Traderight (NSW) Pty Ltd (ACN 108 880 968) and Ors v Bank Of Queensland Limited (ACN 009 656 740) (No 9) and 15 related matters
[2012] NSWSC 154
•01 March 2012
Supreme Court
New South Wales
- Amendment notes
Medium Neutral Citation: Traderight (NSW) Pty Ltd (ACN 108 880 968) & Ors v Bank Of Queensland Limited (ACN 009 656 740) (No 9) and 15 related matters [2012] NSWSC 154 Hearing dates: 27 February 2012 Decision date: 01 March 2012 Jurisdiction: Equity Division Before: Ball J Decision: See paragraph 30 of this judgment.
Catchwords: PROCEDURE - civil - pleadings - further application to amend statement of claim - allege additional representations on same evidence - whether add anything to current pleadings - whether general assertions of fact are sufficient particulars - whether pleadings ambiguous and confusing - where amendments do not require new large factual enquiries - necessary to plead facts giving rising to duty to speak to plead negligent conduct by silence. TRADE AND COMMERCE - competition, fair trading and consumer protection - misleading and deceptive conduct - difference between representation as to future and representation of opinion about future. Legislation Cited: Fair Trading Act 1987 (NSW)
Trade Practices Act 1974 (Cth) (now the Competition & Consumer Act 2010)Cases Cited: Traderight (NSW) Pty Ltd & Ors v Bank Of Queensland Limited [2011] NSWSC 972
Traderight (NSW) Pty Ltd & Ors v Bank Of Queensland Limited (No 7) [2011] NSWSC 1265
Traderight (NSW) Pty Ltd & Ors v Bank Of Queensland Limited (No 8) [2011] NSWSC 1514Category: Procedural and other rulings Parties: Traderight (NSW) Pty Ltd (ACN 108 880 968) (First Plaintiff in 06/258216 and First Defendant in 06/258225)
Bronwyn Smith (Second Plaintiff in 06/258216 and Second Defendant in 08/258225)
Geoffrey Versace (Third Plaintiff in 06/258216 and Third Defendant in 08/258225)
Smith Partners Development Pty Ltd (Fourth Plaintiff in 06/258216)
Verich Holdings Pty Ltd (Fifth Plaintiff in 06/258216)
Bank of Queensland Limited (ACN 009 656 740 (Defendant in 06/258216; Plaintiff in 08/258225; Plaintiff in 08/279848; Defendant in 08/281332; First Defendant in 08/282126; First Defendant in 08/282304; First Plaintiff in 09/287360; Defendant in 09/287814; First Defendant in 07/256081; Fourth Defendant in 09/287816; First Defendant in 09/287824; Defendant in 10/304306; Defendant in 10/305568; Defendant in 10/306022; Defendant in 10/367086; Defendant in 10/367117)
SME Business Assist Pty Limited (ACN 108 524 232) (First Defendant in 08/279848; Tenth Defendant in 09/287360; First Plaintiff in 09/287814; Sixth Plaintiff in 07/256081)
Scott Rolfe McCoy (Second Defendant in 08/279848; Eleventh Defendant in 09/287360; Second Plaintiff in 09/287814; Seventh Plaintiff in 07/256081)
Geraghty & Palmer (NSW) Pty Ltd (First Plaintiff in 08/281332)
Shauna Margaret Geraghty (Second Plaintiff in 08/281332)
Barry Palmer (Third Plaintiff in 08/281332)
Rossmick No 1 Pty Limited (First Plaintiff in 08/282126; Second Defendant in 09/287360; First Plaintiff in 07/256081; First Plaintiff in 09/287816)
Rossmick No 2 Pty Limited (Second Plaintiff in 08/282126; Third Defendant in 09/287360; Second Plaintiff in 07/256081; Second Plaintiff in 09/287816)
Michael Bradley (Third Plaintiff in 08/282126; Fourth Defendant in 09/287360; Third Plaintiff in 07/256081; Third Plaintiff in 09/287816)
Ross Chapman (Fourth Plaintiff in 08/282126; Fifth Defendant in 09/287360; Fourth Plaintiff in 07/256081; Fourth Plaintiff in 09/287816)
