Pedra Holdings v Westfield
[2005] FMCA 475
•15 April 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| PEDRA HOLDINGS & ORS v WESTFIELD & ORS | [2005] FMCA 475 |
| PRACTICE AND PROCEDURE – TRADE PRACTICES – Joinder of parties – where applicants were unrelated parties claiming to have received similar but not contemporaneous representations – whether the parties have a right arising out of the same transaction or series of transactions – whether the Federal Magistrates Court should make orders relating to joinder of parties when the proceedings are to be transferred to the Federal Court – where applicants make claims which if they were damages under s.82 would be in excess of the amount prescribed under s.86AA TPA – whether proceedings should be transferred to the Federal Court – whether it is in the interests of the administration of justice to avoid barren argument in relation to jurisdiction – whether certain claims allegedly under s.87(2)(c) TPA might be construed as claims under s.82 – pleading – where respondents seek orders to strike out pleadings – whether such orders should be given in a case which is to be transferred to the Federal Court – whether decision to transfer should be affected by applicants’ indication that if taken they would withdraw. |
| Australian Civil Procedure; Bernard Cairns Lawbook Co 6th ed Federal Magistrates Court Rules 2001 Federal Magistrates Act 1999 Trade Practices Act 1974, ss.82, 86AA, 87(2)(c) |
| Cheque One Pty Limited v Cheque Exchange (Australia) Pty Limited (In Liq) [2002] FCA 593 Payne v Young (1981) 145 CLR 609 Bishop v Bridgeland Securities Limited (1990) 80 PR 41-060 Demagogue v Ramensky (1992) 39 FCR 31 Truth About Motorways Pty Ltd v Macquarie Infrastructure Investments Ltd (1998) ATPR 41-633 Spathis v Hanave Investments Co Pty Ltd & Anor [2002] NSWSC 304 |
| First Applicant: | PEDRA HOLDINGS PTY LTD (ACN 064 183 222) |
| Second Applicant: | MYRAN HOLDINGS PTY LTD (ACN 009 105 408) |
| Third Applicant: | HENRY AVELING |
Fourth Applicant: | MARIANNE AVELING |
| First Respondent: | WESTFIELD SHOPPINGTOWN WESTFIELD SHOPPINGTOWN CAROUSEL PTY LTD (ACN 060 037 621) |
| Second Respondent: | WESTFIELD SHOPPINGTOWN PT LIMITED (ACN 004 454 666) |
| Third Respondent: | CPM (WA) PTY LTD (ACN 079 927 272) |
| Fourth Respondent | CPT MANAGER LIMITED |
| File Number: | PEG129 of 2004 |
| Judgment of: | Raphael FM |
| Hearing date: | 4 April 2005 |
| Date of Last Submission: | 12 April 2005 |
| Delivered at: | Sydney |
| Delivered on: | 15 April 2005 |
REPRESENTATION
| Counsel for the Applicants: | Mr P Clifford |
| Solicitors for the Applicant: | Alan Rumsley |
| Counsel for the First and Second Respondents: | Ms W Buckley |
| Solicitors for the First and Second Respondents: | Watts Woodhouse |
| Counsel for the Third and Fourth Respondents: | Mr S Crabb |
| Solicitors for the Third and Fourth Respondents: | Clayton Utz |
ORDERS
Proceedings transferred to the Federal Court of Australia pursuant to s.39(3) of the Federal Magistrates Act 1999 and Rule 8.02 of the Federal Magistrates Court Rules.
