Mid-Density Developments Pty Ltd v Council of the Municipality of Rockdale

[1992] FCA 386

386         1 4 2

JUDGMENT No. ........ ........ .. ........ ....

IN THE FEDERAL COURT OF AUSTRALIA)	No NG 432 of 1991
NEW SOUTH WALES DISTRICT REGISTRY)
GENERAL DIVISION	1

Between: MID-DENSITY DEVELOPMENTS

PTY LIMITED

Applicant

And: THE COUNCIL OF THE
MUNICIPALITY OF ROCKDALE

Respondent

EX TEMPORE JUDGBWNT

SYDNEY 6 FEBRUARY 1992

This is a notice of motion brought by the Council of the Municipality of Rockdale (the council), for the summary dismissal of two of the three claims before the Court of Mid- Density Developments Pty Limited (the applicant). The applicant seeks damages in respect of a commercial property deal within the council's municipal area, on which it claims to have lost a sum in the order of $3 million as a result of the council's conduct and actions.

One of the applicant's three claims is for misleading and deceptive conduct under section 52 of the Trade Practices Act 1974, the second is for negligent advice, and the third for mis-statement and deceit at common law. The notice of motion	Practices Act and for negligent advice based upon the	seeks to strike out the claims under section 52 of the Trade
principles to be derived from the decisions in Hedlev Bvrne & CO Ltd v Heller & Partners Ltd [l9641 AC 465 and L. Shaddock & Associates Ptv Ltd v Parramatta Council (No 1) [l9811 150 CLR 225. As is well established, it is necessary on a motion for summary dismissal of a claim to establish in substance that the applicant could not conceivably succeed in the claim made.
So far as concerns the claim under section 52 of the Trade Practices Act, the council argues that it is not a trading corporation to which section 52 can apply. In this connection it relies upon the fact that it, like other local government authorities, is basically in existence for the provision of services to ratepayers and residents of its municipality. The council provides community services across a broad range: garbage and library services, recreation facilities, roads, and other local activities.
The material presented establishes, and it is not denied, that the council does engage in some business or trading
profit in some cases. However, it is submitted that these activities, albeit apparently not for actual or significant
trading activities are an incidental or peripheral aspect of its general activities which are of a non-trading variety.
So far as concerns the question as to whether the council is or is not a trading corporation, it is not necessary for me to make a final judgment or statement at this time. It will suffice to say that the matter of whether public authorities of one kind or another, and even some private generally non- profit organisations, are trading corporations has been given quite a lot of attention in the courts in the last 15 years. A number of formulations have emerged from these cases which successively appear to me to be expanding the criteria of trading corporations. On my understanding of these authorities and on the material available in this motion, it could not be said that an assertion that the council is a trading corporation must necessarily be bound to fail. I can see the point made on behalf of the council that much of its activity, or at least a significant portion of it, ought not properly be described as trading. On the other hand, in the expanding definitions which appear to be emerging from the cases, there is ground for believing that in a number of the council's activities, even within the provision of public facilities, it may be engaged in trading.
One matter particularly put before me in this connection related to garbage services. This council, like others,
establishes that the garbage services provided by this council provides garbage services to local residents. The evidence
are wholly or largely subcontracted. From the accounts provided for the year ending 31 December 1990, the council appears to have made a profit on these services - at least to the extent to which the income derived, presumably from fees charged, is approximately $300,000 in excess of what it had to pay to the contractors, and perhaps to its own staff, for the provision of those services.
The opposite occurs in relation to library services where the income is much less than the outgoings. The authorities establish quite clearly, as indeed they must, that profit is not a determinant of whether a corporation is engaged in trading. However, expressions have been made in a number of cases that where a public authority is providing its services by buying from others the capacity to provide the services, at least one criterion exists that the corporation is engaged in trading.
I make no finding that in this case the garbage, library, or any other services of the council are trading activities so as to bring the council within the reach of the Trade Practices Act. However, it does not seem to me that the argument that they are engaged in trading with these and similar services is so hopeless as to uphold a submission that the relevant passages of the statement of claim should be struck out on that basis.
relates to the paragraphs of the statement of claim that seek The second aspect of the respondents motion to strike out
to establish a cause of action under the general heading of negligent advice. The definitive pronunciation for local councils of this aspect of the law is to be found in the well known case of L. Shaddock & Associates Ptv Ltd v Parramatta Council (No. 1) [l9811 150 CLR 225. This decision holds that the liability of a local authority for negligent advice is limited by a number of matters such as the circumstances in which the advice is given, the person who gave the advice and the nature of the advice, together with other surrounding facts.
In a motion for summary relief such as this I must proceed upon the basis that the applicant will be able to establish, not only the facts alleged in the statement of claim as the basic material upon which the claim is sought to be put forward, but also the surrounding circumstances, which it is not appropriate to plead, but will obviously form part of the evidence. The relevant paragraphs of the amended statement of claim in this regard are 16 and 27, in which it is said that the applicant's representative received the alleged advice and information during discussions with, respectively, a senior engineer of the council and the chief town planner.
I say nothing about whether these allegations will in fact establish the case which the applicant makes out. I am required by the cases to assume that the facts as alleged and
proved and are accepted by the court, and that they can be circumstances as reasonably assumed from those facts can be
established within the framework of the principles which would guide liability in a circumstance such as this. On this basis, it seems to me that there is no warrant for summarily striking out those paragraphs and the other paragraphs which depend on them. On those assertions the applicant has an arguable case.
This is not to find even that a prima facie case can be established, let alone that the case will ultimately succeed. But in a notice of motion for summary dismissal of a claim, the onus is on the respondent to establish the hopelessness of the claim, not the other way round. I think that in this particular case that onus has not been discharged. I decline to make orders 1 and 2, and the notice of motion is therefore dismissed. The council will pay the applicant's costs of the notice of motion.

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