[2021] NSWCA 316
Central Coast Council v Norcross Pictorial Calendars Pty Ltd [2021] NSWCA 75
[1981] HCA 45
PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48
Re Refugee Tribunal
Ex Parte Aala (2000) 204 CLR 82
[2001] NSWCA 142
Sevilleja v Marex Financial Ltd [2021] AC 39
Source
Original judgment source is linked above.
Catchwords
[2021] NSWCA 316
Central Coast Council v Norcross Pictorial Calendars Pty Ltd [2021] NSWCA 75[1981] HCA 45
PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48
Re Refugee TribunalEx Parte Aala (2000) 204 CLR 82[2001] NSWCA 142
Sevilleja v Marex Financial Ltd [2021] AC 39[2020] UKSC 31
Spencer v The Commonwealth (2010) 241 CLR 118
Judgment (20 paragraphs)
[1]
Solicitors:
Mihalatos & Associates (Applicants)
Crown Solicitors Office (Respondents)
File Number(s): 2024/292919
Decision under appeal Court or tribunal: Supreme Court
Jurisdiction: Common law - Civil
Citation: Haigh & Anor v Haddad & Anor [2024] NSWSC 904
Date of Decision: 26 July 2024
Before: Weinstein J
File Number(s): 2020/308863
[2]
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
[3]
HEADNOTE
[This headnote is not to be read as part of the judgment]
This case concerns a claim by the applicants, Stephen Haigh and Dimitrios Kikiras, against Sam Haddad (an officer of the Department of Planning) and the State of New South Wales (the State), primarily concerning the alleged loss to the applicants, consequent upon the refusal by the City of Botany Bay Council (the Council) of the applicants' company's building application in 1996, owing to the location of the relevant land within a 'risk reduction zone'.
The history of these proceedings is protracted. The applicants are joint venturers who develop small to medium density housing, mainly in the Randwick and Botany Bay Council areas. In 1985, the Department of Planning NSW prepared a Risk Assessment Study for the Botany/Randwick Industrial Complex and Botany Bay (the RAS), which identified a risk reduction zone, encompassing land in the Hillsdale area. In 1994, Jazabas Pty Ltd (Jazabas), a company ultimately wholly owned by the applicants and their wives, completed the purchase of a property at Hillsdale.
In 1993 and 1994, the Council issued certificates pursuant to s 149 of the Environmental Planning and Assessment Act 1979 (NSW) in respect of the Hillsdale property. In 1998, Jazabas sold the Hillsdale property. In 1998, Jazabas commenced proceedings against the Council (the 1998 proceedings). Jazabas' claims against the Council included negligence and negligent misstatement, breach of the Trade Practices Act 1974 (Cth) and Fair Trading Act 1987 (NSW), and misfeasance in public office. It obtained judgment in the sum of $1,218,832 plus costs, but this was set aside on appeal and judgment was entered for the Council.
In 2005, Jazabas and associated entities commenced new proceedings in the Supreme Court against Mr Haddad, the State, and the Council, alleging misfeasance in public office (the 2005 proceedings). The plaintiffs alleged that, but for the defendants' misfeasance, they would not have purchased the Hillsdale property and would not have suffered losses arising from business prevention or interruption. The plaintiffs also brought claims for damages for injurious falsehood and misleading or deceptive conduct based on a letter received from Mr Haddad dated 16 February 1998 and statements made by the Minister in evidence in prior proceedings. The 2005 proceedings were dismissed as the plaintiffs failed to provide security for costs, as ordered.
In October 2020, the applicants commenced the present proceedings. The applicants sought:
(1) damages for misfeasance in public office;
(2) damages for the tort of deceit, including damages for psychiatric harm;
(3) damages for misleading or deceptive conduct under the Trade Practices Act and the Australian Consumer Law; and
(4) damages for misfeasance in public office in relation to the approval of the Orica Australia Pty Ltd replacement chlorine plant in 1998.
It was common ground that claims on the same basis as (1)-(3) above had been made in the 2005 proceedings and that, unless the limitation period were extended on the basis of fraudulent concealment, the limitation period of six years had expired in relation to (4) above.
On the motion of the respondents, the applicants' statement of claim was struck out by the first instance judge, bar limited leave for Mr Kikiras to replead a claim for psychiatric injury. The applicants' appeal from those orders was dismissed by the primary judge, who, allowing the respondents' cross-appeal, summarily dismissed the proceedings pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 (NSW). The applicants sought leave to appeal to this Court.
The Court held (Ward P, Adamson JA), refusing leave to appeal, with costs:
(1) The applicants have failed to demonstrate any issue of principle, question of public importance, or reasonably clear injustice arising from the primary judge's dismissal of the proceedings. The applicants claim damages on substantially the same basis as the respective plaintiffs claimed in the 1998 proceedings and in the 2005 proceedings. Although the applicants in the present case are not the same parties as the plaintiff in the 1998 proceedings or the plaintiffs in the 2005 proceedings, the applicants ultimately owned and controlled each of the companies which were plaintiffs in either the 1998 or the 2005 proceedings: [58]-[76].
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45; Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198; [2001] NSWCA 142; Reichel v Magrath (1889) 14 App Cas 665; State Bank of NSW Ltd v Stenhouse Ltd (1997) Aust Tort Rep 81-423; In the matter of HIH Insurance Limited (in liquidation; De Bortoli Wines (Superannuation) Pty Ltd & anor v McGrath & ors [2014] NSWSC 774; CBRE (V) Pty Ltd v Trilogy Funds Management Ltd (2021) 107 NSWLR 202; [2021] NSWCA 316, applied.
[4]
JUDGMENT
THE COURT: Stephen Haigh and Dimitrios Kikiras (the applicants) seek leave to appeal against orders made on 26 July 2024 by Weinstein J (the primary judge) in Haigh v Haddad [2024] NSWSC 904, of which the most significant was an order that the proceedings brought by the applicants in the Common Law Division of the Supreme Court be summarily dismissed pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR).
