Lombardo v Dermatology and Cosmetic Surgery Services Pty Ltd (summary dismissal and pleadings)
[2024] VSC 608
•2 October 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
GROUP PROCEEDINGS
S ECI 2022 00739
IN THE MATTER of
| TINA LOMBARDO & ORS (according to the schedule attached) | Plaintiffs |
| v | |
| DERMATOLOGY AND COSMETIC SURGERY SERVICES PTY LTD (ACN 055 927 618) & ORS (according to the schedule attached) | Defendants |
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JUDGE: | FORBES J |
WHERE HELD: | Melbourne |
DATES OF HEARING: | 11 and 12 July 2024 |
DATE OF JUDGMENT: | 2 October 2024 |
CASE MAY BE CITED AS: | Lombardo v Dermatology and Cosmetic Surgery Services Pty Ltd (summary dismissal and pleadings) |
MEDIUM NEUTRAL CITATION: | [2024] VSC 608 |
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PRACTICE AND PROCEDURE — Group proceeding — Pleadings — Leave to amend statement of claim — Summary dismissal or strike out application in respect of claims under the Australian Consumer Law — Pleading deficiencies — Whether representations to a class of persons relevant where individual loss and damage claimed — Whether claims are for personal injury and precluded by s 137C of the Competition and Consumer Act 2010 (Cth) — Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 — Baltic Shipping Co v Dillon (1993) 176 CLR 344 — Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 — Moore v Scenic Tours Pty Ltd (2020) 268 CLR 326 — Moore v Scenic Tours Pty Ltd (No 4) (2022) 409 ALR 259— Karpik v Carnival plc [2023] FCA 1280.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | C Truong KC M Sharkey B House | Maddens Lawyers |
| For the First Defendant | P Over | L A Warren Lawyers |
| For the Second Defendant | A McClelland KC A Christophersen | Kennedys Law |
| For the Third, Fifth and Sixth Defendants | M A Hartley KC D Guidolin SC | Gilchrist Connell |
| For the Eighth Defendant | D Bongiorno | Colin Biggers & Paisley Lawyers |
Contents
A.. Overview
B.. Principles
C.. Procedural history of amendment
D.. The present application to amend
E... Summary dismissal or strike out of the ACL claims
E.1 The inconsistency deficiencies
E.2 The causation deficiencies
E.3 The statutory prohibition deficiency
F... Other pleading deficiencies
F.1 The representations to ‘potential patients’
F.2 The social media posts
F.3 The Specialist Surgeon Representation
F.4 Section 34 of the ACL
F.5 The direct liability claims against the third through sixth defendants
F.6 The accessorial claims
F.7 Other objections raised
G.. Further and better particulars
H.. Conclusion
HER HONOUR:
A Overview
Four plaintiffs bring a representative proceeding pursuant to Part 4A of the Supreme Court Act 1986 (Vic) (the group proceeding). The group proceeding relates to cosmetic surgery procedures performed on group members by various clinics providing cosmetic surgery services (the clinics). The first defendant, Dermatology and Cosmetic Surgery Services Pty Ltd (ACN 055 927 618) (DCSS) is the corporate body operating the clinics. The second defendant, Dr Daniel Lanzer (Lanzer), is a medical practitioner providing cosmetic surgery services at the clinics as well as a director and an officer of the first defendant. The third to seventh defendants (the other cosmetic doctor defendants) are other medical practitioners who also provide cosmetic surgery services at the clinics.[1] The eighth defendant, Candice Wainstein (Wainstein) is a psychologist who provided psychological services to some group members on referral by medical practitioners employed at the clinics.
[1]The plaintiffs advised prior to the hearing that the proceeding had resolved in principle against the seventh defendant and they were excused from attending. The fourth defendant is deceased and at the time of hearing was not formally represented. Orders have been made appointing Jacqueline and Tony Darbyshire to represent the estate of the fourth defendant.
Before me are five applications on summons. First, the plaintiffs apply for leave to amend their statement of claim. The operative statement of claim was filed on 15 September 2023 (the September SOC) pursuant to the orders of John Dixon J made 14 September 2023 after a contested hearing. The proposed amended statement of claim for which leave is now sought is dated 24 May 2024, with some subsequent uncontentious amendments to that document that have been identified by the plaintiffs at hearing (the PASOC). The second to sixth defendants oppose leave.
Second, Lanzer seeks orders summarily dismissing, or striking out, parts of the September SOC. Alternatively, with respect to the paragraphs of the September SOC dealing with social media posts, he seeks further and better particulars be provided, failing which particular paragraphs be struck out.
Third, the third defendant (Aronov), fourth defendant (Darbyshire), fifth defendant (Wells) and sixth defendant (Fallahi) seek orders summarily dismissing, or in the alternative, striking out, the ACL claims. Alternatively they seek further and better particulars of specified paragraphs of the September SOC in accordance with their request dated 28 March 2024. All these applications address some pleadings that are also the subject of the plaintiffs’ application to file the PASOC and so there is overlap between the defendants’ opposition to the PASOC and their summary dismissal and strike out applications.
Fourth, the eighth defendant has sought further and better particulars relevant to the claims against her. That summons has been resolved and is the subject of orders made by consent on 12 July 2024.
Fifth, the first defendant has a summons seeking the plaintiff pay various costs related to both the history of amendments to the pleadings and the current amendments sought. The first defendant otherwise generally supports the applications of the second defendant but did not participate in the applications for dismissal or strike out. That summons has resolved by consent.
The group proceeding identifies four causes of action:
(a)a claim in negligence;
(b)a claim for breach of contract;
(c)a claim of misleading or deceptive conduct under Schedule 2 of the Competition and Consumer Act 2010 (Cth) (the Act) (the Australian Consumer Law, or ACL), namely breach of ss 18, 29 and 34, for which the plaintiffs seek damages under s 236(1) of the ACL; and
(d)a claim for breach of statutory guarantees under ss 60 and 61 of the ACL for which the plaintiffs seek damages under s 267 of the ACL.
Shortcomings identified by the third to sixth defendants in the pleaded negligence claims have now been satisfactorily addressed by the plaintiff. The summary dismissal and strike out applications remaining are directed at the ACL claims, principally those of misleading and deceptive conduct.
B Principles
Summary dismissal of a claim in a proceeding is provided for by r 23.01 of the Supreme Court (General Civil Procedure) Rules2015 (Vic) (the Rules) and also by s 63 of the Civil Procedure Act2010 (Vic) (the CPA). Rule 23.01 provides for summary judgment or a stay of a proceeding, or any claim made in the proceeding, that is ‘scandalous, frivolous or vexatious’[2] or ‘an abuse of the process of the Court’.[3] Where the relevant pleading discloses no cause of action, or is deficient in a manner which cannot be remedied, it is a matter of discretion whether to order summary dismissal of that claim.
[2]Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 23.01(1)(a)(‘Rules’).
[3]Ibid r 23.01(1)(b).
By s 63 of the CPA, the Court is also given power in a civil proceeding to give summary judgment if satisfied that a claim, defence or counterclaim has ‘no real prospect of success’.[4] The test, on an application by a party, is whether the claim has no real chance of success.[5] It is a test that applies its own language and does not paraphrase other adjectival expressions to measure a claim’s chance of success. Consistent with this approach, which is somewhat broader than the previous common law position,[6] there may be cases that are not bound to fail but that nevertheless do not have a real prospect of success. The Court’s discretion to summarily dismiss a claim under r 23.01 of the Rules or s 63 of the CPA is to be exercised with caution, on any of the identified bases for dismissal,[7] bearing in mind that it disposes finally of the rights and obligations of parties. There is a discretion in the CPA for the Court to allow a proceeding to go to trial despite there being no real prospect of success.[8]
[4]Civil Procedure Act2010 (Vic) s 63(1) (‘CPA’).
[5]Ibid s 62 where the application is made by a defendant.
[6]As set out in General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125.
[7]These matters are set out in Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd (2013) 42 VR 27 at [35](a)–(d).
[8]CPA s 64.
Striking out of pleadings is governed by r 23.02 of the Rules, which provides for a pleading to be struck out if it ‘does not disclose a cause of action or defence’,[9] ‘is scandalous, frivolous or vexatious,’[10] ‘may prejudice, embarrass or delay the fair trial of the proceeding’[11] or where it ‘is otherwise an abuse of the process of the Court’.[12] Rule 23.02 addresses insufficiencies in pleadings and permits a pleading that carries the characteristics of r 23.02 to be struck out or amended so as to be pleaded properly. The purpose of this rule is not to truncate proceedings, but to ensure pleadings serve their purpose in allowing the opposing party or parties to understand and respond to the case against them. A pleading that is unintelligible, ambiguous, vague or confusing may be liable to be struck out, as may a pleading that fails to clearly state material facts and instead pleads conclusionary matters only. A pleading should, standing alone, inform the opposing parties of the factual and legal elements of the claim or defence it raises. Those matters should not be obscured by material that has no direct bearing on the causes of action and issues for determination. An application to strike out a pleading is brought within the context of an obligation on parties under s 42 of the CPA not to make claims that do not have a proper basis on the factual and legal material available.
[9]Rules r 23.02(a).
[10]Ibid r 23.02(b).
[11]Ibid r 23.02(c).
[12]Ibid r 23.02(d).
The threshold for a strike out application, as described by the Court of Appeal in Uber Australia Pty Ltd v Andrianakis,[13] mirrors the summary dismissal test:
When a defendant contends that a statement of claim should be struck out because it does not disclose a cause of action it is necessary for a defendant in the position of Uber to establish that it would be futile to allow the statement of claim to go forward, because it raises a claim that has no real prospect of success in the sense of being ‘fanciful’. It follows that, where there is a contentious or debatable point of law which arises on a pleading, it is usually inappropriate for a trial judge or the Court of Appeal to determine the issue on a strike-out application, particularly where the answer may depend on the factual context.[14]
[13](2020) 61 VR 580.
[14]Ibid 590 [35].
Where the pleading is embarrassing or lacking in some other way that can be remedied, leave would ordinarily be given to replead. In this regard, the number of prior opportunities to replead is a relevant consideration, as are the matters raised in opposition by the other parties.
These principles were not in contest between the parties.
Pleadings serve to outline and identify the issues in dispute for the parties. They also serve to facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute by the Court. Since the September SOC, the issues in the group proceeding have been tolerably clear to the Court and able to be responded to by the defendants in their defences. The case management process and the hearing of these applications have further elucidated the issues exposed by the pleadings. It is common that full particulars cannot be provided before interlocutory steps are completed and leave to amend pleadings often occurs throughout preparation for trial in a timely way.