Luke Nolan (Fifth Plaintiff in 08/282126; Sixth Defendant in 09/287360; Fifth Plaintiff in 07/256081; Fifth Plaintiff in 09/287816)
David Liddy (Second Defendant in 08/282126; Second Plaintiff in 09/287360; Second Defendant in 07/256081; First Defendant in 09/287816; Second Defendant in 09/287824)
Jude Financial Services Pty Ltd (ACN 115 763 481) (First Plaintiff in 08/282304; Seventh Defendant in 09/287360; Eighth Plaintiff in 07/256081; First Plaintiff in 09/287824)
Russell Jude Edward Gardner (Second Plaintiff in 08/282304; Eighth Defendant in 09/287360; Ninth Plaintiff in 07/256081; Second Plaintiff in 09/287824)
Penelope Ann Gardner (Third Plaintiff in 08/282304; Ninth Defendant in 09/287360; Tenth Plaintiff in 07/256081; Third Plaintiff in 09/287824)
Industrial Court of New South Wales (First Defendant in 09/287360)
Donna Quinn (Third Plaintiff in 09/287360; Third Defendant in 07/256081; Second Defendant in 09/287816; Fourth Defendant in 09/287824)
Gary Allsop (Fourth Plaintiff in 09/287360; Fourth Defendant in 07/256081; Third Defendant in 09/287816; Third Defendant in 09/287824)
Southpole Financial Services Pty Ltd (First Plaintiff in 10/304306)
Harunur Rashid Chowdhury (Second Plaintiff in 10/304306)
Iftekhar Tarek Hassan (Third Plaintiff in 10/304306)
Ikthedar Hassan Murad (Fourth Plaintiff in 10/304306)
Best Deal Pty Limited (ACN 119 366 433) (First Plaintiff in 10/305568)
Jeffrey Bruce Jones (Second Plaintiff in 10/305568)
LJH Group Pty Limited (ACN 123 507 497) (First Plaintiff in 10/306022)
Leslie Xu (Second Plaintiff in 10/306022)
Jin Yu Yang (Third Plaintiff in 10/306022)
Leokate Pty Ltd (ACN 111 162 068) (First Plaintiff in 10/367086)
Stephen Sargent (Second Plaintiff in 10/367086)
Lauren Sargent (Third Plaintiff in 10/367086)
Shamarbre Pty Ltd (First Plaintiff in 10/367117)
Ronald George Johnson (Second Plaintiff in 10/367117)Representation: N A Cotman SC with R D Glasson (OMB Parties)
S Couper QC with J V Gooley (Bank Parties)
McCabe Terrill Lawyers (OMB Parties)
HWL Ebsworths (Bank Parties)
File Number(s):
Judgment
This is a further application by the plaintiffs (the OMB Parties ) to file amended statements of claim following a judgment I delivered on 15 December 2011 (see Traderight (NSW) Pty Ltd & Ors v Bank Of Queensland Limited (No 8) [2011] NSWSC 1514) in which I dismissed an earlier application by the OMB Parties for leave to amend their statements of claim. The background to the current application is set out in my earlier judgment and two other judgments I have delivered concerning the pleadings in these proceedings: see Traderight (NSW) Pty Ltd & Ors v Bank Of Queensland Limited [2011] NSWSC 972 and Traderight (NSW) Pty Ltd & Ors v Bank Of Queensland Limited (No 7) [2011] NSWSC 1265. It is not necessary to repeat the background here.
The parties helpfully confined their submissions to the amendments sought to be made by a proposed second further amended statement of claim ( 2FASC ) in the proceedings commenced by Best Deal Pty Limited and Mr Jones against the Bank, on the basis that similar issues were raised by the other proposed statements of claim and the outcome of the application in the Best Deal proceedings would determine the outcome of the applications to amend in the other proceedings. Best Deal was the entity through which Mr Jones operated the owner manager branch ( OMB ) of the Bank in Toronto. That branch opened on 24 August 2006 and closed on 28 November 2008.
