SA E.Med Pty Ltd v Calvary Health Care Adelaide Ltd

REASONS FOR JUDGMENT 1 This is a notice of motion by the applicant in this proceeding seeking an order under O 29 r 2 of the Federal Court Rules for the decision of questions separately from other questions in the proceeding. The respondent opposes the application and submits that all issues of law and fact should proceed to trial at the same time. 2 The applicant brings a proceeding against the respondent which relates to operation of an emergency medical clinic located at Calvary Wakefield Hospital at 300 Wakefield Street, Adelaide, in the State of South Australia. The applicant carries on the business of operating the said emergency medical clinic under the name 'Wakefield Emergency Centre'. The respondent is the lessee of the premises of the Calvary Wakefield Hospital and it carries on the business of operating a hospital on the land. 3 In 2006 the applicant and the respondent entered into a written agreement whereby the respondent granted the applicant the right to operate the Wakefield Emergency Centre. Various payments were to be made between the parties but it is not necessary to set out the details because the dispute between the parties concerns the period or term of the agreement. The written agreement appears to provide for terms of five years, subject to termination by either party by six (6) months' notice in writing to the other party prior to the expiration of the then current period of the engagement. The respondent purported to terminate the agreement by letter dated 6 December 2010 as from midnight on 30 June 2011. The applicant does not accept that the respondent had or has the right to terminate the agreement. It contends that shortly prior to the execution of the written contract in 2006 the respondent agreed that it would not give notice to terminate the term of the engagement of the applicant in accordance with the contract 'unless the respondent intended to close, and not to operate, or permit the operation of, the Emergency Centre, or another Emergency Centre, in the Hospital'. That statement was said by the applicant to be a term of the written agreement (or alternatively the written agreement should be rectified so as to include it) or a collateral contract or a representation. 4 In early March 2008 the parties discussed the carrying out by the applicant of improvements to the Emergency Centre. The applicant's case is that the respondent's servants and agents made statements to it which were to the effect that the Emergency Centre would remain open and that the written agreement would not be cancelled. On that basis the applicant carried out improvements costing it the sum of $621,672.62. The applicant's case is that the statements by the respondent constituted representations or a collateral contract. 5 The applicant's case in relation to the respondent's termination notice is that it is a breach of contract or collateral contract, a 'breach' of the representations and that an estoppel arises in relation to the termination notice. In addition, the applicant claims that the representations were misleading or deceptive conduct contrary to s 52 of the Trade Practices Act 1974 (Cth) ('Trade Practices Act') or that the respondent's conduct in giving the termination notice and in seeking to terminate the written agreement was unconscionable at law and in equity contrary to s 51AA and s 51AC of the Trade Practices Act (as it then was) and/or section 20 and section 22 of the Australian Consumer Law. 6 The loss and damage pleaded in the event that the agreement 'is terminated by the Termination Notice, or otherwise' is as follows: Particulars of Loss and Damage 48.1 The Applicant would not have incurred, and will loose [sic] the present benefit of, 48.1.1 the costs of the Emergency Centre Improvements referred to in paragraph 32, being $621,672.62; 48.1.2 the finance costs and interest to April 2011 referred to in paragraph 33, being $262,451.65, and further financial costs and interest; 48.1.3 the licence fees paid by the Applicant to the Respondent referred to in paragraph 34.1, being $696,674.00 in total to February 2011, and any further licence fees; 48.1.4 reduced management fees received by the Applicant from the Respondent, referred to in paragraph 34.2, being $22,479.00 per annum, and being in total for five years $112,395.00. 48.2 The Applicant will suffer loss of profits from the conduct of the business of the Applicant pursuant to the 2006 Contract for the period from 1 July 2011 to 30 June 2016 and/or the loss or the value of the business of the Applicant. 7 In its Application issued on 6 May 2011 the applicant claims twenty-two forms of specific relief being seventeen declarations, an order for rectification of the written agreement, two prohibitory injunctions and one mandatory injunction, and damages. The claim for damages is in the following terms: 22. Damages for: 22.1 breach of the 2006 Contract; and/or 22.2 breach of the 2006 Contract as amended on or about 20 March 2008; and/or 22.3 breach of the First Collateral Contract; and/or 22.4 breach of the Second Collateral Contract; and/or 22.5 unconscionable conduct of the Respondent; 22.6 conduct of the Respondent contrary to the Trade Practices Act 1974 (Cth) (as it then was) and/or the Competition and Consumer Act 2010 (Cth) ordered pursuant to Section 82 and Section 87 of the said Act. 8 On 14 June 2011 the applicant issued a notice of motion seeking an interlocutory injunction against the respondent. On 23 June 2011 I made the following order: 4. Subject to the applicant's undertaking to pay any damages to the respondent should the respondent suffer any by reason of the making of this order and subject to the payment of $400,000 into Court by 4 pm on Monday 27 June 2011 as security for the said undertaking, and subject to the applicant taking all reasonable steps to expedite a trial of the within proceedings, THE COURT ORDERS THAT until further order the respondent its directors, officers, servants, agents and contractors be restrained from taking any steps, whether directly or indirectly, to: a. give effect to, or enforce, its termination notice dated 6 December 2010 addressed to the applicant and purporting to terminate the contract between the parties made on or about 22 September 2006 ('2006 contract') and evidenced by a document entitled 'Agreement for the Operation of the Wakefield Emergency Centre'; b. exclude, prevent, restrict, hinder or impede the Applicant from: i. occupying the Wakefield Emergency Centre located at premises situated at 300 Wakefield Street, Adelaide, South Australia; ii. carrying on the business of providing emergency services pursuant to the 2006 contract. 