Kizbeau Pty Ltd v WG & B Pty Ltd

[1992] FCA 477

JUDGMENT No. ........ ........ .. .......,.,.. 477 19'-

IN THE FEDERAL COUR'I' OF AUSTRALIA	)
VICTORIA DISTRICT REGISTRY	) No. VG238 of 1990
GENEFWL DIVISION	1

BETWEEN :  KIZBEAU PTY. LTD. , GARRY FRANCIS SHE ILS and ANNA MARIA ELIZABETH SHEILS

Applicants

W.G. & B. PTY. LTD. fformerlv W.G. & G. McLEAN PTY. LTD.) and WALLACE GEORGE McLEAN

Respondents

COM4:	Jenkinson, Gray and Ryan JJ.
PLACE :	Melbourne
DATE:	17 June, 1992

08 1UL1992

MINUTES OF ORDER

THE COURT ORDERS THAT:

1.        The motlon of which was filed on 12 March 1992 be dismissed.

NOTE:	Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules. '

2.        The applicant's costs of the said motion be paid by the respondents.

IN THE FEDERAL COURT OF AUSTRALIA	)
VICTORIA DISTRICT REGISTRY	) No. VG238 of 1990
GENERAL DIVISION	)

BETWEEN:	KIZBEAU PTY. LTD. , GARRY FRANCIS SHEILS.
and ANN A MAR I  A
ELIZABETH SHEILS

Applicants

W.G. & B. PTY. LTD. (formerlv W.G. & B. McLEAN PTY. LTD.) and WALLACE GEORGE McLEAN

Respondents

LRAM : Jenkinson, Gray and Ryan JJ.

PLACE :	Melbourne
-	DATE :	17 June, 1992

REASONS FOR JUDGMENT

JENKINSON JA

Application for leave to appeal against an
interlocutory order of Northrop J. His Honour was engaged in

trying a proceeding which had arisen out of the applicants'

dissatisfaction with the conduct of the respondents on the	sale of a motel business by the first respondent to the first
applicant in October 1988. The proceeding had commenced in
August 1990. The trial commenced on 9 December 1991 and was
adjourned on 17 December 1991 until March 1992. Before the
trial resumed the applicants moved his Honour for leave to
amend the statement of claim. He granted the motion. It is .
against that order that the respondents seek leave to appeal. Part of the case which the applicant's counsel was presenting
when the trial was adjourned was that the purchase of the business had been induced by, inter alia, representations by agents of the vendor, which were alleged also to have constituted warranties, that certain parts of the premises could lawfully be used for business gatherings called seminars and conferences, and that those representations were false, and that the warranties had been breached, and that damage had been in consequence suffered by the applicants. By amendment the applicants sought to add an allegation that weddings and wedding receptions had been represented and warranted as activities which could lawfully be carried on in certain parts of the premises, and that those representations had also been false, the warranties breached, and damage suffered. Northrop
J. gave carefully framed reasons for his conclusion. Mr.
O'Callaghan Q.C., who appeared with Mr. Colbran for the respondents on the hearing of the application for leave to appeal, submitted that the new allegations had no connection with what was being litigated, except that they concerned representations, about what busmess activities could lawfully be carried on in the premises, alleged to have been made before sale. Until leave to amend was sought, Mr. O'Callaghan
pointed out, nothing had been said about weddings or wedding receptions in the course of the litigation except by the second applicant in response to questions in cross-examination of him which suggested that he had hired the premises for wedding receptions without concerning himself with the .
question whether that was a lawful use of the premises. The application to amend was made, Mr. O'Callaghan submitted, at a stage when, if the application were granted, the trial would have substantially to be re-conducted from the beginning, to the very great cost of the respondents, a cost they had reason to fear they would not recoup under an order for costs in their favour, which Northrop J. had made.
However, an application by the respondents for an order for security for costs had been refused by his Honour on the day on which he granted leave to amend the statement of claim, and no application for leave to appeal against that order has been made. The considerations for and against the order granting leave to amend the statement of claim were carefully rehearsed by Northrop J. I can find no error in his Honour's reasons, nor any disquiet at the conclusion to which he came, except by reason of one circumstance to which I will
now re£ er.
His Honour was informed by senior counsel for the respondents on the hearing of the motion for leave to amend
the statement of claim that no relevant limitation period had then expired. And his Honour noted that in his reasons for
judgment. (Neither Mr. O'Callaghan nor Mr. Colbran was then appearing for the respondents.) Mr. O'Callaghan sought leave to advance on the hearing of the application for leave to appeal, and on the hearing of the appeal if leave were granted, that on the date when his Honour's order was made, 6 March 1992, the causes of action under section 82 of the Trade Practices Act 1974 founded upon the representations sought to be added by amendment were barred by sub-section 82(2) of that Act. A majority of the members of this court was of opinion that Mr. OICallaghan should be refused that leave. However, my understanding is that nothing which has happened in this court on the hearlng of the application for leave to appeal could fetter or embarrass the exercise by Northrop J. of the power conferred on him by Order 35 Rule 7(2)(c) to vary or set aside any of the orders he made on 6 March 1992, or the power conferred by Order 13 Rule 2 to give leave to the respondents further to amend their defences.