The amendments fall into four categories. First, the plaintiffs seek to plead an additional representation that is alleged to have been made prior to the opening by the plaintiffs of the Toronto branch which it is said was misleading and deceptive in contravention of what was, at the time the representation was made, s 52 of Trade Practices Act 1974 (now the Competition & Consumer Act 2010) ( TPA ) and what was then s 42 of the Fair Trading Act 1987 ( FTA ). Second, the plaintiffs seek to allege that, prior to the opening of the Toronto branch, the Bank engaged in misleading and deceptive conduct by failing to disclose a number of matters relating to the viability of OMBs in New South Wales which, it is alleged, induced the plaintiffs to enter into the relevant OMB Agency Agreement and to commence operating the Toronto branch. It is also alleged that the same conduct amounted to unconscionable conduct in contravention of ss 51AC and 51AA of the TPA. Third, the plaintiffs seek to allege that the Bank engaged in misleading and deceptive conduct and unconscionable conduct after the Toronto branch opened by failing to disclose certain matters which it is said induced the plaintiffs to continue to operate the branch. Fourth, the plaintiffs seek to make a number of ancillary amendments.
The additional representation
The plaintiffs plead that, prior to the opening of the Toronto branch, the Bank made a large number of representations to the plaintiffs concerning the viability and profitability of OMBs in New South Wales. Paragraph 57A of the 2FASC alleges that the Bank by making a number of those representations:
... impliedly represented that it believed on reasonable grounds that the Bank's pricing, products and credit standards would remain competitive, including as to terms and conditions, pricing and placement in the market, with or remain better than those of the major banks and financial institutions in the NSW market for the period of the operation by Jones of an OMB ...
That representation is defined as the "Competitive Terms Representations". Previously, another representation (which remains in the pleading) had been given that name. It is not necessary to refer to each of the representations from which it is said the Competitive Terms Representations in their new form are said to be implied. However, it is worth observing that some of those representations concern the future. So, for example, one of the representations from which it is said the Competitive Terms Representations are to be implied is the "Turnover Achievable Representation". That representation is alleged in para 53D to be a representation - itself said to be implied from other identified representations - that the Bank "did believe on reasonable grounds that an OMB branch conducted by Jones could and would achieve $4,000,000 loan turnover within 6 months". The representations which are alleged to have been made prior to the opening of the Toronto Branch, including the new Competitive Terms Representations, are together referred to as the "Pre-Opening Representations".
Paragraph 141 of the 2FASC alleges that the Pre-Opening Representations were false and misleading or deceptive in contravention of s 52 of the TPA and s 42 of the FTA. The following particulars are given in relation to the Competitive Terms Representations:
(vi) The BoQ's pricing, products and credit standards were not competitive in NSW with nor were they better than the major players in the NSW market and they were not 'market leading' products;
(vii) There were no reasonable grounds for believing at the time the Competitive Terms Representation s was made nor subsequently that the BoQ's pricing, products and credit standards were competitive with or were better than the major players in the NSW market or that they were or would be 'market leading' products;
( viiA) The products offered by the BoQ were not (at the time the representation was made, nor subsequently) as good as, if not better than, most products on offer in NSW as far as the terms and conditions, pricing and placement in the market place is concerned.
(viii) There were no reasonable grounds for believing at the time the representation was made, nor subsequently, that the products offered by the BoQ were as good as, if not better than, most products on offer in NSW as far as the terms and conditions, pricing and placement in the market place is concerned.
...
(xliv) The Bank's pricing, products and credit standards did not in fact remain competitive, including as to terms and conditions, pricing and placement in the market, with or remain better than those of the major banks and financial institutions in the NSW market for the period of the operation by Jones of an OMB because T the BoQ's financial services products were not competitive as to their terms and conditions to those offered by other comparable financial institutions offering a like or similar service in NSW such that there was no sustainable basis for obtaining new business or a reasonable opportunity of obtaining such business by soliciting it away from competing institutions of the OMB;
(xlivA) There were no reasonable grounds for believing at the time the representation was made, nor subsequently, that the Bank's pricing, products and credit standards would in fact remain competitive, including as to terms and conditions, pricing and placement in the market, with or remain better than those of the major banks and financial institutions in the NSW market for the period of the operation by Jones of an OMB because there was no sustainable basis for obtaining new business or a reasonable opportunity of obtaining such business by soliciting it away from competing institutions of the OMB;
(xlivB) the majority of OMBs operating in NSW had been unable to sell BoQ financial products to consumers in NSW in amounts and in a time that enabled them to break even, make a profit or be a viable business;
(xlv) There were no reasonable grounds for believing at the time the representation was made or subsequently that the BoQ's financial services products (or the persons responsible for making decisions as to lending or terms of lending) were or could be competitive as to their terms and conditions to those offered by other comparable financial institutions offering a like or similar service in NSW such that there was no sustainable basis for obtaining new business or a reasonable opportunity of obtaining such business by soliciting it away from competing institutions of the OMB.
