Brennand and Naughton v Hartung and Best Practice Education Group Ltd t/as Blue Gum Community School [2013] ACTSC 132

2. The first plaintiff commenced these proceedings in April 2012 without representation by a solicitor. She sought judicial review of the decision of the first defendant to withdraw the offer, arguing that the decision had been made pursuant to the Education Act 2004. In addition she sought prerogative relief, specific performance of a contract, damages for negligence and damages for defamation.

3. For reasons which I published on 10 August 2012, I dismissed the applications for judicial review and prerogative relief, and dismissed an application for extension of time to seek judicial review. I ordered that the proceeding continue as if it had been commenced by originating claim, that the second plaintiff be joined, and that the plaintiffs file and serve a statement of claim by a specified date.

4. The matter came before me again on 21 September 2012. I made orders about the costs of the earlier application. I ordered that a statement of claim filed by the plaintiffs on 7 September 2012 be struck out, but granted leave to the plaintiffs to file and serve an amended statement of claim.

5. On 25 October 2012 the plaintiffs applied for an order joining Felicity Lewer as third defendant. They annexed to an affidavit by the first plaintiff a draft statement of claim prepared on the assumption that she was to be a defendant.

6. On 13 November 2012, the first and second defendants filed an application in proceeding, asking that the action be dismissed. The primary ground was that the plaintiffs had not filed a statement of claim by the date fixed by the Court. This ground is no longer relied on. The ground now relied on is that the draft amended statement of claim does not adequately plead any of the causes of action sought to be raised against the first and second defendants.

7. Rule 223 of the Court Procedures Rules 2006 provides that an application to add a defendant must be served on all active parties and on the proposed defendant. Ms Lewer was represented on the hearing of the application and has either been served or has waived that requirement. Rule 220 empowers the Court to order that a person be included as a party to a proceeding if including the person as a party is necessary to enable the Court to adjudicate effectively and completely on all issues in dispute in the proceeding. Such an order may be made at any stage of the proceeding, either on application or on the Court's own initiative. Rule 210 provides that each person whose presence as a party is necessary to enable the Court to adjudicate effectively and completely on all issues in dispute in a proceeding must be included as a party. Rule 211 provides that two or more people may be included as plaintiffs or defendants in a proceeding if separate proceedings by or against each of them may give rise to a common issue of law or fact, and any of the rights to relief claimed in the proceeding arise out of the same series of transactions or events.

8. The draft amended statement of claim has not been filed, for the reason that it includes a fresh claim against the proposed third defendant Felicity Lewer. I shall deal first with that proposed claim.

9. The factual assertions involving Ms Lewer appear at different points throughout the document. It is asserted in paragraph 5 that a friendship formed between the plaintiffs and Ms Lewer following the births of their daughters. The plaintiffs' daughter was born in March 2006 and presumably Ms Lewer's daughter was born at about the same time. It is asserted that the plaintiffs learned about the school from Ms Lewer. The plaintiffs separated in about the middle of 2010, and were apart for about six months. During this time the second plaintiff, Mr Naughton, and Ms Lewer had an affair. During the course of their relationship, he lent her $7,800 in August 2010 and a further $20,000 in December 2010. There was no express agreement as to when the money was to be repaid.

10. On 11 July 2011 Ms Lewer applied to the Magistrates Court for an order, which was made by a magistrate on that date, under the Domestic Violence and Protection Orders Act 2008 against Mr Naughton. The order was expressed to be in force for a month, and restrained Mr Naughton from behaving in a violent, offensive or harassing manner towards Ms Lewer or her daughter. The order prohibited him from being at her home or place of employment, and from being at the Blue Gum School. The magistrate directed service of the order on Mr Naughton, and the sending of a copy of the order to the principal of the school, who was permitted to show the copy of the order to teachers at the school. There was a further direction that a copy be sent to the ACT Department of Education and Training.

