Haigh v Department of Planning NSW

[2022] NSWSC 1434

Supreme Court

New South Wales

Medium Neutral Citation:

Haigh v Department of Planning NSW [2022] NSWSC 1434

Hearing dates:

20-21 April 2022

Date of orders:

21 October 2022

Decision date:

21 October 2022

Jurisdiction:

Common Law

Before:

Harrison AsJ

Decision:

(1) The statement of claim filed 28 October 2020 are struck out pursuant to Uniform Civil Procedure Rules 2005 (NSW) 14.28.

(2) The second plaintiff is granted leave to replead only so far as it relates to the claim of mental harm and psychiatric injury.

(3) The matter is stood over for a directions hearing before the Registrar at 9.00am in 6 weeks (25 November 2022).

(4) Costs are reserved.

Catchwords:

CIVIL PROCEDURE – Dismissal of proceedings – whether a reasonable cause of action is disclosed – whether proceedings constitute an abuse of process – reflective loss – Statement of claim dismissed – Leave granted to replead

Legislation Cited:

Civil Procedure Act 2005 (NSW) s 56

Environmental Planning and Assessment Act 1979 (NSW) s 149

Fair Trading Act 1987 (NSW) s 42

Limitation Act 1969 (NSW) s 18A

Trade Practices Act 1974 (Cth) s 52, 82, 87

Uniform Civil Procedure Rules 2005 (NSW) rr 13.4, 14.28

Cases Cited:

Aon Risk Services Pty Ltd v Australian National University (2009) 239 CLR 175

Brimson v Rocla Concrete Pipes Ltd (1982) 2 NSWLR 937

CBRE(BE) Pty Limited v Trilogy Funds Management Limited [2021] NSWCA 316

Central Coast Council v Norcross Pictorial Calendars [2021] NSWCA 75

City of Botany Bay Council v Jazabas Pty Limited [2001] NSWCA 94

Dey v Victorian Railway Commissioners (1949) 78 CLR 62

Ekes v Commonwealth Bank of Australia (2014) 313 ALE 665; [2014] NSWCA 336

Empire Shipping Co v Owners of Shin Kobe Maru (1991) 32 FCR 78

Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241

Forrest v ASIC (2012) 247 CLR 486; [2012] HCA 39; O'Brien v Bank of Western Australia Ltd [2013] NSWCA 71

General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125

Jazabas v Botany Council [2000] NSWSC 58

Jazabas v Haddad & Ors [2007] NSWCA 291

Jazabas v Haddad [2008] NSWSC 593

Johnson v Gore Wood & Co [2002] 2 AC 1

Lynx Engineering Consultants Pty Ltd v The ANI Corporation (No 2) [2009] FCA 363

Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 2] [2021] WASCA 105

Preston v Star City Pty Ltd [1999] NSWSC 1273

Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204

Sun Earth Homes Pty Ltd v Australian Broadcasting Corporation [1993] 45 FCR 265

UBS AG v Tyne (2018) 265 CLR 77

Wardley Australia Ltd v Western Australia (1992) 175 CLR 514; [1992] HCA 55;

Webster v Lampard (1993) 177 CLR 598

Wickstead v Browne (1992) 30 NSWLR 1

Williams and Humbert Ltd v Marks (Jersey) Pty Ltd [1986] AC 368

Williams v Spautz (1992) 174 CLR 509

Category:

Procedural rulings

Parties:

Stephen Haigh (First Plaintiff)
Dimitrios Kikiras (Second Plaintiff)
Department of Planning NSW (First Defendant)
Sam Haddad (Second Defendant)
State of New South Wales (Third Defendant)

Representation:

Counsel:
P King (First and Second Plaintiffs)
V Thomas with S Love (First, Second and Third Defendants)

Solicitors:
McKells Solicitors (First and Second Plaintiffs)
Crown Solicitors (First, Second and Third Defendants)

File Number(s):

2020/308863

Publication restriction:

Nil

Judgment

1. HER HONOUR: This matter involves an application to summarily dismiss the proceedings or alternatively to strike out the pleadings.

2. The plaintiff is Stephen Haigh. The second plaintiff is Dimitrios Kikiras. The first defendant is the Department of Planning NSW. The second defendant is Sam Haddadd. The third defendant is the State of New South Wales. At the hearing, on 20 April 2022, P King of Counsel appeared for the plaintiffs. V Thomas of Counsel appeared for the defendants with S Love.

3. By Notice of Motion filed 28 May 2021, the defendants seek an order that the plaintiffs’ claim for relief against them be summarily dismissed pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) or alternatively that the pleading against them be struck out pursuant to UCPR r 14.28. The parties relied upon a joint court book (“Ex (1)-(3)”).

Background – plaintiff’s version of events

4. In these proceedings, the plaintiffs seek damages for losses arising from the acquisition of land located at Hillsdale (“the Hillsdale Land”), in the municipality of Botany Bay Council (“the Council”) by Jazabas Pty Ltd (“Jazabas”) in 1993.

5. The circumstances by which the Hillsdale Land was acquired by Jazabas, was information that was provided to Mr Haigh before Jazabas was acquired and the losses that are alleged to have resulted from the acquisition of the land, have been the subject of two proceedings in the NSW Supreme Court. The first of the proceedings, proceeding number 1998/55043, commenced in 1998 (“1998 proceedings”) were determined when an application for special leave to appeal from a decision of the NSW Court of Appeal (City of Botany Bay Council v Jazabas Pty Limited [2001] NSWCA 94 (“City of Botany Bay”)) was refused by the High Court in April 2001. The second proceedings, number 2005/20020, commenced in 2005, (“the 2005 proceedings”) were stayed when the plaintiffs in those proceedings failed to comply with orders for security for costs.

6. The following background is taken largely from judgments delivered in those two proceedings.

The acquisition of the Hillsdale Land by Jazabas and the 1985 Risk Assessment Study (“RAS”)

7. On 21 December 1993, Evenvest Pty Ltd entered into a contract with Amcor Ltd to purchase the Hillsdale Land for the purpose of constructing a medium density residential development. In November 1993, the Council had issued certificates under s 149 of the Environmental Planning and Assessment Act 1979 (NSW), stating that no development control plan or draft plan applied to the land. It also stated that the land was not “affected by any Council policy to restrict development by reason of… any other risk”: See City of Botany Bay at [108]-[109].

8. On 10 December 1993, the Council resolved to prepare a development control plan over the Hillsdale Land. Knowing that the property was going to public auction, the Council informed Amcor of that decision. No information relating to possible contamination of the land was disclosed.

9. Sometime after this decision, Mr Haigh contacted an officer of the Council (Ms Cuthbert) concerning the prospect of Evenvest obtaining approval for the proposed development. In the 1998 proceedings, his evidence was that Ms Cuthbert told him that, provided any proposed development complied with the relevant development standards, she did not think that there would be any problem in obtaining development consent. On 21 December 1993, Evenvest entered into a contract with Amcor for purchase of the Hillsdale Land. The contract was later novated and Jazabas was substituted as the purchaser. On 28 June 1994 Jazabas completed the purchase of the property.

10. Nine years before the purchase, the NSW Department of Planning and Environment had prepared a Risk Assessment Study (“the 1985 RAS”) for the Botany Randwick Industrial Complex. In the 2005 proceedings, it was alleged by Jazabas that the 1985 RAS was prepared by Mr Haddad, the second defendant in the current proceedings, and who at the time was an officer of the first defendant. The introduction to the 1985 RAS stated that it had been prepared due to concerns about “the intensification of potentially hazardous installations and associated facilities in the area and their overall risk implications on nearby residential land uses”. It identified a “risk reduction zone” and stated that, pending a safety review and update, no intensification of new residential developments should be allowed within that zone. The Hillsdale Land fell within the risk reduction zone: See City of Botany Bay at [136]-[143].

11. Despite the fact that the Council had been provided with a copy of the 1985 RAS in June 1985, it was not taken into account in determining development applications in the municipality before July 1996.

12. In the 1998 proceedings, Jazabas alleged that the information conveyed to Mr Haigh by Ms Cuthbert and in the s 149 certificates issued before December 1993, were misleading because the Council had a policy to restrict residential development in the area by reason of the 1985 RAS. Alternatively, it alleged that the Council was negligent in failing to have regard to the 1985 RAS when information was conveyed to Jazabas before the purchase of the Hillsdale Land. It was claimed that, if Jazabas had known of the alleged policy or that the 1985 RAS would likely mean that its development could not proceed, it would not have purchased the Hillsdale Land.

Jazabas’ building application and the subsequent Land and Environmental Court proceedings

13. On 1 April 1996, Jazabas submitted a residential development proposal for the land. On 4 June 1996, it was approved by the Council. It appears that the Council did so, again, without regard to the 1985 RAS.

14. The position changed, however, with the lodgement of Jazabas’ building application. It was lodged on 20 October 1997. After its lodgement, an officer of the Council ascertained that the property fell within the risk reduction zone of the 1985 RAS. He recommended to Council that consideration of the building application be deferred.

