PPK Willoughby Pty Ltd v Baird

Procedural Background 4In a judgment of 9 April 2014, Campbell JA, for the reasons which he then expressed, refused summary dismissal in favour of the State interests and struck out, under r 14.28(1)(c) of the Uniform Civil Procedure Rules 2005, the whole of the pleadings as against the State interests. His Honour's reasons are to be found in PPK Willoughby Pty Ltd v Roads and Maritime Services [2014] NSWSC 407. I will not here repeat the history of the proceedings which is there set out, nor the essence of what his Honour said.

The Crown "carries on a business" 5The proposed pleading asserts a cause of action against the State interests that they, or each of them, made three representations in the course of selling land at Willoughby by tender, which representations are said to be misleading or deceptive or likely to be misleading or deceptive. In particular, the plaintiff alleges that in making those representations, the State interests are in breach of s 42 of the Fair Trading Act 1987. 6The State interests accept that, depending upon the particular and limited circumstances, they may be subject to the Fair Trading Act, but submit that it is essential, for those circumstances to be properly pleaded, and proved. Those limited circumstances are that at the time the representations were made the State interests were carrying on a business: see s 3 Fair Trading Act. 7Section 3 of the Fair Trading Act makes express provision as to the extent to which the Act binds the Crown. Here there is no dispute that the State interests which are sued represent the Crown in the right of the State of New South Wales. Section 3 says, relevantly: "(1) This Act binds the Crown in right of the State in so far as the Crown in right of the State carries on a business, whether directly or by an authority of the State." 8The State interests submit that the pleading does not adequately plead the material facts and circumstances which enable the plaintiff to prove, and enable them to understand, how it is alleged that either or both of the State interests were carrying on business and what that business was. 9The question of the identification of the nature and essence of an undertaking of a government authority as one in which it does "carry on business" has been extensively considered by reference to an identical section of the Trade Practices Act 1974, and by reference to the undertakings and activities of the Commonwealth government. However, the principles are equally applicable to the application of the Fair Trading Act. 10In Village Building Company Ltd v Canberra International Airport Pty Ltd [2004] FCA 133, (2004) 134 FCR 422, Finn J at [90] identified a number of features relevant to whether a government is carrying on a business. He said that in determining this question, a court first needs to determine whether the ambit of the activities relied upon include whether the impugned conduct was engaged in, as a part of, or in the course of, carrying on a business. He said that the phrase "the carrying on of a business" refers to activities undertaken in a commercial enterprise or as a going concern. He further notes that the term "business" "ordinarily connotes activities engaged in for the purpose of profit on a continuous and repetitive basis" although, by reason of the definition in the Act, the business does not have to be carried on for a profit. His Honour goes on to note at [90(3)] this: "However, this does not mean that all non-profit activities constitute a business or that the existence or absence of a profit-making purpose is not a relevant factor in determining whether there is a business activity. Equally, the provision of services for remuneration may constitute the carrying on of a business irrespective of the commercial adequacy of the remuneration." (references omitted) 11Finn J also points to the fact that features such as repetition, systems and regularity are all necessary indicia of carrying on a business, but that they are not sufficient on their own to compel a conclusion that such is the case. 12Importantly at [90(5)], his Honour says: "A business activity is an activity which takes place in a business context and which of itself, bears a business character...an activity is unlikely to be characterised as having a business character, or to take place in a commercial context, where it involves the carrying out of a regulatory or governmental function in the interests of the community or the performance of a statutory duty in respect of which fees are charged."(references omitted) 13Very recently, the Court of Appeal of the Supreme Court of Victoria considered a similar issue Murphy v State of Victoria & Anor [2014] VSCA 238 at [46]. I do not understand anything which is there said to differ in substance or effect from what Finn J has written. I accept that the word "business" and the concept of carrying on a business is a phrase which takes its meaning from the particular context in which it appears and the factual circumstances relevant to it. 14I also accept as Sheller JA said in New South Wales v RT and YE Falls Investments Pty Limited [2003] NSWCA 54; (2003) 57 NSWLR 1 at [47] that the concept of the Crown in carrying on a business is a difficult one in borderline cases, and that ultimately a final decision on that question, may tend to be more intuitive than the product of a process of reasoning. However, I do note that Sheller JA also noted in that paragraph that it was necessary that the business which it was alleged the Crown was carrying on, had "the characteristic of carrying on a business". 15I have in very short terms described the statements of principle necessary to establish whether the State interests or either or both of them were carrying on business. I have done this so as to consider, with care, whether the pleading which is presently proposed to be filed adequately pleads the cause of action under the Fair Trading Act, and, as well, all of the material facts and circumstances necessary to give rise to that cause of action.