11. The plaintiffs assert in the statement of claim that on about 11 July 2011, Ms Lewer met and spoke to the first defendant, Ms Hartung (the school principal). The assertion is that Ms Lewer spoke to Ms Hartung "about the plaintiffs' daughter attending the . . . school, and told her things about the first and second plaintiffs, which led the first defendant to advise the third defendant that 'if there was a court order in place, this could make enrolment in a small community school . . . unworkable'".

12. On 12 July 2011 Ms Hartung notified the plaintiffs that she had become aware of "serious matters which made it impossible for [their] family to join the school community at Blue Gum" and withdrew the place at the school which had been offered to their daughter.

13. On 8 September 2011 the orders made by the Magistrates Court were discharged. The Court accepted undertakings by Mr Naughton and Ms Lewer, made by consent and without admissions for a period of twelve months. These included an undertaking by Mr Naughton not to be on the premises at the school "except for the purpose of collecting his daughter, Emily Naughton, in emergencies or attending any school functions or events or meetings with teachers or staff".

14. It is then pleaded that Ms Lewer "failed to repay the amounts of money loaned to her by the second plaintiff". A claim is made by the second plaintiff for $27,800 plus what is described as a prescribed costs amount of $1,112.

15. Both plaintiffs make a claim against Ms Lewer for defamation. It is asserted that on or about 11 July 2011 Ms Lewer told Ms Hartung things about the plaintiffs "which imputed that they were undesirable as members of the Blue Gum community and that the second plaintiff had engaged in conduct towards Ms Lewer and her daughter which warranted the intervention of a court and the issue of a restraining order against him". It is further asserted that "the defendants told things about the plaintiff [sic] to the ACT Department of Education which imputed that the second plaintiff posed a danger to children and other parents at the Blue Gum Community School, and that the plaintiffs were undesirable as members of the Blue Gum community, with the intention of damaging the Department's consideration of the plaintiffs' complaints".

16. Thus, the claims proposed against Ms Lewer are a claim for debt by the second plaintiff Mr Naughton, and a cause of action in defamation by both plaintiffs, apparently about two publications, one to Ms Hartung and the other to the Education Department.

17. It does not seem to me that the claim for repayment of money lent is capable of succeeding as drafted. The loan is adequately pleaded, but there is nothing pleaded about when the loan was to fall due or when Ms Lewer was required to repay it. There is a specific assertion that there was no written or express term about repayment. There is no assertion that it was a term of the loan that the amount lent was to be repayable on demand, nor is there any assertion that a demand was ever made. These are problems for the second plaintiff which may be capable of resolution by further changes to the pleading before it is filed.

18. The claims in defamation have the threshold difficulty that they are out of time. The limitation period to bring an action in defamation is one year: Limitation Act 1985, s 21B. An extension of a maximum of a further two years is available where it was not reasonable in the circumstances for the plaintiff to have commenced action within the first year. The principles to be applied in an application to extend the one-year limitation period, in relation to the corresponding section of the Limitation Act 1969 (NSW) s 56A, were set out Hislop J in Cassar v Network Ten Pty Limited [2012] NSWSC 680 at [16] and are applicable in this Territory. There is no evidence in the present matter on the basis of which I could be satisfied that it was not reasonable for the plaintiffs to have instituted their proceedings in defamation within twelve months of publication. Counsel for Ms Lewer has made it clear that she would rely on the limitation defence.

19. Quite apart from that, the pleading does not include any detail of the words said to have been used by the third defendant, so that it would not be possible from the pleading for the Court to arrive at a conclusion as to whether the words used by the third defendant were defamatory.

20. The plaintiffs should not be permitted to amend so as to institute proceedings for defamation against the third defendant.

21. This would leave only the debt claim for repayment of the monies lent. I am not satisfied that that claim arises out of the same facts or substantially the same facts as the claim by the plaintiffs against the first and second defendants. If it were permitted to be joined in the present action, it would subject Ms Lewer to a considerable degree of unfairness. She would be required to participate in the entire action. If the second plaintiff wishes to pursue the claim against Ms Lewer for repayment of monies lent, he should do so by separate action. Having regard to the amount claimed, that action would appropriately be brought in the Magistrates Court.