Leave to appeal is required under s 101(2)(e) and s 101(2)(l) of the Supreme Court Act 1970 (NSW). Leave to appeal will only be granted if the applicant demonstrates that there is an issue of principle, a question of public importance or a reasonably clear injustice going beyond something which is merely arguable: see the authorities referred to in PPK Willoughby Pty Ltd v Baird [2019] NSWCA 48 at [6] (Bell P and Simpson AJA).
The procedural history which led to the current application is, in summary, as follows. By notice of motion filed 28 May 2021, Sam Haddad (an officer of the Department of Planning) and the State of New South Wales (the State), together "the respondents", sought orders that the statement of claim be dismissed as an abuse of process under r 13.4 or, alternatively, struck out under r 14.28 of the UCPR. The application was heard by Harrison AsJ, who struck out the whole of the statement of claim but granted Mr Kikiras limited leave to replead in relation to a claim for psychiatric injury: Haigh v Department of Planning NSW [2022] NSWSC 1434. The applicants' appeal from those orders was dismissed by the primary judge, who allowed the respondents' cross-appeal (against the limited leave granted to Mr Kikiras to replead) and dismissed the proceedings.
In submitting that leave to appeal to this Court from the primary judge's orders ought be granted, the applicants identified the following four questions which they contended arise from the grounds of appeal:
(i) Whether the Applicants' case should have been summarily dismissed by the Primary Judge without a hearing on the merits by reason of reflective loss;
(ii) Whether alternatively the proceedings are an abuse of this Court's process as unjustifiably vexatious and oppressive having been brought twice before;
(iii) Whether the issues of loss and causation are triable issues of fact and law which along with 20 identified like issues should have been resolved at trial; and
(iv) Whether the Primary Judge correctly applied the principles of summary dismissal.
[5]
Previous proceedings
In order to address these submissions in the context of the leave application, it is necessary to have regard to the background facts and the allegations made in previous proceedings which were found by the primary judge to render the current proceedings an abuse of process.
[6]
The 1998 proceedings by Jazabas against the Council
On 30 July 1998, Jazabas commenced proceedings NG822/1998 in the Federal Court against the Council. These proceedings continued in the Common Law Division of the Supreme Court as 55043/1998 (the 1998 proceedings), presumably following an order for transfer.
[7]
Factual allegations made by Jazabas in the 1998 proceedings
In the final version of its pleading, the third further amended points of claim filed 5 November 1999, Jazabas made allegations which included the following.
As referred to above, the RAS, which was prepared in 1985, identified a risk reduction zone in the area where the Hillsdale property was located. On 11 November 1993 the Council issued a certificate pursuant to s 149 of the Environmental Planning and Assessment Act 1979 (NSW) (s 149 certificate) in respect of the Hillsdale property. On 10 December 1993, the Council's solicitors sent a letter to Jazabas, which Jazabas alleged made representations about development restrictions on the Hillsdale property. Jazabas also alleged that the Council, through its employee Mrs Cuthbert, made representations to Mr Haigh (and therefore to Jazabas) by phone on 13 December 1993.
On 25 January 1994 the Council issued a further s 149 certificate in respect of the Hillsdale property.
On 28 June 1994, Jazabas became the registered proprietor of the Hillsdale property.
In 1996, Jazabas lodged a development application for ten two-storey townhouses on the Hillsdale property (the development). In June 1996, the Council granted development consent. Jazabas lodged two building applications in respect of the development which the Council was deemed to have refused. Jazabas appealed to the Land and Environment Court. The Council opposed the appeal on the basis that the Hillsdale property was located in a general risk reduction zone identified in the RAS. On 23 April 1998, the Land and Environment Court dismissed the appeal. In 1998, Jazabas sold the Hillsdale property. Jazabas' appeal to this Court was allowed on 16 April 1999.
[8]
Claims made by Jazabas in the 1998 proceedings
Jazabas' claims against the Council included negligence and negligent misstatement, breach of the Trade Practices Act 1974 (Cth) and Fair Trading Act 1987 (NSW) and breach of public duty.
Jazabas' primary case in the 1998 proceedings was summarised by Fitzgerald JA in this Court in City of Botany Bay Council v Jazabas Pty Limited (ACN 060 105 053) [2001] NSWCA 94 at [134] as follows:
"Jazabas' primary case is that, contrary to what it stated in the s 149 certificate, the Council did have a policy 'to restrict development by reason of … risk' which affected the land, and that, in consequence, the s 149 certificate was incorrect and the Council's solicitors' letter and Mrs Cuthbert's statements to Mr Haigh misstated the position because they omitted to refer to the Council's policy. Jazabas submitted that the Council was negligent in providing erroneous and/or incomplete information that was misleading and/or deceptive. It is not part of Jazabas' case that the Council applied its policy to restrict the residential development which it approved on the land or that the approved residential development differed in any material respect from the residential development which the Council's solicitors' letter of 10 December 1993 and Mrs Cuthbert's statements to Mr Haigh led Jazabas (or Evenvest) to expect would or might be approved. Jazabas' primary case is that, if the Council's policy had been disclosed, Jazabas would not have purchased the land but would have used the money which it paid for the land to undertake other profitable developments."
[9]
The first instance decision in the 1998 proceedings
On 24 February 2000, Rolfe J, the primary judge in the 1998 proceedings, ordered judgment for Jazabas against the Council: Jazabas v Botany Council [2000] NSWSC 58. On 14 March 2000, the judgment was quantified in the sum of $1,218,832 and the Council was ordered to pay Jazabas' costs.