I certify that this and the 3 preceding pages are a true copy of the Reasons for Judgment of the Honourable Mr. Gustice Jenkinson.

Dated: 17 June, 1992

IN THE FEDERAL COURT OF AUSTRALIA )

)

VICTORIA DISTRICT REGISTRY	No. VG238 of 1990
GENERAL DIVISION	1
BETWEEN:

KIZBEAU PTY. LTD.. GARRY FRANCIS

SHEILS and ANNA MARIA ELIZABETH SHEILS

Applicants

-and-

W.G. & B. PTY. LTD. lformerly W.G. & B.

McLEAN PTY. LTD.) and WALLACE GEORGE McLEAN

Respondents

CORAM :	Jenkinson, Gray and Ryan JJ.
PLACE	: Melbourne
DATE :
-	17th June, 1992

REASONS FOR JUDGMENT

GRAY J:

i

I agree with the orders proposed by the learned presiding judge and with the reasons that his Honour has given.

I certify that this page is a

true copy of the Reasons for	!
Judgment of the Honourable	!

Justice Gray. j

i

!

Dated: 2 9 - 32.4- 1992

Associate

IN THE FEDERAL COURT OF AUSTRALIA )

)

VICTORIA DISTRICT REGISTRY	1	No VG 238 of 1990
1
GENERAL DIVISION	1

On appeal from a single Judge of the Federal Court of

Australia

BETWEEN:	KIZBEAU PTP LTD, GARRY FRANCIS SHEILS and
ANNA MARIA ELIZABETH SHEILS

(Applicants)

AND:  WG & B PTY LTD fformerlv
WG h B McLEAN PTY LTDl and
WALLACE GEORGE MCLEAN

(Respondents)

Coram:  Jenkinson, Gray and Ryan JJ

Place: Melbourne

Date :  17 June 1992

EX TEMPORE REASONS FOR JUDGMENT

Rvan J: This is an application for leave to appeal from an order of a Judge of the Court giving leave to amend the statement of claim in an action for, amongst other things,

damages for contravention of s.52 of the Trade Practices Act	arising out of the sale of a business.
The application was issued on 14 August 1990. By the original statement of claim it was alleged that the applicants had entered into an agreement for the purchase in the name of the first applicant of a business known as "Sandown Regency Motor Inn" for the sum of $1,110,000. It was further alleged in paragraph 6 of the statement of claim that the applicants were
induced to enter into that agreement by representations that:

"(a) the busrness included the commercial operation of three

conference rooms;

(b)	the areas in the premises known as the Board Room and the Board Room Annexe were used for and were capable of being used for commercial seminar and conference facrlrtres and/or mornlng and afternoon teas and lunches or other commercial uses;
(c)	a substantial part of the income derived by the business came from the commercral use of the Board room and the Board Room Annexe ;
(d)	the Board Room and the Board Room Annexe were integral and important parts of the business and that the takings from the busrness incorporated substantial takrngs derived from functions held in the Board Room and the Board Room Annexe; and
(e)	the books, accounts, and other business and frnancral records which were provided to them accurately reflected the nature of the busrness which was actually conducted at the premises."

