Stockland (Constructors) Pty Limited v Darryl I Coombs Pty Limited
[2002] NSWSC 813
•30 August 2002
CITATION: Stockland (Constructors) Pty Limited & Anor v Darryl I Coombs Pty Limited & Ors [2002] NSWSC 813 FILE NUMBER(S): SC 55046/99 HEARING DATE(S): 30/8/02 JUDGMENT DATE: 30 August 2002 PARTIES :
Stockland (Constructors) Pty Limited (First Plaintiff)
Stockland (Properties) Pty Limited (Second Plaintiff)
Darryl I Coombs Pty Limited (First Defendant)
Philip J Flook Pty Limited (Second Defendant)
Retail Design Group (International) Pty Limited (Third Defendant)JUDGMENT OF: Einstein J
COUNSEL : DE Grieve QC, PL Dodson (Plaintiffs)
AW Street SC, R Newell (Third Defendant)SOLICITORS: Cohen & Krass (Plaintiffs)
Bull, Son & Schmidt (Third Defendant)CATCHWORDS: Practice and Procedure - Leave to amend - Function of pleadings and particulars - Pleadings to state case of the party propounding the pleadings with sufficient clarity to permit the other party to meet the case - Transparency of reasoning processes/use of language LEGISLATION CITED: Supreme Court Rules
Trade Practices Act 1974CASES CITED: Banque Commerciale SA, en liquidation v Akhil Holdings Ltd (1990) 169 CLR 279
Clough & Rogers v Frog (1974) 48 ALJR 481
Cropper v Smith (1884) 26 Ch D 700
Fraser v NRMA Holdings Ltd (1995) 55 FCR 452
Gould and Birkbeck and Bacon v Mount Oxide Mines Ltd [1927] 1 KB 448
Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705
Rhone-Poulenc Agrochime SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477
State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146
Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97DECISION: Leave refused to amend particular sections of summons.
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
TECHNOLOGY AND CONSTRUCTION LIST
Einstein J
30 August 2002 ex tempore
Revised 6 September 2002
55046/99 Stockland (Constructors) Pty Limited & Anor v Daryl I Coombs Pty Limited & Ors
JUDGMENT – On application to amend proceedings
1 Following the Judgment delivered ex tempore on 9 August 2002 and in its revised form bearing date 29 August 2002, the matter was stood over until today for the purposes identified in that Judgment. It is unnecessary to repeat the matters set out in that Judgment, save to point out that the Court today granted leave to the cross claimant, Retail Design Group Pty Ltd [“RDG”] to file in Court a notice of motion seeking leave to amend the entire amended cross-claim in accordance with the annexure to the motion.
2 A comparison of the latest version of cross-claim sought to be propounded [“the latest version”] and the version dealt with in the August Judgment [“the anterior version”] makes clear that
· The paragraphs up to and including paragraph 15 are, apparently, unchanged and essentially represent the contract claim;
· Effectively the latest version involves leave to amend paragraphs 16 and following from the anterior version which sets out all the Trade Practices Act section 52 claims, by substituting the entirety of the new paragraphs 16 – 69 in place of the former paragraphs 16 – 25.
3 The plaintiffs in the proceedings, who are relevant cross defendants, but in particular the first plaintiff, which is the relevant cross defendant to the RDG Trade Practices Act claims, opposes leave to amend being granted.
4 As I understand the position, it is accepted at the Bar table that in the event that the Court would not be disposed to grant leave to amend by permitting the pleading of the Trade Practices Act claims set out in paragraphs 16 – 69 of the latest pleadings, the result which will follow will be that the older paragraphs 16 through to 25 will be disallowed, so that the cross-claim will march on stripped of any causes of action in relation to the Trade Practices Act counts.
5 In relation to questions of principle, the August Judgment, to an extent, treated with the principles concerning the functions of particulars and the functions of pleadings. It is for that reason unnecessary to repeat what was said there, which is relevantly adopted for and to be regarded as included in and forming part of these present reasons.