Rolfe J summarised the way in which Jazabas had put its primary case on damages and on what basis such damages ought be calculated:
"210 The plaintiff's primary case, which, in my opinion, is the only one on which it can succeed, is that had the Council advised it of the RAS and the Risk Reduction Zone, as it should have, it would not have purchased the land. Rather it would have pursued other development operations and utilised capital, which it could have acquired, and the time of its directors in the pursuit of those operations from which it would have derived profits. This was the course which Mr Haigh and Mr Kikiras had followed over a number of years and, it was submitted, they would have continued to pursue it through the plaintiff and the plaintiff would have derived profits therefrom. However, because of the Council's negligent statements, the plaintiff entered into the contract, and, by doing so, tied up loan funds and the time of Mr Haigh. That deprived the plaintiff of those funds and that time, which otherwise would have been used on other projects.
…
283 When one has regard to the history of the building activities of Mr Haigh and his associated companies and to the evidence that there was ample land available, even for the building of dual occupancies other than sub-divided ones after March 1998, it seems to me reasonable to assess damages on the basis that Jazabas would have achieved four dual occupancies per year, save for 1996 during which the dispute between Mr Haigh and Mr Kikiras was on foot. For the reasons to which I have referred, it does not seem to matter whether one utilises the cash flow or loss of profits approach."
[10]
The appeal in the 1998 proceedings
On 12 April 2001, this Court (Mason P, Beazley JA agreeing and Fitzgerald JA, dissenting on the negligence claim) allowed the Council's appeal, set aside orders made by Rolfe J and ordered judgment for the Council with costs: City of Botany Bay Council v Jazabas Pty Limited (ACN 060 105 053) [2001] NSWCA 94.
The Court found unanimously that the s 149 certificate issued in 1993 was neither inaccurate nor misleading because the land was not affected by any council policy to restrict development by reason of the risks identified in the RAS.
The majority of this Court (Mason P and Beazley JA) rejected the alternate claims based on negligence.
[11]
The 2005 proceedings by Jazabas and associated entities against Mr Haddad, the State and the Council
By statement of claim filed in February 2005, Jazabas and its associated entities, BAS Developments Pty Ltd and Permtree Pty Ltd, commenced new proceedings 20020/2005, also numbered 2005/269193, against the Minister, the State and the Council (the 2005 proceedings).
[12]
Claim for misfeasance in public office
In their amended statement of claim filed on 5 October 2005 in the 2005 proceedings, the plaintiffs alleged that Mr Haddad had engaged in misfeasance in public office by making the representations in the 1985 RAS and "concealing or not acting on known dangers and hazards" (in paragraphs 18, 20 and 32 of their amended statement of claim). They also alleged, in paragraph 39 of their amended statement of claim, that the Department had "[f]ailed to use its available powers of residential planning control to prevent or inhibit developments affected by the concealed risk".
This claim was based on Mr Haddad's publication of the RAS, which was alleged to have been "sanitised" and the respondents' alleged failure to make a regional environmental plan controlling development in and around the Botany Randwick Industrial Complex and Port Botany. The applicants alleged that, but for the respondents' misfeasance, they would not have purchased the Hillsdale property and would not have suffered losses arising from business prevention or interruption to their joint venture dual occupancy development activities from 1994 to 2018.
[13]
Other claims brought in the 2005 proceedings
The plaintiffs in the 2005 proceedings also brought claims for damages for injurious falsehood and misleading or deceptive conduct based on Mr Haddad's letter dated 16 February 1998 and statements made by Mr Haddad in evidence in prior proceedings. The damages claimed were on the same basis as those claimed in respect of misfeasance in public office.
[14]
The procedural history of the 2005 proceedings
On 2 June 2005, Mr Haddad and the State applied for security for costs, which was granted by Simpson J: Jazabas Pty Ltd v Haddad [2006] NSWSC 559. An appeal against that order was dismissed by this Court: Jazabas Pty Ltd v Haddad [2007] NSWCA 291 (McClellan CJ at CL, Mason P and Basten JA agreeing).
As the plaintiffs in the 2005 proceedings did not provide security as ordered, the proceedings were stayed. They applied to lift the stay, which was refused by Harrison AsJ on 17 June 2008: Jazabas Pty Ltd v Haddad [2008] NSWSC 593. At [42], Harrison AsJ referred to Jazabas' reliance on an affidavit of Dr McCracken dated 22 May 2008.
On 17 September 2008, the plaintiffs sought leave to appeal against the refusal to lift the stay, which was dismissed with costs: Jazabas Pty Ltd v Haddad (Court of Appeal (NSW), Giles and McColl JJA, 20 March 2009, unrep). On 4 June 2010, Fullerton J dismissed an appeal against the judgment of Harrison AsJ: Jazabas Pty Ltd v Haddad [2010] NSWSC 594.
On 8 June 2010, the plaintiffs appointed John Vouris and Bradley Tonks as Joint and Several Administrators pursuant to s 436A of the Corporations Act 2001 (Cth). On 14 July 2010 a resolution was passed at a meeting of Jazabas' creditors that Jazabas would be wound up.
In September 2010, Mr Haddad, the State and the Council applied for summary dismissal of the 2005 proceedings. On 14 September 2010, the 2005 proceedings were dismissed pursuant to UCPR, r 42.21(3) (as a result of the plaintiffs' failure to comply with the order for security for costs).
[15]
The 2020 proceedings
By statement of claim filed on 28 October 2020, the applicants commenced proceedings 2020/308863 against the Department of Planning, Industry and Environment, Mr Haddad and the State (together, the respondents) (the 2020 proceedings).
