Street & 7 Ors v Luna Park Sydney Pty Limited & 3 Ors

[2007] NSWSC 696

CITATION:	Street & 7 Ors v Luna Park Sydney Pty Limited & 3 Ors [2007] NSWSC 696
HEARING DATE(S):	15 June 2007
JURISDICTION:	Equity Division
JUDGMENT OF:	Brereton J
EX TEMPORE JUDGMENT DATE:	15 June 2007
DECISION:	Leave to amend refused
CATCHWORDS:	PROCEDURE – leave to amend – on day 8 of hearing – where issue flagged by defendants at opening – where cross-examination proceeded on basis that proposed new issue not in case – whether new issue triable
LEGISLATION CITED:	(CTH) Trade Practices Act 1974 (NSW) Civil Liability Act 2002
PARTIES:	Joan Street (first plaintiff) Roslyn Dwyer (second plaintiff) Michael Hesse (third plaintiff) Glen Eight Pty Ltd (fourth plaintiff) Susan Hesse (fifth plaintiff) Robert Simkin (sixth plaintiff) Glen Billington (seventh plaintiff) Fiona Billington (eighth plaintiff) Luna Park Sydney Pty Ltd (first defendant) Metro Edgley Pty Ltd (second defendant) Peter Hearne (third defendant) Warwick Doughty (fourth defendant)
FILE NUMBER(S):	SC 2267/05
COUNSEL:	Mr T Alexis SC w Ms P M Sibtain (plaintiffs) Mr T G Parker SC w Mr J A Potts (first & second defendants) Mr J R Clarke (third & fourth defendants)
SOLICITORS:	Wise Legal (plaintiffs) Clayton Utz (first & second defendants) Esplins (third & fourth defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Friday, 15 June 2007

2267/05 Joan Street & 7 Ors v Luna Park Sydney Pty Ltd & 3 Ors

JUDGMENT (ex tempore)

1 HIS HONOUR: In the course of opening the case for the first and second defendants on 5 June 2007, Mr Parker SC said:

The first dot point talks about the second defendant being silent; second dot point the second defendant knew certain things; and the third dot point says in the circumstances pleaded then the fourth plaintiff had a legitimate and reasonable expectation that the defendant would correct any statement. This did not depend on any act by Metro Edgley at all. It is entirely dependent upon the proposition that the 2001 DA when made was itself an aspect of misleading and deceptive conduct.

Your Honour heard in the course of the opening references to alleged conversations which were taking place involving people from Metro Edgley, so your Honour was told yesterday about alleged conversations between Mr Hearne and Mr Revay where Mr Hearne was supposed to say this is all going to be children’s rides outside here. We have heard similar allegations made against Mr Hearne in relation to statements made at meetings attended by Mr Marton and Mr Abbott and your Honour also has been told of documents that were supposedly sent by Anna Hearne to Mr Hutcheson acting for Mrs Dwyer and Mr Simpkin. None of that is pleaded and we have objected.

The point is that as pleaded the case does not contain any other representation apart from the mere lodgment of the DA and silence thereafter; that's it.

2 The following morning, in the course of opening the case on behalf of the third and fourth defendants, Mr Clarke of counsel said:

The third and fourth defendants are only allegedly knowingly concerned or personally involved in that conduct in respect of two of those; they are the conduct in 4.3, which is alleged in 4.5 and the conduct in 9.3, which is alleged in 9.5. There is no allegation in the pleading that the third and fourth defendants were involved in the misleading and deceptive conduct in paragraph 7.5.

As your Honour will recall, Mr Parker went through with your Honour on Tuesday that relates to the ongoing continuous representation involving silence that is pleaded in 7.4 and particularised there. The same as against the third and fourth defendants is limited only to the allegation that the 2001 DA and Statement of Environmental Effects that went with the DA, and the 2002 DA and Statement of Environmental Effects, and they were misleading and deceptive.

3 This morning, on day eight of the hearing, the plaintiffs, and in particular the fourth plaintiff, apply for leave to further amend the statement of claim in the form of a document which has been handed to the Court, the substance of which is to insert in the pleading a further paragraph 7.4A as follows:

Further and on or about 13 May, 2002, the Second Defendant, in trade and commerce, represented to the Fourth plaintiff:

a. that children’s rides would be operated in the area to the north of Coney Island.

Particulars

· Affidavit of George Stephen Marton sworn 21 August 2006 at paragraphs 12 to 17

· Affidavit of Timothy Gordon Abbott sworn 21 August 2006 at paragraphs 28 to 35

4 In addition, the amendment would insert a new paragraph 7.5A as follows:

Further and at the time of the representation pleaded in paragraph 7.4A hereof, the Third Defendant:

a. aided, abetted, counselled or procured the representation; and/or

b. was directly or indirectly knowingly concerned in the representation,

and was thereby involved in the contravention pleaded in paragraph 7.5 hereof (in so far as that contravention involves the representation pleaded in paragraph 7.4A hereof) for the purpose of section 75B of the TPA
Particulars

· The Third Defendant was the managing director of the Second Defendant

· The particulars to paragraph 7.4A hereof are repeated

· The Third Defendant was aware that the “Ranger”, the “Spider” and other thrill rides were to be operated in the area to the north of Coney Island during the approved operating hours of Luna Park and that the “Ranger”, the “Spider” and other thrill rides were not children’s rides.

