PPK Willoughby Pty Ltd v Roads and Maritime Services

PPK Willoughby Pty Ltd v Roads and Maritime Services - [2014] NSWSC 407 - NSWSC 2013 case summary — Zoe

[2]

Judgment 1This decision involves the determination of two interlocutory applications. The first in time was filed by the plaintiff on 2nd November 2012 seeking leave pursuant to s 64 Civil Procedure Act 2005 (NSW) to amend its Statement of Claim to conform with Annexure "B" to the affidavit of its solicitor, Nicholas Kallipolitis, sworn the same day. The second defendant, being the Roads and Maritime Services and the third defendant being the relevant Minister of the Crown, whom together I will refer to as the Crown defendants, seek summary dismissal, or alternatively the striking out, of parts of the plaintiff's claims by motion dated 23rd November 2012. 2The litigation arises out of the sale of certain land in Willoughby by the Crown defendants to the plaintiff. The properties comprise a number of parcels of land in respect of which the third defendant's statutory predecessor was the registered proprietor and other land in respect of which the Minister was the registered proprietor. The Crown defendants say that the land was "surplus to government requirements" and therefore put to tender. The plaintiff expressed interest on 9th December 2009 and on 21st December 2009 the plaintiff and the Crown defendants entered into a contract for the sale of the land, settlement occurring on 20th January 2010. 3By reference to the statement of claim filed on the 23rd of May 2012, and the proposed amended statement of claim, the plaintiff's case involves claims against the Crown defendants for damages for losses suffered: because the Crown defendants engaged in misleading and deceptive conduct in relation to the sale in contravention of federal and state consumer protection legislation; for breach of a stipulation in a "pre-tender contract" that the Crown defendants would observe requirements of good faith in their dealings with the plaintiff; for breach of a delictual duty to exercise reasonable care in the Crown's conduct of the transaction to avoid the risk of the plaintiff suffering economic loss. There is also a claim for equitable compensation to make good an estoppel by representation.

[5]

The argument of the Crown defendants - The main points 10The Crown defendants say that it is first necessary to identify the applicable law. On my reading of them, both the Statement of Claim and the Amended Statement of Claim plead each of the Trade Practices Act 1974 (Cth) (TPA) and schedule 2 of the Competition and Consumer Act 2010 (Cth) being the Australian Consumer Law (ACL). The Crown defendants say that by dint of cl. 6 of Schedule 7 of the Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010 (Cth), the TPA provisions continue to apply after the commencement of the ACL in relation to acts or omissions (conduct) that occurred before 1st January 2011. 11Focusing, therefore, on the provisions of TPA, the Crown defendants say that the legislation does not apply to them as they are to be regarded as the Crown in the right of the State of New South Wales. They point out that by force of s 2B TPA introduced in 1996 the application of the federal legislation to the Crown in the right of a State is limited. 12The federal legislation only binds the Crown on the right of the States "so far as the Crown carries on a business". These are the same words of limitation in relation to the Commonwealth in s 2A. The same words of limitation appear in s 3 Fair Trading Act 1987 (NSW) (FTA) as it stood just before the ACL came into force. 13The Crown defendants relied upon a number of authorities, especially the decision of Emmett J (as his Honour then was) in JS McMillan Pty Ltd & Ors v Commonwealth of Australia (1997) 77 FCR 337 at 356-7. Reliance was also placed upon the application of this reasoning to FTA by Young CJ in Eq. (as his Honour then was) in State Transit Authority v Australian Jockey Club [2003] NSWSC 726; 11 BPR 21, 107 at [37] - [39]. The essential contention was that in selling off capital assets, which are surplus to current requirements, the Crown does not carry on a business. 14The Crown defendants also argue that in many material respects, the proposed amended statement of claim does not comply with the Rules and is, in the technical sense, embarrassing. It is argued that the averment supporting the misleading and deceptive conduct claims are defective because not all material facts are averred necessary to demonstrate the Crown defendants are carrying on a business; there is no clear identification of the conduct said to be misleading or deceptive; the causation of damage allegations are too general, pleading wide concepts like "reliance" and the "objectionable formula", "as a result of", rather than identifying the relevant material facts; the averments in relation to a "pre-tender contract" fail to plead the material facts establishing the contract and its essential terms; it is said further, that the pre-tender contract case flies in the face of the express terms of the tender conditions and cannot be maintained; the vital features of a claim in negligence for pure economic loss, including vulnerability, are not pleaded, either at all, or with sufficient particularity to enable the Crown defendants to know the case they are required to meet; and there has been a failure to plead all of the essential elements of a promissory estoppel or estoppel by representation.