The material underlined is the material that is sought to be included in the 2FASC. The balance of the particulars were given in relation to the Competitive Terms Representations as previously defined. That representation is pleaded as a representation that the Bank's products and credit standards "were competitive with or better than those of the major players in the NSW market and were 'market leading' products" and were "as good as, if not better than, most products on offer in NSW as far as the terms and conditions, pricing and placement in the market place is concerned". As I pointed out in [16] of the judgment I delivered on 15 December 2011 ([2011] NSWSC 1514), that representation is a representation of opinion. It is not a representation concerning the future. Nonetheless, the Bank appears to have treated it as a representation as to the future and it gave particulars of why it had reasonable grounds for believing that its products were and would remain competitive.
The OMB Parties submit that, although the original form of the pleading of the Competitive Terms Representations was confined to an allegation of an opinion concerning the then current state of affairs, the pleadings in two other cases - the proceedings brought by Jude Financial Services Pty Ltd and Traderight (NSW) Pty Ltd - were not confined in that way. For example, para 46(i) of the Jude 2FASC pleads the Competitive Terms Representation in these terms:
During the First Meeting, Allsop [a Bank employee] made the following representations to Mr Gardner [the person behind Jude Financial Services] in trade or commerce:
(i) that BOQ's financial services were and would be maintained as competitive as to its terms and conditions as those offered by other comparable financial institutions offering a like or similar services in NSW, ...
Paragraph 75(i) of the Traderight third further amended statement of claim is in similar terms. The OMB parties submit that the amendment now sought to be made is simply designed to bring the pleadings in the other proceedings into line with the pleadings in the Jude and Traderight proceedings by making it clear that the representation is a representation concerning the future.
There is, however, a difficulty with that submission. The representation alleged in para 46(i) of the Jude 2FASC is clearly a representation concerning the then existing state of affairs and the future. It is a representation that is alleged to have been made by Mr Allsop. On the other hand, the allegation in para 57A of the Best Deal 2FASC appears to be an allegation that the Bank represented that it held the opinion that its products were and would remain competitive and that it had reasonable grounds for holding that opinion. The representation is not one that an employee of the Bank is actually alleged to have made to Best Deal. Rather, it is said to be a representation that is to be implied from other representations. Some of those representations - such as the original Competitive Terms Representations - arise from statements that are alleged to have been made by Bank employees. But, as I have said, others, such as the Turnover Achievable Representation, are themselves said to be implied from yet other representations made by Bank employees. There is nothing objectionable in itself to an allegation that the Bank impliedly made a representation in the terms alleged. However, it is important to understand that the question whether that representation was misleading depends on whether the Bank held the opinion at the time the representation was made and had reasonable grounds for doing so. The alleged representation is not a representation concerning the future. Rather, it is a representation concerning the Bank's beliefs about the future. The representation will be misleading if, at the time it was made, the Bank did not hold the belief or, if it did, did not have reasonable grounds for doing so. Consequently, what is proposed is to introduce yet another form of the Competitive Terms Representations. The proposed amendment does not bring the pleading into line with the Jude and Traderight pleadings. No explanation is given for what it really adds to the plaintiffs' case. On its face, it seems to add nothing more than an additional layer of complexity. What is alleged is that the Bank told Best Deal that its products were competitive. Does it really add anything to say that the Bank also impliedly represented that it believed its products were competitive and would remain competitive, when other representations from which that implication is to be drawn and which relate to the future, such as the Turnover Achievable Representation, are also pleaded? In the absence of an explanation of what the additional pleading adds to the case, I do not think that it should be permitted.
Since the particulars sought to be added to paragraph 141 are said to be particulars of the falsity of the new representation, they should not be permitted either.