In light of the pleading issues raised, it is useful to set out the matters that must be proved to maintain a claim against a defendant under the ACL. To establish a breach of s 18, four steps are necessary:
first, identifying with precision the “conduct” said to contravene s 18; second, considering whether the identified conduct was conduct “in trade or commerce”; third, considering what meaning that conduct conveyed; and fourth, determining whether that conduct in light of that meaning was “misleading or deceptive or likely to mislead or deceive”.[15]
Similar considerations arise in relation to ss 29 and 34.
[15]Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd (2023) 277 CLR 186, 225 [80] (‘Self Care’).
The first step must identify the conduct relied on. As Hayne J said in Google Inc v Australian Competition and Consumer Commission,[16] ‘the first question for consideration is always: “What did the alleged contravenor do (or not do)?”.[17] Separately, and after identification of conduct, one goes on to consider the characteristics of the conduct in order to determine whether it is conduct that leads or is likely to lead into error.[18]
[16](2013) 249 CLR 435.
[17]Ibid 465 [89].
[18]Miller and Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357, 368 [15] (‘Miller and Associates’).
Once conduct of the requisite character is identified and breach established, in order for any group member to obtain relief, s 236(1) of the ACL provides that:
If:
(a)a person (the claimant) suffers loss or damage because of the conduct of another person; and
(b)the conduct contravened a provision of Chapter 2 or 3;[19]
the claimant may recover the amount of the loss or damage by action against that other person, or against any person involved in the contravention.
[19]Noting s 18 falls within Chapter 2 and ss 29 and 34 fall within Chapter 3.
This requires a claimant to prove a causal nexus, namely that the conduct induced them to act in a particular way or put another way, they relied on the conduct. Under s 236(1)(a) of the ACL, a claimant who suffers loss or damage when reliant on, or induced by, impugned conduct must show that the loss or damage was ‘because of’ the relevant conduct. Proving causation and proving the quantum of the resulting loss or damage are distinct steps, both of which are required in order to obtain relief under s 236. In Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL,[20] which dealt with a claim for damages under s 82 of the Trade Practices Act 1974 (Cth) for a breach of the predecessor provision to s 18 of the ACL,[21] the joint judgment said:
The distinction between proof of causation and damages was emphasized in Hotson v. East Berkshire Area Health Authority. There Lord Ackner stated that the first issue that fell to be determined was that of causation. This was to be determined on the balance of probabilities. Once liability was established, the assessment of the plaintiff's loss could proceed, taking into account any reductions arising from the uncertainty of future events. When the issue of causation turns on what the plaintiff would have done, there is no particular reason for departing from proof on the balance of probabilities notwithstanding that the question is hypothetical.[22]
[20](1994) 179 CLR 332 (‘Sellars’).
[21]Trade Practices Act 1974 (Cth) s 52.
[22]Sellars (n 20) 353 (Mason CJ, Dawson, Toohey and Gaudron JJ) (citations omitted).
To determine causation ‘because of’ misleading or deceptive conduct, Stewart J in Karpik v Carnival plc (‘Karpik’)[23] identified the causal question as whether the plaintiff relied on the impugned representations when deciding to board the cruise, which was a different question to that asked of causation in a negligence claim involving an allegation of a failure to warn. His Honour said:
…one does not ask what Mrs Karpik would have done had the identified warning been given, that rather whether the misleading conduct materially contributed to the loss or damage… In the present case, the question is whether the misleading conduct materially contributed to Mrs Karpik going ahead with the cruise and boarding the vessel…[24]
[23][2023] FCA 1280 (‘Karpik’).
[24]Ibid 219 [842] (citations omitted).
His Honour concluded that the ‘but for’ test of causation as applied in a negligence claim is inappropriate to the causal connection required by the statutory phrase ‘because of’ under s 236 of the ACL. In Karpik, His Honour found that there ‘was little doubt that each of the representations contributed to [Mrs Karpik’s] willingness to board the vessel’, which was sufficient to establish causation.
As to proof of loss and damage occurring ‘because of’ conduct, it is open to allege that, if aware of the true position, the claimant would not have entered into the transaction at all, or believed there were entering into a different transaction. Those scenarios are necessarily alternatives. When assessing damages, if the former position is accepted a ‘no transaction’ approach restores the claimant to the position that would have existed absent entry into the agreement. If the latter position is accepted, a ‘different transaction’ approach seeks damages being the difference between the loss identified and the hypothetical basis of what a different transaction – that which was promised – might have achieved.[25]
[25]Wyzenbeek v Australasian Marine Imports Pty Ltd (in liq) (2019) 272 FCR 373, 396 [89].
C Procedural history of amendment
The PASOC is described by the defendants as the eighth statement of claim, although many of the prior drafts were circulated for comment but not ultimately filed. The September SOC followed a contested application heard by John Dixon J on 28 July 2023. In the reasons for ruling following the hearing, his Honour noted that the statement of claim had developed from a ‘distinctly uninformative’ general endorsement to a pleading that ‘has followed on the plaintiffs’ responses to exchanges between the legal teams through several drafts’.[26] The state of the pleading at that time was thought by his Honour to identify claims that were ‘tolerably clear’, but his Honour was persuaded that a ‘more precise pleading is likely to save time and cost in the long run’.[27] As a result, his Honour did not grant leave to file the amended pleadings in the form proposed and provided reasons that gave guidance as to the shortcomings to be remedied. His Honour ordered the plaintiffs to provide a further pleading dealing with the identified matters and gave the defendants a week to respond by filing an outline of contentions against leave being granted if opposed.
[26]Lombardo v Dermatology and Cosmetic Surgery Services Pty Ltd [2023] VSC 463, 1 [2] (‘Lombardo’).
[27]Ibid 1 [4].
Leaving to one side the shortcomings alleged in relation to the negligence claim which have now been addressed, the major issue before John Dixon J focused on the plaintiffs’ claims of misleading or deceptive conduct under the ACL. To that end, his Honour identified the following four matters that needed to be addressed:
(a)the ‘rolled up’ definition of pleaded representations which made it difficult to know (i) which of the defendants made one or more of the representations and (ii) whether the representations appeared on the Lanzer website, the social media posts or both. In particular it was unclear whether the social media posts took allegations further than written representations on the website;[28]
(b)the lack of identification by the plaintiffs of whether or when they read any of the written statements on particular identifiable social media accounts that constituted a representation. The material was unclear as to which the representations may be inferred and whether oral representations are relied on. His Honour found that the plaintiffs should plead their best general allegations about the material, bearing in mind they no longer had access to the social media content;[29]
(c)the lack of particulars regarding the oral representations alleged by the plaintiffs in the social media content and during consultations. To this end, the defendants accepted that substantially identical oral representations can be pleaded to enable identification of a common fact or issue;[30] and
(d)the lack of particulars regarding the plaintiffs reliance on the oral representations. While his Honour noted the written representations were accompanied by ‘extensive particulars’,[31] reliance on the oral representations is not so particularised, with a consequence that the pleading as to reliance on those representations is opaque.
[28]Ibid 17–8 [50]–[52].
[29]Ibid 18–9 [53].
[30]Ibid 19–20 [55]–[56].
[31]Ibid 19 [54].
The defendants, while noting deficiencies in the pleadings, gave consent for the September SOC to be filed. On one hand, all defendants consented to the filing of the September SOC and none took the opportunity provided to file an outline of contentions as to why leave should be refused. On the other hand, some defendants described their consent as subject to a request for further and better particulars to be provided by the plaintiffs and some reserved their position in relation to a potential strike out application.[32] All defendants have filed substantive defences to the September SOC.
[32]Transcript of Proceedings, Lombardo v Dermatology and Cosmetic Surgery Services Pty Ltd (Supreme Court of Victoria, S ECI 2022 00739, Justice John Dixon, 14 September 2023), 6.28–7.1; 15.12–6, 17.6–8.
Leave was granted to the plaintiffs to file the September SOC pursuant to the orders of John Dixon J made 14 September 2023. It addressed the matters raised by John Dixon J’s reasons for ruling dated 10 August 2023, including the above matters identified with respect to the plaintiffs’ ACL claims.
The defendants now contend that parts of the September SOC ought be summarily dismissed or struck out. I will deal with these matters on their merit, notwithstanding some issues were squarely raised and consented to in filing the September SOC.
The plaintiffs’ case for misleading or deceptive conduct, as described in their written submissions, is that:
the defendants, by their promotion of themselves on the Lanzer Website, on social media and in standard contractual documentation, wrongly induced the plaintiffs and other group members into believing that Lanzer and the Other Cosmetic Doctor Defendants were specialist surgeons with qualified surgical training, were plastic surgeons and were otherwise pre-eminent and excellent in their provision of these services, causing them to pay fees for, and suffer distress and disappointment from, cosmetic surgery.[33]
[33]Plaintiffs, ‘Plaintiffs’ Written Submissions dated 1 July 2024’ in Lombardo v Dermatology and Cosmetic Surgery Services Pty Ltd S ECI 2022 00739, 2 [2.3] (‘Plaintiffs’ Written Submissions’).
The plaintiffs’ ACL claim, as articulated in the September SOC at paragraphs [86] through to [110], pleads a particular sales system for the purpose of selling cosmetic surgery services (the sales system). That sales system is described in John Dixon J’s reasons and set out in paragraph [86] of the September SOC. It remains unchanged in the PASOC apart from some minor amendments. The participation of the other cosmetic doctor defendants in the sales system is pleaded at paragraph [87] of the September SOC, which states that the relevant defendants were advertised on the Lanzer website, conducted pre-engagement and pre-surgery consultations, and performed cosmetic surgery services at DCSS clinics within the sales system.
The September SOC identified the relevant conduct as five representations that were made by the first and second defendants to the public, including to the plaintiffs and group members. They are defined as:
(a)the Pre-Eminence Representation;
(b)the Plastic Surgeon Representation;
(c)the Personal Line to Lanzer Representation;
(d)the Independent Psychologist Representation; and
(e)the Excellent Service Representation (together, the representations).
Each representation is alleged to be misleading or deceptive, or likely to mislead or deceive.
D The present application to amend
One new pleading issue arose after the September SOC was filed. The defences pleaded the operation of s 137C of the Act which precludes recovery of damages under s 236 of ACL for loss or damage resulting from death or personal injury. The plaintiffs’ reply accepted that such damages are precluded and that any claim not so barred ought be articulated in the statement of claim and not in the reply. That issue meant it would be necessary to reopen the pleadings to address this issue.
The plaintiffs’ PASOC addresses the following matters of substance:
(a)amendment to the pleadings to make clear that damages sought under the ACL claims were confined to damages where recovery is not barred by s 137C of the Act;[34]
(b)a change from a pleading that representations were made to ‘the public’ to ones made to a class identified as ‘potential patients’. In both the September SOC and the PASOC the identified class includes the plaintiffs and group members;[35] and
(c)the addition of a sixth representation, defined as the ‘Specialist Surgeon Representation’,[36] alleging that Lanzer and the other cosmetic doctor defendants were specialist surgeons who had specialist surgical training and qualifications. The Specialist Surgeon Representation is alleged to be conveyed on the Lanzer website and is particularised in the PASOC.[37]
[34]See Plaintiffs, ‘Proposed Amended Statement of Claim dated 24 May 2024’ in Lombardo v Dermatology and Cosmetic Surgery Services Pty Ltd S ECI 2022 00739, [2.3] (‘PASOC’) at [204], [206], [208] and [210] which plead this with respect to each of the plaintiffs in identical terms.