Costs of the application shall be the respondent’s costs in the cause.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG129 of 2004
| PEDRA HOLDINGS PTY LTD (ACN 064 183 122) |
First Applicant
MYRAN HOLDINGS PTY LTD (ACN 009 105 408)
Second Applicant
HENRY AVELING
Third Applicant
MARIANNE AVELING
Fourth Applicant
And
| WESTFIELD SHOPPINGTOWN CAROUSEL PTY LTD (ACN 060 037 621) |
First Respondent
PT LIMITED
(ACN 004 454 666)
CPM (WA) PTY LTD
(ACN 079 927 272)
CPT MANAGER LIMITED
(ACN 054 494 307)
REASONS FOR JUDGMENT
On 4 April 2005 I heard a Notice of Motion filed on 3 February 2005 by the solicitors for the first and second respondents and a Re-Amended Notice of Motion filed on 23 December 2004 on behalf of the third and fourth Respondents. Both applications seek orders dismissing the proceedings brought against them by the first and second applicants, they both seek security for costs and the Re-Amended Notice of Motion filed on behalf of the third and fourth respondents also seeks that the action be transferred to the Western Australian District Registry of the Federal Court of Australia. To the extent that the submissions of each of the respondents overlapped they supported one another. In order to understand these rather complex notices of motion a description of the proceedings is required.
The first applicant was the tenant of Shop 157 at the Galleria Shopping Centre Morley Western Australia. Shop 157 is a food outlet in the food court. The second applicant, which is in no way related to the first applicant, is the tenant of Shop 151 at the Galleria Shopping Centre under a lease that it signed on 1 August 2001. Between 30 April 1997 and 1 August 2001 it was first a permitted licensee and thereafter a monthly tenant. This shop is also in the food court and is a food outlet. The second applicant came into the centre by purchasing a franchise business run under the name “Fancy Fillings” which had previously occupied the same premises under a lease. The shopping centre had been built by developers whose agents commenced negotiations with potential tenants. On about 3 December 1996 the developers sold their interest in the centre to the second respondent who employed the first respondent as its agent to manage the property. On about 30 June 2003 the fourth respondent became the owner of the shopping centre and the third respondent was its agent.
At all material times the human face of the centre management was a Mr Pike. It is alleged that it was he who entered into the initial arrangements for the leasing of the two shops as agent for the developers. When Westfield purchased the centre it took on Mr Pike and he remained the agent and involved centre management and matters concerning the leasing of premises within the centre. When Westfield sold out to the fourth respondent Mr Pike remained on in the same position.
Both the applicants allege that certain representations were made to them (directly to the first applicant and indirectly via its predecessor in title to the second applicant) about the way in which the centre’s leasing arrangements would be conducted. In short form these are that there would be an exclusive food court which the planning of the centre would guide and encourage centre users to visit and that this would be the sole area in which food outlets would be allowed with the exception of a McDonalds outlet in the car park area. It is alleged that other representations were made concerning the leasing of premises to food retailers with the intention of ensuring that there was little overlap in menus. It is alleged that these representations were false and misleading insofar as the centre management did, through the period 1996 to 2003, make significant changes to the centre and allowed a significantly greater number of food outlets within the centre in competition to the First and Second Applicants. These outlets were not all in the food court but were in other parts of the centre more convenient to shoppers.
The First and Second Applicants claim in the associated jurisdiction of this court that the actions of the various respondents constituted a breach of the covenant of quiet enjoyment contained in the leases or implied therein or in the tenancy arrangements and that the applicants suffered damage as a result. Insofar as claims made under the Trade Practices Act (the “Act”) are concerned there is a claim for damages under s.82 of the Act and a claim described as “a claim for a refund pursuant to s.87(2)(c) of the Act”. It is admitted that these claims together with the claim for damages are in excess of the sum of $200,000.
There is also a stand alone claim made by the First Applicant against the Third and Fourth Respondents arising out of alleged representations made in 2004 to the effect that the First Applicant could remain in possession of Shop 157 on a monthly tenancy until it found a purchaser for its business that would negotiate a new lease with the Third and Fourth Respondents. It is alleged that before certain offers to purchase could be crystallised the Third and Fourth Respondents gave notice to the First Applicant to vacate the premises by 31 August 2004. A claim is made by the First Applicant for $150,000 being the purchase price the First Applicant would have received from the sale of its business. This claim is in addition to the other claims made.
On 8 February 2005 the two applicants filed a Further Amended Statement of Claim which attempted to address some very serious problems in the pleadings which had been notified to it by the respondents. The Notices of Motion as heard by me addressed this document. I was provided with helpful written submissions by all counsel which addressed not only the alleged failings in the Statement of Claim but also two important preliminary matters with which I shall now deal.