However, I should make one other point about those particulars. In my opinion, the particulars that are sought to be included are not proper particulars of the allegation. Rather, they are general assertions of the falsity of the alleged representations. To take one example, particular (viii) alleges that there were no reasonable grounds for believing either at the time the representation was made or subsequently that the Bank's products were as good as most products on offer in NSW as far as the terms and conditions, pricing and placement in the market place is concerned. That, however, simply states a conclusion without identifying the facts which are said to justify that conclusion - for example, an identification of the products in the NSW market at the relevant time which it is said were better than the products offered by the Bank. It is true that a similar criticism may be made concerning many of the particulars given in the 2FASC. No objection has been taken to those particulars, and it is now too late to do so. However, I do not think that provides a reason for permitting the inclusion of further broad particulars when the case is in an advanced stage of preparation, when the OMB Parties say that they have filed all their evidence and when the hearing should commence as soon as possible this year.
Pre-opening non-disclosure
Paragraph 139A of the proposed 2FASC alleges that between 18 January 2006 and 24 August 2006 (the date the Toronto branch opened), the Bank knew:
(a) the great majority of OMBs in NSW had never achieved $4 million settlements (new lending and deposits) per month during their operation;
(b) the average monthly settlements for OMBs in NSW from the date of their inception to June 2006 was substantially less than $4 million per month;
(c) a great majority of OMBs in NSW had been unsuccessful in selling, in competition with other financial institutions, the Bank's product to consumers in the NSW market in amounts sufficient to break even and be profitable;
(d) a monthly new lending target of $4 million was not easily achieved by an OMB in NSW; and
(e) the great majority of OMBs in NSW were not breaking even and were not profitable.
The pleading then gives detailed particulars of that paragraph.
Paragraph 139B alleges:
139B. At all material times before 23 August 2006, the Plaintiffs had a reasonable expectation that the Bank would disclose to them information which was material to:
(a) the likely financial performance of the proposed Toronto OMB; and/or
(b) the consideration by the Plaintiffs of whether or not to enter into the Toronto OMB Agency Agreement.
The paragraph goes on to give particulars of that allegation.
Paragraph 139C alleges that the plaintiffs had a reasonable expectation that the Bank would disclose to them any information which meant that the Pre-Opening Representations were inaccurate, incomplete or misleading or made it unsafe to rely on those representations.
Paragraphs 139D and 139E then plead:
139D. By reason of the matters in paragraphs 139A, 139B and 139C above, the Bank should have disclosed to the Plaintiffs between 18 January 2006 and 23 August 2006;
(a) the matters in paragraph 139A above; and
(b) that there was a substantial risk that:
(i) Jones would not be able to make the Toronto OMB earn sufficient income to achieve break even and become profitable; and
(ii) the Toronto OMB would not be a viable business;
139E. The Bank did not disclose any of the matters referred to in paragraph 139D above to the Plaintiffs between 18 January 2006 and 23 August 2006 or at all .
Paragraph 139F then pleads that the failure to disclose any or all of the matters referred to in 139D was misleading and deceptive. One particular given of that allegation is that the matters pleaded in paragraph 139A were material because they rendered or were likely to render the Pre-Opening Representations inaccurate or misleading. However, a further particular given is that the information was material to the plaintiffs because there was, to the knowledge of the Bank, a substantial risk that:
(i) Jones would not be able to make the Toronto OMB earn sufficient income to achieve break even and become profitable;
(ii) the Toronto OMB would not be a viable business; and
(iii) Jones would lose a substantial amount of money, incur substantial debt and would lose the opportunity to undertake alternative remunerative activities.
This last allegation does not depend on the Pre-Opening Representations.
Paragraph 139G alleges that the failure to disclose the same matters amounted to unconscionable conduct. One particular given of that allegation (para 139G(iv)) is in the following terms:
[T]he failure of the Bank to disclose was done with the intention of inducing the Plaintiffs to enter into the Toronto OMB Agency Agreement for the benefit of the Bank and to the detriment to the Plaintiffs .
Paragraphs 139H and 139I allege that had the Bank told Best Deal and Jones of the matters referred to in para 139D at various times prior to the opening of the branch they would not have entered into the Toronto OMB Agency Agreement or would have terminated the agreement.
Paragraph 139J alleges that as a result, Best Deal and Jones suffered loss.