[6]

The main arguments for the plaintiff 15The plaintiff does not dispute that the Crown defendants each represent the Crown and are to be equated with the Crown for the purpose of the TPA, FTA, and if applicable, the ACL. The plaintiff accepts that the application of this legislation to the Crown is limited in the manner contended for by the Crown defendants, except that it argues that the statements of Emmett J in McMillan, relied upon by the Crown defendants are statements of fact, not law. The question of whether the State carries on a business is to be determined at a trial, after all relevant evidence is received and argument advanced, and not in a summary judgment application. 16The plaintiff submits that it is not certain law that the ACL does not apply to this case. The transitional provisions of the Trade Practices Amendment (Australian Consumer Law) Act (No. 2) 2010, substantially found in Cl 6 of Schedule 7 make the following provision: The Trade Practices Act 1974 as in force immediately before the commencement of this item continues to apply, after that commencement, in relation to acts or omissions that occurred before that commencement. 17The ACL commenced on the 1st January 2011. The plaintiffs acknowledge that the contract for the sale of land settled on 20th January 2010, nearly 12 months before its commencement, but the plaintiff points out that a cause of action is established, not when the breach occurs, but when the loss or damage is suffered: Wardley Australia Limited v Western Australia (1992) 175 CLR 514 at 525. This is a question of fact to be determined in all the circumstances of the case at the Trial, not at an interlocutory stage of the proceedings : Wardley at 535. Depending on the evidence, this date may well be after the commencement of the ACL. 18The plaintiffs argued that the functions of the Roads and Traffic Authority (now Roads and Maritime Services) under the Roads Act 1993 (NSW) extend to acquiring land (s 177); owning land and dedicating it as a public road (s 10); dealing with land (ss 157 and 161); and disposing of such land once it ceases to be a public road (s 42). The Minister has functions in relation to the acquisition and sale of land under ss 9 and 11 Environmental Planning and Assessment Act 1979 (NSW). The question of whether the Crown defendants carried on the business of buying and selling land, including the land the subject of the proceedings, can only be determined on the evidence at a Trial. 19The plaintiff joined issue with the Crown defendants in relation to the alleged defects in the pleadings. The plaintiff argued that leave should be given to file and serve the amended statement of claim and directions given in relation to the filing of a defence.

[8]

Summary judgment on the misleading and deceptive conduct claim 22In McMillan, Emmett J (at 356 - 357) pointed out that the words "in so far as (the Crown) carries on a business" were words of limitation of the extent to which the Crown (here in the right of the State) would be bound by the TPA. By parity of reasoning, this applies to the FTA, by force of its adoption J by Young CJ in Eq. in State Transit Authority. 23At page 356 of McMillan Emmett J said: I consider that that expression signifies that the Commonwealth [Crown] is to be bound only where the conduct complained of is engaged in, in the course of E carrying on the business. In other words, persons dealing with the Commonwealth [Crown] in relation to the actual conduct of a business will have the same protection as when dealing with a private trader who is carrying on such a business but will not have protection when entering into other dealings with the Commonwealth [Crown]. 24The McMillan case concerned the sale of assets of the Australian Government Publishing Service by the Commonwealth Department of Administrative Services. Acknowledging that some entities might engage in the business of selling capital assets, his Honour found that the sale in that case "had nothing to do with the day to day operations "of the" Australian Government Publishing Service. It was a "one-off" decision to cease engaging in printing activities; to dispose of the plant and equipment relevant to those activities; to undertake not to engage in them in the future; and inviting private enterprise "to take on those activities". 25His Honour's decision was purely factual. It did not establish that as a proposition of law that whenever a government department sells off assets that might be "surplus to its requirements" TPA, or FTA, cannot apply. To adopt the language of a former age, his Honour's finding in that case does not provide the Crown defendants with a demurrer point in this case. 26On the evidence read by the Crown defendants, it seems apparent that the activities of the Crown defendants in the present case were not carried out "on a one-off basis". It is likely at the Trial that there will be evidence that the Crown defendants here, especially the Roads and Maritime Services, buy and sell land on an ongoing basis. I cannot say that the case that the Crown defendants here carry on the business of buying and selling land is so clearly untenable that the case should not be permitted to go to Trial. Rather the plaintiff should have the opportunity of making good its case at trial when relevant evidence gathered in accordance with the usual interlocutory procedures of the Court will be available. 27It seems to me that the Crown defendants are most probably correct in their arguments about the identification of the applicable law. The TPA continues to apply in relation to acts or omissions that occurred before the commencement of the ACL. Cl 6 says nothing about the accrual of causes of action. Indeed, Cl 6(2) makes clear that "action may be taken ... in relation to [pre-commencement] acts or omissions". This expression seems to contemplate the possibility of the accrual of causes of action before and after 1st January 2010 in relation to acts or omissions occurring before that date. 28However, as strong as the contention of the Crown defendants appears to be on this issue, the identification of the applicable law can conveniently be made at the trial when all the facts are established. Allowing the plaintiff to rely on the ACL (as incorporated as State law by FTA), at least in the alternative, will in my view, not lead to any particular confusion nor to any significant waste of time or costs. I have said at least "in the alternative" because as I will make clear below, I am of the view that the Crown defendants have made good most of their points in relation to the form of the pleading, even in the proposed Amended Statement of Claim.