[35]PASOC [88], [94]–[100], [103] and [106]–[108].
[36]This addition was foreshadowed by the plaintiffs’ senior counsel at hearing on 10 May 2024; see PASOC at [88](aa) and [88A].
[37]PASOC [94].
Other changes of less substance expanded or deleted some matters in the September SOC, moved some paragraphs to a more logical location and moved many of the existing particulars to a schedule for ease of comprehension.[38]
[38]PASOC sch B.
E Summary dismissal or strike out of the ACL claims
Lanzer seeks summary dismissal or strike out of paragraphs [88] through to [110] and [203] through to [212] of the September SOC, being almost the entirety of Part C.[39] Lanzer also opposes the amendments sought in the PASOC with respect to these pleadings on the basis that the defects in the September SOC have not been remedied. His submissions were supported by the first defendant and largely adopted by the third to sixth defendants. Unless the context distinguishes their position, I will simply refer to the position of the defendants as articulated primarily by Lanzer.
[39]See Plaintiffs, ‘Statement of Claim filed 15 September 2024’ in Lombardo v Dermatology and Cosmetic Surgery Services Pty Ltd S ECI 2022 00739, (‘September SOC’); Part C of the September SOC commences at [86] and concludes at [110]; see also PASOC [86]–[110].
The defendants submit that there are four ways that Part C of the September SOC remains defective:
(a)the claims for loss are inconsistent with each other and so contravene r 13.09 of the Rules;
(b)the formulation of the claims are inconsistent with the plaintiffs’ reply filed 4 March 2024 (the reply) and so contravene r 13.09 of the Rules (together with (a) the inconsistency deficiencies);
(c)there is no arguable causal nexus between the representations and the plaintiffs’ alleged loss (the causation deficiencies); and
(d)the mental distress claims remain in whole or in part ‘loss that is or is caused by personal injury’ and are precluded under s 137C of the Act (the statutory prohibition deficiency).
E.1 The inconsistency deficiencies
The defendants contend that the pleadings at paragraph [203] through to paragraph [213] of the PASOC are inconsistent with each other and inconsistent with the reply and so breach r 13.09(2) of the Rules which prohibits inconsistent pleadings.
The defendants contend that only a no transaction case is advanced by paragraph [203] and those following, which would only entitle the plaintiffs to recover the amount they lost by entering into the contract. Yet, submit the defendants, loss and damage is sought on three bases: a refund of the full value of the contract, the difference between the price paid and the actual value of the service provided, and damages for distress and disappointment upon the basis of Baltic Shipping Co v Dillon[40] (‘Baltic Shipping’) (Dillon damages).
[40](1993) 176 CLR 344 (‘Baltic Shipping’).
The reply pleads damages for distress and disappointment but, for Ms Tina Lombardo (the first plaintiff, or Lombardo), refers to the particulars in paragraph [191] of the September SOC.[41] Those particulars are found in Part E of the pleadings which deal with the plaintiffs’ claims under negligence and refer to the first plaintiff’s ‘Injury Loss and Damage’ – a defined term which includes particulars of personal injury. Therefore, the defendants submit that the PASOC is inconsistent with the filed reply and maintains a claim for personal injury damages.
[41]See also September SOC at [192]–[194] which are the equivalent particulars for the other three plaintiffs.
The plaintiffs contend that their pleading identifies two alternate ways that they put their case and as such complies with r 13.09 of the Rules, which permits inconsistent pleadings in the alternative.[42] As to any inconsistency with the reply, the plaintiffs submit that the purpose of the proposed amendments is to move the claims from the reply to the statement of claim. If leave is given with respect to the PASOC, then those matters in the reply are overtaken by the PASOC and by any subsequent response to the new defences.
[42]Rules r 13.09(1).
The plaintiffs submit, both in writing and orally, that their ACL claims for loss and damage are alternative. The first alternative is a no transaction case, namely that had the plaintiffs not been misled or induced by some or all of the representations they would not have entered into the relevant contract. On that basis, the relief sought is a refund of the actual cost of the service. The second alternative, if the no transaction case fails, is premised on a finding that the contract was entered into and performed, again in reliance on the representations alleged, with the object and promise that the service would improve the appearance of the plaintiffs and group members. On that case, the plaintiffs seek damages comprising two elements. The first element is the difference between the price actually paid and the true value of the service and the second, Dillon damages for disappointment at the poor aesthetic outcome of the cosmetic surgery services.
An identical plea for loss and damage is in the breach of contract claim at paragraphs [196] through to [202A] and at paragraph [217] of the PASOC. As a breach of contract claim, the defendants take no objection to the pleading.[43] The defendants’ opposition to the ACL claim contends that only a no transaction case is advanced on the pleading.
[43]Transcript of Proceedings, Lombardo v Dermatology and Cosmetic Surgery Services Pty Ltd (Supreme Court of Victoria, S ECI 2022 00739, Justice Forbes, 11-12 July 2024), 11.26–9 (‘T’).
In my view, the difficulty in part arises because of the way paragraph [203] of the PASOC is phrased. It bundles in matters relating to reliance, causation and the issue of loss. It provides:
203In reliance on each of the representations, separately and cumulatively, Lombardo:
a.entered into the Surgery Contract with DCSS for cosmetic surgery services to be provide and performed by DCSS, Lanzer or the other Cosmetic doctor defendants, which contract would not have been entered into but for the representations; and/or
b.maintained or did not withdraw her consent to Lombardo’s surgery being performed on her.
Particulars
Particulars are provided at Schedule B
Further, by reason of the enticing nature of the express statements made constituting the Representations, it should be inferred that the Representations were made to induce, and did in fact induce, entry into the relevant Surgery Contract.[44]
[44]PASOC [203] (underlining added for emphasis).
Other than the addition of the particulars, this paragraph is unchanged from the September SOC. As can be seen, paragraph [203] of the PASOC is principally concerned with the need to plead reliance on the representations. In oral argument counsel for the plaintiffs described it as a paragraph addressing reliance in conventional terms.[45] It was not directly concerned with loss and damage which are addressed at paragraph [204], where the first plaintiff’s loss and damage is particularised as follows:
[45]T 49.1–7.
Particulars
But for the representation contraventions, Lombardo would not have entered into the Surgery Contract and/or would not have maintained her consent for the surgery, and consequently Lombardo lost the full cost value of her Surgery Contract
., and would consequently not have suffered Lombardo’s Injury Loss and DamageIn the alternative;
1. Lombardo’s cosmetic surgery services were either worthless or worth less that the amount she paid having regard to what a fully informed customer would have paid for the services, further particulars of which will be provided prior to trial.
2. Lombardo also suffered Dillon damages in the nature of distress, inconvenience and disappointment at the poor aesthetic outcome of the cosmetic surgery services, and loss of the enjoyment of the expected improvement to her appearance. Lombardo relies on the particulars to paragraph 202A above. Further particulars will be provided prior to the initial trial.[46]
[46]PASOC [204] as there set out, with the proposed additions underlined and proposed deletions struck through.
To obtain the relief pleaded, the plaintiffs must prove a causal link between their decision to enter into the relevant contract and to maintain consent for the surgical services, and the defendants’ representations. Reliance is part of that causal question and addressed below. As to the inconsistency, the words italicised in paragraph [203](a) of the PASOC above appear to address reliance only on a no transaction basis and not on the alternative counterfactual, namely that the plaintiffs would nevertheless have entered into the contract for services in reliance on the representations and claims loss and damage from that inducement. That basis is, to some extent, addressed in the newly added particulars. Paragraph [203] of the PASOC in its present form requires adjustment for clarity.
As to any inconsistency with the reply, it is clear that matters in that document will be overtaken by any permitted amendments to the pleadings and subsequent defences. Should it be necessary to do so, leave can be given to delete matters in the reply where leave is given to include them in the statement of claim.
On the basis that the pleaded ACL claims seek relief that is either the actual cost of the cosmetic surgery services, or alternatively, recovery of the amount paid beyond the actual value of the services and Dillon damages, I turn to the other deficiencies outlined by the second defendant.
E.2 The causation deficiencies
The second defendant submits there is no arguable causal nexus between the representations and the claimed losses. On the no transaction case, it is said that the plaintiffs make no denial of the contract being performed and do not allege a total failure of consideration. The plaintiffs submit that reliance is clearly pleaded and is sufficient to establish an arguable causal nexus, both for the allegation that they would not have entered into the contract for services had the conduct not occurred, and the alternative plea that they were induced to enter into the contract by the conduct. That causal nexus is pleaded for Lombardo at paragraph [203] of the PASOC, at least on the no transaction basis.
As to the alternative basis that in relying on the conduct the plaintiffs suffered loss and damage, the second defendant says that no cause of action is disclosed. He submits there is no pleading to establish a viable causal nexus that the claimed losses are ‘because of’ the conduct as required by s 236 of the ACL. He relies on the observation of Bell, Keane and Nettle JJ in Berry v CCL Secure Pty Ltd[47] that a claimant is entitled to recover by way of damages:
the actual damage “directly” flowing from the fraudulent inducement – including losses flowing from causes “inherent” in the transaction – but is not entitled to recover losses of which the cause is “independent”, “extrinsic”, “supervening” or “accidental” such that those losses cannot rationally be regarded as caused by the deceit.[48]
[47](2020) 271 CLR 151.
[48]Ibid 170–1 [31].
The defendants also take issue with the pleading that the loss of value of the cosmetic surgery services is to be determined with regard to what a fully informed customer would have paid for the services. Lanzer’s written submissions ask rhetorically what things such a customer would know that Lombardo did not which might affect the value of the services provided. Lanzer illustrates this by the following examples: why would knowledge about Lanzer’s availability on his mobile phone as conveyed by the Personal Line to Lanzer Representation, or the knowledge of Aronov and Wainstein’s personal relationship contrary to the Independent Psychologist Representation, make any difference to the value of the services offered.
I do not accept these criticisms of the proposed pleading. First, the no transaction case advanced by the plaintiffs is the counterfactual of action or inaction on their part had the deceptive or misleading conduct not occurred. The causal connection of reliance is identified. Whether it can be proved is a matter for trial. I accept the plaintiffs’ submission as to this, notwithstanding my observations about paragraph [203] of the PASOC.