In the 2020 proceedings, the applicants sought the following:
1. damages for misfeasance in public office along the same lines as were claimed in the 1998 proceedings and the 2005 proceedings in relation to the RAS (see paragraphs 22-26 of the statement of claim) (the first misfeasance claim);
2. damages for the tort of deceit, including damages for psychiatric harm (paragraph 35 of the statement of claim) based on representations alleged to have been made by Mr Haddad in a letter to the Council dated 16 February 1998 in relation to the RAS and the "risk reduction zone" proposed in the RAS, as well as evidence given by Mr Haddad as a witness (see paragraphs 14-16 and 27-37 of the statement of claim);
3. damages for misleading or deceptive conduct under the Trade Practices Act and the Australian Consumer Law on the same basis as claimed in (2) above; and
4. damages for misfeasance in public office in relation to the approval of the Orica plant in 1998 (the second misfeasance claim), on the following basis:
1. that the State "failed to correctly apply" certain planning instruments when granting approval in 1998 for Orica to install a "replacement Chloralkali plant"; and
2. that the determination "was made in bad faith" in that the State and Mr Haddad "concealed the unacceptably high fatality risk to existing nearby residents and to prospective developers from transportation of hazardous materials to and from the Complex" (paragraphs 17, 39 and 43 of the statement of claim).
It was common ground that claims on the same basis as (1)-(3) above had been made in the earlier proceedings and that, unless the limitation period were extended on the basis of fraudulent concealment (on which the applicants relied), the limitation period of six years had expired in relation to (4) above. The respondents accepted that the claim in (4) had not been made in the earlier proceedings.
The damages claimed in the 2020 proceedings included a claim for loss and damage on the basis of "lost … opportunity to retain the [Hillsdale property] and continue and maintain their joint venture business activities" (paragraphs 21(c)-(d) and 43 of the statement of claim).
[16]
The reasons of the primary judge
The primary judge summarily dismissed the 2020 proceedings on the following bases:
1. the applicants' claims were for reflective loss and therefore not maintainable ([72]-[84]);
2. the applicants' claims were plainly statute-barred and there was no tenable argument that there had been any fraudulent concealment of the claims ([85]-[92]);
3. the applicants' claims for misfeasance in public office were deficiently pleaded and this could not be remedied ([99]-[115]);
4. some of the applicants' claims were not maintainable because of the principle of witness immunity ([93]); and
5. the proceedings were otherwise an abuse of process ([110]-[115]).
In finding that the applicants' losses were reflective of the losses of the corporate entities in the 1998 and the 2005 proceedings, the primary judge said at [83]:
"In substance, there is no difference where the loss is that of an ultimate shareholder rather than that of a direct shareholder. In both cases, the loss is the diminution of value in their shareholding and is not a loss distinct from that of the company. In my view, there is no reason in principle to draw the technical distinction cavilled for by the plaintiffs. … I therefore reject the plaintiffs' submission and accept the submission advanced by Ms Thomas."
The primary judge found that there was no tenable basis for the allegation of fraudulent concealment in respect of the first misfeasance claim as the RAS and the report entitled "Report on the Implications of Risk from the Botany/Randwick and Port Botany Industrial Complex on the Proposed Public Housing Sites in Randwick Municipality" (the 1988 report), which together formed the basis of that claim, had been available to and relied on by the plaintiffs in the 2005 proceedings and had therefore been available to the applicants who were the plaintiffs' ultimate shareholders.
The primary judge also found that there was no tenable basis for the allegation of fraudulent concealment in respect of the second misfeasance in public office claim as the only document relied on by the applicants, in addition to those referred to in respect of the first misfeasance claim, was the Scott Lister report dated 12 February 2015 (the Lister report). The Lister report was commissioned by the Council and the Department to assist in the assessment of the application concerning a Bunnings Warehouse, which was to be located in the vicinity of the Orica plant. It contained the following statement which would appear to be antithetical to the allegations of either misfeasance in public office (with its requirement of malice or bad faith) and fraudulent concealment:
"Bunnings have lodged an application for development of a Bunnings Warehouse for Denison St and this proposal is currently before the Joint Regional Planning Panel (JRPP). The DPE, CBBC and the JRPP seek to understand the level of risk associated with DG [dangerous goods] transport risk on Denison Street to further inform their determinations on the proposed Bunnings Warehouse and other future developments around the Botany lndustrial Park.
There have been various QRA studies conducted for the BIP area. Most recently an updated QRA was performed in 2012 for the BIP [ref 3] and prior to that the then DP&l's Botany Randwick Land Use Safety Planning Study, 2001 [ref 1]. Consistent with the DPE's requirements neither of these studies considered the risks posed by the transport of dangerous goods (DG) through the area. A study on dangerous good transport from the expansion of the Port Botany container terminals was performed in 2003 [ref 5], but this was restricted to traffic associated with the container terminal. As a result the DG associated with the bulk liquid berths, Caltex Banksmeadow terminal and non-port DG imported to and exported from the BIP were outside the scope of the study.
With no prior comprehensive study of DG on Denison St this study is a first look at the issue. Further complicating the issue is the lack of risk criteria to evaluate risks of DG transport on surrounding land use areas."
[17]
The proposed grounds of appeal
The applicants propose the following grounds of appeal:
"1 The Primary Judge erred in holding that the appellants' claims are each defeated by the principle of reflective loss.
2 The Primary Judge erred in holding that the pleaded loss and damage of the Appellants as joint venture[r]s in the Haigh Group were not in fact their loss and damage as alleged.
3 The Primary Judge erred by making inconsistent findings regarding whether Jazabas Pty Ltd or the Appellants entered into the contract for the purchase of the Hillsdale Land.
4 The Primary Judge erred in finding that Jazabas Pty Ltd was the purchaser of the Hillsdale land.
5 The Primary Judge erred in holding that each of the current claims and losses in various incarnations were brought by related parties in past proceedings in the Court and/or in making inconsistent findings in that respect.
6 The Primary Judge erred in holding that it is unjustifiably oppressive or vexatious to require the Respondents to deal with claims they had dealt with twice before, and/or in disregarding the juridical advantages arising from the processes and remedies available in the Court to the Appellants in later-in-time proceedings.