Leave to amend
6 In State of Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146 the High Court carefully analysed the development up to January 14 1997, of approaches taken to the exercise of the discretion to permit amendments to pleadings. Generally that judgment of the High Court, without purporting to be exhaustive, serves to set out the types of consideration which ought to direct the mind of the decision maker on such applications. However, the court accepted that the trial judge is afforded a large discretion in relation to the exercise and that it would be unwise and contrary to principle to seek to fetter that discretion with rigid rules. The special significance of the decision is to direct the mind of the decision maker to many of the considerations which may be taken into account in exercising the discretion and to emphasise, if it needed to be emphasised, that justice is the paramount consideration in determining such an application.
7 J L Holdings dealt, of course, with the particular circumstances before the court and whilst the general statements to be found in the joint judgment of Dawson, Gaudron and McHugh JJ and in the judgment of Kirby J. assist a decision maker considerably, the obvious fact is that each and every case in which an application for leave to amend is pursued requires the court to deal with the special and peculiar matrix of circumstances which obtain at the material point in time in the litigation in respect of which such application is pursued.
8 To my mind the following statements of principle affirmed in JL Holdings are fundamental and clearly and succinctly express the general approach to be taken:
- (a) Now, I think it is a well established principle that the object of Courts is to decide the right of the parties, and not to punish them for mistakes they make in the conduct of their cases by deciding otherwise than in accordance with their rights. Speaking for myself, and in conformity with what I have heard laid down by the under division of the Court of Appeal and by myself as a member of it, I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party. Court's do not exist for the sake of discipline, but for the sake of deciding matters in controversy, and I do not regard such amendment has a matter of favour or of grace.
- [ Cropper v Smith (1884) 26 Ch D 700 per Bowen LJ at 710]
(b) As the defence, if established, would be a complete answer in the either action, the amendments sought should have been an amount unless it appeared that injustice would thereby have been an occasion to the respondent, there being nothing to suggest fraud or improper concealment of the defence on the part of the appellants. With the exception of the suggestion of prejudice arising in respect of the loss of the possible claim against the nominal defendant, the matters relied upon by the respondent in opposition to the amendments sought go at the most to delay and irregularity only, matters which are relevant to costs by do not constitute injustice to the respondent in the sense in which that expression is used.
- [ Clough & Rogers v Frog (1974) 48 ALJR 481 at 482]
9 A recent development in this State, which the Court is also entitled and indeed required to take closely into account, relates to Part 1 of the Supreme Court Rules as modified by Amendment No 337, which elucidates the overall objectives of practices and procedures as specified in the Rules. The overriding purpose of the Rules is to facilitate the “just, quick and cheap resolution of the real issues” in civil proceedings. The overriding purpose clause imposes an obligation on the Court to give effect to the overriding purpose when it exercises any of its powers."
10 Hence it may be taken as a given that the Court should strain, where possible, to permit a party to amend his, her or its pleadings when at the stage of application for the amendment, that can be achieved without injustice to the other party.
11 Naturally, also taken as a given, is the critical parameter that as a matter of fundamental natural justice and fairness to a party defending a claim, pleadings must comply with a number of crucial elements before being permitted to be propounded or filed.
12 Reference was made by Dawson J in Banque Commerciale v Akhil Holdings (1990) 169 CLR 279 to the task and function of pleadings. His Honour cited from Isaacs and Rich JJ in Gould and Birkbeck and Bacon v Mount Oxide Mines Ltd [1927] 1 KB 448 at 453 as follows:
- “ Undoubtedly, as a general rule of fair play, and one resting on the fundamental principle that no man ought to be put to loss without having a proper opportunity of meeting the case against him, pleadings should state with sufficient clearness the case of the party whose averments they are. That is their function. Their function is discharged when the case is presented with reasonable clearness. Any want of clearness can be cured by amendment or particulars …”
13 The circumstances in which the cross-claim is brought are complex to say the least. An attempt was made in the August Judgment to broadly outline, by way of a summary, the facts which had been prepared by Mr Dodson of junior counsel for the plaintiffs, albeit
(ii) not necessarily accepted in its entirety by RDG.