Second, the deficiencies raised by the alternative plea of loss and damage are misconceived. If the claimants establish causation under s 236 of the ACL, that is they establish their loss is ‘because of’ the defendants’ conduct, then the quantum of that loss is to be assessed. One measure of damages is assessed by ascertaining the difference between the purchase or contract price paid and what would have been a fair price to have paid.[49] That is precisely the plea made in paragraph [204] of the PASOC and understood as such by the defendants.[50] Whether the loss is ‘directly’ flowing from those representations is a debatable matter for trial.
[49]Potts v Miller (1940) 64 CLR 282; Gould v Vaggelas (1984) 157 CLR 215.
[50]Second Defendant, ‘Second Defendant’s Outline of Submissions dated 1 July 2024’ in Lombardo v Dermatology and Cosmetic Surgery Services Pty Ltd S ECI 2022 00739, 22–3 [97]–[98] (‘Second Defendant’s Written Submissions’).
The complaint is that this does not enable the defendants to understand the quantum of the claim. Leaving aside the price paid for the services, which is surely within the knowledge of at least the first defendant, the issue of quantification of the claim on this basis is a matter of evidence. Damages calculated as the reduction in value of the services are conventionally available for loss sustained because of a false or misleading inducement to enter into a contract.
The ACL provides specifically for such measure of loss under the statutory guarantee provisions by s 267(3)(b). In Moore v Scenic Tours Pty Ltd (No 4) (‘Moore (No 4)’),[51] Garling J observed that, where available, ‘the notion of such damages which most closely approximates a major failure is the “no transaction approach”’.[52] Despite his Honour’s observation, he was constrained by the Court of Appeal’s judgment to assess loss under s 267(3)(b) on the basis of an assessment of market value by estimating the amount a fully informed customer would pay.[53] His Honour observed that no distinction was drawn between causes of damage being either a breach of contract of the relevant ACL breach. It is not suggested that damages on this basis are not available if a no transaction case is not successful. Indeed the defendants do not dispute the pleading of such a claim under the rubric of the breach of contract claim.[54]
[51](2022) 409 ALR 259 (‘Moore (No 4)’).
[52]Ibid [39].
[53]Scenic Tours Pty Ltd v Moore (2023) 376 FLR 187 [24].
[54]T 103.19–104.4.
The defendants’ real complaint seems to be that some particular aspects of the conduct may have no or little causal connection with the value of the services. Accepting that the Pre-Eminence, Plastic Surgeon and Excellent Service Representations, as a general proposition, may be likely to have a greater effect on the value of cosmetic surgery services than the illustrations identified by the second defendant, the submission approaches the pleading as if it must set out the effect of each representation on the value of the services. As has been repeatedly stated, conduct and its characterisation is determined by:
Whether in the light of all relevant circumstances constituted by acts, omission, statements, or silence, there has been conduct which is or is likely to be misleading or deceptive.[55]
[55]Miller and Associates (n 18) 368 [14] (French CJ and Kiefel J).
To similar effect in Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd (‘Self Care’)[56] the joint judgment of Kiefel CJ, Gageler, Gordon, Edelman and Gleeson JJ, after identifying the four steps as set out above at paragraph [16], said:
The third and fourth steps require the court to characterise, as an objective matter, the conduct viewed as a whole and its notional effects, judged by reference to its context, on the state of mind of the relevant person or class of persons. That context includes the immediate context – relevantly, all the words in the document or other communication and the manner in which those words are conveyed, not just a word or phrase in isolation – and the broader context of the relevant surrounding facts and circumstances. …the description of the conduct alleged and identified as the first step should be sufficiently comprehensive to expose the complaint, because it is that conduct that will ultimately, as a whole, be determined to be or not to be misleading or deceptive.[57]
[56](2023) 277 CLR 186.
[57]Ibid 225–6 [82] (citations omitted)(emphasis added).
To submit that the pleadings ought address the effect of each representation on lessening the value of the contract, as the second defendant’s written submissions suggest at paragraphs [104] through to [108], was expressly rejected by Garling J, albeit in the context of the statutory guarantees. His Honour said:
It is also apparent that damages are assessed by reference to the value of the services actually provided and the differential between that value and the price paid for the services. It does not make any difference to that assessment which of the consumer guarantees were breached. The assessment is not increased by the number of guarantees breached. It is therefore not necessary to identify and separately consider each of the breaches of consumer guarantees….[58]
[58]Moore (No 4) (n 51) [43].
If that be so, by analogous reasoning, a statutory claim for misleading and deceptive conduct can also be approached in the same way as a claim for breach of contract. The defendants’ complaint that no cause of action is disclosed cannot be sustained. The plaintiffs’ reliance on the inducing conduct is pleaded, as is the basis upon which the loss of value is claimed. The quantum of any loss to be assessed on this basis becomes a matter for evidence.
It is true that in claims seeking damages for personal injury certain particulars that address the quantum of special damages claimed are required by the Rules. As a result some expenses are particularised in the PASOC, such as the expense of the service itself in the negligence section particulars. As the plaintiffs submit, a refund is not a loss resulting from personal injury, although it may be a loss that can be claimed in an action for personal injury. The ACL claims for misleading and deceptive conduct are not, as all parties accept, claims for personal injury. The pleading identifies the method by which the fair or real value of the services will be proven. Nor is the pleaded loss untethered from the exercise of proving loss ‘because of’ the impugned conduct. The question of reliance relates to the representations found to have been made and the meanings conveyed by that conduct. Causation in such claims is described by Stewart J in Karpik as ‘subtly different’ from the negligence case based on a duty to warn that was also considered in those reasons as set out at paragraph [20] above. His Honour in Karpik also said:
Although it could not be said with confidence that if the misrepresentations had not been made, Mrs Karpik would not have gone on the cruise, such a “but for” test is inappropriate to the causal connection required by “because of” in ACL s 236. It can also not be said with any confidence that if the misrepresentations had not been made, Mrs Karpik would still have gone aboard regardless. The application of a “but for” test in this case would be indeterminate. However, there can be little doubt that each of [the Representations] contributed to Mrs Karpik’s willingness to go aboard, and her sense of safety or security in doing so, which is exactly the effect that they were intended to have on her and the other passengers. That is sufficient to establish causation for the purposes of ACL s 236.[59]
[59]Karpik (n 23) 220 [846].
As the plaintiffs made clear in their submissions, their primary case is that had the conduct identified by them as misleading or deceptive not occurred, they would not have entered into the relevant contracts for services. Their alternative case is that that the conduct materially contributed to their decisions to go ahead with the surgical services. That is the point that emerged clearly in the hearing, but was perhaps less clear in the way paragraph [203] of the PASOC was drafted. Establishing the quantum of loss by reference to a fully informed customer is an accepted method of proving loss on the latter basis.[60]
[60]Moore (No 4) (n 51) at [41]–[42] (Garling J) notwithstanding his Honour’s reservations at [39].
The language used in paragraph [204] of the PASOC to plead loss and damage suffered because of the contraventions of the ACL clearly sets out the two alternatives, albeit with numbering of the alternatives by way of particulars that some have found confusing. The first particular sets out the no transaction case. The alternative case contains two elements of loss and damage; the lesser value of the service provided and the recovery of Dillon damages for distress, inconvenience and disappointment.
For these reasons the defendants’ submission that the pleading regarding the misleading or deceptive conduct claims do not disclose any arguable causal nexus between conduct and damage cannot be maintained. The question of causation in the ACL claims will be approached in light of findings about the representations made and their meaning. The point was made in argument that questions of causation under each of the four claims are to be determined by the appropriate test of causation depending on whether the negligence, breach of contract or ACL claims are under consideration, as well as the individual circumstances of the group members. Causation in the negligence claims is also impacted by various state legislation including the Wrongs Act 1958 (Vic) and the Civil Liability Act 2002 (NSW). Questions of causation do not form part of the common questions presently identified in the PASOC.
The pleadings in the PASOC disclose a causal nexus of reliance by the plaintiffs on the representations identified. Whether that reliance is borne out becomes a matter of evidence, both as to the representations relied on and the meaning conveyed by them, as well as their contribution to the plaintiffs’ preparedness to enter into the agreements for the cosmetic surgery services.
E.3 The statutory prohibition deficiency
The principal objection to the ACL claims as a whole is that, notwithstanding the express plea that the plaintiffs do not claim damages prohibited by s 137C of the ACL, they remain ‘in part or whole a claim for loss that is or is caused by personal injury’.[61] The defendants submit that Baltic Shipping contemplates damages for distress and disappointment where the loss is one of expectation and where the object of the agreement is enjoyment. They submit that, by contrast, none of the alleged representations could have given rise to an expectation about ‘any specific aesthetic outcome’ from the cosmetic surgery services. Further, any disappointment resulting from a poor aesthetic outcome remains factually consequential on personal injury. This submission relies on the comments of Edelman J in Moore v Scenic Tours Pty Ltd:[62]
The scheme in Pt 2 of the Civil Liability Act may be comprehensive in its coverage of damages that are consequential upon physical injury so that, for instance, it would include damages for mental harm where the effect of the physical injury was to ruin or prevent the plaintiff’s holiday. But where the claim for breach of contract or for breach of a statutory guarantee is not for damages that are consequential upon physical injury then Pt 2 of the Civil Liability Act does not apply to either of the components of a claim for compensatory damages for breach of contract, namely the performance interest or consequential losses.[63]
[61]Second Defendant’s Written Submissions 20 [85](d).
[62](2020) 268 CLR 326 (‘Moore (HCA)’).
[63]Ibid 347–8 [62] (Edelman J).
Dillon damages are firstly an exception to the rule that one cannot recover damages in an action for breach of contract for ‘disappointment of mind’ for the contract not being performed as anticipated. The exceptions to this rule identified by Mason CJ in Baltic Shipping, have been expanded by judicial decision so much so that the authority of the general rule was described by his Honour as ‘somewhat uncertain’.[64] However, one accepted exception is where the object of the contract is to provide pleasure, relaxation or freedom from molestation. In other words:
damages for anxiety suffered by the plaintiff may be recovered in an action for breach of a contract which promises freedom from anxiety.[65]
[64]Baltic Shipping (n 40) 361 (Mason CJ).
[65]Ibid 360 (Mason CJ); see also 382 (Deane and Dawson JJ).
The approach to the availability of damages for disappointment favoured by Mason CJ was:
On the other hand, as a matter of ordinary experience, it is evident that, while the innocent party to a contract will generally be disappointed if the defendant does not perform the contract, the innocent party's disappointment and distress are seldom so significant as to attract an award of damages on that score. For that reason, if for no other, it is preferable to adopt the rule that damages for disappointment and distress are not recoverable unless they proceed from physical inconvenience caused by the breach or unless the contract is one the object of which is to provide enjoyment, relaxation or freedom from molestation. In cases falling within the last-mentioned category, the damages flow directly from the breach of contract, the promise being to provide enjoyment, relaxation or freedom from molestation. In these situations the court is not driven to invoke notions such as "reasonably foreseeable" or "within the reasonable contemplation of the parties" because the breach results in a failure to provide the promised benefits.[66]
[66]Ibid 365 (Mason CJ) (emphasis added).