7 The Primary Judge erred in finding that to advance the Appellants' claims any further would give rise to the perception that justice is inefficient and profligate and/or bring the administration of justice into disrepute, in circumstances where the Appellants' claims remain unheard and unresolved, have been concealed and/or misrepresented by the Respondents, and that it is in the public interest and the interests of justice having regard to the scope and nature of ongoing risks to residents and businesses that such claims be heard in open court and determined.
8 The Primary Judge erred in holding that on the ground of reflective loss all the Appellants' claims are statute barred and/or in falling to find that the claims were available to the Appellants having regard to fraudulent concealment as identified by the Court.
9 The Primary Judge erred in mischaracterising the misfeasance claims of the Appellants and [finding that they] were not based on concealment by the Respondents of the hazardous risk and/or in holding that the evidence of concealment was deficient.
10 The Primary Judge erred in holding that the misrepresentation case does not concern or allege any conduct in the nature of concealment by the Respondents and/or that the claim was deficient.
11 The Primary Judge erred in applying the principles of summary dismissal and strike out under UCPR 14.28 and 13.2, and in failing to have regard to the pleaded and/or underlying causes of action of the appellants, and that in respect of each claim that there existed better than a fanciful prospect of success.
12 The Primary Judge erred in holding that the statement of claim in part should be summarily dismissed because some evidence of the First Respondent engaged the principle of witness immunity.
13 The Primary Judge erred in proceeding on the basis that or determining that there was no basis for a reply to be filed by the Appellants in answer to the Respondents' case where no defences including under Limitation Act have been filed.
14 The Primary Judge erred in holding that the proceedings are [an] abuse of process because the Appellants' claims including the new claims identified by it should have been brought by companies controlled by the Appellants.
15 The Primary Judge erred in finding that the Lister report did not support any possible reply to the defence of limitation asserted but not pleaded asserted on grounds of concealment, and/or in finding that it was the first study into the issue of transportation and other risks, and without regard to the evidence of the First Appellant which was not the subject of cross-examination nor dispute, nor to the explanatory Arriscar Report of 2016.
16 The Primary Judge erred in allowing the cross-appeal and in summarily dismissing the personal injury claim of the second appellant and in overruling the decision of Harrison [As]J grant[ing] him leave to replead.
17 The Primary Judge erred in holding in relation to the second misfeasance claim that the expert evidence of Mr Swan was not relevant or of assistance to the Appellants and/or fail[ing] to have regard to the pleaded case of the Appellants as to the character and scope of the alleged misconduct and/or in finding that the claim was speculative and should be struck out."
[18]
Consideration
The grounds concerning reflective loss and those concerning abuse of process are related since if the applicants are, in substance, claiming the same or similar loss to that previously claimed by corporate entities under their control, their claim may be precluded on two bases: reflective loss and abuse of process.
The reflective loss principle is that where loss is suffered by a company as a result of wrongdoing for which the company and the shareholder each has a cause of action, a shareholder cannot sue to recover the reduction in the value of their shares, or loss of benefits associated with their shareholding resulting from the loss suffered by the company, since the shareholder's loss is merely "reflective" of the companies loss: see the discussion in Central Coast Council v Norcross Pictorial Calendars Pty Ltd [2021] NSWCA 75; (2021) 391 ALR 157 at [103] (Bathurst CJ, Macfarlan and Gleeson JJA agreeing). As a significant rationale for the principle is the prevention of double recovery, there is no reason for the principle to apply where the company has no cause of action to recover the loss: Central Coast Council v Norcross Pictorial Calendars Pty Ltd at [103] and [119].
In the present case, the corporate entities could have claimed and, in substance, did claim for the losses which the applicants seek to claim in the 2020 proceedings. Indeed, as is apparent from the particulars provided by the applicants' solicitors by letter dated 23 April 2021 (extracted above), the applicants claimed damages on precisely the same basis as Rolfe J found that Jazabas was entitled to in the 1998 proceedings since they reference his approach and adopt it for the purposes of the 2020 proceedings. In these circumstances, it is difficult to discern any issue of principle or question of public importance, much less any reasonably clear injustice going beyond the merely arguable in the primary judge's finding that the reflective loss principles apply to bar the applicants' claim for damages. In these circumstances, it is not necessary to address Rialto (which concerned the interests of lot owners in common property) or Marex (where there was no prospect of the company itself bringing the claim).
Abuse of process in the present case arises in two respects. First, if the relationship between the applicants and the corporate plaintiffs in the 1998 and the 2005 proceedings is such as to make them, in substance, privies, it may be an abuse of process for the applicants to bring claims which they, or the corporate entities associated with them could have brought in the earlier proceedings on the basis of the principles in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45 (Anshun). Second, if there is such a relationship (between previous plaintiffs and the current applicants), it may be an abuse of process if the applicants are seeking to re-litigate an issue on which the corporate entities were unsuccessful in previous proceedings, on the basis of the principles articulated by this Court in Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198; [2001] NSWCA 142.
[19]
Orders
For the reasons given above, the Court orders:
1. Refuse leave to appeal.
2. Order the applicants to pay the respondents' costs.
[20]
Amendments
04 March 2025 - "the Minister" replaced by "Mr Haddad" - headnote, [3], heading before [23], [24], [25], [26], [27], [31], [32], 33, 33(b),[46]
"for Urban Affairs and Planning" inserted after "the Minister" - [8]
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: 04 March 2025
These questions arise in the following context. The applicants are joint venturers in a business known as the Haigh Group which develops small to medium density housing, mainly in the Randwick and Botany Bay Council areas. They operated the business through various corporate entities, including Jazabas Pty Ltd (Jazabas), which were ultimately owned by the applicants and their wives.
In 1985, the Department of Planning prepared a Risk Assessment Study for the Botany/Randwick Industrial Complex and Port Botany (the RAS) which identified a risk reduction zone, which fell within the City of Botany Bay Council (the Council) area.
In 1994, Jazabas completed the purchase of a property at Hillsdale (the Hillsdale property) which fell within the risk reduction zone identified in the RAS. In 1998 it sold the Hillsdale property for a profit.
