Lesvos v Penrith Whitewater Stadium

Lesvos v Penrith Whitewater Stadium - [2005] NSWSC 693 - NSWSC 2005 case summary — Zoe

[10]

JUDGMENT 1 BELL J: The applicants, Penrith Whitewater Stadium Limited (PWS) and the Penrith City Council (the Council) move on notice for orders that the amended statement of claim filed on 9 September 2004 (the ASOC) be stayed or dismissed generally pursuant to Pt 13 r 5(1) and/or Pt 15 r 26 and/or Pt 65 r 5 of the Supreme Court Rules 1970 (the SCR). In the alternative they seek orders striking out one or more of the paragraphs of the pleading. In the further alternative they seek an order that the respondents, Lesvos Pty Limited (Lesvos) and Koffee Pty Limited (Koffee) be required to "respond fully and properly" to the applicant's request for particulars within a time fixed by the Court, failing which the applicants seek liberty to move for an order dismissing the amended statement of claim. 2 These proceedings have a lengthy history. The respondents commenced the present proceedings in the District Court on 8 September 2000. They pleaded causes of action under the Trade Practices Act 1974 (Cth) (the TPA) and in negligence. Following the transfer of the proceedings to this Court the applicants moved successfully to strikeout the statement of claim: Lesvos Pty Limited v Penrith Whitewater Stadium Limited [2004] NSWSC 441. The ASOC was filed pursuant to an order granting leave to the respondents to replead their claims. They have abandoned their cause of action in negligence and now plead causes of action in contract and under the TPA. 3 In both written and oral submissions, substantial focus was directed to the challenge to the contractual claim, which was said to disclose no reasonable cause of action. 4 The power to stay or to dismiss the proceedings under Pt 13 r 5(1) is distinct from the power to strike out the pleading (or a claim for relief in the pleading) under Pt 15 r 26(1). To the extent that the applicants move for relief under each rule on the ground that the pleading discloses no reasonable cause of action, the principles that I am to apply are those stated by Barwick CJ in General Steele Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 130: I should only do so if the case of the respondents is "so clearly untenable that it cannot possibly succeed".

[14]

Mr Baran responded that the contract pleaded in paragraph 6 falls within the first class described in Masters v Cameron (1954) 91 CLR 353 per Dixon CJ, McTiernan and Kitto JJ at 360 (T 31.57): the parties were to be immediately bound but proposed to have the terms of their agreement re-stated with greater precision in a deed that would not differ in effect. In his submission this could be conveyed by the provision of further particulars. 9 Turning to the query as to the basis for the contractual claim as against the Council, Mr Baran noted that his clients are not privy to the terms of the agreement between the Council and PWS with respect to the Stadium. It is their case that they responded to an advertisement published by the Council calling for expressions of interest for the lease of the kiosk/café at the Stadium (exhibit A, tab 16) and that in all subsequent contractual discussions and in the correspondence particularised in paragraph 6, the Council was present and a participant. 10 I am not persuaded that the contractual claim against the Council should be struck out as inconsistent with the allegation pleaded in paragraph 3 of the ASOC that the Council had licensed the Stadium to PWS for reward. 11 The terms of the agreement pleaded in paragraph 6 are: (a) The defendants would give to the plaintiffs the exclusive right to use and occupy premises that had been set aside as a kiosk/café and would in due course execute a deed of sub-licence to that affect with a term of five years with a further five year option to renew that deed of sub-licence. (b) That the plaintiffs would pay a licence fee. (c) That the plaintiffs would fund the fit out of the premises. (d) The plaintiffs would have the right to exclusively cater for all events at the Stadium with the exception of the Olympic Games. (e) The plaintiffs would be able to trade at night after the Stadium had closed. (f) That the premises would be handed over to the plaintiffs no later than March 1999. (g) That the plaintiffs could trade as the exclusive caterers and providers of food services to the Stadium commencing on 15 March 1999.