It is not novel to have a claim for Dillon damages resting alongside claims for damages for personal injury, whether in tort, contract or under statute. In Baltic Shipping, Mrs Dillon herself recovered damages for personal injury, including both physical injury and emotional trauma, as well as damages for disappointment and distress when the cruise ship she was travelling on foundered and sank. Similarly in Karpik, Mrs Karpik sought damages for personal injury as well as Dillon damages for distress and disappointment for breach of s 18 of the ACL. No issue was taken that the claim for the former precluded claims for the latter as a matter of principle.
In the High Court case of Moore v Scenic Tours Pty Ltd, Mr Moore suffered no personal injury so the distinction between damages for personal injury occasioned by negligence, breach of contract or under statute and damages for disappointment and distress did not arise. The question addressed there was whether distress and disappointment damages were precluded by the Civil Liability Act 2002 (NSW). Edelman J, agreeing as to the outcome that Dillon damages were not precluded but writing separately, said:
The primary species of damages for a breach of contract are often expressed as “expectation damages” or as responding to an expectation loss…. However, the expressions are problematic. In particular, they can conceal a fundamental difference between two components of compensatory damages for breach of contract, both of which are necessary parts of the compensatory goal of restoring the injured party to the position they would have been in if the breach had not occurred. Those components are compensation directly for the performance interest and compensation for consequential losses…
Where contract damages provide compensation directly based on the performance interest, that component of the award is not concerned with loss in any real or factual sense. The compensation for the performance interest, “by the value of the promised performance”, appears “as a ‘loss’ only by reference to an unstated ought”. The aim of this component of the award is to provide the promisee with the difference between the value of what was promised and the value of what was received.
***
A promisee might also suffer true, consequential, loss from a breach of contract. These consequential losses might include economic (financial) losses to the promisee to the extent that they go beyond the value of the promised performance and are within the boundaries of legal responsibility. They can also include some non-economic losses.[67]
[67]Moore(HCA) (n 62) 348–9 [63]–[66] (Edelman J)(citations omitted).
The plaintiffs’ claim is pleaded as a contract entered into for the purpose or object of improving their aesthetic appearance. If they establish this on the evidence, then they have an entitlement to seek Dillon damages which are not personal injury damages but damages arising from their performance interest. The defendants submit that any such claim is and remains ‘inseparable’[68] from distress as a result of personal injuries and that the plaintiffs themselves identify several reasons for their distress at the failed surgeries, one of which is the injuries suffered as a result of the surgeries.[69]
[68]Second Defendant’s Written Submissions 27 [121].
[69]T 108.25–8.
In response, the plaintiffs submit that they can have more than one source of distress and disappointment, and distinguish between the distress at bodily appearance and distress at the personal injury occasioned by the surgery.
The defendants also submit that s 137C of the Act does not allow for an apportionment or contribution of mental distress but rather it precludes all claims that result from personal injury. Questions of contribution or apportionment are not raised by a separate claim for damages that are not personal injury damages. The defendants submission on this point starts from the wrong premise that personal injury damages for mental harm and Dillon damages compensate for the same loss. The relevant principle where both personal injury damages and Dillon damages are sought is the principle that damages are awarded to put a plaintiff in the position they would have been had the actionable wrong not occurred.
Disappointment or distress, indignation and other emotions in reaction to the conduct of another is not a claim for impairment of a physical or mental condition, rather it is a normal and expected reaction to events. In Karpik, Stewart J said:
The applicant is correct in the submission that distress, disappointment, anxiety, frustration, and so on, that arises from personal injury is not compensable as Dillon damages. The result of that, however, and contrary to the applicant’s submission, is that there is very little left to compensate her for as Dillon damages. That is because almost all of those feelings, or experiences of hers – referred to by Edelman J in Scenic HCA as “mental harm” but by the plurality as not being “impairment of a person’s…mental condition” – arise out of personal injury to her (COVID infection and adjustment disorder) or to her husband (COVID infection).[70]
[70]Karpik (n 23) 262 [1021] (citations omitted).
In Karpik, his Honour did conclude on the evidence that Mrs Karpik suffered from both psychological injury as well as distress and other emotions as a consequence of the respondents’ failure to comply with the statutory guarantees. His Honour concluded that the quantum of Dillon damages was not affected by the prohibition on recovery of personal injury damages under the Civil Liability Act 2002 (NSW) and considered that Dillon damages, being distress not consequent upon Mrs Karpik’s personal injuries, did not exceed the amount refunded to her of the cost of the cruise. On this basis no Dillon damages were awarded. There was no argument that because of the psychological injury suffered, there could be no damages awarded for distress, disappointment or physical inconvenience.
Similarly in Baltic Shipping, the award of damages for breach of contract included ‘compensation for disappointment and distress’ at $5,000 and damages for personal injuries (including emotional trauma) of $35,000. In upholding the trial judge’s award of damages, Deane and Dawson JJ said:
Subject to the ordinary need to avoid double compensation, Mrs Dillon was entitled to recover damages for the disappointment and distress which she suffered as the result of Baltic’s breach of contract.
***
Both the learned trial judge and the majority of the Court of Appeal were clearly conscious of the need to avoid overlapping or double compensation. … Viewed against the “emotional scars” and “psychological trauma” (including “sense of panic, continued preoccupation with the event, nightmares, jumpiness, poor concentration and hyper-vigilance”) which the learned trial judge found that Mrs. Dillon had sustained as a result of the shipwreck….the award of an additional $5,000 damages represents more than adequate compensation for any “disappointment and distress at the loss of the entertainment” and other benefits of those final days.[71]
[71]Baltic Shipping (n 40) 382–3 (Deane and Dawson JJ).
The second defendant’s written submissions say:
This is a case where, in most if not all instances, the surgery performed on the plaintiffs involved making incisions to the body and removing fatty tissue. The aesthetic result is the consequence of the surgical procedure.[72]
The prohibition in s 137C is on the recovery of personal injury damages, which is not necessarily the same as loss arising from a surgical procedure. The fact of undergoing a surgical procedure does not, without more, give rise to any entitlement to damages for personal injury or otherwise. If the plaintiffs can establish an entitlement to damages that are not personal injury damages, including Dillon damages, such damages are not precluded as a matter of law. It remains a question of fact whether such loss and damage can be established. As Garling J said in Moore (No 4) ‘the assessment of damages for distress and disappointment in all of the circumstances is a very fact-rich and individual assessment’.[73]
[72]Second Defendant’s Written Submissions 28 [125].
[73]Moore (No 4) (n 51) [111].
A similar argument was raised in Rickhuss v Cosmetic Institute Pty Ltd (No 3)[74] before Garling J. It was submitted that a poor aesthetic outcome from a cosmetic breast augmentation procedure, which inserts an implant, was an outcome consequent upon a physical or psychiatric injury.[75] While accepting that a poor aesthetic outcome may in some claimants amount to or result from personal injury, his Honour found that surgery to change the shape of a patient’s body may occur without any physical impairment or psychological injury.
[74][2022] NSWSC 625.
[75]Ibid [47]–[48] see also [53].
It may be more difficult conceptually to distinguish disappointment, frustration or some other reaction to a failure to provide the promised aesthetic result separately from a psychological injury arising from complications and physical consequences of cosmetic surgery, than it would be to differentiate psychological reaction to contracting a disease during a cruise from a disappointing experience on that same cruise. In principle, because each type of loss and damage is discrete, and because only that which is for personal injury is excluded, the pleading in the PASOC does disclose a cause of action.
Lanzer submits that the proposed claims for distress and disappointment damages under s 236 are ‘novel’. The novelty was submitted to lie because the claim was not framed as relief for breach of contract.[76] If the contract was not performed to the plaintiffs’ expectations, it could not be said that the expectations arose from misleading or deceptive conduct, because the plaintiffs allege that ‘but for’ the pleaded conduct they would not have entered into the contract at all.[77] This is discussed above at paragraphs [19] and [22], but for present purposes it is enough to observe that the characterisation of a claim as ‘novel’ would ordinarily caution against a summary disposal without the benefit of a determination after hearing evidence and full submissions on the law. As was said by Kirby P:
Common experience teaches that it is usually more efficient and just to consider the viability of a cause of action when the facts said to support it are adduced and the suggested action can be judged with a full understanding of all relevant evidence. Testimony gives colour and content to the application and development of legal principle.[78]
[76]T 200.20–31.
[77]T 198.16–199.5.
[78]Wickstead v Browne (1992) 30 NSWLR 1, 5.
To the extent the availability of Dillon damages in the context of provision of cosmetic surgery services to consumers might be novel, given the ‘fact rich’ nature of such conclusions, the matter is not appropriate to be dealt with summarily.
The second defendant’s written submissions addressed an objection to amendment of the relief sought by the plaintiffs with respect to the statutory guarantee claims contained in Part D of the PASOC. The plaintiffs sought damages for non-compliance with the pleaded statutory guarantees under s 267 of the ACL. Those particulars referred the particulars of damage in the negligence claim. They have been amended to plead in the alternative the lesser value of the surgery and Dillon damages.[79] The objection raised in writing was that the plaintiffs had earlier indicated they would not seek claims for distress and disappointment under this part of their claim, but that they have changed their position.[80] Argument was not addressed to any deficiency in the plea for relief under s 267 of the ACL. Therefore the plaintiffs should not be refused leave on this aspect.
[79]PASOC [120]–[123]; see also September SOC [120]–[123].
[80]Second Defendant’s Written Submissions 19–20 [82]–[84].
F Other pleading deficiencies
As I have concluded that the ACL claims as a whole should not be summarily dismissed or struck out, it is necessary to consider the particular aspects of those claims which the defendants submit to be deficient and for which amendment ought not be permitted.
F.1 The representations to ‘potential patients’
The first such proposed amendment is the change from a plea that the representations were made ‘to the public’ in the September SOC to one that representations were made ‘to potential patients’ in the PASOC.
As far as I am aware, no objection was taken to the pleading that the representations were made to the public with respect to the September SOC.
The opposition to the replacement of ‘to the public’ with ‘to potential patients’ is twofold. First, because to recover loss or damage under s 236 of the ACL a claimant must show that the loss and damage was ‘because of’ the conduct. The vice of a reference to potential patients is said to be that it expands the scope of the pleaded case, creating confusion as to the proper inquiry without pleading any material fact to the claims of the plaintiffs and group members. This is contrary to what is said in Butcher v Lachlan Elder Realty Pty Ltd (‘Butcher’).[81] In short, the defendants submit that representations made to persons other than an individual group member, which is not conveyed to the individual or about which they are not aware, cannot provide the necessary causal link. The defendants submit that paragraphs [88] and [94] to [96] of the PASOC do not disclose a cause of action and are allegations that detract from the proper inquiry of the claims and any common questions for determination.