The applicants allege that, in November 1998, the Minister for Urban Affairs and Planning, on behalf of the State, decided to approve a replacement chlorine plant proposed by Orica Australia Pty Ltd (Orica) to be located near those developments, without regard to the hazardous transportation risks, as required by State Environmental Planning Policy 33 and Hazardous Industry Planning Advisory Paper 6. They allege that they suffered loss as a result of the acts and omissions of the respondents.
Further particulars of damages were provided by the applicants' solicitors in a letter dated 23 April 2021. In answer to a request for particulars of the joint ventures undertaken by the plaintiffs, the applicants' solicitors responded:
"The joint ventures undertaken by the plaintiffs were as follows;
1994: Evenvest: XX Menin Rd Matraville. LTO Ref XX
Evenvest: XX Carnegie Circuit Chifley. LTO Ref XX
Haigh & Kikiras: XX Mawson Pde Little Bay. LTO Ref XX
Jazabas: [the Hillsdale property]
1995: Jazabas: XX Wassell St Chifley. LTO Ref XX
Jazabas: XX Menin Rd Matraville. LTO Ref XX
The damages assessment in respect of the foregone dual occupancy developments set out in above were assessed in the damages assessment of Rolfe J in judgment of the Supreme Court [2000] NSWSC 58, No 55043/ 98 at [285] to [307] and [2000] NSWSC 154 at [8] and are adopted as the appropriate assessment of quantum in respect of the above developments in the proceedings in respect of those developments."
In answer to a request that the applicants "[s]pecify the alleged loss and damage, nature of the alleged loss and damage, the basis for the loss and damage claimed, and the calculations for the alleged loss and damage", the applicants' solicitors responded:
"(i) The alleged loss and damage is from business prevention or interruption to the plaintiffs from their joint venture dual occupancy development activities from 1994 to 2018.
(ii) The nature of the loss and damage is set of in Supreme Court proceeding No 55043/1998 and CA50159/2000, in which Rolfe J found; had the Council advised the plaintiff of the RAS and the RRZ [risk reduction zone], as it should have, Jazabas would not have purchased the land.
(iii) ln Supreme Court proceeding No 55043/1998 damages were assessed on the basis that Jazabas had not purchased the land, it would have commenced 4 dual occupancies every year and,
(iv) The Council did not challenge the trial judge's approach to the assessment of the Jazabas damages in the Supreme Court proceedings in the NSW Appeal Court and as such, the calculations for the loss and damage have been assessed on this basis."
At [114], the primary judge said, of the allegation that the 2020 proceedings amounted to an abuse of process:
"Given my findings above with respect to reflective loss, the abuse of process point can be easily determined. It is a fact that these claims, in various incarnations, were brought by related parties in the 2005 proceedings and relate to the recovery of the same losses as sought in those proceedings and in the 1998 proceedings. Permitting such claims to be agitated again would be unjustifiably oppressive to the defendants who have already had to deal with these claims, or very similar claims, twice before. To permit the claims to advance any further would, in my opinion, bring the administration of justice into disrepute, as it gives rise to the perception that justice is inefficient and profligate in spending public time and resources. It is also contrary to contemporary principles of civil litigation."
The proposed grounds can conveniently be divided into categories. Grounds 1 and 2 concern the principle of "reflective loss". Grounds 3 and 4 allege error in the identification of the purchaser of the Hillsdale property. Grounds 5, 6, 7 and 14 challenge the primary judge's conclusion that the 2020 proceedings constitute an abuse of process. Grounds 8, 9, 10, 13 and 15 raise the primary judge's consideration of the limitation defence. Ground 11 concerns the principles applicable to summary determination. Ground 12 raises witness immunity. Ground 16 concerns the cross appeal brought against Harrison AsJ's limited grant of leave to replead with respect to the claim for psychiatric harm and ground 17 concerns the alleged second misfeasance claim.
Grounds 3 and 4 can be addressed briefly. The primary judge identified Evenvest Pty Ltd (Evenvest), an entity related to Jazabas which was also ultimately controlled by the applicants, as the purchaser in the contract for sale of the Hillsdale property. The contract was novated on the day of completion to substitute Jazabas as the purchaser. Accordingly, nothing turns on this and leave ought not be granted on these grounds.
Ground 12 can also be addressed in short form. The applicants claim damages alleged to have been caused by statements made by Mr Haddad when giving evidence in various proceedings. The principles relating to witness immunity are well established and were applied by the primary judge. No arguable error can be discerned.
The applicants' principal submissions on the main grounds are as follows.
As to reflective loss, the applicants submitted that, while the primary judge was correct to regard the losses as having been framed as the applicants' losses and separate from that of any corporation or other entity, his Honour erred, in effect, in eliding the distinction between the loss suffered by a shareholder and the loss suffered by the company and in treating the applicants as direct shareholders of Jazabas when they were shareholders of companies who were either direct or ultimate shareholders of Jazabas. In substance, the applicants submitted that their loss was distinct from that of Jazabas in the 1998 proceedings or Jazabas, BAS Developments Pty Ltd and Permtree Pty Ltd in the 2005 proceedings; that they were not claiming for the diminution in the value of their shares or loss of benefits associated with their shareholding; that therefore the principles of reflective loss did not bar their right to claim losses in their own right; and that the principles of abuse of process did not apply in this instance.
The applicants also contended that because they advanced funds to various entities, including Jazabas, (and were therefore creditors of those entities) and provided their skill and time to the developments which were undertaken, their loss was personal to them and not reflective of the losses suffered by corporate entities. They relied on Rialto Sports Pty Ltd v Cancer Care Associates [2022] NSWCA 146 (Rialto) and Sevilleja v Marex Financial Ltd [2021] AC 39; [2020] UKSC 31 (Marex) to support this submission.