Proposed Pleading 16The pleading against each of the State interests follows a similar form and there is no reason in delivering this judgment to differentiate between either of the State interests. For present purposes, I will address the pleadings so far as it is alleged that the RMS is liable. In so doing, I should comment that whilst the RMS is the party sued, that is because it is the legal successor to the Roads and Traffic Authority ("RTA") which was, at the relevant time, the authority whose conduct is in question. 17Paragraphs 4, 5 and 6 are the relevant paragraphs so far as the RTA is concerned. They are in the following form: "4. At all material times, the RTA has been conferred with functions under the Roads Act 1993 (NSW) including the creation and maintenance of public roads. 5. At all material times, the RTA has carried on the following activities under the Roads Act on a regular and systematic basis for the purposes of performing its functions: a.acquiring land for the purposes of creating public roads; b.developing land to create and improve public roads; and c.disposing of land once it is no longer required to be used for creating a public road or has ceased to be a public road. ... 6. By virtue of conducting the activities pleaded in paragraph 5 of the Amended Statement of Claim on a regular and systematic basis, the RTA has at all material times carried on a business." 18What is to be observed from these paragraphs is that the pleader, who I note is neither of the senior or junior counsel who appear on this Motion, identifies the fact that the RTA has been conferred with particular statutory functions and then alleges that for the purpose of performing those functions the RTA has carried out activities on a regular and systematic basis. 19It is then pleaded, by merely the fact that those activities have been carried out on a regular and systematic basis, that the RTA has at all material times carried on a business. It seems to me that there are a number of difficulties with this pleading. The first is that nowhere in that pleading does the pleader identify what the business is, which the RTA is engaged in. All that is pleaded is that the RTA is carrying out its statutory function. Of itself that is not, and is not capable of being, a business. That is because the statutory functions of the RTA under the Roads Act 1993 are activities that might properly be called typical governmental functions. 20Senior counsel for the plaintiff has informed the Court that it will be the plaintiff's submission at trial, that the business in which the RTA was engaged at the relevant time, can be described in this way: "The business of acquisition, development and disposal of land, including the disposal of land for development by others for the purpose of generating revenue to carry out the activities of the RTA." 21A business described in such a way, and pleaded as such, may sufficiently identify the business in which the RTA was engaged. It is unnecessary for me to determine that question. 22But, even if so described, there would need to be pleaded as well such material facts as are relied upon to give rise to the commercial characteristics or, alternatively, the characteristics of carrying on a business that fall within such a description. Those material facts may not be many. However, they do need, in my view, to be identified and specifically pleaded. 23What is proposed in this pleading is an asserted conclusion based only on activities carried out on a regular and systematic basis. This is, as senior counsel for the plaintiff accepts, a necessary but not sufficient basis for the existence of a business being carried on by the Crown. 24In short, it is my view that if the plaintiff wishes to rely upon a cause of action under the Fair Trading Act what is necessary is that there be a clear identification or nomination of the business in which each of the State interests is engaged. Next, there needs to be a pleading of the material facts and circumstances, if there be any, which demonstrate that at the relevant times, and for the relevant purpose, that business was being engaged in. Thirdly, there needs to be a pleading linking the carrying on of the business with the particular impugned conduct upon which the plaintiff relies, here, the three representations which are alleged. 25I do not regard these essentials of pleading to be technical, nor do I regard them as being unduly demanding. After all, the pleader is not required in their pleading to prove their case; merely to indicate, in accordance with the many authorities on pleading what their case is. In my view, the pleading which is proposed to be filed does not address those matters for either of the State interests and, accordingly, I would not allow this pleading to be filed.