[9]

Summary judgment - the pre-tender contract 29The express provisions of the tender conditions relied upon by the Crown defendants may well present a formidable obstacle to the plaintiff establishing a "pre-tender contract". But the relevant principle seems to be that expressed by Gallen J in Pratt Contractors Ltd v Palmerston North City Council [1995] 1 NZLR 469 at 478-9 in the following terms: Authority makes it clear that the starting point is that a simple uncomplicated request for bids will generally be no more than an invitation to treat, not giving rise to contractual obligations, although it may give rise to obligations to act fairly. On the other hand, it is obviously open to persons to enter into a preliminary contract with the expectation that it will lead in defined circumstances to a second or principal contract, along the lines of the analysis in the Canadian cases. Whether or not the particular case falls into one category or the other will depend upon a consideration of the circumstances and the obligations expressly or impliedly accepted. 30This statement of principle was accepted by Finn J in Hughes Aircraft Systems International v Air Services Australia (1997) 76 FCR 151 at 185; by McGrath J in Transit New Zealand v Pratt Contractors Ltd [2002] 2 NZLR 313 (referred to as a "process contract" at [77]); and by Adams J in Cubic Transport Systems Inc v State of New South Wales [2002] NSWSC 656 at [44]. The reference by Gallen J to "a consideration of the circumstances and the obligations expressly or impliedly accepted" bespeaks a question of fact to be determined at a trial fixed after the usual interlocutory steps for the purpose of gathering evidence and refining issues have been engaged in and all the evidence and arguments of each party have been made at a full hearing. That is to say, his Honour's expression is apt to apply to a triable issue of fact. The express tender conditions referred to by the Crown defendants do not raise a legal bar to the maintenance of a case in this regard. 31The Crown defendants have not made out a case for summary judgment and I will deal with the issues in relation to the adequacy of the plaintiff's pleading.

[10]

