Exchanges P/L v State of New South Wales
[2000] NSWSC 59
•22 February 2000
CITATION: Exchanges P/L v State of New South Wales [2000] NSWSC 59 CURRENT JURISDICTION: Common Law FILE NUMBER(S): SC 20488/98 HEARING DATE(S): 2 February 2000 JUDGMENT DATE: 22 February 2000 PARTIES :
Exchanges Pty Limited
(First Plaintiff)Irraydda Pty Limited
State of New South Wales
(Second Plaintiff)
(Defendant)JUDGMENT OF: Master Harrison
COUNSEL : Mr R J Darke
Mr M J Leeming
(Plaintiffs)
(Defendant)SOLICITORS: Blake Dawson Waldron
Ms R Fitzhardinge
(Plaintiffs)
Legal Services Branch
Department of Urban Affairs & Planning
(Defendant)CATCHWORDS: Strike out paragraphs statement of claim LEGISLATION CITED: Supreme Court Rules CASES CITED: Air Services Australia v Zarb (NSWSC unreported, 26 August 1998)
Dey v Victoria Railway Commissioners (1948-49) 78 CLR
General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125
Webster & Anor v Lampard (1993) 177 CLR 598DECISION: See para 25
9
THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISIONMASTER HARRISON
TUESDAY, 22 FEBRUARY 2000
20488/98 - EXCHANGES PTY LIMITED & ANOR v
JUDGMENT (Strike out paragraphs of statement of claim)
STATE OF NEW SOUTH WALES
1 MASTER: By notice of motion filed 22 November 1999 the defendant/applicant seeks that paragraphs 16 and 17 of the amended statement of claim be struck out pursuant to Part 15 r 26 or alternatively Part 13 r 5 of the Supreme Court Rules (SCR). The defendant relied on the affidavits of Rachael Fitzhardinge sworn 24 November 1999 and 25 January 2000. The plaintiff relied on an affidavit of Alexander Dwyer sworn 13 January 2000.2 The statement of claim pleads that on 26 August 1996 Pacific City Pty Limited purchased from Mr Halloran lands known as the Copper Cup Point Lands, the Golfhurst Lands and the Birmington Lands. The plaintiffs alleged that at various times from June 1992 discussions took place between the defendant and Realty Realisations Pty Limited (Realty) acting on behalf of a number of land owners in the Jervis Bay area, including Mr Halloran, Exchanges Pty Limited and Pacific City concerning the development of land in the vicinity of Culburra and a proposal to extinguish by consolidation certain subdivisions located within the Copper Cup Point Lands, Golfhurst Lands and the Birmington Lands.
3 The statement of claim pleads a cause of action, namely of negligent misstatement made by the defendant to the plaintiffs. The representation relied upon is contained in paragraph 11. It states that:
“11. On 23 June 1993 the Department, through The Director, represented to that:
(a) the land affected by the Culburra Local Environment Plan was outside the study area of the Jervis Bay Region Environment and Planning Committee; and
(b) Realty could therefore be assured that any Development Applications within the area covered by the Culburra Local Environment Plan would not be affected by the findings of the Jervis Bay Region Environment and Planning Committee.
Particulars
See letter dated 23 June from the Department of Planning to Realty.”
4 The defendant accepts that paragraph 12 pleads that the Department owed a duty of care to provide accurate information. Paragraph 14 pleads a breach of that duty of care.
5 Paragraphs 16 and 17 of the amended statement of claim are as follows:6 Paragraph 19 says that contrary to the assurance given by the Department on 23 June 1993 the subdivision lands were affected by the findings of the Jervis Bay Region Environment and Planning Committee. At paragraph 15 of the defence the defendant admitted that the study area of the Jervis Bay Region Environment and Planning Committee included areas within the area covered by the Culburra Local Environment Plan.
“16. Exchanges and Pacific City as owners of the Copper Cup Point, Golfhurst and Birmington Lands, acting reasonably and in reliance upon the information provided by the Department on 23 June 1993:
(a) agreed to lodge for registration the plans of subdivision necessary to extinguish the Subdivisions;
(b) proceed to take steps whereby the Subdivisions were extinguished; and
(c) sold the Copper Cup Pont, (sic) Golfhurst and Birmington Lands to Mr W Hollaran.
