By notice of motion filed on 18 February 2016 the plaintiff seeks an order that he be granted leave to file an amended statement of claim in this matter. Although the plaintiff's motion seeks leave to amend pursuant to Part 19, Rule 19.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), the relevant provisions are in fact ss 64(1) and 65(2) of the Civil Procedure Act 2005 (NSW) (CPA).
The plaintiff is unrepresented in these proceedings. He practised as a solicitor for many years. In October 2010, he was diagnosed with a brain abscess that required surgery and a lengthy recuperation. He has apparently not returned to practice.
Mr Robertson of counsel, who appears for the second defendant Elders Limited, opposes the motion. He does not contend that the second defendant is prejudiced by the timing of the proposed amendment in circumstances where no defence has as yet been filed. Rather, the motion is opposed on the basis that the proposed amended statement of claim does not disclose a reasonable cause of action and is embarrassing.
[2]
Background
The plaintiff's causes of action are said to have arisen in the context of his purchase of a farm property near Bungonia known as 'Reevesdale' in 2007. The second defendant acted for the vendor in that sale. The agent employed by the second defendant who conducted the sale on behalf of the vendor was Mr Les Hannan.
On 3 August 2015, some eight years after the purchase of Reevesdale, the plaintiff filed a statement of claim against five defendants. On 7 March 2016, notices of discontinuance were filed in relation to the first, third, fourth and fifth defendants. The second defendant is the only active defendant in the proceedings.
In his statement of claim filed on 3 August 2015 the plaintiff alleges fraud as against the second defendant in reliance upon two matters.
First, the plaintiff relies upon an assertion that Mr Hannan told him that the reason the vendor was selling Reevesdale was that the vendor's wife thought there were ghosts on the property. This is the only representation that Mr Hannan is said to have made to him concerning the reason for the sale.
The second matter relied upon by the plaintiff in his original statement of claim in support of his allegation of fraud is an assertion that he can prove that the contents of an affidavit affirmed by Mr Hannan on 21 April 2015 in relation to earlier proceedings (Williamson v Carneys Lawyers [2015] NSWSC 1080) are false.
The false assertions in that statement are said to be to the effect that, when the plaintiff and Mr Hannan visited Reevesdale in May 2007, there were placards along the road to the property protesting against a proposed quarry. Mr Hannan states that he made some inquiries with a local resident about the signs and afterwards informed the plaintiff that there was a development planned for an adjoining property to be turned into a quarry. He says that he told that plaintiff that he should make some inquiries about the development. In support of his allegation of fraud, the plaintiff relies upon the fact that he can prove that this statement by Mr Hannan is false
The plaintiff alleges that, but for the fraud, the plaintiff would not have considered purchasing Reevesdale.
Mr Hannan died on 3 July 2015 shortly after affirming his affidavit in the earlier proceedings.
The plaintiff now seeks to amend his statement of claim to plead a cause of action founded on misleading or deceptive conduct under s 52 of the Trade Practices Act 1974 (Cth) (TPA). The alleged misleading or deceptive conduct is said to have occurred in 2007 before the re-enactment of the relevant provisions of the TPA in Schedule 1 of the Competition and Consumer Act 2010 (Cth). The plaintiff further seeks to re-plead his action for fraud.
At the hearing of the motion the plaintiff read his affidavit sworn 18 February 2016 as well as two further affidavits sworn by him on 15 March 2016 and 29 March 2016 respectively. Counsel for the second defendant objected to large portions of these later affidavits. Although I ruled that the affidavits could be read in their entirety subject to their relevance being made apparent, it is now obvious to me that those affidavits largely concern matters not relevant to the present application.
During the course of his oral submissions the plaintiff read from the affidavit that Mr Hannan affirmed for the purpose of the previous proceedings. Given the reliance placed on that document by the plaintiff in the proposed amended pleading and in oral submissions, as well as the interlocutory nature of the proceedings before me, I invited the plaintiff to tender that affidavit and it became Exhibit A on the motion.
The amended pleading which the plaintiff sought leave to file is headed 'Further amended statement of claim' in circumstances where only one previous statement of claim has been filed. I was informed during the hearing of the motion that the plaintiff had prepared an amended statement of claim on 10 August 2015, seven days after the filing of the original pleading. This document was never filed. It would appear that the plaintiff relied upon UCPR Rule 19.1 which provides that a plaintiff may, without leave, amend a statement of claim once within 28 days after the date on which it was filed. The difficulty is that the plaintiff never filed that document. The pleading he now seeks to file marks up that second document which was never filed and is not before the Court.