The Counts against the First and Second Defendants: Defamation

22. This leaves the claims against the first and second defendants in contract, negligence and defamation.

23. I shall deal first with the defamation claim. In paragraph 26 of the draft amended statement of claim, the plaintiffs rely on a number of publications. They say at 26(b) that by the act of excluding the plaintiffs' daughter from the school on 12 July 2011, the first and second defendants published to the Blue Gum community that the plaintiffs were undesirable as members of that community. There is no allegation of any oral or written publication to other parents. The Blue Gum community is not defined. At paragraph 11 of the pleading, the plaintiffs assert that on 12 July 2011 the first defendant notified them that the place at the school offered to their daughter was withdrawn, by letter. There is no allegation that this letter was published to anyone other than the plaintiffs. The assertion contained at paragraph 26(b) is not in my opinion capable of amounting to a cause of action in defamation.

24. At paragraph 26(c), the plaintiffs assert that on 7 October 2011 the first defendant wrote a letter to the Human Rights Commission attaching a copy of an interim order made in the Magistrates Court against the second plaintiff. It appears from paragraph 16 of the pleading that the letter was in response to a letter from the Human Rights Commission following a complaint to the Commission by the plaintiffs. The concern of the plaintiffs in paragraph 26(c) seems to be that by the date of the letter, the interim orders had been discharged and replaced by undertakings. It seems to me that in all of the circumstances the letter from the first defendant to the Human Rights Commission is protected by qualified privilege. It is not alleged that the first defendant intentionally misled the Commission or that she was activated by malice. It does not seem to me that a count in defamation based on the letter of 7 October 2011 could succeed.

25. In paragraph 26(d), the plaintiffs complain about a letter of 28 November 2011 sent by the first defendant to the ACT Department of Education. They complain that the letter included the words "the police were recently called by Ms Lewer following a perceived breach by Emily's family of the agreement made in Court". The letter also said "we take the physical safety and emotional wellbeing of our enrolled families and their children very, very seriously". The plaintiffs say that this amounted to a statement that the second plaintiff was a danger to the physical safety and emotional wellbeing of other children and families.

26. The letter complained of was a letter to the solicitor then acting for the plaintiffs, or at least the first plaintiff. Ms Hartung sent a copy of the letter to the Registrar of Non-Government Schools at the Education Department. I am satisfied that she did this because she saw it as part of her continuing response to the Department, who had asked for her comments on the complaint made to the Department by the plaintiffs. Such correspondence is protected by qualified privilege unless actuated by malice. There is no assertion of malice, unsurprisingly in the factual circumstances.

27. The plaintiffs complained in paragraph 26(f) of a subsequent letter to the same solicitors, copied to the Education Department. The letter included the sentence "however, if a parent comes to see me in a very distressed state, stating she is concerned for the personal safety of herself and her child, so feels her only option is to leave school, I would ask whether she has considered taking out a Court order to protect herself and her child, as I am aware that other parents have successfully done this." The plaintiffs say that this carried an imputation that the second defendant was dangerous and had posed a physical risk to the other child and her mother. Again, publication of a copy of a letter to the department was protected by qualified privilege. I have read the whole letter, which is annexed to an affidavit affirmed by the first plaintiff on 12 April 2012. I am satisfied that it is not capable of carrying the imputation asserted.

The defendants told things about the plaintiff to the ACT Department of Education which imputed that the second plaintiff posed a danger to children and other parents at the Blue Gum Community School, and that the plaintiffs were undesirable as members of the 'Blue Gum Community', with the intention of damaging the Department's consideration of the plaintiffs' complaints.

It is not clear whether this is a separate assertion from the earlier paragraphs about the letters of 28 November and 28 December 2011. If so, the paragraph is inadequate for the purpose of pleading a fresh count in defamation. If it is merely intended to summarise the earlier paragraphs, the earlier correspondence is, as I have said, protected by qualified privilege. That privilege would be lost if the publication was made maliciously. On a full reading of the two letters, no malicious intention could be found from their terms alone. There is no other factual assertion of malice.