(i) for the purposes of a submission as to background; and
14 It is unnecessary to repeat that summary presently. Again it is to be regarded as forming part of this present judgment.
15 Standing back from the particular pleading questions and endeavouring to focus upon the somewhat unusual complex of contractual inter-relationships which here obtained, one has first the circumstance that the registered proprietor of the relevant property was National Australia Trustees Ltd (“the trustee company”).
16 As Mr Grieve QC has pointed out, this is not a case in which, as may be commonly found, a proprietor will retain a group of architects to prepare drawings. In fact, this is a case in which apparently the effective ‘running’ of the building contract was left to the first plaintiff, Stockland Constructors Pty Ltd [“Stockland” or “Stockland Constructors”], which entered into an agreement to that end in which it was regarded as head contractor/builder. That agreement was clearly enough entered into with the trustee company. Stockland apparently then entered into the relevant engagement by contract and retainer of the three defendants who have together been referred to as the “architects”, or as the “architectural consultants”.
17 RDG apparently provided its services in terms of construction drawings, preparation of trade packages and the like to Stockland which had commissioned them and used them for the purpose of its dealing with invitations to tender. One of the tenderers was Story Steel. The circumstances in which Story Steel tendered appears to form part of the essential underpinning of the cross-claim in terms of the Trade Practices Act claims now sought to be pursued against Stockland.
18 It seems that at the centre of the RDG claims sought to be now pleaded in the new Trade Practices Act cross-claims are allegations of extremely serious moment, to the effect that the tender price submission by Story Steel was based on the wrongful disclosure of information to it in consideration of the payment of a bribe. The gravamen of that claim is to be found in a number of places in the proposed Trade Practices Act cross-claims. A number of sections of the proposed cross-claim pleading concern a secret commission alleged to have been paid. Individuals by whom that commission is said to have been paid and to whom that commission is said to have been paid, are named. The pleading is replete with allegations of tape recordings being removed by named individuals for the purpose of wiping incriminating material on tapes. Allegations which appear to involve the gravest of frauds are to be found in this pleading from time to time, whether in the pleading proper or in particulars, being allegations which involved a number of persons and companies.
19 During the course of the commencement of submissions taken today, Mr Street SC sought to explain in as much detail as he was able from the bar table, the nature of the alleged bribe and how it is said to have reflected upon his clients in terms of causal effect and the real world. As I have understood him, in very general terms what is said to have occurred is that Story Steel, becoming seised of information which it should not have had in relation to the range which Stockland Constructors would consider when conforming tenders were received, obtained information as to that range and by reference to that information, was able to put in a tender which was for far less than it ought to have been, if there would ever have been a practicable chance of the tender price being sufficient for the carrying out of the work.
20 Mr Street also explained, as I understood him, that RDG claims that part and parcel of this alleged legal wrongdoing, in terms of the secret commission, the bribe and the consequential tender, was the failure of Stockland Constructors to elicit from Story Steel anything akin to a usual form of written contract of the type which is commonly found (often by reference to the tender conditions) when conforming tenders are accepted. Apparently, as I have understood Mr Street, RDG claims that the very confusing, irregular and informal manner of documenting the tender and the contract acceptance, in turn led to grave difficulties.
21 In the fullness of time the Queensland proceedings were brought by Story Steel against Stockland Constructors, claiming reimbursement for extras, variations and damages. That action was settled by Stockland Constructors on 24 December 1997.
22 One then turns to the commencement of these proceedings which were brought purely and simply by the plaintiffs against the architects for damages for professional negligence, the claims generally being for loss and damage, said to be the result of defending and settling the Supreme Court proceedings in Queensland. An amount is sought as part of the settlement sum which was paid by Constructors to Story Steel when the Queensland proceedings were settled. Another amount is sought by way of the costs of investigating, defending and properly settling the Supreme Court proceedings in Queensland.