[15]

12 The applicants submitted that the term pleaded in subparagraph (e) above was meaningless. It was said that this term may bear a number of meanings. It was submitted to be "quite nonsensical" when viewed in light of paragraph 5 of a letter written by Ms Mihas dated 12 May 1999 to Mr Robert Paluzzano, an employee of the Council (exhibit A, tab 28). In that letter Ms Mihas says: "The trading hours oblige us to trade till 8:00 pm Monday to Friday. I need to amend this so that we are only obliged to trade until 5:30 pm obviously if the centre starts to trade in the evening as a night-time venue we will trade to cater for the patrons." 13 It was submitted to be an abuse to plead a material fact inconsistent with the evidence that had been filed. To my mind the claim that it was a term of the agreement that the respondents would be able to trade at night after the Stadium had closed is not necessarily inconsistent with the desire expressed on Lesvos' behalf that the respondents not be bound to trade until 8:00 pm on Mondays to Fridays. The contention that the term pleaded in paragraph 6(e) is meaningless is one aspect of the broader challenge that the agreement pleaded is so plainly uncertain as to justify summary dismissal. I will return to this. 14 The applicants submitted that the pleading of term (g) "that the plaintiffs could trade as the exclusive caterers and providers of food services to the Stadium commencing on 15 March 1999" was "completely meaningless and incomprehensible" (WS p 9, 3). It was argued that such a term may be susceptible of a number of meanings. Again, this submission goes to the broader challenge that the agreement pleaded is void for uncertainty. Also encompassed in this broader challenge is the complaint that the right of exclusive catering was open-ended in that there was no pleading of when the parties contemplated that the deed of sub-licence would be executed. 15 The applicants complained that the respondents' response to their request for particulars did not serve to clarify the case that they were asked to meet. In paragraph 11.2 of their request (dealing with the representation pleaded in paragraph 10(b) of the ASOC, which comprises the TPA claim) the applicants asked: "Do the plaintiffs say it was a term of this agreement of sub-licence that the plaintiffs would be the exclusive caterers for the Stadium?"

[20]

19 For an agreement be binding, it must be sufficiently definite to enable the court to give it practical meaning: Scammell v Ouston [1941] AC 251 per Lord Wright at 268-9. In Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1967-1968) 118 CLR 429 at 436-437 Barwick CJ observed: "But a contract of which there can be more than one possible meaning or which when construed can produce in its application more than one result is not therefore void for uncertainty. As long as it is capable of a meaning, it will ultimately bear that meaning which the courts, or in an appropriate case, an arbitrator, decides is its proper construction: and the court or arbitrator will decide its application. The question becomes one of construction, of ascertaining the intention of the parties, and of applying it. Lord Tomlin's words in this connexion in Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503 at 512 ought to be kept in mind. So long as the language employed by the parties, to use Lord Wright's words in Scammell v Ouston is not 'so obscure and so incapable of any definite or precise meaning that the court is unable to attribute to the parties in particular contractual intention', the contract cannot be held to be void or uncertain or meaningless. In the search for the intention, no narrow or pedantic is warranted, particularly in the case of commercial arrangements. Thus will uncertainty of meaning, as distinct from absence of meaning or of intention, be resolved." 