The first of these matters is whether or not it is appropriate and proper for these proceedings to be brought by two unrelated parties claiming breaches of the Act arising out of representations which were impliedly not made at the same time or in the presence of each other although they are said to be the same and to have been made by the same person. In addition there is in respect of one of the applicants an entirely separate claim based upon an alleged much later representation against only two of the respondents. The general rule relating to co plaintiffs joining in the same proceedings is set out in Australian Civil Procedure; Bernard Cairns Lawbook Co 6th ed at 239:
“Co plaintiffs may join in the same proceedings where:
·They have a right arising out of the same transaction or series of transactions and
·If separate trials were held there would be a common question of law and fact; or
·In most jurisdictions, if the court gives leave.”
The situation in the Federal Court is covered by Order 6 Rule 1 which states:
“Subject to Rule 6 an applicant, whether claiming in the same or different capacities, may, in any proceeding, claim relief in respect of more than one cause of action.”
“RULE 2 JOINDER OF PARTIES GENERALLY
2 Two or more persons may be joined as applicants or respondents in any proceeding –
(a) where –
(i)If a separate proceeding were brought by or against each of them, as the case may be, some common question of law or fact would arise in all the proceedings; and
(ii)All rights to relief claimed in the proceedings, (whether they are joint, several or alternative) are in respect of or arise out of the same transaction or series of transactions; or
(b) where the court gives leave so to do.”
The sub-section was considered recently by Sackville J in Cheque One Pty Limited v Cheque Exchange (Australia) Pty Limited (In Liq) [2002] FCA 593 where his Honour discussed the authorities including Payne v Young (1981) 145 CLR 609 and quoted from the decision of Mason J at [618] as follows:
“Joinder is not authorised when the relief claimed is in respect of, or arises out of, two or more different series of transactions, when the participation of each individual plaintiff is limited to participation in one series of transactions, the other plaintiffs not participating in that series.”
The views of the High Court in Payne were adopted by Wilcox J in Bishop v Bridgeland Securities Limited (1990) 80 PR 41-060. His Honour held that there could be no joinder where each of the prospective plaintiffs had been the recipient of separate, although similar, alleged misrepresentations. This is the case that I am faced with here. We do not know very much from the Statement of Claim about when the representations were meant to have been made to each of the separate parties. An additional problem is that the representations made and relied upon by the Second Applicant were not made to it. They were made to the proprietors of the business which it purchased. Certainly, the claim by the First Applicant in respect of the 2004 representations has absolutely nothing to do with the Second Applicant. Although both of the applicants claim to have been affected by the actions of the respondents in a similar way, namely the loss of business because of the introduction of competition, the way that loss was manifested is also likely to be different. I am of the view that the proper course to have taken was for each applicant to have brought separate proceedings making a separate claim against each of the respondents and then an application could have been made to the court to hear the cases consecutively and possibly for the evidence in the one to be the evidence in the other. Alternatively an application could have been made to allow joinder under Order 6 Rule 2(b) which is what occurred in Bishop but not in Cheque One. No such application was made to me either. In fact Order 6 Rule 2 was not referred to in argument. In Cheque One Hill J struck out the claim by the improperly joined parties as against one of the respondents who had brought the Notice of Motion. I do not propose to take that course because for reasons which I will now give I am of the view that this case should be transferred to the Federal Court pursuant to the provisions of Part 8 Rule 8.02(1) of the Federal Magistrates Court Rules and s.39 of the Federal Magistrates Act. If a case is transferred to the Federal Court then the docket Judge dealing with the matter is the proper person to consider the way in which the proceedings should be continued. I should not fetter any discretion available to that judicial officer by a pre-emptory order.