[3]
Principles regarding amendment of pleadings
Subject to the overriding purpose set out in ss 56 and 58 of the CPA, an application for leave pursuant to s 64 of that Act would normally be granted if the application is made in a timely manner and for a proper purpose: AON Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 at [89]. Nonetheless, there are limits to the general discretion to amend, including that the proposed amendment must comply with the UCPR and the CPA, disclose a reasonable cause of action and not be liable to be struck out.
The relevant principles in relation to the requirement for proper pleadings are well established and were recently summarised by Garling J in Clarke v State of New South Wales (No.4) [2015] NSWSC 1054 at [36] - [42] as follows:
"36. The function of pleadings is to state with sufficient clarity the case that must be met by a defendant. In this way, pleadings serve to define the issues for decision and ensure the basic requirements of procedural fairness, namely that a party should have the opportunity to meet a case against him or her: Banque Commerciale SA v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 at 286, 296, 302-3. As well, the issues defined in the pleadings provide the basis upon which evidence may be ruled admissible or inadmissible at trial upon the ground of relevance: Dare v Pulham [1982] HCA 70; (1982)148 CLR 658 at 664.
37 Proper pleading is of fundamental importance in assisting courts to achieve the overriding purpose of facilitating the just, quick and cheap resolution of the real issues in the proceedings: s 56 Civil Procedure Act; McGuirk v The University of NSW [2009] NSWSC 1424 at [24] per Johnson J.
38 As Hodgson JA (with whom Mason P and Handley JA agreed) said in Kirby v Sanderson Motors Pty Ltd (2001) 54 NSWLR 135 at 142-143:
"The requirement for a pleading to state material facts which is to be found in the Rules includes the cause or causes of action which are relied upon. Materiality of facts means how those facts are material to a cause of action."
39. Bongiorno J said in Gunns Ltd v Marr [2005] VSC 251 at 57, in a passage with which, if I may say with respect, I entirely agree:
"Not only must the pleading inform the defendants of the case they must meet now, but it must clearly set out the facts which the plaintiffs must assert to make good their claim with sufficient particularity to enable any eventual trial to be conducted fairly to all parties. Vague allegations on very significant matters may conceal claims which are merely speculative. If this be not the case, the plaintiffs must put their allegations clearly."
40. As his Honour went on to say,
"A pleading is embarrassing where it is unintelligible, ambiguous, vague or too general."
41. In Shelton v National Roads and Motorists Association Ltd [2004] FCA 1393 at [18], Tamberlin J dealt with the concept of embarrassment, with respect to a pleading, in this way:
"Embarrassment in this context refers to a pleading that is susceptible to various meanings, or contains inconsistent allegations, or in which alternatives are confusingly intermixed, or in which irrelevant allegations are made that tend to increase expense. ..."
42. As Bryson J recognised, a pleading may be embarrassing if the material facts alleged are couched in expressions which leave difficulties or doubts about recognising or piecing together what is referred to: Northam v Favelle Favco Holdings Pty Ltd (Bryson J, 7 March 1995, unreported)".
It is with the above principles in mind that I turn to consider the proposed amended statement of claim.
[4]
The submissions of the parties
At the hearing of the motion before me I was provided with written submissions and a folder of authorities by Mr Robertson on behalf of the second defendant. I was informed that the submissions had been provided to the plaintiff a week earlier. The plaintiff was hence on notice of the basis for the second defendant's opposition to the motion.
[5]
The submissions of the second defendant
Mr Robertson submitted that, to the extent that the proposed amended pleading relies upon misleading or deceptive conduct under the TPA, the cause of action is statute barred by virtue of s 82(2) of the TPA. Similarly, the allegation of fraud is statute barred by virtue of s 14 of the Limitation Act 1969 (NSW). Accordingly, no reasonable cause of action is disclosed.
Section 82 of the TPA relevantly provides:
(1) Subject to section (1AAA), a person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV, IVA, IVB or V or section 51AC may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.
…
(2) An action under subsection (1) may be commenced at any time within 6 years after the day on which the cause of action that relates to the conduct accrued.
Section 14(1)(b) of the Limitation Act 1969 relevantly provides:
(1) An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims
…
(b) a cause of action founded on tort, including a cause of action for damages for breach of statutory duty.