[81](2004) 218 CLR 592.
As discussed earlier, the identification of the representations made and the meaning conveyed by them is a separate question to the causal questions of awareness and reliance necessary to establish loss and damage. The common questions go to the conduct and its characterisation. The sales system is alleged to be a public facing system with contact initiated by an interested potential patient from information provided on a website and linked social media accounts and responded to by standard form documentation. In assessing the representations and the meaning conveyed, the website presents that information in a public way to an intended audience.
The pleading identifies, in a more precise way than ‘the public’, the intended audience as a section of the public which includes group members and the plaintiffs. The relevant question raised by this aspect of the pleading is not directed at reliance by any individual but on whether the conduct is objectively misleading, deceptive or likely to mislead or deceive, potential patients.
The defendants rely on Butcher to submit that the proposed pleading discloses no cause of action because it is not linked to anything the plaintiffs or group members allege they themselves saw. In particular, the defendants place weight on paragraph [37] of Butcher. However, in my view the pleading in the PASOC does properly raise questions of the characterisation of the representations. Butcher identifies two ways of analysing conduct of a defendant. Gleeson CJ, Hayne and Heydon JJ said:
36.…One is employed in relation to “members of a class to which the conduct in question [is] directed in a general sense”. The other, urged by the purchasers here, is employed where the objects of the conduct are “identified individuals to whom a particular misrepresentation has been made or from whom a relevant fact, circumstance or proposal was withheld”; they are considered quite apart from any class into which they fall…
37.The former approach is common when remedies other than those conferred by s 82 (or s 87) of the [Trade Practices] Act are under consideration. But the former approach is inappropriate, and the latter inevitable, in cases like the present, where monetary relief is sought by a plaintiff who alleges that a particular misrepresentation was made to identified persons, of whom the plaintiff was one. The plaintiff must establish a causal link between the impugned conduct and the loss that is claimed. That depends on analysing the conduct of the defendant in relation to that plaintiff alone. So here, it is necessary to consider the character of the particular conduct of the particular agent in relation to the particular purchasers, bearing in mind what matters of fact each knew about the other as a result of the nature of their dealings and the conversations between them, or which each may be taken to have known.[82]
[82]Ibid 604–5 [36]–[37] (judgment paragraph numbers included, citations omitted).
Both approaches are footnoted with reference to Campomar Sociedad Limitada v Nike International Ltd (‘Campomar’).[83] In the context of a discussion about causation and the nexus between the conduct and the right to relief, the Court in Campomar emphasised the point that s 52, the predecessor prohibition of misleading and deceptive conduct in the Trade Practices Act 1974 (Cth), did not of itself give rise to any liability. The consequences of any breach are found in other provisions in both that Act and in the ACL. In Campomar, the two approaches set out above in the preceding paragraph were contrasted. In the case of an untrue representation made only to identified individuals, the Court described the nexus with conduct as a ‘direct and uncomplicated’ question of fact. However, in other cases ‘the process will be more complicated and call for the assistance of certain guidelines upon the path to decision’.[84] The Court went on to say:
The other classes of case which their Honours had in mind include those of actual or threatened conduct involving representations to the public at large or to a section thereof, such as prospective retail purchasers of a product the respondent markets or proposes to market. Here the issue with respect to the sufficiency of the nexus between conduct or the apprehended conduct and the misleading or deception or likely misleading or deception of prospective purchasers is to be approached at a level of abstraction not present where the case is one involving an express untrue representation allegedly made only to identified individuals.
It is in these cases of representations to the public ... that there enter the ‘ordinary’ or ‘reasonable’ members of the class of prospective purchasers. Although a class of consumers may be expected to include a wide range of persons, in isolating the ordinary or reasonable members of that class there is an objective attribution of certain characteristics.[85]
[83](2000) 202 CLR 45 (‘Campomar’).
[84]Ibid at [100] citing Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 202 (Deane and Toohey JJ).
[85]Campomar (n 83) [102]–[103].
The distinction has been drawn many times since. In characterising conduct the approach will differ between conduct which is said to be misleading or deceptive to members of the public and conduct which arises between entities in individual commercial negotiations.[86]
[86]See Miller and Associates (n 18) at [19]–[20] (French CJ and Kiefel J) dealing with commercial negotiations between individuals; see also Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304, 319 [25]–[26] (French CJ)(‘Campbell’).
Characterisation of conduct is a logically anterior question to whether loss or damage flows from that conduct.[87] Breach of ss 18, 29 or 34 of the ACL must be established before the right to damages is enlivened under s 236. In Campbell v Backoffice Investments Pty Ltd (‘Campbell’),[88] litigation which included a claim for damages for misleading or deceptive conduct under the Fair Trading Act 1987 (NSW), French CJ said:
The distinction between characterisation of the conduct and determination of the causation of the claimed loss said to result from it must be maintained. In so saying, it is necessary to acknowledge that there may be practical overlaps in the resolution of these logically distinct questions. The characterisation of conduct may involve assessment of its notional effects, judged by reference to its context. The same contextual factors play a role in determining causation.[89]
[87]Campbell (n 86) 318 [24].
[88]Ibid.
[89]Ibid 318 [24] (French CJ).
It is correct to say, as the plaintiffs concede,[90] that to obtain relief under the ACL a representative plaintiff or individual group member had to have been aware of and relied on one or more of the representations identified, either on the website, through social media posts or in the standard documents (or some combination of these). That is the step that entitles an individual to relief, which is not to be confused with the anterior step of identifying whether common representations made in public and standard form documents have the characteristics alleged.
[90]T 59.22-30.
The defendants rely in particular on paragraph [37] in Butcher to submit that because the group members are seeking monetary relief in this proceeding, the question of characterisation of conduct directed at members of a class is inappropriate and the characterisation of conduct made to each plaintiff is inevitably the approach to be adopted. The defendants submit that the amendment to potential patients as a class of the public in the PASOC is therefore irrelevant and confusing.
However, that submission conflates the question of characterisation of conduct directed to a class of persons, with the need to establish a causal link for the claimed loss of any particular person. As French CJ observed in Campbell with respect to paragraph [37] in Butcher:
Although the passage begins by referring to the need to establish a causal link between the impugned conduct and the claimed loss, it is clear that thereafter their Honours were addressing the task of characterisation. Determination of the causation of loss or damage may require account to be taken of subjective factors relating to a particular person’s reaction to conduct found to be misleading or deceptive or likely to mislead or deceive. A misstatement of fact may be misleading or deceptive in the sense that it would have a tendency to lead anyone into error. However, it may be disbelieved by its addressee. In that event the misstatement would not ordinarily be causative of any loss or damage…[91]
[91]Campbell (n 86) 319–20 [27]–[28].
The representations are not made in circumstances where the defendants are making statements to known individuals in a bespoke negotiation. They are made as a promotion of their services to engage a class of people in a transaction. Notwithstanding the need to prove causation and loss individually, the task of characterisation of the representations is one appropriately addressed by the analysis of the class to which those representations are directed. The proposed amendment identifies that class in a more precise way and addresses the characterisation of the conduct.
The pleading identifies which defendants engaged in which conduct. Broadly, DCSS and Lanzer made certain representations on the Lanzer website and on Lanzer’s social media posts. Aronov and Wells made identified representations on their social media posts and are alleged to have a direct liability as discussed below. Otherwise the third to eighth defendants are alleged to have an accessorial liability. The first issue identified by John Dixon J with respect to the ‘rolled up’ definition of the pleaded representations[92] has been addressed.
[92]Lombardo (n 26) 17–8 [50]–[52].
The amendment of the plea that the representations were made ‘to potential patients’ is permitted.
F.2 The social media posts
In particular the second defendant notes that Lanzer’s social media posts as particularised in paragraph [94] of the September SOC and the Aronov and Wells social media posts at paragraph [95], are described as being made to potential patients but none are alleged to have been seen by any plaintiff or group member in paragraph [96A] and paragraphs [97] to [100].
The plaintiffs say that paragraph [96A](d) of the September SOC makes explicit that social media posts which conveyed the identified representations were accessed by some or all of the group members. Further, by paragraph [97], the September SOC pleads that the conduct by which the representations were made to Lombardo, included the representations on social media accounts which she accessed and by reasons of her access to the Lanzer website and social media accounts the identified representations were made in writing to her. Particulars are provided at paragraph [97](h) which state Lombardo ‘followed’ Lanzer’s Instagram profile from September 2020, was ‘exposed’ to his posts repeatedly thereafter and which included videos reposted from TikTok.
The particulars are further expanded in the PASOC, by addition of the Specialist Surgeon Representation but also by further detail as to the period of time during which Lombardo visited the website and social media posts. The proposed particulars also allege a failure to provide to Lombardo the Specialist Surgeon Clarification (a defined term in the PASOC, essentially a correction that Lanzer and the other cosmetic doctor defendants did not have specialist surgical qualifications).
The third to sixth defendants submit that the failure to particularise the social media posts at all in the version of the pleadings before John Dixon J in July 2023, or adequately in the September SOC subsequently filed or the present PASOC means that the plaintiffs case has arrived at a point where the claims based on representations on social media have no real prospect of success.
I do not accept this argument as it ignores the reality, accepted by John Dixon J, that the provision of particulars by the plaintiffs is hampered by their inability to access the relevant information. Not insignificant time has passed since the relevant posts, which largely seem to date from 2020 and 2021. It is not that the plaintiffs require discovery to identify a viable case, they have identified the conduct – the representations relied on – that form the basis of their case. What they cannot do at this time is identify actual words used, or the ‘before and after’ images posted, beyond those examples that have been provided in paragraphs [94] and [95] of the PASOC.
The four representative plaintiffs each identify that they visited the Lanzer website and read information presented there. Each identified the time period during which the website was visited. Three of the four plaintiffs identify accessing information on Lanzer’s Instagram account including seeing videos reposted from his TikTok account. Again a timeframe is identified in the particulars.
Whilst the particulars are limited because the plaintiffs no longer have access to those accounts, information including examples have been provided. The plaintiffs submit they have complied with the matters John Dixon J identified, namely that they identify the relevant social media accounts, the period of time over which they saw and read content posted there and their best general allegation of the content. By way of example Lombardo pleads at paragraph [97](h) of the PASOC that she ‘followed Dr Lanzer’s Instagram profile from September 2020’. From that time posts that were conveyed to her in writing (see paragraph [97](a)(iii) of the PASOC) are identified as containing the Pre-Eminence Representation, the Excellent Service Representation and the Plastic Surgeon Representation conveyed on Instagram, including reposted TikTok content. In the case of the Plastic Surgeon Representation it was conveyed by the phrase ‘#plasticsurgeon’ in the social media posts. I think it reasonable to take ‘conveyed in writing to her’ as being ‘read’ by her. This is later made explicit in paragraph [97](h) of the PASOC. At present there is likely to be a need to further particularise matters once discovery is available but there is nothing exceptionable about further particulars being provided in this way.