29. I have accordingly come to the view that the plaintiffs could not succeed on any of the counts in defamation contained in the draft amended statement of claim. I shall return to the question of whether they should be permitted a further opportunity to amend, or whether the first and second defendants are entitled to have the action dismissed.

30. At paragraph 23 of the draft amended statement of claim, the plaintiffs assert the making of a contract with the defendants and a breach of the contract. The only relief they seek is specific performance of the contract for their daughter to attend the Blue Gum Community School.

31. Their case about the contract is that they made an offer to the second defendant by submitting an application form on 7 June 2010 for their daughter to attend the school. They say that the offer was accepted on 1 July 2011 when the second defendant contacted them and informed them that a place was available for their daughter commencing on 25 July 2011, at the beginning of the third term of that year. They say that they took actions in accordance with the contract, in that their daughter attended the school for the last remaining days of the second term, from 4 July to 7 July 2011, and that on 7 July 2011 they completed and lodged an enrolment form which included undertakings and commitments to pay fees.

32. There is no assertion that the plaintiffs paid any school fees, nor is there a claim for any refund of school fees, from which I take it they did not.

33. The document completed by the parents on 7 June 2010 is headed "Waiting list application". The form makes no reference to fees. The case for the plaintiffs is that a contract arose immediately upon the school notifying them that a place for their daughter was available. In my opinion the waiting list application form cannot be read as an offer capable of resulting in a contract binding on the plaintiffs as parents upon the school notifying them that a position was available. This is starkly illustrated by the lapse of time between lodgment of the waiting list application form and the communication from the school more than a year later. It is common knowledge that many parents lodge waiting list applications with a number of private schools, sometimes years before their child will be ready to start school. For such an application to be construed as an offer capable of acceptance by the school, it seems to me that it would have to state specifically that that was its effect, and would have to go into considerably more detail about fees and other matters relevant to the arrangements for the child to attend the school.

34. That is not to say that a contract does not eventually come into existence between a private school and the parents of a child. Clearly a contract does arise. In the present case, it seems to me that the offer of a place at the school by the second defendant should be seen as the offer, with the acceptance arising at the time of lodgement of the signed enrolment form. The enrolment form signed by the parents on 7 July 2011 is in evidence. It is clearly intended to be a contractual document. Although the case for the plaintiffs is not pleaded in this way, it seems to me arguable that an offer was made by the school on 1 July 2011 which was accepted by the parents on 7 July 2011, on which date a contract came into existence. There is an argument that the consideration for the contract was the payment of fees for the first term of the attendance of the plaintiffs' daughter, and that the contract was not enforceable by the parents until the fees were paid.

35. However, I need not go into that. It is enough to say that the only relief sought by the plaintiffs for breach of contract is specific performance of the contract, and that I am satisfied that the contract was not one in respect of which a court would grant specific performance. The principle in this regard is explained in JC Williamson Limited v Lukey and Mulholland [1931] HCA 15; (1931) 45 CLR 282. Dixon J said at 297 and following:

Specific performance, in the proper sense, is a remedy to compel the execution in specie of a contract which requires some definite thing to be done before the transaction is complete and the parties' rights are settled and defined in the manner intended. Moreover, the remedy is not available unless complete relief can be given, and the contract carried into full and final execution so that the parties are put in the relation contemplated by their agreement. Specific performance is inapplicable when the continued supervision of the Court is necessary to ensure the fulfilment of the contract. It is not a form of relief which can be granted if the contract involves the performance by one party of services to the other or requires their continual co-operation.

. . . it would be contrary to principle to bind the [appellant] by a decree to perform its obligations leaving it only a remedy sounding in damages in the event of a breach by the plaintiffs of the conditions to be observed by them. It would be equally contrary to principle for the Court to undertake the supervision of the specific fulfilment of these conditions.

36. A further difficulty facing the plaintiffs in the present case is as to the term of the contract. Were the parties to be bound only for the term following the admission of the plaintiffs' daughter to the school? Were they to be bound until the daughter finished her schooling? It is difficult to imagine circumstances in which a Court would force a child, whether against her own wishes or against the wishes of her parents, to continue her education at a particular school for a period which might amount to a number of years.