15. Mr Haigh became aware that the Council’s attitude towards the development had changed. The time for approval of Jazabas’ application lapsed and, on 23 December 1997, Jazabas commenced proceedings in the Land and Environment Court (“LEC”), challenging the Council’s deemed refusal of Jazabas’ application for building approval. Early in 1998, officers of the Council appeared to be considering whether Jazabas’ application could be approved, notwithstanding the 1985 RAS.

16. This seems to have prompted correspondence with the NSW Department of Urban Affairs and Planning. On 16 February 1998, Mr Haddad wrote to the Council, responding to a letter of 30 January 1998, concerning the scope of the risk reduction zone in the 1985 RAS. In it, he stated that: (City of Botany Bay at [227])

“Irrespective of the quantitative nature of risk contours, the intensification of residential development at this location, notwithstanding minor, is inconsistent with good land use safety planning.”

17. Having received this letter, the Council determined that it would oppose Jazabas’ LEC proceedings. The grounds on which it did so included that the land was located in the risk reduction zone, was proximate to a petrochemical plant and that the building plans did not satisfactorily address measures to protect inhabitants from risk of death or injury in the event of a substantial release of toxic gases or some other contamination event. Mr Haddad gave evidence on behalf of the Council at the hearing.

18. On 23 April 1998, an LEC Assessor dismissed Jazabas’ appeal against the Council’s deemed refusal of its application for building approval, deciding that the evidence established that the land was unsuited for further residential intensification on hazard grounds.

The 1998 proceedings

19. By a Statement of Claim dated 30 July 1998, Jazabas commenced proceedings in the Federal Court against the Council alleging breaches of the Trade Practices Act 1974 (Cth) and the Fair Trading Act 1987 (NSW) and negligence. Those proceedings were later transferred to the Supreme Court of NSW.

20. After the commencement of those proceedings, the Council took the unusual step of seeking to overturn the LEC decision upholding the refusal of Jazabas’ application for building approval. On 2 February 1999, the Council lodged an appeal from the decision in its favour. The Council’s new position was that it should have granted Jazabas application for building approval because it had no power to refuse it on the basis of the 1985 RAS. On 16 April 1999, Lloyd J upheld the appeal and the application was remitted to an assessor for redetermination. On 15 July 1999, the LEC made an order granting approval of Jazabas’ building application.

21. On 15 August 1999, Jazabas sold the Hillsdale Land with the benefit of building approval and secured a “modest profit”: Jazabas v Haddad & Ors [2007] NSWCA 291 at [43].

22. With that background, the 1998 proceedings were heard by Rolfe J in December 1999 and February 2000. In Jazabas v Botany Council [2000] NSWSC 58, his Honour found in favour of Jazabas, finding that the information in the s 149 certificates, and conveyed by Ms Cuthbert, constituted negligent misstatements that had induced Evenvest and Jazabas to enter into contracts for the Hillsdale Land.

23. Jazabas’ case on damages was that, if it had not purchased the Hillsdale Land, it would have undertaken four new dual occupancy developments each year from 1994 up to 1999. Rolfe J assessed Jazabas’ damages on the basis that it would have undertaken 12 developments during that period. After discounting the total for the chance that such profits may not have been derived and deducting the profit that Jazabas had derived on the sale of the property in 1999, his Honour awarded damages to Jazabas in the sum of $1,218,832.

24. An appeal by the Council from the decision of Rolfe J was upheld in April 2001. The Court found that there had been no misleading conduct or negligent misstatement by the Council. An application for special leave by Jazabas was refused by the High Court.

The 2005 proceedings

25. In 2005, Jazabas, BAS Developments Pty Ltd and Permtree Pty Ltd commenced fresh proceedings in this Court in relation to the Hillsdale Land in the Supreme Court against Mr Haddad, the State of NSW and the Council.

26. While there was some overlap with the 1998 proceedings, new allegations of fact were pleaded to found the liability of Mr Haddad and the State. In particular, it was alleged that the 1985 RAS was a “sanitised” version of an earlier unpublished RAS, prepared by Mr Haddad in 1983, and contained “erroneous representations about the risk of death, serious injury and irritation from toxic hazards to present and future residents”.

27. The plaintiffs made claims against Mr Haddad for misfeasance in public office, injurious falsehood, breach of s 42 of the Fair Trading Act 1987 (NSW), negligent advice and deceit.

28. As against the State, the plaintiffs claimed negligent misstatement, based on its failure to warn or disclose information about the toxic risks and hazardous industry risk affecting land within the risk reduction zone. They also claimed that it was vicariously liable for the acts and omissions of Mr Haddad.

29. The loss and damage for which Mr Haddad and the State of NSW was said to be liable included the cost of acquiring the Hillsdale Land, expenses arising from the development and building applications and interruption to and loss of opportunity for the plaintiffs’ dual occupancy development for residential purposes.

30. In the 2005 proceedings, the defendants sought orders for security for costs, on the grounds of the impecuniosity of each of the plaintiffs. Notwithstanding the fact that, by the time of the hearing of that application, Mr Haigh had proffered a personal undertaking to meet any costs order against the plaintiffs, the application was successful. An appeal was dismissed. In dismissing the appeal, Basten JA referred to the fact Mrs Beverly Haigh and Mr Kikiras and Ms Zoe Kikiras, who were the other natural persons who were members of Jazabas at the time, had not offered any undertakings. As the plaintiffs did not provide security, the proceedings were stayed.

31. Changes were then made to the shareholding of Jazabas. The Kikiras shares were transferred to a company controlled by Mr Haigh. Mr Haigh and his wife, Beverley became the only natural persons to hold shares in Jazabas.

32. With those changes in place, Jazabas, BAS Developments and Permtree sought to have the stay orders lifted on the ground that Mr Haigh and his wife would give personal undertakings to meet any adverse costs order. On 27 May 2008 the matter came before me. On 17 June 2008 I dismissed the motion in Jazabas v Haddad [2008] NSWSC 593. In 2010, an appeal from my decision was dismissed by Fullerton J .

The statement of claim in the current proceedings

33. The statement of claim filed on 28 October 2022 sets out the following pleadings and particulars:

“[22] Each of the defendants were at all material times the holders of public office.

[23] Had the defendants not misconducted themselves in public office and not abandoned the 1983 RAS or the 1988 report:

[a] the defendants would have published the 1983 RAS and the 1988 report and not the sanitised 1985 RAS in order to inform the public of hazardous risks in the public interest and to be transparent in respect of arrangements with users of the Complex and disclosure of all risk sources to affected adjacent communities;

[b] the defendants would have made the REP instead of leaving it to languish in draft form between 1985 and 1993 and thereby not requiring disclosure by planning authorities including Botany Bay City Council of the risks as set out in the 1983 RAS and the 1988 report;

[c] the defendants would have made the REP between 1985 and 1993 disclosing the cumulative risks as set out in the 1988 report;

[d] that planning instrument would have been disclosed in the Council s 149 certificate which the plaintiffs would have been able to read;

[e] the defendants would have informed the Council's planning officer Ms Cuthbert prior to 1994 who would have advised the plaintiffs that the land was not suitable for development or would have otherwise qualified her statements to the plaintiffs that the land was suitable for development when it was not;

[f] as a consequence the plaintiffs would not have purchased the land.

[24] In publishing the 1985 RAS being the sanitised study and report of disclosure by the defendants of hazardous risks in the Complex and affected adjacent areas the defendants acted in bad faith because firstly they did not disclose to the affected communities the real hazards to their health and well-being from the Complex and the transportation to and from it of hazardous materials, secondly they did not disclose to the public the cumulative risks identified in the 1988 report of which they were aware knowing of their true fatality risk exposure, thirdly they mislead the public, Botany Bay City Council and the plaintiffs into believing that the sanitised 1985 RAS was a complete and accurate assessment of risks from all sources which was not the case.

[25] In failing to make the REP between 1985 and 1993 the defendants acted in bad faith because part of the REP was a requirement that each relevant planning authority including Botany Bay City Council had to develop an LEP referring to and having regard to such risks as provided for in clause 25(f), secondly the REP was to the knowledge of the defendants the appropriate and lawful measure under the Environmental Planning and Assessment Act 1979 for giving notice by and to planning authorities in respect of future development including by the plaintiffs -hut which measure was not taken or adopted against the public interest, thirdly the defendant acted for an ulterior motive namely to promote development of the dangerous chlorine plant in the Complex without regard to the interests of the public or safe hazard free residential development.

[26] As a result of the alleged misconduct of the defendants their servants or agents in public office the plaintiffs suffered loss and damage.

Sale and Business Interruption

[27] The plaintiffs repeat paragraphs 14 and 16 and say that in the following respects each representation was false.