The social media posts of Lanzer, Aronov and Wells plead the same three representations as are relied on as being conveyed by the Lanzer website. Those representations as they appear on the website are further particularised in some detail in the PASOC and no summary dismissal or strike out application is made regarding them. Nor was any complaint made about those matters when leave was given to file the September SOC. I do not accept that the proposed pleading lacks identification of the material facts relating to the conduct on social media. The media platform, the conduct identified by the particular three representations and the relevant time frame are all now identified. What is lacking are the full particulars of the actual words by which those representations were conveyed.
Finally, as the plaintiffs submitted, the defendants have been able to plead in detail to the matters raised by the representations in the social media posts, including an admission by Aronov of posting ‘before and after’ photographs on social media and a description of his usual practice in relation to his social media use.
The defendants submit that the necessary conduct is not pleaded. Rather they say the pleading of the representations jumps immediately to the third step in Self Care, namely addressing the meaning of the representations. This submission overlooks the separation between the representations pleaded at paragraphs [88](aa) to [88](e) of the PASOC and what they are alleged to have conveyed at paragraphs [88A] through to [93]. As Hayne J said in Google Inc v Australian Competition and Consumer Commission:[93]
It will often be possible to identify the relevant conduct as the making of one or more representations, but it is necessary to bear in mind that s 52 was not confined to the making of representations…
Melding the two issues of conduct and characterisation is apt to distract and confuse. Especially is that so if the melding is achieved by using the language of misrepresentation to give a single composite description of the conduct and its character.[94]
[93](2013) 249 CLR 435.
[94]Ibid 465 [92]–[93] (Hayne J).
The proposed pleading does not meld the two steps. It identifies six representations (conduct), it identifies as best it can at present, the words both express and implied that conveyed those representations (at paragraphs [94] and [95] of the PASOC) and separately identifies the character or meaning that was likely to lead those who saw them into error. Both on the Lanzer website and the identified social media posts the relevant conduct is identified as the specific representations.
The second defendant contends that while paragraph [94] of the PASOC particularises social media posts, none of the plaintiffs allege seeing, reading or relying on these or any other social media posts. This submission ignores the later pleading at paragraph [96A](d) that some or all group members accessed social media posts that conveyed the Pre-Eminence, Plastic Surgeon and Excellent Service representations and the similar pleadings at paragraphs [97](h) and [98](h) with respect to Lombardo and Ms Tina Bonnici (the second plaintiff, or Bonnici) and to a lesser extent paragraphs [100](a) and [100](i) in respect of Ms Julie Rose Morrison (the fourth plaintiff, or Morrison).
In circumstances where the second defendant’s defence admits that neither he nor the other cosmetic doctor defendants were plastic surgeons,[95] it is difficult to see how particulars identifying ‘#plasticsurgeon’ are not presently adequate particulars of the Plastic Surgeon Representation in social media posts. In relation to the remaining two representations, although incomplete, the available particulars identify overlap with matters pleaded as being conveyed on the website, the adequacy of which is not challenged in the summary dismissal and strike out applications. The defendants submit that each publication – on a website or on a social media platform – is separate conduct. But the plaintiffs characterise the conduct as the particular statements or representations made, albeit made and repeated in different digital spaces and documents.
[95]Second Defendant, ‘Second Defendant’s Defence dated 22 December 2023’ in Lombardo v Dermatology and Cosmetic Surgery Services Pty Ltd S ECI 2022 00739, [90(c)] (‘Second Defendant’s Defence’).
While the defendants are entitled to proper particulars, the plaintiffs are unable to do so precisely from recollection at present. That is not to say there is insufficient material that is pleaded to allow the defendants to understand the case they must meet. They know both the representations said to be the relevant conduct on Instagram and the way in which the plaintiffs allege it is misleading. What they do not presently have pleaded is the actual form of words used at all times by the relevant defendant on the social media platform.
F.3 The Specialist Surgeon Representation
A new sixth representation is added in the PASOC. It is a representation that Lanzer and/or the other cosmetic doctor defendants were specialist surgeons with specialist surgical training and qualifications.[96] The particulars of that representation being conveyed are set out in particulars at paragraph [94](b) of the PASOC and further conveyed by a failure to provide information on the website clarifying that the relevant defendants did not have specialist training, or study making them eligible for registration as a specialist surgeon. That representation is conveyed on the Lanzer website.
[96]PASOC [88].
The defendants submit this is misleading. The statement is that Lanzer and/or the other cosmetic doctor defendants were specialist surgeons so that three possible meanings might be implied: that Lanzer is a specialist surgeon, that the other cosmetic defendants were individually specialist surgeons or that all cosmetic doctor defendants were specialist surgeons. The defendants ought not be left to guess which meaning is intended.
That submission must be rejected. Each doctor can plead to their own qualifications and indeed all have done so in the defences filed.[97] Each doctor has admitted that they do not hold plastic surgery qualifications. Lanzer has admitted dermatology qualifications and the other cosmetic doctor defendants have admitted holding general practitioner qualifications. The only difference in the pleading from that of the other representations is the inclusion of the word ‘or’, which although perhaps superfluous, does not make the representation ambiguous. The particularised specialist surgeon website statements which separately identify statements relating to Lanzer and those relating to other cosmetic doctor defendants removes any ambiguity.
[97]For example, Lanzer admits he is not a specialist plastic surgeon and is a medical practitioner with specialist qualifications in dermatology (see Second Defendant’s Defence at [90(c)] and [6(a)] respectively; See also Third Defendant, ‘Third Defendant’s Defence dated 22 December 2023’ in Lombardo v Dermatology and Cosmetic Surgery Services Pty Ltd S ECI 2022 00739 at [90(a)] where Aronov admits he is not a qualified plastic surgeon, [89(c)] where he admits he is not registered as a specialist health practitioner and [89(d)] where he sets out the qualifications that he does have.
Further the defendants contend that absent an explanation for the late inclusion, the amendment ought not be permitted. They challenge the way that plaintiffs could ‘only now’ recollect a belief and reliance on matters decisive in their decision to enter into the surgery contracts. This argument is somewhat disingenuous. The existing representations and particulars pleaded are replete with references to ‘surgeons’. The Pre-Eminence representation included particulars referencing a world pioneer in cosmetic surgery and having ‘talented surgical associates’. Likewise the Plastic Surgeon Representation has been a part of the pleaded claim. In the context of a system for selling cosmetic surgery services the question of surgical expertise and qualifications has always been central. While there is no explanation for the timing of the amendment, it does not follow that the plaintiffs have only now instructed their lawyer about such matters.
The amendment to add of the Specialist Surgeon Representation is permitted.
F.4 Section 34 of the ACL
The second defendant claims that plaintiffs do not have a basis for relief under s 34 of the ACL. Section 34 provides:
Misleading conduct as to the nature etc. of services
A person must not, in trade or commerce, engage in conduct that is liable to mislead the public as to the nature, the characteristics, the suitability for their purpose or the quantity of any services.
The second defendant submits that while the plaintiffs and group members claim they were misled by reference to ss 18 and 29 of the ACL, they have no claim for relief for representations liable ‘to mislead the public’. As I understand the submission, there is no longer a plea that the representation were liable to mislead the public (it having been amended to potential patients). The second defendant contends s 34 provides for an action when a person suffers loss or damage because of misleading conduct that has occurred to someone else.[98] The claims are therefore properly under ss 18 and 29 but not s 34.
[98]Second Defendant’s Written Submissions 8 [36].
The third to sixth defendants did not join in this submission. Mr Guidolin SC submitted that as s 34 appears in Chapter 3 of the ACL, s 236 provides for a personal right of action to recover loss and damage for a contravention of s 34.[99] Further the third defendant relies on Australian Competition and Consumer Commission v Master Wealth Control Pty Ltd[100] in which Jackman J sets out the principles in relation to claims under s 34.[101] This was a case without identification of particular individuals who were misled but a case brought by the ACCC relying on representations made to a sufficiently large class of persons.
[99]T 127.3-8.
[100][2024] FCA 344.
[101]Ibid at [38].
The third to sixth defendants do contend that the s 34 claim suffers from the same problem as the ACL claims under the other provisions; the limitation in Butcher at paragraph [37] which has been addressed above.
I do not accept the argument that s 34 of the ACL cannot arguably give a personal right to damages in the event that a representation is one liable to mislead the public. Section 236 on its face provides a right of an individual to recover loss and damage for contraventions in Part 2 and 3 of the Act. This prima facie includes s 34. As discussed earlier, the right to a remedy under s 236 requires proof of an individual suffering loss and damage. The individual remedy responds to a breach of provisions in Part 2 and 3. No authority was cited for the proposition that no personal right of action exists under this section for an individual member of the public who is misled. Any argument, and any nuance in what must be established under s 34 as distinct from the other provisions, is a matter for the second defendant to raise at trial.
The third to sixth defendants adopted the second defendants submissions, save for the issue of the availability of a cause of action under s 34. Two issues raised by the defendants remain. The first seeks summary dismissal of the claims against Aronov and Wells as principal wrongdoers. The second seeks summary dismissal of the accessorial claims.
F.5 The direct liability claims against the third through sixth defendants
Paragraph [108] of the PASOC pleads direct liability of the other cosmetic doctor defendants. The plaintiffs concede that pleading should be narrowed to the third, fifth and seventh defendants.[102] Both the September SOC and the PASOC at paragraph [95] allege direct liability of Aronov and Wells for only three representations; the Pre-Eminence Representation, the Excellent Service Representation and the Plastic Surgeon Representation.
[102]With the proviso that as against the seventh defendant there is an intention by the plaintiffs to seek leave to discontinue the proceeding.
These defendants submit that there are three reasons why the pleading does not disclose a cause of action. First, the point arising out of paragraph [37] in Butcher – that where damages or compensation are sought the conduct is to be considered without reference to the class of individuals. I have dealt with this point at paragraphs [86] through to [93] above, namely the distinction between the characterisation of conduct directed to a class of persons and the need to individually establish causation and loss.