The strike out application 32It is trite to observe that pleadings are of fundamental importance in civil litigation. It's not necessary in the present case for me to review the relevant principles of law concerning the adequacy of pleadings. They have been fully discussed in many cases including the decision of Johnson J in McGuirk v University of New South Wales [2009] NSWSC 1424 at [21] to [35]. I have borne these principles in mind in approaching this aspect of the decision, especially the basic rule expressed by Mason CJ and Gaudron J in Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd (1990) 169 CLR 279 at 286: The function of pleadings is to state with sufficient clarity the case that must be met... In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision. The rule that, in general, relief is confined to that available on the pleadings secures a party's right to this basic requirement of procedural fairness. [citations omitted] (See also Dare v Pulham (1982) 148 CLR 658 at 664.) 33The basic rule as to form is provided by Rule 14.7 Uniform Civil Procedure Rules, that is, that a "pleading must contain only a summary of the material facts on which the party relies, and not the evidence by which those facts are to be proved". By Rule 14.14, the plaintiff must plead any matter that if not pleaded specifically may take the defendant by surprise. 34As Hodgson JA pointed out in Kirby v Sanderson Motors Pty Ltd (2001) 54 NSWLR 135, concerning the previous rules ([20]-[21]): It might appear that these rules do not require that causes of action be stated in pleadings: the requirement is to have a statement of material facts, and indeed to have only such a statement. However, in my opinion - (1) "Material" means material to the claim, that is, to the cause orcauses of action which are relied on. (2) The requirement of a statement of material facts does not exclude the allegation of legal categories, such as duty of care, fiduciary duty, trust and contract. (3) The general requirement to avoid surprise means that material facts must be stated in such a way that a defendant can understand the materiality of the facts, that is, how they are material to a cause of action. Accordingly, even on the basis of these rules which are common to the District Court and the Supreme Court, I do not take cases such as Konskier as establishing that there is never any requirement to do more than set out facts. Where there is a danger of surprise, which arises particularly where there is lack of precision and clarity in the pleading, it may well be appropriate torequire a plaintiff, either in a statement of claim or in particulars, to explicitly relate the facts it pleads to specified causes of action. This statement of principle has continuing vigour under the Uniform Civil Procedure Rules. It may be taken as indicating that where, on the basis of the same facts, a number of different causes of action are said to arise, there may be an obligation on the part of the party whose pleading is called into question to demonstrate that it is clearly organised so that those matters going to each relevant legal category are clearly identified. This may extend to showing the differing application to various causes of action of the facts common to some or all of them. Repetition may be called. The responding party ought not be left in a position where it must guess about the legal significance of an averment, or particular. Generally, material facts should be pleaded as opposed to merely included as a required particular of another material fact. 35As Johnson J pointed out in McGuirk at [35]: It is not the function of the court to draw or settle a party's pleading. The court is confined to the function of ensuring that pleadings are within the rules and fulfil the functions for which they exist. Objectionable matter that is so mingled with other matter may lead to the conclusion that the pleading as a whole would tend to embarrass the fair trial of the action [and] ought be struck out [citations omitted] 36I appreciate that practical difficulties will sometimes arise where, as here, a need arises to make many amendments to a pleading which has been assessed as insufficient by a party's legal advisors. The attempt to salvage the existing pleading may compound the problems. Sometimes it may be better simply to start again, although the rules do not accommodate such an approach readily. As I have said, a single fact may be material to more than one cause of action or category of claim, but its materiality may differ from category to category. The differences should be made plain. 37Bearing these matters in mind I will deal with the various issues. I have found it useful to adopt the template of the plaintiff's written submissions in this regard.

[13]

Causation and damage allegations 43The Crown defendants argue that the averments as to causation and damage are too wide and vague, relying upon "the objectionable formula as a result of" in the damages pleading at [52] of the amended statement of claim. The plaintiff counters by pointing to the averments that the Crown defendants induced the plaintiffs to rely upon the representations and they did so at [22], [24], [35] and [36]. 44The central averment is at [52], which is in the following terms: As a result of the RTA's and the Minister's misleading or deceptive conduct, breach of their duty of care and breach of contract, PPK has suffered loss and damage. Particulars follow, which adumbrate in very general terms what might be referred to as the heads of damage which will be relied upon at the hearing but without giving any idea of the content or magnitude of them. I accept quantification will depend upon the taking of further interlocutory steps including the preparation of expert reports. 45One of the difficulties is that very general words are used to connect the wrongful conduct of the Crown defendants to the loss or damage suffered by the plaintiff in respect of three separate causes of action where the requirements for establishing legal causation are not identical. No mention is made of actionable estoppel. 46Guidance as to what is required is to be found in Bond Corp Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 215, per French J (as his Honour then was). One of the points his Honour makes at 223 is that particulars "cannot supply the deficiency in pleadings". His Honour stated that it is necessary to set out the "facts and circumstances which would support by reasonable inference that the conduct complained of and the damage alleged stood to each other in the relation of cause and effect" (page 222). I would add, where as here, the same facts are said to support the causation element of four separate causes of action, if one includes the claim for equitable damages, then in each case it should be shown what the material facts are that the plaintiff relies upon to demonstrate the necessary degree of causation required in respect of each claim individually. Neither the current pleading, nor the proposed amendment, has achieved this.

[14]