Section 52 of the Limitation Act 1969 provides for the suspension of limitation periods where a person is under a disability:
(1) Subject to subsections (2) and (3) and subject to section 53, where:
(a) a person has a cause of action,
(b) the limitation period fixed by this Act for the cause of action has commenced to run, and
(c) the person is under a disability,
in that case:
(d) the running of the limitation period is suspended for the duration of the disability, and
(e) if, but for this paragraph, the limitation period would expire before the lapse of three years after:
(i) the date on which the person last (before the expiration of the limitation period) ceases to be under a disability,
(ii) or the date of the person's death,
(whichever date is the earlier), the limitation period is extended so as to expire three years after the earlier of those dates.
(2) This section applies whenever a person is under a disability, whether or not the person is under the same or another disability at any time during the limitation period.
Mr Robertson acknowledged that there is authority for the proposition that limitation questions should generally not be decided in interlocutory proceedings except in the clearest of cases: Wardley v State of Western Australia (1992) 175 CLR 514 at 525 (Wardley). Mr Robertson sought to distinguish the decision in Wardley from the present case on the basis of the type of loss pleaded in the present matter.
Claims arising under s 52 of the TPA are complete when the plaintiff sustains loss or damage by reason of the conduct that is the subject of the cause of action: Wardley at 525. The measure of damages is the difference between the purchase price and the value of the property at the time of purchase: Potts v Miller (1940) 64 CLR 282 at 297-299.
The second defendant relies upon Potts v Miller in support of its submission that any loss or damage that the plaintiff suffered by reason of his reliance on any misleading or deceptive conduct or fraud on the part of Mr Hannan arose when the plaintiff acquired the Reevesdale property for more than its true value. That is, the loss was sustained on 27 July 2007 at the time of exchange. This is to be distinguished from the type of loss relied upon in Wardley. The plurality in that matter drew a distinction between two types of loss or damage for the purposes of s 52. The first is contingent loss, in which case the plaintiff's cause of action is not complete until the contingency is satisfied and the loss becomes certain. The second is loss caused by the plaintiff's acquisition of property at a price greater than its true value in reliance on the defendant's misleading or deceptive conduct: Wardley at 533.
Counsel for the second defendant submitted that the present case is one in which the plaintiff claims that he effectively paid more than the market value for an asset. It is not a case in which the loss was upon any contingency. On this basis the time for commencing proceedings expired six years from the sale of the property on 27 July 2007, namely 26 July 2013.
As for the time limit in relation to the action for fraud, Mr Robertson conceded that s 52 of the Limitation Act 1969 does apply to the tort of deceit but noted that there was no evidence before the court in relation to the timing of the plaintiff's awareness of his cause of action and the impact of his disability on that issue.
In addition to reliance upon a submission that the TPA proceedings were statute barred, Mr Robertson drew my attention to a number of difficulties with the proposed amended pleading.
First, at paragraph 14 of the proposed amended pleading, the plaintiff relies upon certain implied representations to the effect, inter alia, that the second defendant held itself and Mr Hannan out as having certain expertise and reputation, that the second defendant and Mr Hannan were "honest and trustworthy," that, "The defendant knew the local market for rural real estate in the Bungonia area," and that, "Hannan and the defendant did not know of any matter relating to Reevesdale or its value that was not otherwise known to the Plaintiff."
Mr Robertson submits that no actual representation is alleged in paragraph 14, in circumstances where the plaintiff is obliged to allege with specificity any implied representations relied upon. Any allegation is to include the terms of the alleged implied representation, the conduct alleged to have constituted the implied representation and any facts, matters and circumstances relied upon as giving rise to the implied representation.
Other paragraphs of the proposed amended pleading are said to directly contradict each other. For example, paragraph 15 alleges that the relevant appeal to the Land and Environment Court against the refusal of the development application for use of part of the adjoining property as a quarry was dismissed on 19 June 2007. Paragraph 16.2, on the other hand, alleges that the second defendant and Mr Hannan ought to have known that the application had not been finally determined at the time of inspection "or any later time."
Elsewhere in the proposed amended statement of claim, the plaintiff relies upon omissions that are said to be misleading or deceptive without making any specific allegations. Mr Robertson submits that, if the plaintiff is relying upon silence on the part of the second defendant as being misleading and deceptive, he needs to identify the particular factors which are alleged to have required the silent party to volunteer information. He drew my attention to the decisions in Rhone-Poulenc Agrochimiesa v UIM Chemical Services Pty Ltd (1986) 12 FCR 477 at 504, Lam v Ausintel Investments Aust Pty Ltd (1990) 97 FLR 458 and Miller & Associates Insurance Broking v BMW Australia Finance (2010) 241 CLR 257 at [16]-[22] at [20]-[22]. No such particulars are provided in the proposed amended pleading.