Second, the defendants say that the pleading does not demonstrate that Aronov and Wells have engaged in the conduct complained of. Paragraph [95] of the PASOC provides:
At all material times, in trade and commerce Aronov and Wells made the Pre-eminence, Excellent Service Representations and Plastic Surgeon Representations… [reference to Wong] ….to potential patients
the public(which included the Plaintiffs and Group Members as alleged at paragraphs 103 and 104 below)members of the publicwho might wish to improve the aesthetic appearance of their body throughcosmeticsurgery), by their conduct in:(a)publishing content on their social media accounts including Instagram and Tik Tok;
(b)acquiescing to the pre-eminence, plastic surgeon and excellent service Representations being made to the public by DCSS and Lanzer as pleaded at paragraph 95 94 in circumstances where Aronov, Wells and Wong:
i.were held out to potential patients to the public as ‘associates’ of Lanzer;
ii.performed cosmetic surgery at a Lanzer clinic and as part of the DCSS Sales System; and
iii.commercially benefitted from DCSS and Lanzer making the Pre-Eminence, Plastic Surgeon and Excellent Service Representations to potential patients being made to the public by DCSS and Lanzer;
(c)not resiling from the pre-eminence, plastic surgeon and excellent service Representations as made to potential patients the public by DCSS and Lanzer in circumstances where [they]
i.were held out to potential patients as ‘associates’ of Lanzer
ii.performed cosmetic surgery at a Lanzer clinic and as part of the DCSS Sales System; and
iii.commercially benefitted from DCSS and Lanzer making the Pre-Eminence, Plastic Surgeon and Excellent Service Representations to potential patients being made to the public by DCSS and Lanzer;
Particulars are then provided to paragraph [95](c) of the PASOC. As can be seen above, paragraph [95] of the PASOC makes amendment only to the class of persons to whom the representations are made but otherwise is unchanged from the September SOC that has been filed.
The other cosmetic doctor defendants submit that a claim of direct liability requires Aronov or Wells to have directly made the representations. While Aronov and Wells make no complaint on this score as to representations made on their own social media accounts (at paragraph [95](a) of the PASOC), they say that being held out by someone else as associates and performing services is not conduct making the representations as relied on by the plaintiffs. The defendants rely on Australian Competition and Consumer Commission v Dukemaster Pty Ltd[103] in which Gordon J said that error or ‘misconception must result from conduct …and not from other circumstances for which the [person] is not responsible’.[104]
[103][2009] FCA 682.
[104]Ibid [10].
The third to sixth defendants submit that this pleading of acquiescence or consent in paragraph[95](b) of the PASOC and of not resiling or failing to correct in paragraph [95](c) are insufficient to establish as a matter of fact that Aronov and Wells engaged in conduct and the claims have no real prospect of success, effectively because neither defendant made any statement on the website.
The plaintiffs resist this, submitting that the conduct relied on was to consent or acquiesce to the statement being made about them on the website and commercially benefitting from permitting such statements to be made about them.[105] The plaintiffs submit that a claim of direct liability is at least arguable when viewed through the prism of the whole of Aronov and Wells’s conduct, including all acts, omission, silences and positive statements.
[105]T 35.21–2.
It is not clear from the PASOC at paragraphs [95](b) and [95](c) how direct liability is differentiated from the accessorial liability alleged at paragraph [96] which is set out below. In those circumstances, I propose to strike out paragraphs [95](b) and [95](c) as presently framed. If the plaintiffs wish to articulate a claim of direct liability against these two defendants that is broader than the social media representations at paragraph [95](a), the elements of their conduct said to give rise to that liability need to be articulated.
The third basis for opposition was directed at paragraph [103] of the PASOC in two parts. First as it related to the representations made on social media posts the inadequacy of particulars and a failure to identify what was said and by whom. This has been dealt with above. Second objection was taken to reliance on oral representations made by Aronov and Wells respectively to Lombardo and Bonnici during consultations. These paragraphs have been deleted. A similar plea against the fourth defendant at paragraph [103](c) is now understood by the defendants to be similarly not persisted with.
It is accepted in relation to the direct liability of Aronson and Wells arising from their social media posts that the contravening conduct pleaded against them in paragraph [108] is confined the three representations made by them.[106]
[106]T 121.13.
F.6 The accessorial claims
The accessorial liability claims are pleaded at paragraph [96]:
Further each of the Other Cosmetic Doctor Defendants were ‘directly or indirectly knowingly concerned in or party to DCSS and Lanzer making [ the representations ] to potential patients
the publicthrough the Lanzer website in circumstances where:(a)the other cosmetic doctor defendants (save for Darbyshire) were advertised on the Lanzer website;
(b)the other cosmetic doctor defendants made a commercial gain or were to commercially gain from the Lanzer website because the Lanzer website generated customers;
(c)the other cosmetic doctor defendants knew that the specialist surgeon, pre-eminence and excellent service representations were being made to potential patients on the Lanzer websiteto the public;(d)the other cosmetic doctor defendants knew that the Specialist surgeon, pre-eminence and excellent service representations were false misleading or deceptive in the ways pleaded at paragraphs 88A, 89 and 94 above.
These circumstances are particularised. Then at paragraph [102] of the PASOC it is pleaded that each of the other cosmetic doctor defendants ‘aided, abetted or procured, or alternatively were knowingly concerned in or party to, DCSS and Lanzer making the Representations…and consequently were ‘involved’ in making the Representations within the meaning of s 2 of the ACL’. Six circumstances are identified as going to involvement:
(a)provision of services within the sales system;
(b)participation on the sales system in various ways;
(c)the commercial interest in patients engaging services of DCSS;
(d)the failure to resile from (or correct) the representations made;
(e)the knowledge that the representations were being made; and
(f)the knowledge that the representations were false, misleading or deceptive.
The objection to the accessorial claims is on the basis that actual knowledge, and not merely imputed or constructive knowledge must be proved.[107] The defendants submit that the four matters identified in paragraph [96] of the PASOC, and the six matters at paragraph [102], if established could not prove actual knowledge that the representations were made and were false. The pleading is based upon the premise that the defendants provided information to be published on the Lanzer website, as has been particularised. This is consistent with Aronov’s defence which admits providing personal profile information to the first and second defendants who operated the Lanzer website. It is said however, that provision of information is not sufficient to establish actual knowledge.
[107]Yorke v Lucas (1985) 158 CLR 661.
The plaintiffs submit that the accessorial claims, and the requisite knowledge, arises from the participation of those defendants in the sales system as defined and not merely from the provision of information to Lanzer and DCSS. Further, the deficiency raised by the defendants overlooks the pleading of actual knowledge that the representations were being made and the pleading of actual knowledge that they were false, as pleaded at paragraphs [96](c), [96](d), [102](e) and [102](f).
The defendants’ submissions do not address the context of the representations made on the Lanzer website as part of the sales system, in which the other cosmetic doctor defendants participated. It is in the context of participation in this system that actual knowledge is to be proved with respect to the representations on the Lanzer website.
I do not accept the submission that, on its face, if the plaintiffs establish that one or more of the third to sixth defendants knew they were advertised on the Lanzer website, knew that the website generated customers from which they would commercially gain, knew that the specified representations were being made and knew that they were false, misleading or deceptive, that this is incapable of establishing actual knowledge.
Actual knowledge of the essential facts constituting the contravention is necessary to establish the requisite intent for an accessorial claim.
As a pleading matter, the third to sixth defendants also submit that both paragraphs [96] and [102] of the PASOC plead a conclusion from unstated material facts as to the acts, matters or things done by them upon which the accessorial claims rest. They set out that the conclusion in paragraph [96] of the PASOC is that they helped, assisted or encouraged, or they persuaded, or they committed an act to bring about, or participated with DCSS and Lanzer to make the representations. The pleadings identify participation in the sales system which includes the website in various specific ways including by conducting consultations, surgical procedures, attending potential patients who made an inquiry from the Lanzer website, and by permitting themselves to be advertise on the Lanzer website. These factual matters are set out at Part A.4 of the September SOC and in paragraphs [86] and [87]. The case against these defendants was ‘tolerably clear’ to John Dixon J in September 2023, and without substantive amendment in the PASOC, remains so in my view.
F.7 Other objections raised
For completeness, the defendants ask that the ACL claims in the September SOC be struck out as it is presently not logical nor coherent in sequence, lacks material facts, pleads unsupported conclusions and overuses definitional terms. These matters are all raised in the context of the specific failings discussed above and stand or fall by those earlier considerations. They are not matters that persuade me that the defendants are unable to understand, still less unable to plead to, the allegations.
The summary dismissal applications in respect of Part C of the September SOC will be dismissed. Save for the matters mentioned above, the strike out applications are also dismissed.
G Further and better particulars
The remaining issue is the provision of further and better particulars by the plaintiffs. There has been some agreement between the parties on this point. As mentioned earlier, the eighth defendant’s summons for further and better particulars has been resolved by consent. By the conclusion of the hearing the third to sixth defendants’ summons for further and better particulars mentioned at paragraph [4] above had also been resolved by consent. The second defendant’s position at the end of the hearing was that there were no outstanding particulars sought.[108]
[108]T 207.18–26.
H Conclusion
Accordingly, subject to hearing from the parties as to the form of the orders, the relief to be granted in broad terms is:
(a)The plaintiffs have leave to file a statement of claim in substantially the form of the Proposed Amended Statement of Claim dated 24 May 2024, with the following changes:
(i)Paragraph [108] be amended to replace ‘the Other Cosmetic Doctor Defendants’ with ‘Aronov and Wells’;
(ii)Clarification of the pleading at paragraph [203];
(iii)Paragraph [213] be amended to read ‘By reason of the matters in paragraphs [94] to [110];
(iv)Striking out paragraphs [95](b) and [95](c), but without restricting the plaintiffs’ right to seek leave to replead; and
(v)Deleting the references to a non-delegable duty of care in respect of the third to eighth defendants in Section E.
(b)Provision of further particulars has been by consent reached at the time of the hearing.
(c)Any outstanding costs issues are to be argued.
Much of the costs dispute has also been resolved by consent. Insofar as the costs of the summons before me have been reserved, I would seek proposed costs orders from the parties, and if necessary list the matter for mention in relation to the proposed form of orders.
SCHEDULE OF PARTIES
| S ECI 2022 00739 | |
| BETWEEN: | |
| TINA LOMBARDO | First Plaintiff |
| TINA BONNICI | Second Plaintiff |
| SIMONE RUSSELL | Third Plaintiff |
| JULIE ROSE MORRISON | Fourth Plaintiff |
| - v - | |
| DERMATOLOGY AND COSMETIC SURGERY SERVICES PTY LTD (ACN 055 927 618) | First Defendant |
| DANIEL LANZER | Second Defendant |
| DANIEL ARONOV | Third Defendant |
| JACQUELINE DARBYSHIRE AND TONY DARBYSHIRE (ON BEHALF OF THE ESTATE OF THE LATE DANIEL DARBYSHIRE) | Fourth Defendant |
| RYAN WELLS | Fifth Defendant |
| ALIREZA FALLAHI | Sixth Defendant |
| GEORGE SHU-KHIM WONG | Seventh Defendant |
| CANDICE WAINSTEIN | Eighth Defendant |
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