Particulars
On 10 November 1993 Deposited Plan 833420 was registered, effecting a consolidation in respect of the Copper Cup Point and Golfhurst Lands.
On 10 November 1993 Deposited Plan 833421 was registered, effecting a consolidation in respect of the Birmington Lands.
17. In taking the steps referred to in the preceding paragraph, Exchanges and Pacific City Pty Limited have suffered loss and damage.
Particulars
The extinguishment of the Subdivision resulted in a diminution in value of the Copper Cup Point, Golfhurst and Birmington Lands.”
7 Part 13 r 5 says:
The law in relation to summary judgment
“(1) Where in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings -
(a) no reasonable cause of action is disclosed;
(b) the proceedings are frivolous or vexatious;
or
(c) the proceedings are an abuse of the process of the Court,
the Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings.”
9 In General Steel Barwick CJ, who heard the application alone stated:
8 In a recent decision Air Services Australia v Zarb (NSWSC unreported, 26 August 1998) Rolfe AJA found it useful to remind himself of the highly demanding test imposed on a party seeking summary judgment. His Honour referred to Dey v Victorian Railway Commissioners (1948-49) 78 CLR 62; General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 and Webster & Anor v Lampard (1993) 177 CLR 598. I have reproduced some of the passages quoted in Zarb.10 Barwick CJ also said:
“Although I can agree with Latham CJ in the same case when he said that the defendant should be saved from the vexation of the continuance of useless and futile proceedings, in my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff’s claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed.”
11 In Webster Mason CJ, Deane and Dawson JJ reinforced the rigorous testing stating, at p 602:
“It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of cause of action - if that be the ground on which the Court is invited, as in this case, to exercise its powers of summary dismissal - is clearly demonstrated. The test to be applied has been variously expressed; ‘so obviously untenable that it cannot possibly succeed’; ‘manifestly groundless’; ‘so manifestly faulty that it does not admit of argument’; ‘discloses a case which the Court is satisfied cannot succeed’; ‘under no possibility can there be a good cause of action’; be manifest that to allow them’ (the pleadings) ‘to stand would involve useless expense.”
12 According to Rolfe AJA in Zarb:
“The power to order summary judgment must be exercised with ‘exceptional caution’ and ‘should never be exercised unless it is clear that there is no real question to be tried.”’
“The demanding nature of the test is in no way lessened in circumstances where there are the potential for difficult factual and legal issues to arise. Rather, as the decision in Webster made clear, it is heightened: see also Wickstead & Ors v Browne (1992) 30 NSWLR 1 and Esanda Finance Corporation Limited v Peat Marwick Hungerfords (1997) 188 CLR 241.”
13 The defendant submitted that the only window of opportunity within which the plaintiff could suffer loss or damage was the period between 23 June 1993 and 30 June 1993 but the loss could not occur until after those plans were registered namely 10 November 1998, ie., after the land had already been sold back to Mr Halloran. It was not until after 30 June 1993 that the plans were registered with the Land Titles Offices and the subdivision was extinguished.
14 The plaintiffs submitted that paragraphs 16 and 17 should not be struck out. According to the plaintiffs, it is not to the point that the registration of the new divisions which extinguish the old subdivisions did not take place until after the plaintiffs had resold the land to Mr Halloran. The plaintiffs submitted that they took steps which had the effect of crystallising their loss at the time of the resale to Mr Halloran on 30 June 1993, although at that time the plaintiffs did not know that the representation was false. The plaintiffs also submitted that had they retained ownership of the land they would have suffered loss as soon as the value of the lands was diminished and this event would have occurred as soon as the relevant dealings were lodged in registrable form. The plaintiffs also submitted it would be a matter of evidence at the trial for the plaintiffs to quantify the loss which they alleged was crystallised on 30 June 1993.