[28] As at 16 February 1998 it was erroneous and false for the defendants by their servant or agent the second defendant to allege that the Botany Bay City Council and other persons reading such correspondence including the plaintiffs were

[a] proceeding under a misunderstanding or false assumption on the basis the RRZ provided for in the 1985 RAS was founded on the hazards of fire and explosion when in fact it was and the defendants thereby misled the Council and the plaintiffs;

[b] representing that the RRZ takes into account risks from all sources as applicable and was a cumulative assessment of risk when that was not the case as a result of which the Council and the plaintiffs were misled;

[c] representing that the RRZ should not be equated to a particular criterion level when that was not the case as a result of which the Council and the plaintiffs were misled;

[d] the subject site, [Hillsdale Land], was within the risk contours notwithstanding minor when that was not the case as a result of which the Council and the plaintiffs were misled.

[29] Further the second defendant with the authority of the first and third defendants provided a statement to Botany Bay City Council in Land and Environment Court proceedings No 20190/ 1997 and thereafter to the plaintiffs and Jazabas in Supreme Court of NSW proceedings No 55043/1998 and No CA40159/2000 repeating the misrepresentations referred to in paragraph 28 and the following further representations to them as follows:

[a] The 1985 RAS was one of the first of its kind worldwide which considered the cumulative offsite risks from all industrial activities at the Complex which was erroneous in fact in that the 1985 RAS did not consider the cumulative offsite risks from all industrial activities at the Complex but referred to toxic risks separately and did not include these in the RRZ;

[b] The aim of the 1985 RAS was to identify quantify and assess the cumulative risk to the surrounding area from the industrial facilities which was in error because the 1985 RAS did not identify quantify and assess the cumulative risk to the surrounding area from the industrial facilities;

[c] The 1985 RAS established by way of a contour line a surrounding area where risk levels exceeded those which would be expected to be tolerated by the community for the purpose of residential development namely as set out in HIPAP 4 being the one per million per year criterion in respect of residential exposure which was in error because the risk levels did not exceed such levels as they were based on fire and explosion.

[d] The advices of the Department contained in the correspondence to and from the Council and seen by the plaintiffs are consistent with broad Departmental policies for the formulation and implementation of land use planning criteria which was in error because the advices paid no regard to the 1983 RAS and the 1988 report and only the sanitised 1985 RAS and no or inadequate regard to land use safety planning criteria adopted by the Department.

[30] Each representation was made by the first and third defendants by their servant or agent the second defendant with the intention that it be relied on by the plaintiffs personally and their joint venture vehicle Jazabas.

[31] Each representation was made by the first and third defendants by their servant or agent the second defendant with knowledge that it was false or made recklessly careless as to whether representation was false or not, in that as to the matters alleged in paragraph 28:

[a] the second defendant managed and largely undertook each of the risk assessment studies and in particular the 1985 RAS so was aware that the RRZ therein was based on the hazards of fire and explosion;

[b] the second defendant managed and largely undertook each of the risk assessment studies and in particular the 1985 RAS so was aware that the RRZ did not take into account risks from all sources;

[c] the second defendant managed and largely undertook each of the risk assessment studies and in particular the 1985 RAS so was aware that the RRZ was equated to a particular criterion level;

[d] the second defendant managed and largely undertook each of the risk assessment studies and in particular the 1985 RAS so was aware that the advices of the Department contained in the correspondence to and from the Council and seen by the plaintiffs were not consistent with broad Departmental policies.

[32] Each representation was made by the first and third defendants by their servant or agent the second defendant with knowledge that it was false or made recklessly careless as to whether representation was false or not, in that as to the matters alleged in paragraph 29:

[a] the second defendant managed and largely undertook each of the risk assessment studies and in particular the 1985 RAS so was aware that the study did not consider the cumulative offsite risks from all industrial activities at the Complex;

[b] the second defendant managed and largely undertook each of the risk assessment studies and in particular the 1985 RAS so was aware that the study's aim was not to identify quantify and assess the cumulative risk to the surrounding area from the industrial facilities;

[c] the second defendant managed and largely undertook each of the risk assessment studies and in particular that the1985 RAS did not establish by way of a contour line a surrounding area where risk levels exceeded those which would be expected to be tolerated by the community for the purpose of residential development;

[d] the second defendant managed and largely undertook each of the risk assessment studies and was thereby aware that the advices of the Department contained in the correspondence to and from the Council and seen by the plaintiffs were not consistent with broad Departmental policies for the formulation and implementation of land use planning criteria.

[33]    Induced by each representation and in reliance thereon the plaintiffs proceeded with the chain of litigation and ultimately sold the land in reasonable mitigation of their losses.

[34] At all material times the first and third defendants were liable for the acts and omissions of its senior executive officer the second defendant.

[35] As a result of relying on each representation the plaintiffs have suffered loss and damage.

Particulars

Acting in reliance on the said false representations and each of them the plaintiffs have lost the whole of their interest in Jazabas and in the development blocks at [Hillsdale Land] and suffered consequent business interruption of their joint venture dual occupancy development activities from 1997 to date including very significant and hurtful family and personal losses.

[36] Further or alternatively the plaintiffs repeat paragraphs 27 to 35 and allege that in the premises the defendants by themselves their servants or agents in trade or commerce engaged in conduct that is misleading or deceptive or likely to mislead or deceive in contravention of Australian Consumer Law section 18 and/or the provision which it replaced namely Trade Practices Act 1974 section ·52.

[37] In the premises by conduct of the defendants their servants or agents that contravenes a provision of the Australian Consumer Law or the said former Trade Practices Act the plaintiffs have suffered loss or damage entitling them pursuant to section 236, 237 and 243 of the Australian Consumer Law and/or sections 82 and 87 of the Trade Practices Act so as provide for the amount of the loss or damage.

Particulars

As a result of the conduct complained of herein of the plaintiffs have suffered significant loss and damage as claimed herein.

[38] Further or alternatively the first and third defendants abused the process of the court whereby the plaintiffs suffered loss and damage or suffered additional loss and damage.

Particulars

The said defendants by their servants or agents informed the court and the plaintiffs in April 1998 in response to a subpoena issued to DUAP on 27 3 1998 for production of the 1985 RAS that the Department had no specific files in respect of the risk assessment study for the Complex and that only file held was file R91/01458/001 BEING A Cabinet submission which was privileged, but which file was produced in 2002 under FOI after the chain of litigation and loss caused to the plaintiffs.

Chlorine Complex

[39] The Plaintiff repeat paragraphs 17 to 21 and allege that by reason thereof the defendants and each of them by their servants or agents engaged in a number of errors or shortcomings in respect of application No 35/98 of Orica for the installation of a replacement Chier-alkali plant to produce 35,000 tonnes per annum gaseous chlorine in the Complex at XXX Beauchamp Road which errors were not but should have been addressed and carried out in accordance with SEPP 33 and HIPAP 6 as required by Environmental Planning and Assessment Act 1979 and the Director General's Guidelines prepared by the first defendant under section 115C(2) of the 1979 Act.

[40] In the premises the third defendant failed to correctly apply SEP 33 and HIPAP 6 and did not lawfully assess the application against the relevant criteria set out in the Environmental Planning and Assessment Act 1979 including but not limited to undertaking a transport risk assessment or risk evaluation study as required by SEPP 33 which was not done whereby the determination dated 6 November 1998 was void or liable to be set aside and/ or had the true cumulative hazardous risks from all sources been exposed or considered the determination would not have proceeded or would have been set aside according to law and is void.

[41] In the premises application No 35/98 for the installation of a replacement Chier-alkali plant to produce 35,000 tonnes per annum gaseous chlorine in the Complex should have been refused or was void with the result in that inter alia that the plant would have been installed at another location so as to reduce the fatality and other risks to residents and residential development adjacent to the Complex.

[42] In the premises the determination occurred made by the third defendant by its minister being an officer in public office upon the recommendation of the first defendant its servants or agents also being such officers which determination was made in bad faith in that the said defendants concealed the unacceptably high fatality risk to existing nearby residents and to prospective developers from transportation of hazardous materials to and from the Complex and/or failed to formulate and implement land use planning controls as required by HIPAP 4.

[43] In the premises by misconduct in public office as alleged in paragraphs 39 to 43 the plaintiffs have suffered the loss and damage alleged herein, and lost the opportunity to retain the land at [Hillsdale Land] and continue and maintain their joint venture business activities.”

34. At [35] of the statement of claim, the plaintiffs refer to “very significant and hurtful family and personal losses”. At the hearing, Counsel for the plaintiffs clarified that this is to include a personal injury claim for the psychiatric and mental harm suffered by Mr Kirkiras (T57.14-16). This claim is said supported by the affidavit of Dimitrios Kirkiras dated 22 March 2022 and the psychologist report of Tim Watson-Munro dated 15 March 2022, together with other documents. However, this claim has not been pleaded or particularised with any specificity.

Leave to amend notice of motion

35. At the hearing, Counsel for the first defendant sought leave to amend the notice of motion filed 28 May 2021 to include an application for a permanent stay of proceedings.

36. Counsel for the first defendant submitted that the principles that apply to abuse of process, as the Court of Appeal has noted in CBRE(BE) Pty Limited v Trilogy Funds Management Limited [2021] NSWCA 316 (“Trilogy Funds”), either under the rules or as a permanent stay are identical. In their submission, there can be no prejudice to the plaintiff in relation to that application and this comfortably satisfies the requirement of an abuse of process under UCPR r 13.4.