In other respects the proposed amended pleading is said to be contradictory and inconsistent, to fail to provide any particulars and to incorporate other material without reference. By way of example, the plaintiff alleges both that Ms Hannan acted fraudulently in that he knew that the real reason for the sale was the prospect of a quarry redevelopment on the adjoining property and also that the second defendant and Mr Hannan were in some way incompetent in that they should have known about it if they did not.
As for the claim for $20 million in exemplary damages, Mr Robertson submitted that nowhere in the proposed amended pleading is there any indication of a proper basis for this. The plaintiff alleges that the second defendant was aware of the plaintiff's illness but no time frame is provided. The plaintiff asserts that the second defendant acted in "contumelious disregard for the rights of the Plaintiff" but does not identify the substance of that conduct.
[6]
The submissions of the plaintiff
I invited the plaintiff to clarify some of the inconsistencies in his proposed amended pleading as identified by the second defendant. In particular, I sought clarification from him as to whether he asserted that Mr Hannan did know or did not know about the pending quarry, given that he makes both assertions in the proposed amended pleading.
The plaintiff confirmed that the only representation from Mr Hannan upon which he relies is the representation that the reason for the sale was that the vendor's wife believed there were ghosts on the property. He further confirmed that he relied upon proving that Mr Hannan had lied in his affidavit affirmed on 21 April 2015 in the earlier proceedings. When I invited the plaintiff to indicate whether this meant that his case was that Mr Hannan did know about the quarry or did not know about it, the plaintiff responded "…he knew or he ought to have known because he was a real estate agent. But the reality is that he did know. He knew perfectly well" (T 35.25).
The plaintiff placed particular reliance upon his ability to prove that Mr Hannan's affidavit was false. His submissions focussed on his proposed evidence rather than the deficiencies in the proposed amended pleading identified by Mr Robertson.
As for the question of the plaintiff being statute barred from proceeding under the TPA, the plaintiff placed reliance upon s 52 of the Limitation Act 1969.
As outlined above, in October 2010 the plaintiff was diagnosed with a brain abscess and underwent surgery. The plaintiff asserts that this abscess and subsequent surgery had an impact on his ability to function.
When it was pointed out to the plaintiff that s 52 of the Limitation Act 1969 has no application to the TPA aspect of his claim, he conceded that his point on s 52 of the TPA was "…probably a waste of time."
[7]
No reasonable cause of action
I accept the submission of the first defendant that the plaintiff's actions in both fraud and misleading or deceptive conduct accrued on the day on which he acquired an interest in Reevesdale; that is, at the time of exchange of contracts in relation to that property. Taking the plaintiff's case at its highest, he pleads that he entered into a contract to purchase Reevesdale as a result of his reliance on Mr Hannan's express representations as to the vendor's reason for selling. That express representation persuaded the plaintiff that he need not make his own enquiries in respect of development proposals or litigation in relation to neighbouring properties.
The proposed amended pleading also asserts that the true value of Reevesdale at the time of exchange was less than the price at which the plaintiff bought it by reason of the existence of a proposal to develop an adjacent property as a quarry. The plaintiff alleges that he purchased Reevesdale at a price greater than its true value and, as a result, suffered economic or financial loss. The quantum of the plaintiff's loss is the difference between the price for which he purchased Reevesdale and its true value: Potts v Miller at 297 and Wardley at 530. The plaintiff alleged that he suffered actual loss immediately upon entering into the contract. The loss could not be described as prospective or potential: Wardley at 532.
The plaintiff does not, for example, assert that Mr Hannan had private knowledge, unknown to the market, that a quarry could be constructed on a neighbouring property and yet expressly represented to the plaintiff that there would be no such development. If that had occurred the cause of action would not have accrued until some subsequent event (such as the lodgement of a development application) caused the true value of Reevesdale to decrease. On the contrary, the plaintiff appears to assert that Mr Hannan knew about the quarry because everyone in the area knew or ought to have known.
As a result of my finding that the plaintiff's actions in both fraud and misleading or deceptive conduct accrued on the day on which he acquired an interest in Reevesdale, the application of both s 82(2) of the TPA and s 14(1)(b) of the Limitation Act 1969 mean that both of the plaintiff's causes of action are statute barred. I turn then to the question of whether the plaintiff's asserted disability arising from his brain abscess has any impact on the running of time for the purposes of the relevant limitation periods.