15 The background facts which, for the purposes of this application are taken at their highest, should there be a trial these facts will be disputed.
16 On 10 July 1992 Realty who was acting as agent for the plaintiffs wrote to the Director of the Department of Planning. The letter referred to two meetings and asserted that the Department of Planning advised that the Minister required agreement to the extinguishment of certain “rural subdivisions” as a condition precedent to proceeding with the gazettal of the Culburra Town Expansion LEP. Paragraph 3 of this letter referred to the Department warranting that the potentiality for development and the timing of any subdivisions of land within the Culburra Town Expansion LEP would not be affected by the findings of the Jervis Bay Region Environment and Planning Committee. Reality advised that arrangements would be made to extinguish the subdivisions namely DPs 15103, 15061 and 12592 on the attached plan and they would reluctantly agree to the extinguishment of DP 12592. The letter further stated that upon confirmation that this is acceptable to the Minister they were prepared to proceed with the preparation of linen plans of the consolidation to extinguish the subdivisions, and that it was likely that these linen plans would be lodged at the Land Titles Office around Christmas.
17 On 26 August 1992 the plaintiffs exchanged contracts for the sale of land with the vendor, Mr Halloran. The plaintiffs’ interest in the properties became an equitable one.
18 On 1 June 1993 the Council approved the application to consolidate lands and released the plan in registrable form. A letter dated 2 June 1993 from Realty to Mr Woodward the Acting Regional Manager of the Department of Planning, referred to the plaintiffs’ intention as previously discussed with him, to act promptly to extinguish the subdivisions and that this act was a sign of good faith to the Minister.
19 On 23 June 1993 the Director of the Department of Planning wrote to Realty and stated:
“As you are aware, the discussion paper “Jervis Bay - Our Heritage our Future” does not have any legal status. Furthermore, any policy suggestions are concerned with land within the Jervis Bay study area. The land affected by the Culburra LEP is outside the study area. I can therefore assure you that any development applications within the area covered by the Culburra LEP will not be affected by the findings of the Jervis Bay Region Environment and Planning Committee.
Once again your co-operation in consolidating the subject small rural lots is appreciated, and I trust that my assurances are sufficient for your purposes.”
20 On 28 June 1993 Realty wrote to the Department of Planning and said that their clients would proceed to lodge linen plans at the Land Titles Office and that they should be registered within a matter of days of lodgment.
21 On 30 June 1993 the plaintiffs exchanged contract for the sale of the same land back to Mr Halloran for $2.6 million dollars less. It is puzzling that the same property decreased in value by the sum of $2.6 million in one day. However clause 24 of the resale contract stated that the purchaser acknowledged and undertook the plan of the subdivision of the land to be registered at the Land Titles Office. On 30 June 1993 Phil Howell faxed Ernie Royston (who was in the employ of the plaintiffs) stated that the Land Titles Office had asked for a letter from the Council in order to register the plans of extinguishment. At the time that settlement and resale occurred it can be argued that the plaintiffs knew that the subdivision had not been consolidated. That letter was subsequently provided on 5 July 1993 by the Council.
22 On 30 June 1993 the plaintiffs completed the contract. They became the legal and equitable owners of the land and were entitled to become registered as proprietors of the land.
23 On 10 November 1993 registration in relation to the plans effecting the extinguishment of the subdivisions was affected. Thus, the plaintiffs may be able at the trial to show either that they received the fax after settlement and resale of the properties had taken place or that they caused the result sought by the Minister to come to fruition. The date that the plaintiff became aware that the representations were not true can be ascertained at the hearing.
24 It is my view that the issue of loss cannot be said to be hopeless and it should go to trial. I decline to strike out paragraphs 16 and 17 of the amended statement of claim. The notice of motion is dismissed. Costs should follow the event. The defendant is to pay the plaintiffs’ costs.
25 The orders I make are:
(1) I decline to strike out paragraphs 16 and 17 of the amended statement of claim.(2) The notice of motion filed 22 November 1999 is dismissed.
(3) The defendant is to pay the plaintiffs’ costs.**********
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