Section 86AA of the Trade Practices Act is in the following form:
If proceedings under section 82 are instituted in, or transferred to, the Federal Magistrates Court, the Federal Magistrates Court does not have jurisdiction to award an amount for loss or damage that exceeds:
(a) $200,000; or
(b) if another amount is specified in the regulations–that other amount.”Particulars of the First Applicant’s loss and damage are set out commencing at paragraph 79 of the Further Amended Statement of Claim. The pleading commences in the following form:
“The First Applicant suffered trading losses in the relevant financial years inclusive of the payments made to the First Respondent, particularised in paragraph 77.3 which constitute amounts in respect of which the First Applicant is entitled to a refund pursuant to s.87(2)(c) of the Trade Practices Act as follows” [There are then set out sums which total in excess of $350,000].
The pleadings continue with a claim in the following form:
“79.2 In relation to the difference between the costs to the First Applicant of the purchase of the business of $486,813 in September 1994 and the offer to purchase the business received by the First Applicant as pleaded in paragraph 108 being $336,813.
79.2.1 Damages of $200,000 pursuant to ss.82 and 86AA of the Trade Practices Act and a refund of $236,813 pursuant to s.87(2)(c) of the Trade Practices Act or
79.2.2 In the alternative damages of $200,000 pursuant to ss.82 and 86AA of the Trade Practices Act 1974.
In regard to the Second Applicant there is a claim for loss and damages made up of trading losses, although in the five years particularised a profit figure is given, and then there is the difference between the cost for the Second Applicant for the purchase of the business of $300,000 in April 1997 and the current value of its business particulars of which have not yet been provided. In addition there are losses for the Third and Fourth Applicants of wages which they would have earned had they not worked in the business. These are described as damages claimed under the Trade Practices Act, there are similar damages claimed for the breaches of the lease. Finally, there is the First Applicant’s claim against the Fourth Respondent pursuant to the 2004 representations of $150,000 being the purchase price the First Applicant would have received from the sale of its business.
Counsel for the Applicants indicated that in his view the loss and damage recoverable under s.82 of the Act would be a figure less than $200,000. We did not debate whether in one proceeding brought by two applicants the $200,000 limit is given to both of them or that they each have this figure, but this appears to be an additional matter of concern. Obviously it will not be a problem if two separate proceedings are brought. Counsel indicated that in his view the other claims were being brought under s.87, they did not constitute loss and damage under s.82 and therefore they were entitled to be heard and judgment for the amounts claimed could be given in the Federal Magistrates Court. The respondents argued that s.82AA is not restricted to loss and damage under s.82 but for all claims under the Act and, more importantly, that in any event the manner in which the claims had been articulated did not fit them within s.87(2), they were in reality claims for loss and damage under s.82.
In these days of judicial control of litigation it is not enough for a court to sit back and watch a litigant being deprived of very large sums of money which he might be entitled to by way of damages because of an ill founded view about the jurisdiction of the court. It seems to me that it is also inappropriate for the court to allow litigants to expend money in legal fees to argue a point of this type when by commencing the proceedings in the Federal Court or having them transferred there, there will be no possibility that the damages will be cut down by virtue of some jurisdictional limit. It is unfair that the respondents should be required to pay their lawyers any money to argue the point when there would have been no necessity for such argument had the case been commenced in or transferred to the Federal Court. It seems to me that the way in which the applicants have put their case for a refund under s.87(2) strains the conception of a refund. It seems to me that if the respondents are liable for the alleged misrepresentations then what the applicants lost because of the reduction in their business through the additional competition entitles them to restitutio in integrum and that is a damages concept. It is not a refund.
When considering a motion to transfer I am obliged pursuant to s.39(3) of the Federal Magistrates Act 1999 to have regard to the matters contained in Rule 8.02 and also to other matters including the interests of the administration of justice. It is in the interests of the administration of justice that parties should be free to claim their full damages and not be constrained as to the manner of expressing them by jurisdictional limits of a lower court. There is, regrettably, no provision in the Act for consent to increase jurisdiction. In those circumstances I believe I should act on the motion of the Third and Fourth Respondents, supported by the First and Second Respondents to transfer this matter to the Federal Court.
