The Further Substituted Statement of Claim
4 The new pleading identifies the first respondent, Eastern Prosperity, (pars 1 to 4). It continues the irrelevant assertion that Eastern Prosperity was in breach of provisions of the Corporations Law for failing to file annual accounts, was deregistered on 28 February 2001 and re-registered on 29 August 2001 (pars 5 and 6). Paragraphs 7 and 8 identify directors of Eastern Prosperity and other companies in Australia of which they were also directors. The Singaporean holding company of Eastern Prosperity is identified (par 9).
5 The company's ownership of the shopping centre is pleaded (par 10) as is the irrelevant fact of the price paid for it (par 11). The land on which the shopping centre stands is also identified (par 12) and adjacent land later acquired by the company (par 13).
6 The assertion is continued from the previous pleading that the shopping centre thrived for the first two years of its operation, that it had nearly full occupancy and had a good retail mix with Woolworths as a key tenant (par 14). This paragraph does not appear material to any cause of action. It is accompanied by inexplicable particulars, including the assertion that the trading figures of the various Group Members reveal that their businesses initially traded successfully and have been in decline ever since. The inclusion of these allegations as particulars of par 14 disclose a basic misunderstanding of what particulars are for. The shopping centre is said to be uniquely situated to take advantage of any substantial change in the character of Victoria Park, the suburb in which it is located (par 15). Planning restrictions in the area meant that it was unlikely that any other shopping centre could be constructed nearby (par 16).
7 It is alleged that Eastern Prosperity failed to apply sufficient moneys towards the maintenance and upkeep of the shopping centre and that numerous problems were encountered as a result (par 17). Because of the failure to maintain the shopping centre, its attractiveness declined, several tenants departed and were not replaced and the flow of customers decreased (par 18). Woolworths elected to renew its lease for five years only instead of the ten years to which it was entitled (par 21). It negotiated an agreement that Eastern Prosperity would undertake significant repairs and refurbishment of the centre (par 21). Woolworths was prepared to expend significant funds of its own upon the improvement of its store (par 22). Thus far the pleading appears unchanged from the previous pleading. Much of it is irrelevant.
8 The statement of claim goes on to recount the formation of a tenant action group called "The Heart of the Park Tenant Action Group". It is said to have been formed early in 1998 because of generally deteriorating conditions at the shopping centre (par 23). The Group approached the WA Retailers Association and its then Chief Executive Officer for assistance (par 24). Following that approach, Eastern Prosperity and its then managing agents, Druitt First National Real Estate, are said to have entered into discussions with the WA Retailers Association on a number of issues relating to the promotion of the shopping centre, rent relief, improving the retail tenant mix, confirming the long term commitment of the owners to it, negotiating with Eastern Prosperity's Perth-based representative and negotiating to finalise long term plans for the centre involving its redevelopment (par 25). Eastern Prosperity was represented by a David Tian (par 26).
9 It is alleged that on 15 June 1998, letters signed by David Tian were sent to the various Group Members (par 27). Representations are said to have been made in these letters. They were to the general effect that Tian, on behalf of Eastern Prosperity, was negotiating finance in relation to car park extensions and general refurbishment of the shopping centre. When confirmation of the finance was to hand the commencement date of the refurbishment and car park extensions would be confirmed which was anticipated at that time to be in or during January 1999 (par 28). These express representations are said to have conveyed certain implied representations being:
(a) That Eastern Prosperity had undertaken extensive investigations into the refurbishment of the shopping centre and that it had the reasonable expectation that the refurbishment of the shopping centre would commence shortly.
(b) That Eastern Prosperity was currently in a financial position to meet its existing liabilities together with additional future liabilities that would arise from the obligation to make repayment of the moneys that were to be borrowed by Eastern Prosperity to effect the refurbishment of the shopping centre.
(c) That Eastern Prosperity was in good financial standing with potential lenders and was in a position to borrow and repay substantial sums of money.
(d) That the express representations could be relied upon and were not mere statements of opinion or puffery (par 29).
The Tian representations are said to have been misleading or deceptive or likely to mislead or deceive in contravention of s 52 of the Trade Practices Act 1974 (Cth) (par 30). Particulars of the falsity of the express representations referred to in par 28 are set out in par 30. Particulars of the falsity of the implied representations pleaded in par 29 are set out in par 31. The express representations and their asserted falsity are outside the terms of the leave granted on 8 April 2002. Many of the alleged particulars of falsity are not particulars of falsity at all.