Negligence 47The plaintiff says that it has discharged its obligations to plead its case in negligence by [20], [22], [24], [28(a)], [9], [30], [37(a)] and [38] of its proposed amended statement of claim. 48One of the difficulties with this approach is that paragraph [20] is an averment of what is referred to as the first representation, particulars of this follow. The knowledge attributed to the defendants for this purpose might also inform questions of reasonable foreseeability which may be satisfied by actual, as well as constructive, knowledge (knew or ought to have known) but negligence is not the context of this pleading. At [22] there is an averment that the Crown defendants induced the plaintiff to rely upon the representations made, and [24] sets out an allegation of reliance. Again, these matters are averred in a context different from negligence, although the same underlying facts may have relevance for both purposes. But the Crown defendants should not be left to resolve the resulting ambiguity. It is for the plaintiff to make its case plain. 49The first "clear' reference to matters identifiable as facts material to a case in negligence can be found at [28] and [29]. [28] contains averments of assumption of responsibility and the foreseeability of reliance, not "known reliance", the usual formula. [29] avers that on the basis of those matters, the Crown defendants owed a duty of care. But the duty is not expressed in the language of an obligation to exercise reasonable care, rather it's said to be a duty "not to misrepresent". The risk of injury is not identified. Presumably it is a risk of the plaintiff suffering pure economic loss. 50In [30] and [38] there is a bare assertion that by making the three representations relied upon, the Crown defendants "breached their duty of care", but no conventional provision of particulars of negligence by reference to concepts which underpin or inform the law of negligence, or at all, follows. There is no clear identification of the specific act or omission, or acts or omissions, relied upon as constituting negligence. Again at [37] there is an averment of assumption of responsibility and the foreseeability of economic loss and at [38(c)] a further bare allegation of breach, unsupported by particulars. 51The Crown defendants point out that there is no express averment of vulnerability in the sense discussed in Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515 at 530 [23], and this is so. It could be said that this is implicit in the averments of assumption of responsibility and foreseeable reliance (rather than known reliance): Woolcock at 531 [24]. But good pleading practice in commercial matters in New South Wales requires an express averment of vulnerability in claims for damages for pure economic loss arising in negligence: CJD Equipment v A&C Constructions [2009] NSWSC 1362 at [245] per McDougall J; and Brambles Australia Limited Trading As Chep Australia v Tatale Pty Limited and Anor [2006] NSWSC 204 at [37] - [39] per Bergin J (as her Honour then was). 52In my judgment, the pleading in relation to the negligence claim is inadequate. It suffers from interleafing the facts relied upon as giving rise to this cause of action with the other categories of claim with insufficient differentiation by reference to the essential ingredients of each, different cause of action. The required particulars are virtually non-existent.

[16]

Conclusions about the pleadings 57The Crown defendants have made good virtually all of their complaints about the adequacy of the pleadings. As I have said more than once, the problem with the pleading springs from the attempt to "put new wine into old wineskins": Matthew 9:17. The consequences are well known: "the wineskins break, the wine is spilled and the wineskins are ruined". In a pleading sense, that is what seems to have happened here. Better, I think to "put new wine in new wineskins, and both are preserved". 58Rather than striking out matters piecemeal and running the risk of inviting the further compounding of the problem, I think the better approach is to strike out the whole of the statement of claim so far as it relates to the Crown defendants, refuse leave to rely upon the proposed amended statement of claim, (Annexure F to the affidavit of Nicholas Kallipolotis sworn on 2nd November 2012), but grant leave to the plaintiff to replead its case against the Crown defendants in respect of each alternative cause of action it seeks to raise of misleading and deceptive conduct; for damages in negligence for pure economic loss; for damages for breach of the pre-tender contract; for actionable estoppel by representation; and no others. I will make orders in that regard. 59The Crown defendants have failed in their attempt to have the proceedings summarily dismissed. And, although the plaintiff has obtained leave to re-plead, that leave has not been granted in the form it proposed. It strongly resisted the attempts of the Crown defendants to strike out the pleading which I have now held to be defective. In these circumstances, I am of the view that the costs of each party should be costs in the cause as each as had a measure of success and failure. But as I have not heard the parties on costs, I will grant liberty to apply in respect of this order. 60My orders are: (1)Refuse summary dismissal in favour of the Crown defendants; (2)Under Rule 14.28(1)(c) strike out the whole of the pleadings and particulars appearing in the statement of claim filed on 25th May 2012 so far as it relates to a claim against the State of New South Wales or any manifestation of the Crown in the right of New South Wales; (3)Grant leave to the plaintiff to file an amended statement of claim within 28 days of today, naming Roads and Maritime Services and the Minister administering the Environmental Planning and Assessment Act as defendants in addition to the partners of HWL Ebsworths, and repleading its claims for damages, or equitable compensation, against the additional defendants for misleading and deceptive conduct, in contract, for negligence, and actionable estoppel by representation in accordance with the rules; (4)The notice of motion of 2nd November 2012 is otherwise dismissed; (5)The notice of motion of 23rd November 2012 is otherwise dismissed; (6)Costs be costs in the cause; (7)The parties to have liberty to apply on three days written notice to the Associate to Campbell J in respect of the costs order. (8)List for directions before the Common Law Case Management Registrar on Monday 12th May 2014 at 9 am.

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (17 paragraphs)

Parties

Legislation Cited (8)

Cases Cited (16)