Mr King, who appeared on behalf of the applicants, also argued that the respondents were not entitled to submit that the allegation of personal losses was a "contrived" attempt to avoid the reflective loss principle in circumstances where that had not been put to the applicants (who had given evidence in support of their pleaded case). He relied on Re Refugee Tribunal; Ex Parte Aala (2000) 204 CLR 82; [2000] HCA 57 in support of the submission that the making of this submission in these circumstances had led to a denial of procedural fairness.
The applicants also submitted that the second misfeasance claim had "nothing to do with the purchase by Evenvest or Jazabas of the Hillsdale land".
They further submitted that the loss in respect of which they claimed damages was the loss of opportunity to retain the Hillsdale property, including special purchase home unit company dual occupancy developments generating two allotments available for separate sale (on separate titles) by the applicants, and that these losses were losses suffered by them as joint venturers as distinct from the losses suffered by Evenvest or Jazabas as purchasers.
The applicants relevantly submitted:
"The decision making process at the State level commenced on 16 February 1998 when the Respondents issued the Director Generals Requirements for the preparation of an EIS for the Orica replacement chemical plant, but which omitted reference to transport risks associated with the activities of transportation of chlorine, contrary to the standards in SEPP 33 entitled 'Hazardous and Offensive Development' as concluded in the expert report of Mr Swan [refer statement of claim paragraph 17]. Significantly on the same day The Minister gave erroneous advice to Botany Council [ie not Jazabas] regarding the Hillsdale land building application, as alleged in the deceit claim [see paragraphs 13 to 15 of the SOC]. The purchase of the Hillsdale land was a precursor to later losses claimed by Jazabas, but not of the Applicants' separate and discrete losses."
They further submitted that:
"Jazabas properly had no claim in respect of losses arising from other projects of the Haigh Group … Similarly Jazabas did not have any claim in respect of loss or damage to the dual occupancy units generated by the developments under SEPP 25 under the special company dual occupancy provisions … Likewise Jazabas had no legal or equitable interest in claims of the Applicants to beneficial interests held for them by corporate vehicles."
The applicants argued, relying on Spencer v The Commonwealth (2010) 241 CLR 118; [2010] HCA 28 at [25] (French CJ and Gummow J), that the Court's power to dismiss proceedings summarily ought not to be exercised so as to stifle the development of the law and that, as the parameters of the reflective loss principle were not fixed, this matter ought not to have been summarily dismissed.
On the limitation question, the applicants submitted that, between 1998 and 2005 (when proceedings were brought for losses suffered by corporate entities within the Haigh Group), they were unaware of the "true facts relating to their causes of action now advanced" and only became aware of those matters when the "concealed transportation hazardous risks to residential development predominantly from the … plant were disclosed in 2015 and 2016 by the Lister and Arriscar reports … that the applicants then became aware … and fully apprehended for the first time the nature and cause of the losses they had suffered arising from the … plant and its location". The applicants allege that they only became aware of the full nature and cause of the losses in 2015 and commenced the proceedings "in anticipated reliance on a case of fraudulent concealment of the relevant causes of action under Limitation Act [1969 (NSW)], s 55(1)(b) to suspend the running of time against their claims".
Generally, the applicants submitted that because the primary judge misapprehended both the facts and their pleaded case his Honour led himself into error when exercising the discretion whether to dismiss the proceedings summarily. They submitted that leave ought be granted because the appeal raises a significant matter of public interest including by reason of the alleged non-compliance with planning instruments and in the granting of approval for the chlorine plant. They submitted further that they have suffered a real injustice as a consequence of the respondents' acts and omissions, as alleged in the 2020 proceedings.
In Reichel v Magrath (1889) 14 App Cas 665, the House of Lords held that a defence which was not barred by res judicata estoppel may nevertheless be struck out as an abuse of process. Lord Halsbury said at 668:
"… it would be a scandal to the administration of justice if, the same question having been disposed of by one case, the litigant were to be permitted by changing the form of the proceedings to set up the same case again … There must be an inherent jurisdiction in every Court of Justice to prevent such an abuse of its procedure …".
In Rippon v Chilcotin, the purchasers had sued the vendors of a business for damages for breach of contract and also in relation to financial results for the 1991 year which were contained in the document attached to the sale contract. They were unsuccessful in respect of the claim based on the representations as they were found not to have relied on these figures and therefore could not prove causation. They subsequently sued the accountants who had prepared the figures for the 1991 year for damages for negligent misstatement. Their claim in the subsequent proceedings depended on their establishing that they had relied on the figures.
This Court found that the subsequent proceedings against the accountants ought be dismissed as an abuse of process since they involved an attempt to re-litigate the issue of causation (which depended on reliance) on which the purchasers had been unsuccessful in their claim for negligent misrepresentation in the earlier proceedings against the vendors.
In determining whether attempted re-litigation amounts to an abuse of process in any given case, the relevant factors are, as identified by Giles CJ (CommD) in State Bank of NSW Ltd v Stenhouse Ltd (1997) Aust Tort Rep 81-423 at 64,089:
"The guiding considerations are oppression and unfairness to the other party to the litigation and concern for the integrity of the system of administration of justice, and amongst the matters to which regard may be had are -
(a) the importance of the issue in and to the earlier proceedings, including whether it is an evidentiary issue or ultimate issue;
(b) the opportunity available and taken to fully litigate the issue;
(c) the terms and finality of the finding as to the issue;
(d) the identity between the relevant issues in the two proceedings;
(e) any plea of fresh evidence, including the nature and significance of the evidence and the reason why it was not part of the earlier proceedings; …
(f) the extent of the oppression and unfairness to the other party if the issue was relitigated and the impact of the relitigation upon the principle of finality of judicial determination and public confidence in the administration of justice; and
(g) an overall balancing of justice to the alleged abuser against the matters supportive of abuse of process."