23 One next comes to the content of the cross-claims now sought to be propounded by RDG. Notwithstanding the benefit of Mr Street's submissions and notwithstanding the benefit of two separate occasions when the matter has been before the Court and notwithstanding the two separate forms of cross-claims seeking to plead the Trade Practices Act claims, I have had the very gravest of problems in understanding as a matter of fundamental transparency of reasoning, what the relevant causes of action are said to comprise, outside, of course, of the fact that the cross-claimant seeks to engage and rely upon the provisions of s 52 of the Trade Practices Act.
24 It is not going too far to say that outside of my understanding that it is s 52 of the Trade Practices Act that the cross-claimant seeks to rely upon, a very great deal of the otherwise usual elements which the court is used to being able to discern from a pleading seeking to rely upon that section are not only difficult but, it seems to me, often impossible to glean from even this newest pleading.
25 The whole of the pleading now sought to be propounded will be annexed to this judgment in its revised form and I do not intend, for obvious reasons, to repeat the pleading in that regard. Suffice it to say that, as the transcript of argument will reveal, there seemed to be a general consensus at both sides of the bar table that one conveniently divided the s 52 claim into three compartments.
The structure of the pleading
26 Some background but clearly significant allegations appear to commence following the preparatory paragraphs running from 16 up to and including paragraphs 36 and 37.
The three categories/brackets
27 The section running from paragraph 37 up to paragraph 56 has for convenience been referred to during the course of argument as "bracket 1” and I intend to use that terminology in what follows.
28 Bracket 1 itself appears to be divided into two sections. The first in terms of chronology, covers alleged representations commencing in October 1995 and running up to September 1997. This section begins with paragraph 46 and runs up to paragraph 56. The second appears to involve representations said to have been made between September 1997 and running up to December 1997. This category of relevant paragraphs appears to begin at about paragraph 37 and to run up to paragraph 45.
29 The bracket of the claims which has been referred to during the course of argument as the "bracket 2" of claims commences at paragraph 63 and runs up to paragraph 69.
30 The bracket of claims which has been referred to during argument as the "bracket 3" commences at paragraph 57 and appears to run up to paragraph 62.
Bracket 2
31 Paragraph 63 commences with an alternative pleading where an allegation is made that Constructors commenced these proceedings for a commercial purpose being to prevent any claim by Trustee Company of Australia against RDG arising out of the deed of settlement of December 1994 or arising out of the payment of approximately $7 million to Constructors or its agent.
32 Paragraph 64 commences as follows:
- "The cross-claimant says that by the filing of the summons and the first amended summons in these proceedings and by the pursuit of relief claimed therein, as provided for by agreement under deed executed with the Trustee Company of Australia Ltd on 24 December 1997 the cross-defendant made the following representations collateral to the proceedings in that the first cross-defendant represented to Trustee Company of Australia Ltd that:"
33 Following the semi-colon one has subparagraphs (a)-(i) by way of the alleged representations.
34 The first point to note in relation to the commencement of paragraph 64 are the words towards the end of that section:
- "...made the following representations collateral to the proceedings in that the first cross-defendant represented to Trustee Company of Australia Ltd." [Emphasis added]
35 Particulars to paragraph 64 are given and read as follows:
The cross-claimant relies upon the absence of a release between Trustee Company of Australia Ltd and the first cross-defendant in the deed of settlement dated 24 December 1997 and on clause 2.5 of the said deed as to the continuing interest of Trustee Company of Australia Ltd."
"The first cross-defendant filed and served the summons and amended summons and the silence of the cross-defendant in respect of the falsity of the representations and the knowledge of the first cross-defendant of the falsity of the representations and the knowledge of the first cross-defendant of the ignorance of the Trustee Company of Australia Ltd as to the falsity of the representations.
36 It is clear enough that silence may constitute misleading or deceptive conduct. Authorities in support of that proposition are generally to be found in paragraph 1.52.50 of Miller's Annotated Trade Practices Act, 23rd edition 2002.
37 Silence, as those annotations by reference to a number of cases make plain, may amount to a breach of s 52 in a number of circumstances. The circumstances are not always easy to proscribe and one must assume that silence may amount to misleading and deceptive conduct in a variety of ways, many of which have probably not yet been before the Courts.