37. The claim by the plaintiffs in contract for specific performance cannot succeed.

38. This leaves the claim in negligence. The plaintiffs plead in paragraph 25 of the proposed statement of claim that the first and second defendants owed them a duty of care and negligently committed a breach of that duty. The duty is said to arise from the Education Act 2004 (ACT) and the grievance and complaint policy of the school. The plaintiffs assert that the second defendant had at the relevant time a published grievance and complaints policy, portions of which are set out in the pleading. Counsel for the plaintiffs was unable to identify on the hearing of the application any specific provision of the Education Act imposing a duty of care on Ms Hartung or the school. There is no reference to the grievance and complaints policy in the waiting list application form or the enrolment form, and the pleading is silent as to when the plaintiffs became aware of it.

39. Particulars of the alleged negligence are set out in paragraph 25 of the pleading, and may be summarised as follows:

(a) Ms Hartung provided unfair and biased advice to Ms Lewer on about 11 July 2011 which was prejudicial and disadvantageous to the plaintiffs;

(b) Ms Hartung and the school failed to advise the plaintiffs of the nature of accusations and allegations made by Ms Lewer and failed to give them an opportunity to respond before withdrawing the place offered to their daughter;

(c) Ms Hartung and the school failed to reconsider the withdrawal of the place for the plaintiffs' daughter at any subsequent time;

(d) Ms Hartung and the school treated the plaintiffs without dignity and respect and without regard for their emotional or psychological wellbeing, and with reckless disregard for the emotional wellbeing and needs of their daughter;

(e) Ms Hartung and the school assisted Ms Lewer to avoid responsibility for repaying the money she had borrowed from Mr Naughton.

40. The plaintiffs assert that they suffered damage as a result of the negligence, including damages for non-economic loss in the form of pain and suffering, "joint and several liability for the third defendant's debts to the second plaintiff" in the sum of $27,800, solicitor's costs for defending and settling the apprehended violence proceedings of $1,974, and other losses of $60,731 associated with their purchase of a house near the school.

41. A threshold question arises as to whether Ms Hartung or the school owed a duty of care to the plaintiffs of the kind asserted. Section 45 of the Civil Law (Wrongs) Act 2002 requires a consideration of whether or not it is appropriate for the scope of a negligent person's liability to extend to any harm caused by the negligence. In deciding the scope of liability, a Court is required to consider, amongst other relevant matters, whether or not, and why, responsibility for the harm should be imposed on the negligent party. Negligence, for the purposes of s 45, is defined to mean failure to exercise reasonable care and skill. Assuming, for the sake of the argument, that either Ms Hartung or the second defendant failed to exercise reasonable care and skill, and that the failure caused harm to the plaintiffs, the question remains whether responsibility for that harm should be imposed on either Ms Hartung or on the school.

42. In my reasons for an earlier decision in this matter (Brennand v Hartung [2012] ACTSC 150) I said at [18] and following:

The negligence count is an unusual one . . . There is no claim for bodily injury to either plaintiff, or physical damage to their property. The claim is one for damages for economic loss and for pure mental harm. Claims for pure mental harm are governed by Part 3.2 of the Civil Law (Wrongs) Act 2002 and are effectively limited to claims for recognised psychiatric illness: s 35. No such illness on the part of either plaintiff is pleaded.

[19] The provisions to be applied by a court in determining whether a defendant was negligent are set out in Chapter 4 of Civil Law (Wrongs) Act. There are recognised relationships out of which negligence claims come before the court with such frequency that the Court Procedures Rules 2006 make specific provision for them. The relationships include those of employer to employee, motorist to fellow road-user, and occupier of premises to entrant, in the context of claims for personal injury. In circumstances where there is no such familiar relationship between the parties the plaintiff will need to set out in the statement of claim the facts which will be relied upon to establish the relationship giving rise to the duty of care.