Having made the decision to transfer the matter I now have to consider whether or not I should fetter that court with my decisions upon the pleadings. The pleadings as they presently stand do give cause for concern. They do not to my mind comply with the requirement of pleading with clarity so that the respondents can known the case they have to answer; Truth About Motorways Pty Ltd v Macquarie Infrastructure Investments Ltd (1998) ATPR 41-633. On behalf of the First and Second respondents it is argued that the plea against them is that they have independently breached s.52 TPA by their failure to advise that the second respondent would not be acting in accordance with the initial representations which were made by a Mr Pike who was at that time the agent of the developers against whom no claim is made. The first and second respondents argue there is no plea that the second applicants knew of the initial representations and there was no notice of reliance by the tenants under the leases. They say that the initial representations contained in paragraph 11 of the Statement of Claim when read with the plea that they were untrue found at paragraphs 41 to 67 of the Statement of Claim lacked clarity because the untruthfulness relies on unpleaded implications. There is also the difficulty that the attempt to impute Mr Pike’s knowledge of events preceding the first and second respondent’s agency and ownership (and his employment by the first respondent) is not grounded in law. Bearing in mind that the first respondent is the second respondent’s agent one has to wonder why it was necessary to plead against them at this stage. The principal is responsible for the acts of its agent. There also seems to be a difficulty with the case against the first respondent because it only became the second respondent’s agent after the second respondent purchased from the developers. There is no plea as to when the first respondents knew of the second respondent’s intentions.
I would also have concern as to whether paragraph 26 of the statement of claim is sufficient to fix liability upon either the first or second respondent for the initial representations. They are pleaded as having been known to the first and second respondents, there does not appear to be a pleading that they were affirmed or adopted.
It is also not clear from the pleadings whether the initial representations are being pleaded as continuing representations. It is also not completely clear whether the misleading and deceptive conduct alleged against the first and second respondents is conduct by silence and there is certainly no pleading that the failure to speak was deliberate and not merely inadvertent; Demagogue v Ramensky (1992) 39 FCR 31 at [42].
The second and third respondents are not the subject of a claim under the Trade Practices Act save for the representations pleaded at paragraphs 111 and 112 of the Statement of Claim. This is the claim which relates to the alleged representation concerning the first applicant’s ability to remain as a monthly tenant until it sold its business. The first applicant relies on that case to plead in the accrued jurisdiction the claims for continuing breaches of the lease. That claim relies on an alleged breach of covenant of quiet enjoyment based upon what seems to me from my reading of the pleadings to be the imposition of competitive businesses within the centre. Counsel for the third and fourth respondents urged upon me that the dicta of Campbell J in Spathis v Hanave Investments Co Pty Ltd& Anor [2002] NSWSC 304 made it clear that this type of claim could not succeed. I have read his Honour’s judgment and in particular the sections on derogation from grant and breach of covenant of quiet enjoyment found between [124] and [160]. I do not find what counsel for the third and fourth respondents claim to be his Honour’s dicta. Campbell J considered all the relevant authorities both in Australia and England and concluded in the following manner:
[152] “In Southwark London Borough Council v Tanner [1999] 3 WLR 939 the House of Lords has confirmed that breach of a covenant of quiet enjoyment is not limited to direct and physical injury to land (per Lord Slynn of Hadley at 942 B, per Lord Hoffman at 945-6, per Lord Millett at 957. Lord Steyn and Lord Clyde each agreed with both Lord Hoffman and Lord Millett.) Further, that case has reiterated the close connection there is between the covenant for quiet enjoyment, and a lessor’s obligation not to derogate from his grant. Lord Millet at 957 explained how the mistaken belief that there had to be a direct and physical interference with the tenant’s use and enjoyment of the land, before the covenant for quiet enjoyment was breached, had on occasions led courts to incorrectly dismiss (at 957),
“... complaints of the making of noise or the emanation of fumes, of interference with privacy or amenity, and other complaints of a kind commonly forming the subject matter of actions for nuisance. Little harm seems to have been done, since in cases where a remedy was appropriate the tenant has been able to have recourse to the landlord’s implied obligation not to derogate from his grant. ...