38 At common law, silence can give rise to an actionable misrepresentation where there is a duty upon the representor to reveal a matter if it exists, and where the other party is therefore entitled from the silence of the representor to infer that that matter does not exist.
39 In Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (1988) 79 ALR 83 at 95, Lockhart J made this point and added:
"The circumstances in which silence may constitute misleading conduct under the Act were referred to in Rhone-Poulenc (1986) 12 FCR 477. That case established that silence may be relied on in order to show a breach of s 52 when the circumstances give rise to an obligation to disclose relevant facts...The duty to disclose is not confined to cases where there are particular relationships, such as trustee and beneficiary or solicitor and client, principal and agent, guardian and ward. There is no useful purpose in seeking to analyse the circumstances in which the duty to disclose will arise as this must depend on the facts of each case."
40 In Winterton Construction Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97 at 114, Hill J explained the position as follows:
"Obviously, it is difficult to see how a mere silence could, of itself, constitute conduct which is misleading or deceptive...However, if the circumstances are such that a person is entitled to believe that a relevant matter affecting him or her would, if it existed, be communicated, then the failure to communicate it may constitute conduct which is misleading or deceptive because the person who ultimately may act to his or her detriment is entitled to infer from the silence that no danger or detriment existed."
41 Clearly enough, where an applicant claims to have been misled by a failure to make full and true disclosure the applicant bears the onus of proving how what was not said, was likely to mislead or deceive. Errors and omissions must be relevant and material: Fraser v NRMA Holdings Ltd (1995) 55 FCR 452.
42 The very clear problem which this bracket of the proposed cross-claim includes is quite simply that the particulars to paragraph 64 in no way, shape or form represent particulars of the representation alleged in terms of the cross-defendant being able to follow how or when and in what terms the representation is alleged to have been made. A mere reference, as in these particulars, to silence of the cross-defendant, absent some other adjectival information as to where this goes, leaves the cross-defendant light years from being in a position to follow what it is that is alleged to have constituted the representation. Nor do the so-called ‘particulars’ advance the position in its reference to the absence of a release.
43 A further problem with a number of areas in the pleading, indeed it seems to me a problem with significant sections of the proposed propounded pleading, concerns what has recently been referred to in another context as lack of transparency of reasoning processes - see Hayden JA, Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 at [86]. Whilst of course Makita dealt with the necessity of transparency of reasoning processes in terms of a court's requirement that the reasoning processes of an expert be made explicit in terms of the need for s 79 to be satisfied, and that, it does seem to me that the same reasoning has a place in relation to the function of pleadings and particulars.
44 In relation to the particulars to paragraph 64 as a matter of ordinary English, I fail to follow by way of the transparency of reasoning processes necessary, what it is that the pleader is there saying. The penultimate sentence, that is to say the first sentence of the particulars, are grammatically meaningless. Further the final sentence, referring to the contents of a document without either setting out the actual words or the effect of the words, offend as it seems to me, the principle that the material must be able to be understood by a cross-defendant, but more significantly simply do not advance the matter. The cross defendant cannot follow what is being alleged in either the pleading or in the opaque and meaningless particulars.
45 Sufficient has been said for the grant of leave to amend to plead bracket 2 to be refused.
46 It is important also to note the significance of the commencement of these proceedings as part and parcel of this bracket of the Trade Practices Act claims. In a curious sense the claim may arguably be likened to one where a defendant sued in the commercial list for professional negligence, let us say as an auditor or engineer or medical practitioner, cross-claimed against the plaintiff asserting that the commencement of the proceedings was for a commercial purpose of or by reference to which, that relevant defendant suffered loss, simply because the proceedings had been commenced. In short, the relevant, let us say, medical practitioner sued, would cross-claim for the reason that the very bringing of the proceedings and the environment in relation to which the proceedings were brought, or the publicity given to the proceedings or the media coverage of the proceedings, had led to that medical practitioner's practice suffering. Whilst I do not suggest that this is four square with that example, it does serve to give some adjectival information as to the very real difficulty which the notion underpinning the pleading appears to me to present. This ‘credibility’ problem is not however relied upon in this Judgment as a ground for rejecting the grant of leave.