20 The respondents plead that a binding agreement had been struck and that they acted upon it. To the extent that the applicants contend that the terms pleaded are susceptible of more than one meaning it seems to me that their submissions fall short of demonstrating that the Court at trial may not be able to ascertain their meaning. The Court may imply terms necessary to give efficacy to the parties' intention. I do not consider it is appropriate to summarily dismiss the contractual claim as pleading an agreement so plainly uncertain as to be void. 21 The pleading of breach is as follows: (a) By oral representations made on or about 15 March 1999 Sherry Spurlin and Steve Hackett conveyed to the plaintiffs that they were not permitted to trade in the kiosk/café despite the fact that the kiosk/café had been fitted out by the plaintiffs at their expense. (b) Served a notice on the plaintiffs on 8 May 2000 to vacate the premises and to remove the entire fit out for a period described as the 'exclusive Games period' being from 7 July 2000 to 22 January 2001 contrary to the agreement in paragraph 6 precluding trade for that period and for such further periods as would be notified by the defendant. (c) The defendants imposed a restriction upon the plaintiffs' ability to trade by letter dated 26 May 1999 for trade to be conditional upon performance when it commenced as opposed to the agreement in paragraph 6, namely that the plaintiffs would have exclusive right to cater for all functions and provide all food services to the Stadium with the exception of the Olympic Games. (d) The plaintiffs were precluded from trading until such time as the Olympic Co-ordination Authority and the Sydney Organising Committee (SOCOG) handed over the exclusive right to occupy the premises back to the first and second defendants on 22 January 2001 or at such other date as the Olympic Co-ordination Authority or the Sydney Organising Committee would prescribe. 22 The applicants challenged the pleading in subparagraph (a) on a number of grounds. It is not necessary to deal with each of them. I consider that the subparagraph is embarrassing. This is not merely for want of an allegation that Ms Spurlin and Mr Hackett were authorised by PWS and the Council respectively to make the representations. The respondents do not plead that they ceased to trade as the result of the representations. The significance of the representations to their claim in contract is left entirely unclear. Mr Baran pointed to the pleading of ceasing to trade in subparagraph (d) set out above. This does not assist in understanding the breach pleaded in subparagraph (a). Paragraph 8(a) will be struck out. The respondents will have leave to replead. 23 The applicants submitted that the pleading of breach in paragraph 8(b) is inconsistent with the terms of the document dated 8 May 2000 referred to therein. The applicants refer to a letter, apparently signed by Ms Spurlin on behalf of PWS (exhibit A, tab 40), and submit that nothing in the letter is to the effect that the respondents were obliged to vacate the kiosk/café until 22 January 2001. The letter refers to "the exclusive games period" and in parentheses to the period 7 July to 12 October 2000. The applicants also submitted that the letter is not a notice but merely an intimation that unless the respondents made arrangements with the SOCOG Master Caterer they would have to leave the premises during the period 7 July to 12 October 2000. Finally, the applicants contended that the pleading is inconsistent with paragraph 6(d), which asserts that the agreement of November/December 1998 included a term stating that the respondents would have the right to exclusively cater for all events at the Stadium with the exception of the Olympic Games. 24 In their response to the applicants' request for further particulars the respondents state that it is their case that the period of the Olympic Games referred to in paragraph 6(d) is not co-extensive with the "exclusive Games period" pleaded in paragraph 8(b). It is their case that "the Olympic Games" refers to the ten days during which the Olympic games were held in Sydney in 2000 and not to some longer period. The respondents plead that the service of the notice dated 8 May 2000 to vacate the premises for the "exclusive Games period" constituted a breach of the agreement. Whether the letter dated 8 May 2000 constituted a notice to the respondents to vacate the premises for a period between 7 July and 12 October 2000, or for some other period being the "exclusive Games period", or whether it constituted no notice at all, is a question that is not appropriate to determine an application for summary dismissal.