Once these artificial restrictions on the operation of the covenant for quiet enjoyment are removed, there seems to be little if any difference between the scope of the covenant and that of the obligation which lies upon any grantor not to derogate from his grant. The principle is the same in each case: a man may not give with one hand and take away with the other.”
The applicants for their part rely on Campbell J’s assertion at [125] that the words utilised in ordinary covenants for quiet enjoyment or non-derogation from grant are:
“Ordinary English words, and it is a question of fact whether they have been broken in any case.”
I would not, on the strength of the arguments put forward by the third and fourth respondents exclude the applicant from pleading a breach of the covenant of quiet enjoyment although this expression of opinion should not be taken as any endorsement of the claim.
I have come to the conclusion that I should adopt an approach with regard to the pleadings consistent with the approach which I adopted in regard to the joinder of parties. That is, I should not interfere with any possible discretion that the Judge to whose docket this matter will be assigned may have. I have come to this decision not withstanding the further representations made to me by the applicants on 12 April 2005. the relevant parts of which are as follows:
2. The applicants chose to commence the proceedings in the Magistrates Court as it is a cheaper and quicker alternative to the Federal Court, had they not been able to do so the action would not have been confirmed
3. The principal instructors of my clients were both in Court for the hearing and understood the risk in relation to the limit on damages addressed by Raphael FM. That was a risk explained to them before the action was commenced.
4. The applicants’ instructions are to pursue the action in the Federal Magistrates Court and if the matter is transferred to the Federal Court their instructions are not to pursue their claims in that jurisdiction as a result of the increased cost and time that will necessarily result from the action being transformed to that jurisdiction.
A court must take into account the wishes of a party when exercising a discretionary power such as the one to transfer a case into another court. But equally, the court should not be made to feel that its discretion is being hobbled by a party’s intention to act in a particular way depending upon the manner in which that discretion is exercised.
I am afraid that I do not really understand the attitude of the applicants. They commence an application making a claim for a very substantial amount of money between them. They have been advised that the jurisdiction of the court is considerably lower than the amount they are claiming. They do not say to their legal advisers “we will limit our damages to the amount of the jurisdiction” they say “please try and secure for us the larger amount we are claiming by pleading our claim in a manner which circumvents the restriction”. When offered the opportunity to avoid any possibility of their losing this important argument they say “we will not proceed in the Federal Court because it is too expensive and will take too long”. In my view this attitude shows a misunderstanding of the procedures of the Federal Court. It also misunderstands the procedures of the Federal Magistrates Court. Merely because a court is set up to be speedier, cheaper and more informal does not mean that its judgments should not follow the settled law. If a case is determined to be heard on pleadings then those pleadings must be as good as they would be in any other court. Informality does not mean that a case is subject to a lower standard of proof or that suspect assertions of law will be accepted without demur. No evidence has been provided to me that if this case is moved into the Federal Court it will be much delayed or that there will be a substantial increase in costs. I note that the Federal Magistrates Court does not have a permanent representative in Perth. The court is served by circuit. The Federal Court has four full time judges. The reduction in workload due to the passing of Migration proceedings into the Federal Magistrates Court will have released a considerable amount of judicial time. It is very possible that the case will be given an earlier hearing date in the Federal Court than it would in the Federal Magistrates Court. If the proper course to take is to transfer this case then I should not resile from that decision because the applicants threaten that if it is taken they will withdraw. That is their choice. It is my responsibility to deal with these proceedings consistent with what I consider to be the proper administration of justice.
The orders which I will make are that the proceedings shall be transferred to the Federal Court of Australia pursuant to the provisions of s.39(3) of the Federal Magistrates Act 1999 and Rule 8.02 of the Federal Magistrates Court Rules. In regard to the costs of the motion
I am of the view that the respondents were substantially successful.
It may well be that before the matter receives it first directions in the Federal Court the applicants take some steps to deal with the matters referred to in this judgment. If that was the case then the hearing before me would have been of some considerable utility. I believe the appropriate order in those circumstances is that the costs of the application shall be the respondent’s costs in the cause.
I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
Date:
4
4