9 I also made an order that the proceeding be listed for trial for five days from 29 August 2011. 10 The applicant's notice of motion formulates the order it seeks in the following terms: 2. The questions relevant to the relief sought in paragraphs 1-21 of the Application dated 6 May 2011 be tried and determined separately from, and prior to, the trial and determination of the questions relevant to the relief sought in paragraph 22 of the Application. 11 At the hearing of the motion, counsel for the applicant formulated the order the applicant seeks in the following terms: The question of the quantification of the loss or damage, if any, suffered by the applicant be determined separately and after the determination of other issues in the proceedings. 12 In broad terms, the applicant submitted that it was unlikely that the quantification of damages will ever arise; that the quantification of damages is complex; that there is little overlap in terms of the evidence to be led at the hearing between the issues raised by the claims for relief in paragraphs 1-21 inclusive of the Application and the applicant's damages claim, and that the applicant is working to a very tight timetable in preparing its case for trial. 13 In broad terms, the respondent submitted that even if the applicant succeeded in its claims the most likely remedy was damages or compensation; that on any view at least some evidence of loss or damage will have to be led at the 'first' trial; that there would be an overlap in terms of the evidence to be led at the hearing or at the very least it was not possible at this stage to say that there would be no overlap and that the applicant had not adduced any evidence that it could not be ready for trial on all issues by 29 August 2011. 14 There was no dispute between the parties about the relevant principles. The starting point is that ordinarily a proceeding proceeds to trial on all issues of fact and law. In Tepko Pty Ltd v Water Board (2001) 206 CLR 1, Kirby and Callinan JJ (at 55 [168]) warned of the dangers of a trial of the issues rather than cases in their totality. It seems well-established that whether an order should be made under O 29 r 2 depends on whether it is just and convenient to do so in the circumstances: Reading Australia Pty Ltd v Australian Mutual Provident Society (1999) 217 ALR 495 ("Reading") at 499 at [9] per Branson J; Bathox Australia Pty Limited v PJ SAS Trading Pty Limited [2004] FCA 1082; BlackRock Asset Management Australia Services Ltd v Waked [2011] FCA 272 at [7] per Perram J. 15 With respect, in Reading, Branson J gives a helpful summary of the relevant principles and in particular the factors which will often go to support or to tell against an order for the separate decision of a question under O 29 r 2 (at 497-499 [6]-[9]). 16 I have decided that an order under O 29 r 2 should not be made. In reaching that decision I am influenced primarily by the following four matters. 17 First, I do not think it can be said that it is unlikely that the issue proposed to be hived off will need to come to trial. The applicant's submission was that if it was successful in its claims it was likely to obtain an injunction and if it was unsuccessful then that would be the end of the matter. At this stage, I will not express a view on likely remedies if the applicant is successful. It is sufficient for me to say that I do not think it can be said it is unlikely damages will need to come to trial and that therefore this supports the applicant's case for an order under O 29 r 2. 18 Secondly, there is no clear division in this case between liability and damages. Some aspects of damages such as the cost of the improvements and the profits being made at the time of the representations in 2008 seem to be inextricably linked with the applicant's liability case, including the making of the representations, reliance, detriment and the estoppel case. It seemed to me that the gravamen of the applicant's application was to postpone the issues raised in paragraph 48.2 of the statement of claim. Furthermore, there is force in the respondent's submission that the extent of the applicant's loss or damage will or may be relevant to whether relief in the form of injunctions is granted. 19 Thirdly, it is not possible at this stage to determine the extent of any overlap between the issues and, importantly, the possibility of witnesses whose credibility may be challenged, having to give evidence twice. That may become clearer as the matter progresses towards trial, but at this stage it has to be said that there is a distinct risk of that occurring. 20 Finally, although I am prepared to infer that both parties will have to work hard to be ready for trial by 29 August 2011, the respondent is correct in its submission that there is no evidence that the applicant cannot be ready by 29 August 2011. 21 For these reasons, I dismiss the applicant's notice of motion dated 1 July 2011. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.