37. Counsel for the plaintiff firstly argued that this application has been constituted as it presently sits for a long time. The submissions were prepared on that basis. Counsel submitted that the new application is not the same opposed it on that basis. The suggestion that there's no prejudice, when it's raised “well, now at 1 o'clock on the first day of the hearing, in our respectful submission is not supportable.” Secondly, it was submitted that the principles for summary dismissal are well established, and they give rise to different questions, they may be nuanced, they may be similar, but they're not the same: See Aon Risk Services Pty Ltd v Australian National University (2009) 239 CLR 175 at [50]. Counsel for the plaintiff submitted that prejudice is suffered by the plaintiff trying to deal with this application on the run.

38. As I stated at the hearing, the problem with this application was that the first defendant was notified that they hadn't brought the stay and failed to amend the notice of motion until the outset of the hearing. The factors to be satisfied in order to be granted a permanent stay of proceedings differ in some regards. Further, the plaintiff had not been given the opportunity to fully ventilate anything else they wanted to say in relation to it. In these circumstances I refused to grant leave to amend the notice of motion (T74.45-50).

Summary dismissal or strike out of proceedings

39. The first defendant relies on UCPR rr 13.4 and 14.28. They read:

13.4 Frivolous and vexatious proceedings

“(1)   If 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)    the proceedings are frivolous or vexatious, or

b)    no reasonable cause of action is disclosed, or

c)    the proceedings are an abuse of the process of the court,

the court may order that the proceedings be dismissed generally or in relation to that claim.

(2)   The court may receive evidence on the hearing of an application for an order under subrule (1).”

14.28 Circumstances in which court may strike out pleadings

"(1)   The court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading-

a)    discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, or

b)    has a tendency to cause prejudice, embarrassment or delay in the proceedings, or

c)    is otherwise an abuse of the process of the court

(2) The court may receive evidence on the hearing of an application for an order under subrule (1)."

40. UCPR r 14.28 enunciates grounds, upon which a defective pleading may be struck out. UCPR r 13.4 focuses on the weakness of a party’s case rather than the defects of a pleading: Brimson v Rocla Concrete Pipes Ltd (1982) 2 NSWLR 937.

41. The present application needs to be approached upon the basis that a very clear case is required before summary dismissal is granted and that the power to make such an order should be sparingly employed: Dey v Victorian Railway Commissioners (1949) 78 CLR 62 at 91; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 (“General Steel”) at 129; Webster v Lampard (1993) 177 CLR 598 at 602-603.

42. The test to be applied by a court when considering summary dismissal is clear. It has been variously expressed as a claim being “so obviously untenable that it cannot possibly succeed”, “manifestly groundless”, or “so manifestly faulty that it does not admit of argument”: General Steel Industries Inc v Cmr for Railways (NSW) (1964) 112 CLR 125 at 128-129. In Dey v Victorian Railway Commissioners (1949) 78 CLR 62 at 91 Dixon J observed that before summary intervention can be justified, the case must be a very clear one and there must be no real question of fact or law to be determined.

43. By bringing an application for summary dismissal, the defendant undertakes the burden of establishing that there is no triable issue: Wickstead v Browne (1992) 30 NSWLR 1 at 11. The General Steel test remains the primary touchstone for such an application. The mere fact (if it be the case) that a plaintiff’s prospects of success might be characterised as slim would not be enough to strike out a pleading: Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 at 271; Preston v Star City Pty Ltd [1999] NSWSC 1273 (“Preston”) at [31].

44. The question for determination is whether a reasonable cause of action is disclosed, that is a cause of action which has some chance of success, or which could conceivably give the plaintiff a right to relief, or which, although weak, is properly debatable and has some apparent legitimate basis if the facts upon which it is alleged to be based are made good: Preston at [37].

45. The onus of satisfying the Court that there is an abuse of process lies upon the party asserting the abuse of process, and that onus is ‘a heavy one’: Williams v Spautz (1992) 174 CLR 509 at 529 (Mason CJ, Dawson, Toohey and McHugh JJ).

Reflective loss

46. Both parties referred to the decision of Ekes v Commonwealth Bank of Australia [2014] NSWCA 336; (2014) ALR 65 (“Ekes”) where at [150]-[151], Bathurst CJ (with whom Beazley P and Emmett JA agreed) described the principle of reflective loss as follows:

“[150] The principles are well established. When a company suffers loss caused by a breach of duty owed to the company, no action lies at the suit of a shareholder to make good a diminution of the value of the shareholder's shareholding where that loss merely reflects the loss suffered by the company: Prudential at 222-223, Johnson at 35 and 62 and Gould at 221-222. That principle extends to include losses suffered as a result of diminution in the value of a person's shareholding, loss of dividends and other amounts which the shareholder might have obtained from the company had it not been deprived of its funds: Johnson at 66. The principle extends to a case where both the company and the shareholder have a claim for breach of duty which caused the loss: Johnson at 62.

[151] However, the principle does not prevent the shareholder suing for a loss suffered from a breach of duty owed to him or her where the loss is separate and distinct from the loss suffered by the company: Gould at 220, 241 and 257-258 and Johnson at 35 and 62.”

47. As stated above, an exception to this principle is where a company suffers loss caused by a breach of duty to it, and a shareholder suffers a loss separate and distinct from that suffered by the company caused by breach of a duty independently owed to the shareholder, each may sue to recover the loss caused to it by breach of the duty owed to it but neither may recover loss caused to the other by breach of the duty owed to that other: see Johnson v Gore Wood & Co [2002] 2 AC 1 (“Johnson”) at 35 per Lord Bingham.

48. In the more recent decision of Central Coast Council v Norcross Pictorial Calendars [2021] NSWCA 75 (“Central Coast Council”) Bathurst CJ (with whom Macfarlan and Gleeson JJA agreed) set out the rationale of the reflective loss principle at [103]:

“[103] … The rationale for the principle has been described as the prevention of double recovery (Prudential Assurance at 222; Johnson v Gore Wood & Co [2002] 2 AC 1 (‘Johnson’) at 62 - 63, 66 - 67 per Lord Millett, Lord Goff agreeing), or on the basis that the shareholder does not suffer a loss distinct from the company and the shareholder is barred from pursuing the claim by the principle in Foss v Harbottle (1843) 2 Hare 461 (‘Foss v Harbottle’) (Marex at [10] per Lord Reed PSC, Lady Black and Lord Lloyd-Jones JJSC agreeing), or perhaps because the shareholder has no legal or equitable interest in the company's assets (Marex at [80] per Lord Reed PSC).”

49. In Central Coast Council at [119], Bathurst CJ set out a further exception to the reflective loss principle when the rationale is considered:

“[119]… There seems to be no reason for the principle to apply to circumstances where the company has no cause of action to recover the loss. This is so regardless of the rationale of the principle. If the purpose is to prevent double recovery, there is no prospect of double recovery where the company has no cause of action. If is as I conceive it, the principle is based on the rule in Foss v Harbottle that only the company can sue for a wrong done to the company, the principle is not outflanked because there is no actionable wrong done to the company, the company having no cause of action. If, as Perram J suggests, it is associated with the doctrine of maintenance of capital, there is no reduction of capital if a shareholder recovers funds that the company as a matter of law cannot recover. Finally, there is no policy reason not to impose such an exception.”

50. A helpful summary of the reflective loss principle was set out in Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 2] [2021] WASCA 105 in the Western Australian Court of Appeal per Buss P, Murphy JA and Beech JA at [268]:

“[268] The principles emerging from the authorities may be summarised as follows:

1. Where a company suffers loss caused by a breach of duty owed to it, only the company may sue in respect of that loss. No action lies at the suit of a shareholder to make good a diminution of the value of the shareholder's shareholding where that loss merely reflects the loss suffered by the company.

2. This will be so even if the company has declined or failed to take action to recover the loss.

3. If the company suffers loss, but has no cause of action to sue to recover that loss, a shareholder with a cause of action who suffers loss to the value of his shares may sue in respect of it.

4. The reflective loss principle does not prevent a shareholder suing for a loss suffered from a breach of duty owed to him or her where the loss is separate and distinct from the loss suffered by the company.

5. The principle extends to the case where both the company and the shareholder have a claim for breach of duty or breach of contract which caused the loss.”

The defendant’s submissions

51. Mr Haigh and Mr Kikiras, without Jazabas or any of the other companies that brought the 1998 or 2005 proceedings, bring these proceedings. Their Statement of Claim alleges the following facts and matters that were also alleged in either the 1998 and 2005 Supreme Court proceedings (or both):

1. the fact of the 1983 RAS;

2. the fact of the 1985 RAS;

3. the fact that both the 1983 and 1985 RAS were prepared by Mr Haddad;

4. the allegation that the 1985 was a “sanitised version of the 1983 RAS modified for the purpose of public consumption”;

5. the acquisition of the Hillsdale Land by Jazabas and the approval of its development application in June 1996;

6. the 16 February 1998 letter from Mr Haddad to the Council (responding to a letter from the Council dated 30 January 1998), the allegation that it contained erroneous representations that led the Council to resolve not to approve Jazabas building application; and

7. allegedly false and misleading representations included in the evidence given by Mr Haddad in the LEC proceedings and in the 1998 proceedings.