It was then alleged in paragraph 15 of the original statement of claim that those representations were false:

.

"in that the Board Room and the Board Room Annexe are not capable of
being used under the town plannang permrt for commercial purposes."

That statement of claim was amended on 23 July 1991 when an additional alleged representation was added to paragraph 6 which was in these terms:

"(f) the Lrquor Licence contained the only restrrction on the number of persons who could be present on the premises."

After the trial of the action had proceeded for some time, at

what the learned trial judge called a late stage in the

applicants' case, the applicants were granted leave to make

further amendments to the statement of claim which included	.
the insertion of yet another sub-paragraph to paragraph 6 to allege that the respondents had represented that:

"(g) the business included the conduct of weddings, wedding receptrons and other functions and receptrons from which was derived significant revenue."

Somewhat inconsistently the corresponding allegation of the falsity of that representation introduced by the same further amendment is in these terms:

"The applicants have discovered and the fact is that the representations referred to m paragraphs 6(a) to (g) above were false and the warranties referred to rn paragraphs 6(a) to (g) were breached in that:

(a) the Board Room and the Board Room Annexe were not capable of berng used under the Town Planning Permit for commercial purposes, prior to 27 March, 1991 alternatively prior to 8 May, 1991;

(b) weddings and wedding receptions and other functions and receptrons could not be held at the premises under the Town Plannrng Permit for commercial purposes."

The respondent has, we have been told, filed an amended defence in accordance with directions given by the learned . trial judge when he allowed the application for leave to amend the statement of claim. That defence has not pleaded that one of the causes of action raised by the amendments is barred by operation of s.82 of the Trade Practices Act as having been raised out of time.

This Court refused leave this morning to the respondents to	raise that bar as a ground of their application for leave to
appeal from the order of the learned trial judge granting leave to amend the statement of claim. In the course of argument which led to that refusal of leave, i-t was accepted by M r Shavin of Counsel who appeared with Ms Zapparoni for the applicants, that the grant of leave to amend the statement of claim would not preclude the respondents from relying on the limitation to the extent that it would have been available had an action based on the amendments been instituted at the date when leave to amend was granted.
I agree with the learned presiding judge that nothing said by
this Court this morning or now should be taken as fettering the discretion of the trial judge in dealing with any application which the respondents may choose to make for leave to further amend their defence. Nor should we be taken to have expressed any view on any of the complex questions which may ultimately have to be resolved as to the extent, if any, to which some cause of action, invoked by the applicants, has become statute-barred.
I have reviewed, in the light of -the submission made by Mr
OICallagahan QC who appeared with Mr Colbran for the
respondents, the reasons given by the learned trial judge for
exercising his discretion as he did. I can detect, in those
reasons, no error of the kind which the well-known authorities in this area require before an appellate court can interfere
with such a discretion. I therefore agree with Jenkinson J
that leave to appeal should be refused with costs.

I certify that the preceding four (4) pages are a true copy of the reasons for judgment of his Honour Mr Justice Ryan

.

Associate:

Date:  17 June 1992

Counsel for the Applicants:	Mr D. Shavin and
Ms Zapparoni
Solicitor for the Applicants:	Molomby & Molomby
Counsel for the Respondents:	Mr P. O'Callaghan QC and Mr M. Colbran
Solicitor for the Respondents:	Wisewoulds '