Mr Cotman SC, who appeared for the OMB Parties, submitted that this pleading complimented the plaintiffs' misrepresentation case. If the plaintiffs fail to establish that the Bank made the representations complained of, they were still entitled to succeed because the Bank had failed to disclose the pleaded matters.
The Bank raises a number of objections to this pleading.
First, it submits that para 139A is ambiguous and confusing because it does not identify when the Bank learned each particular matter. Second, it submits that para 139B is deficient because one of the particulars given of the reasonable expectation was the fact that "the Bank did purport to provide useful advice, assistance and information concerning the OMB franchise and, in doing so, referred to the business performance or results of other OMB businesses in NSW or inside or outside Queensland by way of comparison or example", but no particulars are given of when that advice, assistance and information was given. Third, the Bank submits that the pleading is defective because it does not identify whether the OMB Parties relied on all of the matters the Bank should have disclosed or whether they relied on each of them for taking the course they did. Fourth, the Bank submits that the pleading adds nothing to the pleading of the Pre-Opening Representations since the failure to disclose is alleged to be misleading or deceptive because it rendered the Pre-Opening Representations inaccurate or misleading. Lastly, it submits that particular 139G(iv) amounts to an assertion that the Bank intended to cause detriment to the plaintiffs and there is no proper basis for that assertion.
I do not accept the Bank's submissions. As to the first point, the particulars to para 139A identify when it is alleged that the Bank knew particular matters. It is reasonably plain that the allegation is that by 23 August 2006, it knew each of those matters and was under an obligation to disclose them but failed to do so. I do not think that that allegation is ambiguous or confusing. As to the Bank's second point, in my opinion, the precise terms of the advice, assistance and information given by the Bank is not material to the allegation. Rather, the allegation is that prior to 23 August 2006, the Bank did give some advice, assistance and information and I do not think the Bank needs detailed particulars in order to be able to respond to that allegation. As to the third point, I accept that this is a defect in the pleading as drafted. However, that defect can be easily remedied and I do not see why the plaintiffs should not be permitted to do so. As to the fourth point, it is correct that one of the reasons that it is alleged the non-disclosures were misleading is that the were likely to render the Pre-Opening Representations misleading, and put in that way the non-disclosure case adds nothing to the representation case. However, as I have said, the case based on non-disclosure is also put in a way that does not depend on the Pre-Opening Representations. As to the last point, Mr Cotman says that paragraph 139G(iv) makes two allegations. The first is that the Bank intended to induce the plaintiffs to enter into the Toronto OMB Agency Agreement. The second is that, as a matter of fact, that agreement benefited the Bank and caused detriment to the plaintiffs. I accept that the paragraph is ambiguous. However, Mr Cotman has made its intended meaning clear. The case should proceed on that basis. On the interpretation Mr Cotman gives the paragraph, I do not think that it is objectionable.
The plaintiffs say that they do not intend to lead any additional evidence in relation to the amendments. In my opinion, the amendments do not require the Bank to engage in large new factual enquiries. The amendments have some utility because, at least in part, they cater for the possibility that the court may find that the alleged representations were not made out. Subject to remedying the defect I have referred to, the pleading is sufficiently particular to enable the Bank to understand the case that it needs to meet. For those reasons, the amendments alleging the pre-opening non-disclosures should be permitted.
Post-opening non-disclosure
The pleading in relation to the post-opening non-disclosures follows the pleading of the pre-opening non-disclosures. Paragraph 149B alleges that the Bank knew the matters pleaded in para 139A after the Toronto Branch opened (that is, after 24 August 2006) up until the time it closed (on 28 November 2008). In support of that allegation, it repeats the particulars given of para 139A and gives additional particulars of matters the Bank is said to have learned after 24 August 2006. Paragraph 149C alleges that the plaintiffs had a reasonable expectation that the Bank would disclose information which was material to the financial or likely financial performance of the Toronto OMB and any consideration by the plaintiffs of whether to continue or cease operating the Toronto OMB. Paragraph 149D alleges that the plaintiffs had a reasonable expectation that the Bank would disclose any information which rendered the Pre-Opening Representations inaccurate. Paragraph 149E alleges that by reason of those matters the Bank should have disclosed the matters referred to in para 149B and that there was a substantial risk that the Toronto OMB would not be a viable business. Paragraph 149F alleges that the Bank did not disclose those matters and para 149G alleges that the failure to disclose those matters was misleading or deceptive. Paragraph 149H alleges that the failure to disclose those matters was also unconscionable conduct within the meaning of s 51AC and/or s 51A of the TPA. Paragraph 149I alleges that had those matters been disclosed, Best Deal would have ceased operating the Toronto OMB. Paragraph 149J alleges that by reason of those matters, the plaintiffs have suffered loss and damage.