52. While the pleading is not an easy document to interpret, it would appear that the only new allegations of fact are:

1. The existence of a further report prepared by Mr Haddad in 1988 concerning environmental planning safety strategy in respect of risk arising from activities in the Botany Randwick Industrial Complex and Port Botany. It is not clear from the pleading whether this is said to have perpetuated the misleading effect of the 1985 RAS or was inconsistent with it.

2. The approval, in November 1998, by the Minister for Urban Affairs and Planning, of the installation of a replacement chlorine plant, allegedly contrary to various planning instruments. Given that this occurred after the Hillsdale Land was acquired by Jazabas and that entity had applied for development and building approval, the defendants do not understand the relevance of these allegations to the plaintiffs’ case.

3. Knowledge acquired by the plaintiffs after 2015 of “the true position of the nature and extent of both the cumulative hazard risks including transportation risks to residential and other development in the area of the Complex.” It is not alleged that these transportation risks were known to Mr Haddad when he prepared the 1985 RAS and deliberately or negligently omitted from it, and accordingly the relevance of these allegations to any of the pleaded causes of action, is unclear.

53. While the causes of action alleged by the plaintiffs do not emerge with any clarity from the pleading, it is understood that the plaintiffs seek to advance the following claims against all defendants:

1. misfeasance in public office;

2. deceit; and

3. misleading or deceptive conduct within the meaning of the Trade Practices Act or the Australian Consumer Law.

54. Each of these causes of action were advanced against Mr Haddad and the State in the 2005 proceedings.

55. The plaintiffs claim to have suffered loss and damage by reason of the various wrongs alleged in the current Statement of Claim. Within the pleading, the only particulars that have been given are under [35], in which it is alleged that the plaintiffs have “lost the whole of their interest in Jazabas and in the [Hillsdale Land]” and suffered “consequent business interruption of their joint venture dual occupancy development activities from 1997 to date”. They also claim to have suffered “hurtful family and personal losses”.

The proceedings are an abuse of process

56. The defendants accept that, although both plaintiffs, and Mr Haigh in particular, had capacity to control Jazabas and some or all of its related entities at the time of the commencement of the 1998 and 2005 proceedings, there is no evidence that either had a legal interest in the outcome of those proceedings, so as to render either of them a privy in interest with Jazabas or the other corporate plaintiffs in the 2005 proceedings.83 Accordingly, the issue is not whether any of the forms of estoppel by judgment apply, but whether the bringing of these proceedings constitutes an abuse of process.

57. The Court’s jurisdiction to dismiss or permanently stay proceedings as an abuse of process will be enlivened by one of two conditions. The first is where the use of the Court’s procedures occasions unjustifiable oppression to a party. The second is where the use of the Court’s procedures serves to bring the administration of justice into disrepute.

58. Whether conduct is properly characterised as an abuse of process of the court requires consideration of all the circumstances. In UBS AG v Tyne [2018] 265 CLR 77 (“UBS”), the plurality cited with approval the following explanation of the required approach from the speech of Lord Bingham of Cornhill in Johnson v Gore Wood & Co [2002] 2 AC 1; [2001] 2 WLR 72 (“Johnson”):

“[A] broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not.”

59. The defendants accept that they bear the onus of satisfying the Court that there is an abuse of process and that onus is a heavy one.

60. It is well established that, in some circumstances, where a claim should have been brought in the earlier proceedings, the bringing of that claim in later proceedings will constitute an abuse of process, even where the later proceeding is not precluded by an estoppel. It is relevant to note that, here, although the corporate entities that brought the 2005 proceedings may not have been privies of the plaintiffs, they were closely related to them.

61. The Court can be comfortably satisfied that these proceedings amount to an abuse of process and should be dismissed or permanently stayed.

The claims should have been brought in the 2005 proceedings

62. For the following reasons, the claims brought in these proceedings should have been brought in the 2005 proceedings.

63. First, the claims in these proceedings arise out of the same allegations of fact made in the 2005 proceedings – the central claim being that the 1985 RAS was misleading.

64. Secondly, not only is there a substantial overlap in the factual allegations, but the causes of action alleged in the current proceedings were also advanced in the 2005 proceedings. It was unreasonable for the plaintiffs in these proceedings not to have made the claims they make in these proceedings, in the 2005 proceedings, assuming that they were viable causes of action.

65. Thirdly, the Court would be entitled to infer that, if the plaintiffs in the current proceedings (who, as natural persons, would not have been required to provide security for costs) had viable causes of action arising from the 1985 RAS, they would have made those claims in the 2005 proceedings, so as to enable them to continue. The 2005 proceedings were stayed because the corporate plaintiffs were unable to meet orders for security for costs. Strenuous attempts had been made by those companies to pursue their claim, notwithstanding their impecuniosity. These included an appeal from the orders of Simpson J to the NSW Court of Appeal, a restructuring of the affairs of Jazabas so that shareholders who were not willing to give personal undertakings, ceased to be members of the company, a further application to discharge the orders of Simpson J and a further appeal from the order dismissing that application. If the present plaintiffs had viable causes of action in their own right, they could and should have brought them in the 2005 proceedings. Had they done so, there is every reason to believe that those proceedings would not have been subjected to a stay.

66. In the circumstances of this case, the Court would be entitled to expect that an explanation as to why the plaintiffs’ claims were not made in the earlier proceedings. The defendants are unable to identify any such explanation in the evidence served by the plaintiffs.

The proceedings occasion unjustifiable oppression to the defendants

67. For the following reasons, the current proceedings are such as to occasion unjustifiable oppression to the defendants.

68. First, they face the vexation of being required to deal again with claims that should have been raised and resolved in the 2005 proceedings.

69. Secondly, the time that has passed between the circumstances giving rise to these claims and the commencement of the proceedings, is such that the Court should find that a fair trial of the issues is impossible. The defendants accept that there is no evidence of actual prejudice. But the delay is so substantial that it would justify a finding of presumptive prejudice. Some 37 years have elapsed between the preparation of the 1985 RAS, which the plaintiffs allege was prepared by Mr Haddad with knowledge that what was included in it was misleading or erroneous, and the commencement of these proceedings. Other facts that appear to provide the basis for the plaintiff’s case on causation and would need to be the subject of evidence, span the period from 1983 to 1994.

70. It would be oppressive to the defendants to allow an action to be brought so long after the circumstances which gave rise to it have passed.

Continuation of the proceedings would bring the administration of justice into disrepute

71. For the following reasons, the continuation of the proceedings would bring the administration of justice into disrepute.

72. First, the public interest in the timely and efficient administration of justice, would not be served. The circumstances of the acquisition of the Hillsdale Land and the events that would have occurred if the risk of contamination of the land had been known, have already been the subject of a trial (in the 1998 proceedings), an appeal and an application for special leave. In the 2005 proceedings, in which the current defendants were also defendants, there were two interlocutory decisions by Simpson J, an appeal to the Court of Appeal, a further decision by the Associate Judge and an appeal to Fullerton J. Substantial public resources have already been utilised. To allow these proceedings to continue would frustrate, not serve, the public interest in the timely and efficient administration of justice.

73. In UBS, the plurality said at [59]:

“For the Federal Court to lend its procedures to the staged conduct of what is factually the one dispute prosecuted by related parties under common control with the attendant duplication of court resources, delay, expense and vexation, as Dowsett J found, is likely to give rise to the perception that the administration of justice is inefficient, careless of costs and profligate in its application of public moneys.”

74. The same observation could be made with even greater force in respect of these proceedings.

75. Secondly, as the defendants in these proceedings would not be bound by the damages assessment in the 1998 proceedings, there would be the potential for inconsistent findings.

76. Thirdly, to allow these proceedings to be prosecuted by those who stood behind the corporate plaintiffs in the 2005 proceedings would suggest that the orders for security made in those proceedings could be circumvented. Relevant to this point is the submission, made below, that the plaintiffs’ claim is for reflective loss, rather than any independent substantive loss they have suffered in their own right, and the defendants repeat that submission to support their application based on abuse of process.

The proceedings disclose no reasonable cause of action

77. The defendants accept that the Court’s power to summarily dismiss is only exercised in “clear” or “plain and obvious” cases where it can be said that the plaintiff’s case is “futile” or “manifestly hopeless” and where the defendant cannot fairly be put to the expense of defending the claim. For the following reasons, those requirements are comfortably met in this case.

The claims are statute barred

78. As noted, the plaintiffs appear to claim to have suffered losses from tortious conduct or contraventions of statutory provisions, by reason of the acquisition, by Jazabas, of the Hillsdale Land. That property was acquired by a contract entered into in December 1993 and sold in October 1999. Relevant causes of action are likely to have accrued between those dates. The tortious claims were statute barred six years after they accrued and the statutory claims may have been subject to a three-year limitation period. Even if the Court were to take a more generous view of the losses that the plaintiffs have potentially sustained through their corporate vehicles, such losses must have been incurred, and any cause of action accrued, by 2012 at the latest, when Jazabas and related entities were deregistered. These proceedings were not commenced until 28 October 2020.