Proposed Pleading - other alleged deficiencies 26The State interests submitted that with respect to two other parts of the proposed Further Amended Statement of Claim, namely the pleading of breach of duty and the pleading of causation, the pleading was inadequate. 27If they were the only bases of complaint about this pleading, I would have permitted the pleading to be filed. However, it is plain from the of submissions that if the plaintiff is to be allowed to re-plead, then senior counsel will give consideration to the issues raised in respect of those paragraphs and the submissions made by the State interests with respect to those paragraphs. I need say nothing further about that.

Discretion 28The State interests submit that further leave should not be granted to the plaintiff to reformulate their pleadings. The State interests point, as a matter of history, to the fact that the first statement of claim was filed on 23 May 2012; that there were then three proposed amended statements of claim; the final of which was considered by Campbell J in his judgment delivered on 9 April 2014; that pursuant to leave granted by Campbell J, an Amended Statement of Claim was filed on 6 June 2014; and that this Court has dealt with a proposed Amended Statement of Claim dated 9 July 2014. Putting it shortly and concisely, senior counsel for the State interest says "enough is enough". 29In short, he says that if, by now, the plaintiff cannot adequately formulate its causes of action in the proposed Amended Statement of Claim, then the Court ought to be persuaded that that the plaintiff does not have a cause of action and, putting it colloquially, they should "pack up their bags and go home". Putting it slightly more formally, the State interests contend that in the proper exercise of my discretion under s 56 of the Civil Procedure Act 2005, and taking into account the provisions of s 57 and s 58 of the Civil Procedure Act, the overriding purpose is not served by permitting the plaintiff to have an opportunity to file a Further Amended Statement of Claim. 30I accept that there may be some prejudice to the State interests by the filing of the Further Amended Statement of Claim. First, there will be additional legal costs. Secondly, the State interests continue to be exposed to litigation with respect to a transaction involving the sale of land, which occurred at the end of 2009 and the beginning of 2010. The State interests complain that the more time passes, the more difficult will be their task in defending the proceedings. I am not satisfied that these matters of cost and delay and the prejudice to which the State interests rightly point, have by this time reached such a stage as would justify the Court denying relief to the plaintiff. 31The plaintiff is making a claim for pure economic loss. A claim for pure economic loss against government authorities and State interests can be difficult to formulate. That is not to say that such a claim may not be proved but they can be difficult to plead, and it is important for the State interests and the Court that the pleadings be clear and cover all of the essential elements. I am not satisfied, accordingly, that in light of the complexity of the nature of the claims being pleaded and what is proposed, that is the delay and history of previous proposed pleadings are sufficient to debar the plaintiff from the relief which it seeks. 32The plaintiff's Motion sought that leave be granted to file the proposed Further Amended Statement of Claim in the form exhibited to the affidavit of Ms Morgan sworn 14 August 2014. I am not prepared to grant such leave. 33However, it seems to me that the appropriate course in light of what I have said in this judgment, and in light of the helpful approach adopted by senior counsel for the plaintiff, is simply to stand over the hearing of all Motions, part-heard before me for an appropriate period of time, and to make directions with respect to the delivery of a further proposed Amended Statement of Claim. In making those orders today I would reserve all issues relating to costs for further submission at a later point in time. 34I make the formal orders: (1)I stand over the Notices of Motion of 14 August 2014 and 20 August 2014 for further directions to 9.30am, 13 February 2015. (2)I order that the plaintiff is to serve on the solicitors for the defendants a proposed Further Amended Statement of Claim by 4pm, 21 November 2014. (3)I order the defendants to seek any further particulars of that proposed pleading and to set out any reasons why the form of the pleading is inadequate by letter addressed to the defendants by 4pm, 12 December 2014. (4)I order the plaintiffs to respond to such letter and provide such particulars as are reasonably requested by 4pm, 23 January 2015. (5)I reserve all questions of costs. (6)I grant the parties liberty to apply on three days' notice.

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: 05 November 2014