Bracket 3
47 I turn next to the bracket of materials which I have described as "bracket 3".
48 The cross-defendant's submission in this regard was that the pleading amounts to an allegation that Constructors represented to RDG effectively that they were incompetent. Next, that RDG was misled or deceived by these representations in relation to its own professional competence and for that reason, failed to engage in commercial activity which might have provided profitable.
49 Baldly so stated, the pleading may be said to have credibility problems. However, at the stage of determining a pleading issue the court is not involved with credibility problems in terms of the exercise. If the truth be known, far more commonly than one might otherwise expect, claims to legal wrongdoing involving the most amazing and, one would have thought, preposterous, notions have sometimes succeeded. Life, it is true, is often stranger than fiction. Hence I put out of my mind altogether, the alleged bizarre nature of what is here put.
50 However, in terms of the basal principles which are to be kept in mind, I have this problem with this bracket of the pleading. The particulars in paragraph 59 of the conduct said to have been misleading and deceptive or likely to mislead and deceive within the meanings of s 52 of the Trade Practices Act, also fail as a matter of elementary failure of transparency of reasoning. It does not seem to me that it is possible for the court or a cross-defendant in reading those particulars to understand, as a matter of English or as a matter of logic, and certainly as a matter of transparency of reasoning, what it is that the pleader is seeking to allege. As I have said, a general rule of fair play resting on the fundamental principle that no-one should be put to loss without having a proper opportunity of meeting the case against him. This must involve the pleading stating the case with clarity.
51 This is the second occasion when the Trade Practices Act section of the cross-claim has been before the court. On the first occasion it was made very plain in the ex tempore judgment that a patchwork quilt of obviously a number of attempts to get it right, seemed to be the order of the day. To my mind, in terms of this latest bracket 3 of the pleading, that remains the case.
Bracket 1
52 Turning then to the first bracket of the pleading, one has a commencement alleged set of representations by Constructors to Stockland Property Management Ltd, Stockland Properties Pty Ltd, National Australia Trustees Ltd and to the Trustee Company of Australia Ltd. This appears in paragraph 37.
53 The internal division within bracket 1, as I have said, is as between on the one hand, the representations said to have taken place between October 1995 and September 1997 and on the other hand, those representations said to have taken place, or said to have involved conduct between September 1997 and thereafter.
54 This bracket of representations at least involve allegations as to
(i) what the representations were;
(ii) why the representations were false or incorrect;
There is further, in paragraph 45, an allegation of loss and damage which is sought to be particularised by reference to lost opportunity and lost reputation.(iii) a pleading as to the reliance placed upon the representations by a number of the representees.
55 Likewise the second part of bracket 1 does seem to include a dealing with the incorrect or false aspects of those representations, and the alleged reliance placed by a number of entities upon the representations. Allegations are also made that by reference to that reliance by representees, the cross-claimant suffered loss and damage particularised in 56.
56 In the result, and although I continue to have very severe continued doubts about the prudence of exercising the discretion in this fashion, it seems to me that the appropriate exercise of the discretion is to permit the bracket of pleading which I have referred to as "bracket 1". It seems to me that the transparency of reasoning process problems, which do clearly infect brackets 2 and 3, may be said to have sufficiently overcome for the purpose, on General Steel bases, for the court to permit bracket 1.
57 I am quite clear that the proper exercise of the discretion is not to grant leave to the cross-claimant to pursue either brackets 2 or 3.
58 In those circumstances and for those reasons leave to amend will not be given in terms of brackets 2 and 3 and will be given in terms of bracket 1.
I certify that paragraphs 1 - 58
are a true copy of the reasons
for judgment herein of
the Hon. Justice Einstein
given on Friday 30 August 2002
ex tempore and revised 6 September 20026 September 2002___________________
Susan Piggott
Associate
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