79. It is accepted that limitation points should not be decided in interlocutory proceedings in advance of trial “except in the clearest of cases” (Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533). The present, however, is such a case and the proceedings should be dismissed on the ground that the pleaded causes of action are unquestionably all statute barred.

The plaintiffs’ claim is for reflective loss

80. Where a company suffers loss caused by a breach of duty owed to it, only the company may sue in respect of that loss. No action lies at the suit of a shareholder to make good a diminution of the value of the shareholder's shareholding where that loss merely reflects the loss suffered by the company. The principle extends to losses suffered as a result of diminution in the value of a person’s shareholding, loss of dividends and other amounts which the shareholder might have obtained from the company had it not been deprived of its funds.

81. The plaintiffs were asked to provide particulars of their loss and damage (as opposed to that sustained by Jazabas and other corporate vehicles controlled by the plaintiffs). Their response was contained in Exhibit BC1 to the Affidavit of Bruce Cantrill sworn 28 May 2021. Their response includes the following (Ex 1(1), tab 4, p 13):

“The allegations of loss and damages made in these proceedings have been made by the shareholders of the relevant companies. The business interruption to the plaintiffs from their established dual occupancy development activities that commenced in 1994 as a result of the acquisition of the Hillside land continued and the quantum for the losses have been calculated on a similar basis as the losses assessed and awarded to Jazabas in [the 1998 Supreme Court proceedings] from 1994 to 2018.”

82. The plaintiffs have provided the following particulars at [3] of the Statement of Claim (Ex 1(1), tab 4, p 22):

“The damages assessment in respect of the foregone dual occupancy developments set out in above were assessed in the damages assessment of Rolfe J in judgment of the Supreme Court [2000] NSWSC 58, No 55043/98 at [288] to [307] and [2000] NSWSC 154 at [8] and are adopted as the appropriate assessment of quantum in respect of the above developments in the proceedings in respect of those developments.”

83. The plaintiffs have provided the following particulars of their loss and damage, as pleaded at [26] of the Statement of Claim: (Ex 1(1), tab 4, p 33):

“(i) The alleged loss and damage if from business prevention or interruption of the plaintiffs from their joint venture dual occupancy development activities from 1994 to 2018;

(ii) nature of the loss and damage is set out in Supreme Court proceeding No 55043/1998 and CA50159/2000, in which Rolfe J found: had the Council advised the plaintiff of the RAS and the RRZ, as it should have, Jazabas would not have purchased the land;

(iii) In Supreme Court proceeding No 55043/1998 damages were assessed on the basis that Jazabas had not purchased the land, it would have commenced 4 dual occupancies every year and;

(iv) The Council did not challenge the trial judges [sic] approach to the assessment of the Jazabas damages in the Supreme Court proceedings in the NSW Appeal Court and as such, the calculations for the loss and damage have been assessed on this basis.”

84. It is clear from these particulars that the plaintiffs are claiming damages for losses suffered by Jazabas and have no separate and independent claim for loss. As the claim is for reflective loss, no reasonable cause of action is disclosed. Alternatively, this is a further basis on which the Court would conclude that the claim is an abuse of process and should be permanently stayed.

The Statement of Claim should be struck out

85. If the proceedings are not summarily dismissed or permanently stayed, the Statement of Claim should be struck out for disclosing no reasonable cause of action or being such as to cause prejudice embarrassment or delay.

86. First, the first defendant is a government department forming part of the Government of New South Wales and is not a necessary or proper party to the proceedings given the State of New South Wales (the third defendant) is a party to the proceedings. It should be removed as a defendant from the proceedings.

87. Secondly, the pleading contains paragraphs that are confusing (for example [24], [25] and [31]), contain a multiplicity of allegations (for example [24], [25] and [29]) are put at such a level of generality (for example [35]) that the defendants do not know the case that they have to meet. It is appropriate to strike out the pleadings rather than order the provision of particulars. It is not the function of particulars to take the place of pleadings.

88. Thirdly, the pleading contains allegations that have no obvious relevance to the pleaded causes of action, including [17], [19], [20], [25], [38] and [39] to [43].

89. Fourthly, the pleading contains allegations of bad faith and other deliberate improper conduct, including [24], [25], [30], [32] and [42]. These allegations fail to meet the requirements of UCPR r 15.3 and should not be permitted to proceed in their present form.

90. Fifthly, the pleading contains inconsistent allegations. On the one hand, it is alleged that, but for the wrongful conduct, the plaintiffs would not (through Jazabas) have purchased the Hillside Land. On the other, it is claimed that the plaintiffs would have developed the site and continued their successful dual occupancy joint venture business.

91. Sixthly, there is no allegation of any private right of the plaintiffs that Mr Haddad infringed in giving the allegedly inaccurate evidence in the LEC and Supreme Court proceedings. There appears to be no proper legal basis for these claims.

85. Seventhly, the cause of action for loss or damage referred to at [38] of the claim is ambiguous and unclear.

86. Given the number and significance of the defects in the statement of claim, it should be struck out it its entirety.

The plaintiff’s submissions

94. The plaintiff submitted that there is no evidence of ulterior or improper motive amounting to oppression or misuse of the Court’s process. The plaintiffs have filed longstanding and independent claims that are unresolved and unestopped. Further, the statement of claim discloses a reasonable cause of action which the defendants apprehend. To the extent the defendants rely in this application on meritsbased defences such as limiting the caselaw and common-sense point to the conclusion that they have struck prematurely. As a fall-back case the defendants contend that some or all of the statement of claim should be struck out on form grounds under UCPR r 14.28 because either it discloses no reasonable cause of action under sub-r 1(1)(a) or under sub-r (1) (b) causes prejudice, embarrassment or delay.

95. As to delay and prejudice, apart from the complete absence of any relevant evidence with respect to proof of a merits case in response to the underlying facts, it is the defendant who filed its application late and then has taken almost a year to get the matter heard including by failing to lodge its material on time with costs orders made by the Registrar against them for such failures.

96. Both bases of the application set out above should now be rejected. Further the defendants’ contention that the nub of its complaint that the proceedings rehash old matters cannot either initially or finally withstand scrutiny in light of the defendants’ concession that there is no estoppel defence by way of res judicata, conventional estoppel, Anshun estoppel or any issue estoppel from past actions involving the defendants and deregistered corporate entities, and upon which they erroneously seek to rely. Further, the contention at [61]-[65] of the first defendant’s submissions that the plaintiffs could and should have made all the current allegations in the 2005 proceedings makes no sense especially having regard to the risk of concealment issues. In the circumstances, the Court should dismiss the application with costs and the defendants should be ordered to put on defences and proceed with the case.

97. Another way of testing the defendants’ case as submitted with respect to the abuse of process argument is to ask whether the statement of claim discloses a reasonable cause of action. It would be extraordinary if the proceedings were found to be an abuse of process in such a case having regard to rr 13.4(1)(b) and 14.28(1)(a) of the UCPR. The two grounds relied on by the defendants for the conclusion that the statement of claim in its form discloses no reasonable cause of action in the defendants’ submissions are that the claims are statute barred and that the claims are ‘for reflected loss’. However upon clear authority it is not appropriate to summarily dismiss proceedings on the former ground where a defendant has filed no defence and the plaintiff no reply: see Forrest v ASIC [2012] HCA 39; 247 CLR 486 at [24]–[27] per French CJ, Gummow, Hayne and Kiefel JJ.

98. In Wardley Australia Ltd v Western Australia("Rothwells Loan case") (1992) 175 CLR 514; [1992] HCA 55 Mason CJ, Dawson, Gaudron and McHugh JJ said at [31]:

“We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question.”

99. That ruling applies in full measure here. That aspect of the defendants’ form case is hopeless.

100. As to ‘reflected loss’ which on one reasonable view informally admits a loss to the plaintiffs because the word reflected means a representation or image in this case of the plaintiffs’ loss, the way the case is put is confected. Unsurprisingly the phrase is not found in the caselaw on this topic. As to demonstration of that loss it is submitted that this must await the final hearing, which will affect the evidence as a whole and in particular determine whether the plaintiffs have proved the losses and injury they have claimed. The defendants acknowledge that the plaintiffs’ claimed loss and injury includes loss of opportunity, business interruption, and hurtful family and personal losses. There is accordingly plainly disclosed in the statement of claim a reasonable cause of action as to loss and injury, which is sufficient to dispose of the whole application.

101. At the hearing, counsel for the plaintiff provided further submissions regarding reflective loss (T164-166):

“The second submission that my friend makes concerns what she called reflected loss. In our submission, there is no foundation for any summary dismissal in relation to that issue. My friend made a submission this morning, which I noted, to the following effect: she said that nowhere in the particulars or evidence have the plaintiffs identified a loss other than a reflected loss, although she conceded that there was such a loss in relation to Mr Kikiras's claim in respect of his psychiatric injury.