5 A consequential amendment is made to paragraph 7.5, the effect of which is to include the conduct to be alleged in proposed paragraph 7.4A amongst the alleged misleading and deceptive conduct.

6 The first question is whether the proposed amendment is sufficiently arguable to justify leave to amend being granted. Although points have been taken concerning whether the pleading would or would not be verified, any leave to amend would be conditional on verification on behalf of the fourth plaintiff. Although it has been submitted that the amendment is futile because the conduct alleged in it is not in trade or commerce, it is at least sufficiently arguable that it is in trade or commerce that I would not find it untenable at this stage.

7 It is the question of reliance that I have found most troubling. I accept that reliance is not necessarily proved only by sworn assertions that, but for certain conduct, the deponent would or would not have taken a certain course of action. Indeed, in litigation covered by the (NSW) Civil Liability Act 2002 in this state, plaintiffs are now precluded from giving such evidence, and a conclusion of reliance must be inferred from the facts objectively, rather than founded on the subjective evidence of a plaintiff saying what he, she or it would or would not have done. That, of course, does not apply in the context of litigation under the (CTH) Trade Practices Act 1974, but it is still the case in such litigation that reliance can be a matter of objective inference as well as subjective evidence.

8 However, in order to evaluate whether the plaintiffs, and in particular the fourth plaintiff, might arguably establish a case that they detrimentally altered their position and thereby suffered damage on the basis of the representations said to have been made on 13 May 2002, the context needs to be appreciated.

9 First, it was already – before 13 May 2002 – the state of mind, belief and assumption of the fourth defendant that there would be children’s rides and not thrill rides in the area to the north of Coney Island.

10 Secondly, as indeed one of the directors of Glen Eight says, what they were told or what their representatives were told at the meeting of 13 May 2002 contained “nothing we didn’t know already.” In other words, no change in their state of mind was procured by anything said on 13 May 2002. Glen Eight was already embarked on a course of action towards residential conversion. On its case, it would have been able to abandon that course and revert to commercial use of the property, had it learnt at any time – at least up until about June 2002 – that thrill rides were proposed to be located and operated in the area north of Coney Island. But what would have been required to produce that result was not a restatement of a representation consistent with the state of mind which the directors already had, but a positive disclosure that it was intended to locate and operate thrill rides in the relevant area, contrary to the plaintiffs’ existing assumption that children’s rides would be operated there.

11 Thus the present extant version of the pleading in fact accurately captures the case that Glen Eight needs to make out in this respect, and the pleader was right to frame the case as one of misrepresentation by silence or non-disclosure, rather than one of a positive misrepresentation. It may be that what was said at the meeting of 13 May reinforced an existing state of mind, but it did not impact in any way on the course on which Glen Eight was already then embarked. What might have impacted on that course was a disclosure that it was in truth intended to operate thrill rides. So understood, I do not think the plaintiff loses anything by not having the opportunity to rely on positive representations made on 13 May 2002.

12 As I indicated in evidentiary rulings yesterday, evidence of the positive representations is potentially relevant as providing context for the non-disclosure, and perhaps accentuating any obligation that there might have been to make a disclosure. But it seems to me that, upon close analysis, a case of reliance on the alleged positive representation, rather than any non-disclosure, on 13 May 2002 would not ultimately avail the plaintiffs. Accordingly, the proposed amendment is insufficiently arguable to justify leave being granted.

13 I am then reinforced in that view by discretionary considerations: first, that despite the circumstance that counsel for all defendants drew attention to the matter at the outset of the case, it is not till the eighth day that the application was made, and in a context where there has been extensive cross-examination of plaintiffs’ witnesses on reliance, having close regard to the form of the pleading in which it currently is – and in particular of Mr Stanley Roth, whose evidence on reliance is material to Glen Eight’s case. I accept that he gave no evidence directly in respect of the meeting on 13 May, and was not cross-examined in respect of that meeting, but the overall hypothesis of the plaintiffs’ case is that, had Glen Eight been told that thrill rides and not children’s rides were to be operated in the relevant area, they would not have proceeded, and Mr Roth was certainly cross-examined extensively on that proposition. I think there are strong discretionary reasons why an issue which might well have influenced the course of the cross-examination so far should not now be allowed to be raised.

14 A second significant discretionary consideration is that the proposed amendment would raise, against the third and fourth defendants, for the very first time, allegations arising out of the 13 May 2002 meeting, which previously were not pleaded as part of a cause of action against them. If that were the only consideration, I would probably have allowed the amendment because, despite that prejudice, the factual substratum of the allegation has been traversed in the defendants’ affidavits; but, in the view that I take of the arguability of the proposed amendment, it provides further reason for declining leave to amend.

15 Accordingly, I refuse leave to further amend the statement of claim. I will mark the document containing the proposed amendments MFI 14.

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