaintiff's costs as agreed or assessed on an ordinary basis The Court Orders: (1) The orders made by Registrar Kenna on 25 August 2014 are affirmed. (2) The defendants' notice of motion filed 12 September 2014 is dismissed. (3) The defendants are to pay the plaintiff's costs as agreed or assessed on an ordinary basis.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 May 2015

Trade Practices Act 1974(Cth)

At a glance

Court

Decision date

Catchwords

Source

Catchwords

Judgment (12 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (12)

Cited By (1)