In the present proceedings, the applicants claimed damages on substantially the same basis as the respective plaintiffs (being the companies referred to above) claimed damages in the 1998 proceedings (which this Court decided adversely to Jazabas) and in the 2005 proceedings (which were eventually dismissed as security for costs was not paid).
Although the applicants in the present case are not the same parties as the plaintiff in the 1998 proceedings or the plaintiffs in the 2005 proceedings, it was not in dispute (and was established by the company searches tendered by the respondents in the Court below) that the applicants ultimately owned and controlled each of the companies which were plaintiffs in either the 1998 or the 2005 proceedings.
Brereton J in In the matter of HIH Insurance Limited (in liquidation; De Bortoli Wines (Superannuation) Pty Ltd & anor v McGrath & ors [2014] NSWSC 774 at [34]-[59] considered the circumstances in which it will be an abuse of process for a party to bring proceedings to litigate the same issue which was decided adversely to a different party in previous proceedings.
His Honour summarised the effect of the authorities at [59] as follows:
"The above authorities establish that a person who was not party to earlier proceedings may nonetheless be precluded from maintaining later proceedings in respect of substantially the same subject matter, even though not in privity in the strict sense with the unsuccessful party in the earlier proceedings, if the person is sufficiently identified with a party to the earlier proceedings, and it was unreasonable to stand by and allow the earlier proceedings to be determined without intervening. In my view, in Australia these cases are best explained as a sub-species of Anshun estoppel; such that where a given matter becomes the subject of litigation and adjudication, the court requires not only the parties to bring forward their whole case, but other persons with a sufficient interest also to do so. Short of privity in the strict sense, there will be sufficient identification where there is control of one by the other - because it is offensive to the efficient administration of justice for a party who could have caused others with a similar interest to join in the proceedings to refrain from doing so and then seek indirectly to relitigate the issue through a controlled entity. In addition, the requisite relationship will be taken to exist where there has been what Lord Hobhouse called an 'order for the marshalling of litigation', because where a court has put in place arrangements to facilitate the quick, just and inexpensive resolution of complex related litigation, it is offensive to the administration of justice that a person involved in those arrangement subsequently be able to circumvent them [cf Ashmore, 348H-349A]. However, the existence of the requisite identification is not of itself enough; as with the more familiar form of Anshun estoppel, a non-party will be precluded from later litigating the issue only where it was unreasonable to stand by without intervening in the earlier proceedings."
(Emphasis added.)
The issue was also considered by this Court in CBRE (V) Pty Ltd v Trilogy Funds Management Ltd (2021) 107 NSWLR 202; [2021] NSWCA 316 (CBRE) at [26]-[36] (Bell P, Basten JA agreeing) and [82]-[87] (Macfarlan JA, Basten JA agreeing). In CBRE, the Court found that the respondent was neither related to nor a "privy" of CP, a previous responsible entity for a fund. CP's earlier claim was not brought in its capacity as responsible entity for the fund and the alleged loss was not one suffered by the fund. As the respondent's claim was a representative claim brought on behalf of the fund in respect of a different loss, it was held not to be an abuse of process to bring the claim.
In the present case, the applicants were the ultimate shareholders of the corporate entities which brought the 1998 proceedings and the 2005 proceedings. The claims brought in the 2020 proceedings are, with the exception of the second misfeasance claim, the same as those brought in the earlier proceedings and were, in the case of the 1998 proceedings, ultimately decided after a contested hearing and an appeal adversely to the plaintiffs. With respect to the second misfeasance claim, the material relied on (such as the Lister report) does not provide any tenable support for the propositions sought to be extracted from it. In those circumstances, the second misfeasance claim could, had there been any proper basis for it, have been brought in the earlier proceedings since it is founded on the approval given with respect to the Orica plant in 1998.
That the applicants also claimed "personal losses" does not affect the conclusion in the present case. Further, the respondents' submission that this was a contrivance to get around the reflective loss principle was not something that had to be put to the applicants in the witness box before it could be made. Whether proceedings amount to an abuse of process is a matter for the Court and does not depend on any intention on the part of the alleged abusers to commit an abuse. Thus, in Rippon v Chilcotin, Handley JA said at [28]:
"The present proceedings are an attempt to litigate or re-litigate issues which were either decided in or are barred by the earlier proceedings. In substance, ignoring the camouflage, the purchasers are attempting to re-litigate the issue of reliance on the 1991 figures which they lost. If they cannot succeed against anyone in respect of the 1991 figures because they did not rely on them, they could hardly succeed in establishing reliance on the earlier figures."
(Emphasis added.)
In this extract, Handley JA was describing the effect of the second proceedings against the accountants and not the intention of the purchaser in bringing them. The difference in the parties was, in substance, a "camouflage". It was not, in the circumstances of that case, material whether it was intentional or not. The words, camouflage or contrivance, ought not be read as signifying intent.
It is obviously a significant matter to dismiss proceedings summarily as the primary judge did. However, the applicable principles relating to reflective loss and abuse of process are well established. The Court is not persuaded that any issue of principle is raised by any of the proposed grounds of appeal. Although the matters raised by Mr King as being of public importance (the conduct of planning authorities in deciding to approve developments and in the application of planning instruments) are matters of importance to the public, these issues must be balanced against the abuse of process involved in the bringing of this claim at this stage, to which we have referred above. In these circumstances, we are not persuaded that it is appropriate to grant leave to appeal.
Nor is the Court persuaded that there is any reasonably clear injustice (going beyond something which is merely arguable) arising from the primary judge's conclusions that the loss claimed by the applicants is properly to be characterised as reflective loss or that the proceedings are an abuse of process because the applicants are seeking to re-litigate claims in respect of which companies which they ultimately controlled were unsuccessful.
In these circumstances, it is not necessary to address the grounds relating to limitation issues, or to the cross-appeal allowed by the primary judge, since they do not arise.
In these circumstances, leave to appeal ought be refused with costs.