43. Whilst the pleading has been amended since that decision, I have been taken to no authority for the proposition that the operator of a school, or the principal of a school, owes a duty of care to the parents of a pupil to take precautions against the risk of their suffering pure economic loss. It may be that the categories in which courts will impose a duty of care are expanding, but it seems to me that it is for a court at a higher level in the judicial hierarchy than a Master at first instance to take the step which counsel for the plaintiffs urges upon me. I am not persuaded that such a duty of care exists between the first and second defendants and the plaintiffs.

44. If such a duty exists, it does not in any event seem to me that anything done by either the first or the second defendant amounted to a breach of duty. The standard of care to be applied is prescribed in s 42 of the Civil Law (Wrongs) Act. It is that of a reasonable person in the defendant's position who was in possession of all the information that the defendant either had, or ought reasonably to have had, at the time of the incident out of which the harm arose. Section 43 provides that a person is not negligent in failing to take precautions against a risk of harm unless the risk was foreseeable and was not insignificant; and that in the circumstances a reasonable person in the defendant's position would have taken those precautions. It does not seem to me that it was reasonably foreseeable that anything done by the first or second defendant on or about 12 July 2011 carried a foreseeable risk of financial harm to either of the plaintiffs.

45. As an additional problem for the plaintiffs, I cannot see that they could succeed in establishing that any of the losses they claim were a consequence of any conduct of either the first or second defendant. Most of the direct expenditure they are claiming seems to have been incurred before the date of the alleged breach of duty. Quite apart from that, it does not seem to me that the requisite causal connection existed. As I have said, there is no entitlement to damages for non-economic loss or pain or suffering.

46. The plaintiffs must fail in their claims for specific performance and for damages for negligence. It remains possible that if they were permitted to amend their pleading, they could establish a cause of action in defamation which should be permitted to go to trial. The question is whether they should be given another chance to do so, perhaps ultimately unsuccessfully and at further expense to the first and second defendants.

47. The proceedings were commenced in April 2012 by originating application seeking judicial review, which I found in August 2012 was unavailable. In September 2012 the plaintiffs filed a statement of claim, which I found on 28 September contained numerous defects. I ordered that the statement of claim be struck out but gave the plaintiffs leave to file an amended statement of claim. In October 2012 they provided the present draft amended originating statement of claim, which again I have found requires wholesale amendment if the matter is to proceed further.

48. Already significant costs have been incurred, presumably on both sides. An order for costs which I made in September 2012 has resulted in an assessment by the Deputy Registrar against the plaintiffs of an amount in excess of $40,000. Counsel for the plaintiffs asked me to postpone recovery of those costs until final orders were made in the action, but the evidence was that the defendants had already been billed by their solicitors and counsel and had paid their costs as between solicitor and client to date. In those circumstances it seemed to me unfair to postpone recovery when the order for costs would be unaffected by the eventual outcome.

49. Senior counsel for the defendants reminded me on the hearing of the application of what had been said by the High Court in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175 as to the significance of r 21 of the Court Procedures Rules, which refers to the resolution of the issues in civil proceedings with minimum delay and expense, and the timely disposal of proceedings (and all other proceedings in the court) at a cost affordable by the respective parties.

50. Since the order for costs which resulted in the assessment by the Deputy Registrar, there has been considerably more work done on both sides, including that associated with the hearing of the present application.

51. It seems to me that I should consider the defamation counts on the draft pleading as it stands, rather than speculating as to whether the plaintiffs may be able to produce after further amendment a claim in defamation which could go to trial. On the present draft pleading, the plaintiffs could not succeed on the defamation counts.

52. I am accordingly persuaded that the plaintiffs should not be given a further opportunity to amend, and that the action should be dismissed. The power of dismissal is available under s 21(4) - see example thereunder.

53. The plaintiffs must pay the costs of the defendants and of the proposed third defendant, Ms Lewer, of the applications and of the action.

I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Master Harper.

Counsel for the first and second defendants: Mr C M Erskine SC

Solicitor for the first and second defendants: Meyer Vandenberg

Counsel for the proposed third defendant: Mr N Kitchin