That is simply in error, your Honour. I'll take you to the evidence in a moment but in the particulars we have identified the various paragraphs in the statement of claim including, amongst others, para 35 in which a claim is made in respect to the plaintiffs' losses…

…The claim requires an understanding of the role of the dual occupancy companies from 1993 to date, which is not addressed by the defendant.

Now, just pausing there your Honour, we have very carefully, addressed that question, in our written submissions. Can I just explain to your Honour, how the dual occupancy companies work? Each site is owned by the company. This is a special planning arrangement in New South Wales. Each site is owned by the company, and then the company issued shares to the people who are proposed occupants.

In fact, what the developer does, is to buy the land and the dual occupancy company name. And there are special rules and provisions under the planning laws in New South Wales for this purpose. And then the land is not sold by the company. What happens is, once the dual occupancy residences are constructed, the apartment is then sold, linked to the share, not the share itself, but it's linked to the share.

So, what Mr & Mrs Haif and Mr & Mrs Kikiras were doing, is that they were selling the right to occupation. And that's a personalised, quite distinct from the dual occupancy company, which actually owns the land itself and continues the ownership. So, the dual occupation company stays there. But the share and the right of occupation is sold on the market and are accepted by banks for security purposes…

So, it's plainly a personal loss. It's not a company loss, it’s a personal loss. It's not a reflected loss. And in addition, if our Honour goes to the paragraph that I've just taken you to in the document that I just handed to your Honour.

… As alleged, the plaintiff, that is, he and Mr Kikiras have suffered loss and damage. Well, that's his opinion, but it's some evidence, that they have suffered loss, as distinct from the company, by reason of the plaintiff's acquisition of the Hillsdale land and lost the whole of their interest in Jazabas. So, that’s their investment loss, as distinct from the corporate loss.”

102. It is submitted that the following triable issues of fact arise in the matter and should be heard on the merits upon the whole of the admissible evidence at final hearing and as to which for present purposes the applicants/defendants bear the onus of proof, that being a heavy onus:

1. Whether or not the plaintiffs and each of them in their personal capacities suffered compensable loss and injury including as to loss of opportunity, and/or business interruption loss for the ongoing dual occupancy developments and/or personal and family loss and injury?

2. Whether or not the proceedings are an abuse of process in the respects of being oppressive or a misuse of the Court’s process?

3. As to particular causes of action, whether or not the Defendants held public office at all material times?

4. Whether or not the Defendants misconducted themselves in public office from December 1993 to 2015 by concealing transport risks to development in the vicinity of the Botany Randwick Industrial Complex (‘the Complex’) and adjacent affected areas including Nilson Avenue?

5. Whether or not the Defendants:

1. were aware of the true extent and nature of the cumulative risks including transportation in the vicinity of the Complex from 1988;

2. were aware that the draft REP if implemented according to law should include planning controls associated with the 1985 RRZ of no residential intensification in the RRZ associated with the Complex;

3. were aware that applicable laws and rules namely SEPP 33 (State policy made under Environmental and Planning Assessment Act 1979 (NSW) implementing controls for development of hazardous industry) and HIPAP No 6 (Guidelines for Hazard Analysis) should include planning controls associated with transportation risks;

4. knowingly or recklessly failed to extend coverage and/or implementation of such laws in respect of the published and unpublished cumulative risks of which they were aware; and

5. whether or not the Defendants failed to inform the public and the plaintiffs of hazardous risks from all risk sources to affected communities in the vicinity of the Complex (statement of claim at [23], [24] and [25])?

6. Whether or not the defendants made a false representation as alleged in [28] and [29] of the statement of claim?

7. Whether or not the defendants made any such representation with the knowledge that it was false, or that the defendants were reckless or careless as to whether the representation was false or not?

8. Whether or not the defendants made the above representation with the intention that it be relied upon by the plaintiffs?

9. Whether or not the defendants made the representation with the intention that it be relied upon by the plaintiff?

10. Whether or not the plaintiffs suffered damage which was caused by reliance on the false representation?

11. Whether or not plaintiffs relied on the representations causing or contributing to their loss and injury?

12. Whether or not the misconduct alleged occurred in trade or commerce?

13. Whether or not the defendants abused the process of the Court causing loss and injury to the plaintiffs?

14. Whether or not the decision to approve the redevelopment of the Orica replacement chlorine plant in the Complex was flawed(statement of claim at [17], [39], [40], [41] & [42])?

15. Whether the plaintiffs first became aware of the cumulative risks to their business in 2015 and if so whether the defendants knowingly or recklessly concealed those risks?

16. Whether or not the proceedings have caused or will cause unjustifiable oppression of the defendants?

17. Whether or not the proceedings bring the administration of justice into disrepute?

18. Whether or not the central claim in the present proceedings is that the 1985 RAS was misleading?

19. Whether or not it was unreasonable for the plaintiffs not to have made the present claims in the 2005 proceedings?

20. Whether or not the inference sought by the defendants at [64] of their submissions should be drawn?

21. Whether or not ‘there is every reason to believe’ that had the plaintiffs brought the proceedings in 2005 they would not have been the subject of a stay (defendants submissions at 65)?

103. As to the relevant test of summary dismissal the defendants fail to draw attention to the leading authority in this Court set out in O'Brien v Bank of Western Australia Ltd [2013] NSWCA 71 at [3]:

“The High Court decision in Spencer v The Commonwealth [2010] HCA 28; 241 CLR 118 was concerned with s 31A(2) of the Federal Court Act 1976 (Cth) but the following principles stated in it are of general application:

(a) On a summary judgment application, the real issue is whether there is an underlying cause of action or defence, not simply whether one is pleaded (at [23]).

(b) The critical question can be expressed as whether there is more than a "fanciful" prospect of success (at [25]) per French CJ and Gummow J) or whether the outcome is so certain that it would be an abuse of the process of the Court to allow the action to go forward (at [54] in the judgment of the plurality). Demonstration of the outcome of the litigation is required, not an assessment of the prospect of its success (ibid).

(c) Powers to summarily terminate proceedings must be exercised with exceptional caution (ibid at [55]; see also French CJ and Gummow J at [24]).”

104. The defendants have conspicuously failed to address the onus upon them of demonstrating that not only the pleaded case, but also the available case, is fanciful. They acknowledge the causes of action and their potentiality. However, they have not sought to demonstrate the outcome of the litigation as required by the Court of Appeal, but instead their submissions speculate about what might have been and what could be. The plaintiff submitted that this application fails on these grounds at the outset. It was open to the defendants to submit evidence if admissible on the triable issues set out above, but it has not done so. In the plaintiff’s submission, the defendants admit that they cannot rely on any issue estoppel in these proceedings and yet they seek to set out the facts of the case (see defendant’s submissions at [14]-[54]) by reference to such judgments, and not the allegations of fact alleged in the statement of claim: see defendants’ submissions at [22].

105. As to the form issue it is further submitted that the statement of claim identifies with precision what it is that constitutes the breach or breaches of duty: see Lynx EngineeringConsultants Pty Ltd v The ANI Corporation (No 2) [2009] FCA 363. Of course the allegations in the statement of claim are taken to be accepted for present purposes: Empire Shipping Co v Owners of Shin Kobe Maru (1991) 32 FCR 78. Embarking upon a detailed investigation of the whole matter on a strike out application which the defendants invite the Court to undertake requires the defendants to satisfy the Court that doing so will either avoid the need for or substantially reduce the scope of a subsequent trial: Williams and Humbert Ltd v Marks (Jersey) Pty Ltd [1986] AC 368 at page 436; Sun Earth Homes Pty Ltd v Australian Broadcasting Corporation [1993] 45 FCR 265. That ought to be done at the outset, but no attempt has been made to do so, and looking at the matter such an investigation, before close of pleadings, discovery, and exchange of the evidence of the parties on the pleaded issues, is unlikely to be a worthwhile use of the Court’s time and resources: see Civil ProcedureAct 2005 (NSW) s 56.

106. The contention of the defendants that the whole of the claims in the current proceedings arise out of ‘the central claim’ that the 1985 RAS was misleading, as recorded in the defendant’s submissions at [62], is in error. Accordingly had the defendants not misconducted themselves in public office,

1. The defendants would have given notice by and to planning authorities in respect of future development in the vicinity of the Complex and as such, the losses claimed would have not occurred including those arising from inter alia the later chain of litigation that commenced with LEC proceedings No 20190/1997; and

2. The plaintiffs’ business would not have been interrupted and lost significant opportunities as claimed in the proceedings up to and including 2018.