The plaintiff places reliance upon s 52 of the Limitation Act 1969 in this regard, but s 7 of the Limitation Act 1969 relevantly provides that nothing in that Act applies to an action for which a limitation period is fixed by or under an enactment other than that Act. This includes s 82 of the TPA. There is no analogous provision for the suspension of a limitation period for claims for damages arising under the TPA. This means that the plaintiff's asserted disability cannot extend the time period specified in s 82(2) of the TPA and the plaintiff is statute barred from claiming damages under the TPA.
It is possible that the plaintiff may be able to rely upon s 52 of the Limitation Act 1969 in relation to his action for fraud so as to extend the six year time limit set by s 14 (1)(b) of the Limitation Act 1969. There is simply no material before me to make any finding on that issue.
Accordingly, I would not propose to grant the plaintiff leave to file his amended statement of claim insofar as it pleads a cause of action under the TPA.
[8]
The embarrassing nature of the pleadings
In circumstances where I am of the view that I would not be prepared to find that the plaintiff's action for fraud is statute barred at an interlocutory stage, given the potential application of s 52 of the Limitation Act 1969, I turn to consider that aspect of the proposed amended pleading.
Having considered the proposed amended pleading as a whole I am of the view that it is embarrassing in that it is ambiguous, vague and internally contradictory. The proposed pleading does not state with sufficient clarity the case that must be met by the first defendant. I find that the complaints made in relation to it on behalf of the second defendant as set out above at [26] - [31], insofar as they appear to pertain to both causes of action, are made out.
While I accept that the plaintiff can plead his actions in the alternative, as the pleading presently stands some of the internal inconsistencies mean that the proposed pleading is not in a form sufficient to permit the second defendant to respond to it.
Mr Robertson quite properly submitted during oral argument that, if the plaintiff could persuade the court that there is some case he could plead based on fraud or deceit, then the second defendant would not oppose him having the opportunity to do so.
UCPR Rule 15.3 provides that a pleading must give particulars of, inter alia, any fraud, misrepresentation, or wilful default on which the party relies. In Magill v Magill [2006] HCA 51; (2006) 231 ALR 277 Gleeson CJ at [37] cited the following passage from the decision of Viscount Maugham, in Bradford Third Equitable Benefit Building Society v Borders (1941) 2 All ER 205 at 211 as setting out the elements of the tort of deceit:
"First, there must be a representation of fact made by words, or, it may be, by conduct. The phrase will include a case where the defendant has manifestly approved and adopted a representation made by some third person. On the other hand, mere silence, however morally wrong, will not support an action of deceit. Secondly, the representation must be made with a knowledge that it is false. It must be wilfully false, or at least made in the absence of any genuine belief that it is true. Thirdly, it must be made with the intention that it should be acted upon by the plaintiff, or by a class of persons which will include the plaintiff, in the manner which resulted in damage to him. If, however, fraud be established, it is immaterial that there was no intention to cheat or injure the person to whom the false statement was made. Fourthly, it must be proved that the plaintiff has acted upon the false statement and has sustained damage by so doing."
The plaintiff does purport to make a claim in fraud or deceit at [25] of the proposed amended pleading but it is unclear which of the various assertions made elsewhere in pleading are particulars of that claim. Furthermore, as counsel for the second defendant submitted, the claim in fraud refers to implied representations as being relevant to the vicarious liability of the second defendant for the alleged fraud of Mr Hannan without any identification of the relevant connection to the allegedly fraudulent conduct.
[9]
Summary
I have concluded that, for the above reasons, leave should not be granted for the plaintiff to file the amended statement of claim.
Although there was no claim based on s 52 of the TPA in the original statement of claim, there was a claim based on fraud or deceit. The consequence of my refusal to grant the plaintiff leave to file the proposed amended pleading is that the initial statement of claim remains the relevant pleading as against the second defendant. The plaintiff would appear no longer to rely upon that pleading as he amended that document within seven days, as permitted under UCPR Rule 19.1. The difficulty is that the plaintiff never filed that amended document. No application to strike out the original pleading is before the court, although I note that during the hearing of the motion counsel for the second defendant foreshadowed that the second defendant may make such an application once the present motion was decided.
The plaintiff will need to produce a pleading which is in a form that allows the first defendant to understand the nature of the case against it. In the circumstances I propose to allow a reasonable period to enable him to re-plead his action in fraud or deceit. In my view, six weeks is sufficient.
[10]
Orders
My orders are as follows:
1. Plaintiff is refused leave to file the proposed amended statement of claim.
2. Leave is granted to the plaintiff to file an amended statement of claim by 3 June 2016
3. Plaintiff is to pay the second defendant's costs of the motion as agreed or assessed.
[11]
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: 26 April 2016