10 The particulars of falsity of the implied representations relating to the financial position of Eastern Prosperity set out in par 29(b) and (c) are specified in par 31 at particulars C and D. There it is said:
"C. The First Respondent was not in a financial position to meet its existing liabilities together with the additional future liabilities that would arise from the obligation to make repayment of the monies that were to be borrowed by the First Respondent to effect the refurbishment of the shopping centre.
D. The First Respondent was not in good financial standing with potential lenders and the ANZ Bank in Singapore was seeking to terminate the existing financial accommodation provided to the First Respondent."
The further substituted statement of claim pleads that at all material times Tian and/or Eastern Prosperity well knew or ought to have known that Eastern Prosperity was not in a financial position to effect the promised refurbishment (par 32). Particulars of that assertion are given.
11 The further substituted statement of claim refers to a mediation process undertaken before the Commercial Registrar pursuant to the provisions of s 19 of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA). This mediation process followed a referral by the first Tenant Action Group through the WA Retailers Association (par 33). During the course of the mediation it is said that Eastern Prosperity's solicitors, James Chong & Co, made express representations that Eastern Prosperity had in place plans that included an upgrade of the premises and the car parking and that the works to the car park would not be carried out until after Christmas 1998 so as not to disrupt the Christmas trade at the shopping centre (par 37). These representations are said to have been contained in correspondence sent by the solicitors to the Commercial Tribunal on 20 August 1998. Implied representations are pleaded which again are outside the terms of the leave granted on 8 April 2002 (par 38). None of them relate to the financial capacity of Eastern Prosperity. Particulars of the falsity of the implied representations assert that Eastern Prosperity could not have had the reasonable expectation that the refurbishment would take place as there were strong grounds to suspect that for financial and regulatory reasons, the proposed refurbishment would not take place (par 40). It is also said that there were circumstances (which are not specified) in existence that required the original express representations to be qualified in a significant manner. Moreover, the express representations could not be relied upon and were mere statements of puffery, wishful thinking or good intention.
12 The outcome of the mediation is pleaded as yielding an agreement between the first Tenant Action group and Eastern Prosperity under which Eastern Prosperity would attend to refurbishment of the shopping centre, the members of the first Tenant Action Group would desist from taking further legal action against Eastern Prosperity and new standardised leases would be given to the tenants at the cost of Eastern Prosperity to reflect the changed circumstances that would apply after the refurbishment (par 41).
13 On 31 August 1998, Druitt First National ceased acting as the shopping centre managing agents and were replaced with effect from 1 September 1998 by DBF (par 42). The statement of claim identifies DBF as a corporation carrying on the business of a duly licensed real estate agent, its trading name and style and pleads its engagement by Eastern Prosperity in the management of the shopping centre from 1 September 1998 until 31 August 2000 (pars 43 to 47). At all times material to the action one Jodi Costello was engaged in the Commercial and Retail Property Management Department of DBF and had specific responsibility for the day to day management of the shopping centre (par 49). At all material times DBF and Costello were duly authorised to act on behalf of and bind Eastern Prosperity in all material respects (par 50). It is said that from 1 September 1998 onwards Costello made representations to the various Group Members on numerous occasions, both orally and in writing, that the refurbishment of the shopping centre was imminent (par 53). The occasions of the Costello representations are set out in par 54 thus:
(a) Oral representations to a meeting of tenants at the shopping centre on 14 September 1998;
(b) Oral representations to various individual Group Members in October 1998, October 1999 and January 2000;
(c) Correspondence to individual tenants towards the end of 1998, early 1999 and early 2000;
(d) Memorandum circulated to all tenants of the shopping centre dated 8 June 1999, 27 August 1999 and 9 November 1999;
(e) Individual conversations with the various Group Members;
(f) The display of an artist's impression of the refurbished shopping centre.
14 Express representations said to have been made on each of the occasions and in each of the ways identified in par 54 of the further substituted statement of claim are set out in pars 55 to 84 inclusive. In each case the same set of implied representations is relied upon. These are set out in par 57 in the following terms:
"a) that the Second Respondent had the reasonable expectation that the refurbishment would take place and there were no grounds to suspect that the refurbishment would not take place;
b) that Jodi Costello as a professional real estate agent, charged with the responsibility for the management of the shopping centre on behalf of the First Respondent had undertaken reasonable inquiries as to the veracity of the representations that were being made on behalf of the First Respondent prior to adopting the representations as her own;
c) that there were no circumstances then in existence that would require the oral representations to be qualified in any significant manner;
d) that the oral representations could be relied upon and were not mere statements of opinion or puffery."