[22]

27 The claims under the TPA and the Fair Trading Act 1987 (NSW) are pleaded in paragraphs 10 to 15 of the ASOC (the TPA claim). 28 The respondents plead the TPA claim on the basis that in or about November/December 1998 they attended a series of meetings at which representations were made by Ms Spurlin on behalf of PWS and Mr Hackett on behalf of the Council, namely that: "(a) The plaintiffs, as the successful tendering companies, would be the exclusive caterers and providers of food services to the Stadium for the period commencing March 1999 and thereafter by way of a five year sub-licence with a further option for another five years. (b) That the plaintiffs would be able to trade into the night after the Stadium closed for the period of the sub-licence save and except for the Olympics." 29 The respondents plead that they relied upon these representations and undertook expenditure in fitting out the area reserved for the café and the purchase of equipment and the hiring of staff between December 1998 and March 1999. 30 The respondents plead that each of the above representations was misleading or deceptive, or likely to mislead or deceive, contrary to s 52 of the TPA (and s 42 of the FTA). 31 The applicants acknowledge that a term of an agreement may amount to conduct contrary to s 52 of the TPA: Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 114 ALR 355; Concrete Constructions Group v Litevale Pty Ltd [2002] NSWSC 670 and Wright v TNT Management Pty Ltd (1989) 15 NSWLR 679. They pointed to the decision of Katz J in Aussie Home Security Pty Ltd v Sales System Australia Pty Ltd [1999] SCA 145. In that case (at [19]) his Honour cited with approval the following passage in the judgment of Goldberg J in Phoenix Court Pty Ltd v Melbourne Central Pty Ltd (1997) ATPR 46-179: "Although the mere fact that a representation as to future conduct or the happening of a future event does not occur does not make the representation misleading or deceptive, such a representation can ripen into misleading or deceptive conduct for the purposes of s52 in a number of circumstances; namely, if there is an implied statement in the representation as to a present or past fact; if the representation represents impliedly that the representor has a present intention to make good the promise or has the means or ability to do so; if the representation involves a representation that the representor has a present state of mind; or if a representation is made, which having regard to relevant circumstances at the time, requires a qualification because of the possibility of its non-fulfilment (see James v Australia and New Zealand Banking Group Limited; Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd; Wheeler Grace & Pierucci Pty Ltd v Wright). In any of these circumstances it is necessary to plead more than simply the fact of the representation as to the future matter and the fact that it does not occur. One has to plead material facts in relation to the implication in the statement of the present or past fact, the present intention and the means to carry it out, the relevant state of mind and the fact that there was no basis for it, and the relevant circumstance giving rise to the qualification. Without pleading such matters all material facts necessary to complete the cause of action have not been stated and the respondent does not know what case it has to meet". 32 In the present case the applicants submit that the pleading of the TPA claim is deficient in that it does not allege that either of the representations contained an implied statement that one or more or both of them did not have the present intention to make good the promise or the means or ability to do so (WS 9.1.4). 33 The applicants also submitted that the allegation pleaded in paragraph 10(a) is susceptible of more than one meaning, including that occupants of the Stadium would be prevented from ordering food from any source other than the kiosk/café operated by the respondents at any time whether an event was taking place at the Stadium or not (WS 9.3.1). They query whether this means that they were obliged to prevent anyone from bringing food into the Stadium, including by searching entrants, or whether it means no more than that another café would not be permitted to operate at the Stadium (WS 9.3.1). In written submissions the applicant also contended that the allegation pleaded in paragraph 10(a) is inconsistent with the pleading in paragraphs 4 and 5, which does not refer to any undertaking that the respondents would have the right to occupy the premises from 15 March 1999. This latter objection falls away since paragraphs 4 and 5 have been struck out. The applicants also point to the answer to their request for particulars (paragraph 11.2). On one view this suggests that the right to trade as exclusive caterers for the Stadium was not said to arise until the execution of the deed of sublicense. As I have noted, the answer to this request is acknowledged to have been misconceived. 34 The applicants submit that the representation pleaded in paragraph 10(b) is also susceptible of a number of meanings, including that the respondents had the capacity to trade into the night (sufficient staff for night work, sufficient supply of food, or that even if the respondents made a loss because of night trading, they had the financial means to carry that loss) (WS 9.4). They ask whether it is contended that the representation was that they were obliged to operate the Stadium day and night for the convenience of the respondents. 35 The respondents have chosen to plead the effect of the two representations upon which they rely for their TPA claim. It is open for them to do so: Pt 15 r 9 of the SCR; Aussie Home Security at [26]. It may be that the precise terms of the representations admitted of several meanings and as Katz J noted in Aussie Home Security, this may have consequences for the applicants' case at trial. 36 The respondents have sought in particulars (a) - (g) to paragraph 13 to identify the respects in which they allege that the two representations are misleading or deceptive (or likely to mislead or deceive). In subparagraph 13(a) they assert the representations to have been false. When regard is had to subparagraphs 13(b) and (d) it appears that the case to be made is that at the time the representations were made they were false to the knowledge of the applicants. Subparagraph 13(b), which is relevant to the representation pleaded in paragraph 10(a), goes to the state of the mind of the applicants at the time the representation was made and makes clear that it is the respondents' case that the intention of the applicants at the time of making the representation was that they were not going to fulfil their promise. 