The Bank raises similar objections to this pleading as it has raised in relation to the pleading of the pre-opening non-disclosures. In addition, it alleges that the pleading is flawed because the OMB Parties give extensive evidence of the information supplied to them by the Bank which it is said was the very information that the Bank is alleged not to have disclosed. Finally, the Bank submits that the amendments are futile because the evidence does not address what the OMB Parties would have done if the relevant information had been disclosed and the plaintiffs have made it clear that they do not propose to lead any additional evidence.
In my opinion, the plaintiffs should be permitted to make the amendments in relation to the post-opening non-disclosures. Again, they do not raise any large areas of factual enquiry that have not already be raised in the proceedings. There is clearly a very live issue of what the plaintiffs were told by the Bank and whether they relied on any failure by the Bank to disclose the pleaded information. But I accept Mr Cotman's submission that that issue should not be resolved on an application to amend.
Ancillary amendments
The plaintiffs seek to include a number of ancillary amendments in the 2FASC. They are principally to paragraphs 156, 156A, 162A, 162B, 168A, 168B, 181A, 181B and 280(c).
The amendments to paragraphs 156 give particulars of concerns that it is alleged Mr Jones raised with the Bank. Paragraph 156A then alleges that the concerns Mr Jones raised occurred to Mr Jones's observations. Whether the inclusion of paragraph 156A adds anything is unclear. However, no specific objection is taken to the amendments to paragraphs 156 and to 156A, and there appears to be no reason not to permit them.
The amendments to paragraphs 162A, 162B, 168A, 168B, 181A, 181B graft the Bank's non-disclosure case on to claims that the Bank made representations after the branch opened. For example, paragraph 158 alleges that the Bank made various statements to allay concerns raised by Mr Jones after the branch opened. Those statements are defined to be the "Competitive Issues Representations". Paragraph 162A alleges that the Competitive Issues Representations were misleading and deceptive. The additional particulars sought to be included to that allegation allege that the Bank failed to disclose the matters pleaded in paragraphs 149C and 149D. The amendments to paragraph 162B allege that in making the Competitive Issues Representations and by failing to disclose the matters in paragraphs 149B and 149E, the Bank engaged in unconscionable conduct. In my opinion, these amendments add nothing but complexity to a pleading which is already excessively complex. Absent the amendments, there is still an allegation that the Bank failed to disclose certain matters and still an allegation that the Bank made certain representations after the branch opened. I cannot see how the amendments add anything to those allegations. They should not be permitted.
Paragraph 280(c) is in these terms:
Negligently, and in breach of duty the [Bank] failed:
(a) ...
...
(c) failed [sic] to disclose to or warn the Plaintiff of facts and circumstances that falsified or qualified information or opinion previously expressed both before and after the commencement of the operation of the Toronto OMB by the Plaintiffs, in particular the matters in paragraphs 139A and 149B above ,
by reason of which the Plaintiffs were induced to enter into the Contracts and Arrangements [that is, the contracts etc under which Best Deal would operate the Toronto branch] and undertake the OMB businesses and to continue to conduct it, whereby they suffered loss and damage.
In my opinion, this is not a proper pleading of negligent conduct by silence. At a minimum, it would be necessary for the plaintiffs to plead the facts which they allege give rise to a duty to speak out. The pleading does not do that. It, also, should not be permitted.
Orders
The OMB Parties should have leave to file amended statements of claim which include amendments substantially in the terms of paragraphs 139A - 139J, 149B - 149J, 156 and 156A of the 2FASC proposed to be filed in the Best Deal proceedings. The parties should bring in short minutes of order to give effect to this order.
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Amendments
06 March 2012 - Typograhpical error in paragraph 30 - the words "162A and 162B" have now been deleted.
Amended paragraphs: 30
Decision last updated: 06 March 2012
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