107. Further, had the defendants not interfered in Botany Councils consent process for the Jazabas building application, and misled the plaintiffs and the Council:

1. In correspondence to Botany Council on16 February 1998;

1. and Statements of Evidence in LEC proceedings No 20190/1997 and;

2. in Supreme Court proceedings No 55043/1988 and CA 40159/2000;

2. Botany Council would have approved the said building application;

3. The development at the Hillsdale Land would have been constructed for Jazabas;

4. The joint venture dual occupancy arrangement would have continued; and

5. Would have constructed four D/O developments every year.

108. Again, had the defendants not abused the process of the Court and provided the 1983 RAS and the 99 annexed maps to the Court and the plaintiffs:

1. The LEC proceedings No 20190/1997 would have failed and would not have commenced; and

2. The chain of litigation thereafter would also not have commenced.

109. And, had the defendants not approved the Orica replacement chlorine plant in 1998:

1. And removed the old Orica chlorine plant;

2. Botany Council would have approved the Jazabas building application and constructed the development; and

3. The joint venture dual occupancy arrangement would have continued; and

4. The plaintiffs would have constructed four joint venture dual occupancy developments each year through different publicly recognised special purpose corporate vehicles which rewarded the plaintiffs not the companies, and would not have purchased the subject land.

Resolution

110. Through a fair reading of the statement of claim in this matter, the most noticeable differentiation between this matter and the 1998 and 2005 proceedings is that this claim is brought by the first and second plaintiffs in a personal capacity as shareholders of Jazabas.

111. As raised by the defendants, an issue of law arises as to whether a shareholder can bring a claim for damages with regards to losses suffered by the company in which they retain shares.

112. As stated earlier in this judgment, the principle of reflective loss dictates that when a company suffers loss caused by a breach of duty owed to the company, no action lies at the suit of a shareholder to make good a diminution of the value of the shareholder’s shareholding where that loss merely reflects the loss suffered by the company. However, the principle does not prevent the shareholder suing for a loss suffered from a breach of duty owed to him or her where the loss is separate and distinct from the loss suffered by the company:  see Ekes at [150]-[151].

113. The principle extends to include losses suffered as a result of diminution in the value of a person’s shareholding, loss of dividends and, importantly, loss of other amounts which the shareholder might have obtained from the company had it not been deprived of its funds: see Johnson at 66.

114. As per Lord Bingham of Cornhill in Johnson at 35, the object is to ascertain whether the loss claimed appears to be or is one which would be made good if the company had enforced its full rights against the party responsible, and whether the loss is merely a reflection of the loss suffered by the company.

115. In the matter of Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204 at 223 their Honours Cumming-Bruce, Templeman and Brightman LJJ, set out a simple illustration which in my view is quite fitting to the matter before this Court. It is as follows:

“Suppose that the sole asset of a company is a cash box containing £100,000. The company has an issued share capital of 100 shares, of which 99 are held by the plaintiff. The plaintiff holds the key of the cash box. The defendant by a fraudulent misrepresentation persuades the plaintiff to part with the key. The defendant then robs the company of all its money. The effect of the fraud and the subsequent robbery, assuming that the defendant successfully flees with his plunder, is (i) to denude the company of all its assets; and (ii) to reduce the sale value of the plaintiff's shares from a figure approaching £100,000 to nil. There are two wrongs, the deceit practised on the plaintiff and the robbery of the company. But the deceit on the plaintiff causes the plaintiff no loss which is separate and distinct from the loss to the company. The deceit was merely a step in the robbery. The plaintiff obviously cannot recover personally some £100,000 damages in addition to the £100,000 damages recoverable by the company.”

116. If the current case is to be compared to this illustration, the £100,000 is the Hillsdale Land and the fraudulent misrepresentation in persuading the plaintiff to part with the key to the cash box is equivalent, for the sake of this comparison, to the allegations of concealment, misfeasance in public office, deceit and misleading and deceptive conduct.

117. In the defendants’ submission, just as in the illustration above, there is no loss to the plaintiffs which is separate and distinct to that of the company Jazabas.

118. I have carefully read the statement of claim filed by the plaintiffs. All of the damages claimed relate to alleged losses suffered by Jazabas in relation to the purchasing of the Hillsdale Land in 1994. This is evident in the plaintiffs’ response to a request of particulars made by the defendants (Ex 1(1), tab 4, p 13-22):

“The allegations of loss and damages made in these proceedings have been made by the shareholders of the relevant companies. The business interruption to the plaintiffs from their established dual occupancy development activities that commenced in 1994 as a result of the acquisition of the Hillside land continued and the quantum for the losses have been calculated on a similar basis as the losses assessed and awarded to Jazabas in [the 1998 Supreme Court proceedings] from 1994 to 2018.

…

The damages assessment in respect of the foregone dual occupancy developments set out in above were assessed in the damages assessment of Rolfe J in judgment of the Supreme Court [2000] NSWSC 58, No 55043/98 at [288] to [307] and [2000] NSWSC 154 at [8] and are adopted as the appropriate assessment of quantum in respect of the above developments in the proceedings in respect of those developments.”

119. From this, it is clear that the losses claimed are those which were sought by Jazabas in previous proceedings.

120. While [39] of the statement of claim onwards does appear to set out a new claim relating to the Chlorine Complex, the losses claimed still relate to the one which would have been made good had Jazabas enforced its rights against the defendants in the previous proceedings. This claim falls within the ambit of reflective loss and is an abuse of process.

121. Counsel for the plaintiffs, Mr P King, referred to the Stendhal, who in his opinion is perhaps one of the greatest novelists, and adapted a quote from his novel Le Rouge et le Noir in stating that “what is a beautiful pleading to one is unintelligible to another.” (T133.38-41). While that may be the case, the pleadings before this Court disclose no reasonable cause of action except for what follows below.

122. The only alleged actionable wrong which is separate and distinct to that which is available to Jazabas is the mental harm and psychological loss claimed to have been suffered by Mr Kirkiras. Jazabas has no cause of action to sue and recover that loss and so, as an exception to the reflective loss principle, Mr Kirkiras, as a shareholder, may sue: see Johnson at 35 and Central Coast Council at [104], [119]. Further pleadings and particulars are needed with regard to the alleged mental harm suffered.

123. At the hearing, counsel for the first defendant conceded that the alleged psychological harm suffered by Mr Kirkiras is a loss that is separate and distinct from the loss suffered by the company (T123.16-20).

124. There is the report by Tim Watson-Munro, psychiatrist, dated 15 March 2022 which somewhat supports Mr Kirkiras’ personal injury claim (Ex 1(3), tab 13, p 24). Mr Watson-Munro first examined Mr Kirkiras in 2021. His opinion is that it was apparent to him from the history he obtained that Mr Kirkiras was suffering features of a depressive disorder reflected in high levels of anxiety, marital conflict, substance use as a means of self-medication, a gambling addiction as a means of escape with associated dissociative behaviour when gambling and a general sense of despair. Mr Kirkiras reported to Mr Watson-Munro that, up until the acquisition of the Hillsdale Land, he was well regarded in the community and did not suffer any symptoms of depression or anxiety. Mr Watson-Munro reported that Mr Kirkiras’ history reflects, up until that time, he was enjoying a trajectory of success both as a real estate agent and through his involvement with Mr Stephen Haigh referable to successful and profitable property developments. Mr Kirkiras believes that his Depressive Disorder essentially developed and escalated because of the delays referable to the property at Hillsdale.

125. However, s 18A of the Limitation Act 1969 (NSW) reads:

18A   Personal injury

(1)  This section applies to a cause of action, founded on negligence, nuisance or breach of duty, for damages for personal injury, but does not apply to—

(a)  a cause of action arising under the Compensation to Relatives Act 1897, or

(b)  a cause of action that accrued before 1 September 1990, or

(c)  a cause of action to which Division 6 applies.

…

(2)  An action on a cause of action to which this section applies is not maintainable if brought after the expiration of a limitation period of 3 years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims.

126. From the report of Mr Munro-Watson, it is unclear when the second plaintiff first became aware that he suffered a depressive disorder. It may be that the second plaintiff’s claim for personal injury is statute barred or he may seek an extension of the limitation period depending on when he became aware or ought to have became aware that he suffered the psychiatric injury. This is a matter that should be further investigated by the plaintiffs’ legal representatives, as to whether the cause of action is statute barred before filing an amended statement of claim.

127. Leave is granted to the second plaintiff to replead the statement of claim only so far as it relates to the psychological harm suffered by Mr Kirkiras as pleaded in the statement of claim filed 28 October 2020 and further clarified in Mr Kirkiras’ affidavit dated 22 March 2022. The sum of the statement of claim, as it merely reflects the loss suffered by Jazabas, discloses no reasonable cause of action and is an abuse of process. It should be struck out pursuant to UCPR 14.28(1)(a).

Result

128. The result is that the pleadings in the statement of claim filed 28 October 2020 are struck out pursuant to UCPR r 14.28. The second plaintiff is granted leave to replead only so far as it relates to the claim of mental harm and psychiatric injury. The matter is stood over for a directions hearing before the Registrar at 9.00am in 6 weeks.

Costs

129. Costs are reserved.

The court orders:

1. The statement of claim filed 28 October 2020 are struck out pursuant to Uniform Civil Procedure Rules 2005 (NSW) r 14.28.

2. The second plaintiff is granted leave to replead only so far as it relates to the claim of mental harm and psychiatric injury.

3. The matter is stood over for a directions hearing before the Registrar at 9.00am in 6 weeks (25 November 2022).

4. Costs are reserved.

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Decision last updated: 21 October 2022