15 In addition, there is an oral representation said to have been made in August 2000 by Costello to Mr McIntyre which concerned the security of his lease. This representation is outside the terms of the leave given on 8 April 2002. Particulars of falsity of the express and implied representations pleaded are set out. The particulars of falsity of the implied representations in par 57, which are asserted as implied representations arising out of subsequent communications, are set out in par 89. They are as follows:
"A. The Second Respondent did not have or ought not to have had the reasonable expectation that the refurbishment would take place as there were strong grounds to suspect that for financial and regulatory reasons, that the proposed refurbishment would not take place.
B. Jodi Costello as a professional real estate agent, charged with the responsibility for the management of the shopping centre on behalf of the First Respondent had not undertaken sufficient inquiries or any inquiries at all as to the veracity of the representations that were being made on behalf of the First Respondent prior to adopting the representations as her own.
C. There were circumstances then in existence that required the original representations to be qualified in a significant manner.
D. In light of the parlous state of the finances of the Ang Corporate Entities, the express representations by Jodi Costello as to the refurbishment of the shopping centre could not reasonably be relied upon and the representations were made and form part of a pattern of misleading and deceptive conduct embarked upon by the First Respondent and/or the Second Respondent as agents of the First Respondent to induce the members of the first Tenant Action Group to desist from taking further legal action and/or to induce the members of the first Tenant Action Group to continue trading at the shopping centre and thereby prevent the vacancy rate from increasing and/or in order to maintain or enhance the valuation of the shopping centre for purposes of obtaining financial accommodation by the Ang Corporate Entities from potential lenders.
E. Further and better particulars will be provided after discovery and/or the administration of interrogatories."
Particulars of falsity of the various express representations said to have been made by Jodi Costello on the numerous occasions pleaded are set out together with a repetition of the particulars of falsity of the implied representations said to have arisen on those occasions (pars 90 to 112 inclusive). There follows an allegation that Jodi Costello at all material times well knew or ought to have known that the representations regarding the refurbishment of the shopping centre earlier pleaded "… were unlikely to materialise in light of her knowledge of the financial and regulatory position of the First Respondent and the related Ang Corporate Entities". Particulars of knowledge are then set out in twenty two separate paragraphs designated A to V inclusive.
16 The next set of representations are those attributed to Johnny Ang, a director of Eastern Prosperity and said to have been made in March 2001 to the twelfth group member (par 114). Representations said to have been made were that the shopping centre would be refurbished and that the refurbishment would be completed by September 2001. Implied in this representation are said to be the assertions:
"a) that the First Respondent had the reasonable expectation that the refurbishment would take place and there were no grounds to suspect that the refurbishment would not take place;
b) that there were no circumstances then in existence that would require the express representations to be qualified in any significant manner;
c) that the express representations could be relied upon and were not mere statements of opinion or puffery."
The particulars of falsity of the express representations relied upon the non-fulfilment of the prediction that the shopping centre refurbishment would be completed by September 2001. Particulars of falsity of the implied representations are again that Eastern Prosperity could not have had the reasonable expectation that the refurbishment could take place as there were strong grounds to suspect that for financial and regulatory reasons the proposed refurbishment would not take place.
17 The further substituted statement of claim then turns to the question of inducement. It is alleged that as a result of all of the pleaded representations the various Group Members were induced into continuing to trade at the shopping centre in the reasonable expectation that its refurbishment would take place and have thereby suffered loss and damage (par 118). There is a repeated assertion of ongoing trading losses (par 119) and that the Group Members were induced into changing their positions by not taking legal action to enforce their rights against Eastern Prosperity, or selling their businesses or otherwise minimising their losses through ceasing to trade or pursuing alternative commercial opportunities etc (par 120). Their businesses are said to have been rendered valueless as a result of the failure by Eastern Prosperity to complete the refurbishment of the shopping centre (par 122). There is a general allegation that the conduct of Eastern Prosperity permitting its agents to make the various representations asserted was misleading or deceptive in contravention of the Trade Practices Act in light of the state of knowledge of the directors of Eastern Prosperity as to its financial and regulatory affairs. Particulars of the asserted knowledge are then set out in pars A to Q inclusive. There are further pleas about the failure of the directors of Eastern Prosperity and DBF to qualify or retract representations made by Costello. It is not clear what function this pleading plays as there is no action against the directors themselves.
18 The pleading then focuses on the position of the particular Group Members, the nature of the businesses that they were operating, repeats by reference to earlier pleading the representations said to have been made to them and their responses to those representations and their suffering of loss and damage as a result.