37 With respect to the representation pleaded in paragraph 10(b), the case that the respondents seek to make is particularised in subparagraphs (a), (c), (d), (e), (f) and (g). This representation, like that pleaded in 10(a), is said to have been false. It appears that the respondents assert that it was false at the time it was made. In subparagraph (d) it is asserted that the applicants were aware that there would be an "exclusive Games period" commencing 7 July 2000 whereby the Olympic Co-ordination Authority and SOCOG would have exclusive rights of occupation of the Stadium until such time as they deemed necessary. While at the date of the making of the representation the respondents do not assert the applicants to have known the date on which the Olympic Co-ordination Authority and SOCOG would hand back the exclusive rights of occupation of the Stadium, it is their case that the applicants knew the period of exclusion to be greater than the period between the opening and closing ceremony of the Sydney 2000 Olympic Games ((d), (f) and (g)). 38 The particular contained in paragraph 13(e) refers to an official notice served on the respondents dated 5 June 2000. The notice related to the exclusive Games period. It is unclear how the service of a notice dated 5 June 2000 bears upon the asserted falsity of the representation at the time it was made or on the applicants' then state of mind, namely that they were not intending to adhere to it or that there were no reasonable grounds for making it. Subparagraph 13(e) is embarrassing will be struck out. 39 The respondents particularise in subparagraph (c) that by using the term "Olympics" the applicants were "conveying objectively the time period between the opening ceremony and the closing ceremony of the Sydney 2000 Olympic Games". The applicants in oral submissions queried, "if we were conveying that objectively, how does that become false and misleading" (T 21). The inclusion of the word "objectively" in the particular is confusing. It will be struck out. I understand it to be the respondents' case that the representation pleaded in paragraph 10(b), that they would be able to trade into the night after the Stadium closed for the period of the sublicense, save and except for the Olympics, is to be understood as a representation that they would be able to trade, save and except for the ten days during which the Olympic Games were held in Sydney in September 2000. 40 The respondents have sought to plead a case that the two representations in paragraph 10 contravene the provisions of s 52 by reason of the fact that at the time they were made they were false and, with respect to representation (a), that the applicants did not intend that it should be fulfilled. In the alternative, the respondents invoke the provisions of s 51A of the TPA and assert that both representations relied upon were as to future matters and that at the time they were made the applicants did not have reasonable grounds for making them. 41 It was not submitted that the representations were not as to future matters: see the discussion Ting v Blanche (1993) 118 ALR 543 per Hill J at 553. The pleading in paragraph 14 is not expressed with precision, but I understand it to refer to the two representations pleaded in paragraph 10, being the representations made in November - December 1998. While there has been some controversy with respect to the appropriateness of pleading s 51A, since it does not create a cause of action or define a norm of conduct (Ting per Hill J at 552) and is an evidentiary provision, I am mindful of the observations of French J in Western Australia v Bond Corp Holdings Ltd (1991) 13 ATPR at 52,279 which were cited with approval by Foster J in Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd, Federal Court of Australia, (unreported) 18 May 1998. I consider that the respondents have sufficiently raised their intended reliance on s 51A. 42 The respondents do not rely solely on the operation of s 51A to establish their case. They seek to make a positive case that the representations were in each instance false at the time they were made, and with respect to the representation pleaded in 10(a) that it was made without the intention of fulfilling it. The material facts in support of that case are not pleaded in the substantive pleading, but are set out in the particulars. 43 In Truth About Motorways Foster J emphasised the importance in cases based upon the contravention of s 52 for precision in pleading. In this context his Honour observed at 4: "Whilst I am dealing with the subject of pleading it is convenient to note that the rules of this Court require a pleading to contain and contain only a statement in summary of the material facts on which the party relies. O 12 r 1(1) directs that a party shall state in the pleading (or an associated document) "the necessary particulars of any claim, defence or other matter pleaded by him". It must also be remembered that it is not the function of particulars, so provided, to fill in the gaps in the pleadings and that particulars cannot be regarded as statements of material facts which can cure defects in a statement of claim (H 1976 Nominees Pty Ltd v Galli and Apex Quarries Ltd (1979) 30 ALR 181). It may also be noted that it is a principle of pleading that a respondent does not plead to the particulars (TPC v David Jones (Australia) Pty Ltd (1985) 7 FCR 109). If a statement of claim puts a respondent in this position he can, in my opinion, properly claim that the relevant parts of that pleading are embarrassing. In this regard it will be remembered that O 11 r 16 of the Federal Court Rules enables the striking out by the Court of the whole or any part of a pleading that "has a tendency to cause prejudice, embarrassment or delay in the proceedings"". 44 When regard is had to the allegations in particulars (a), (b), (c), (d) and (g) (counsel for the respondents accepted that the particular in (h) is inconsistent with the pleading and is not relied upon) it seems to me that the case that is sought to be made is articulated with sufficient clarity to enable the applicants to understand what is put against them. I am mindful of the overriding purpose of the SCR enunciated in Pt 1 r 3. Taking into account the history of the proceedings, and my view that the particulars sufficiently identify the positive case that is made with respect to the two representations relied upon for the TPA claim, I propose to direct that particulars (a), (b), (c), (d), (f) and (g) stand as part of the pleading subject to striking out the word "objectively" in particular (c). 45 I will hear the parties on the question of costs. 46 For these reasons the orders that I make are:

At a glance

Court

Decision date

Before

Source

Judgment (28 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (9)