Westfield Management Limited v Direct Factory Outlets Homebush Pty Limited [No 3] - [2004] NSWLEC 688

No judgment structure available for this case.

Land and Environment Court

of New South Wales

CITATION: Westfield Management Limited & Ors v Direct Factory Outlets Homebush Pty Limited & Ors [No 3] [2004] NSWLEC 688

PARTIES:
APPLICANTS
Westfield Management Limited
GPT Management Limited
Centro Properties Limited
Stockland Trust Management Limited
FIRST RESPONDENT
Direct Factory Outlets Homebush Pty Limited
SECOND RESPONDENT
Sanity Music Stores Pty Limited
THIRD RESPONDENT:
Perfumania Pty Limited t/as The Perfume Connection
FOURTH RESPONDENT
Colorado Group Limited t/as Mathers Shoes
FIFTH RESPONDENT:
Foad Haddad & Ronda Haddad t/as Florentine Eyewear

FILE NUMBER(S): 40871 of 2002

CORAM: Pain J

KEY ISSUES: Practice and Procedure :- Application for summary dismissal or stay of proceedings - Whether Applicants' case as pleaded discloses a reasonable cause of action against the Respondents

LEGISLATION CITED: Environmental Planning and Assessment Act 1979, s 4, s 76A
Interpretation Act 1987, s 3, s 6, s 11
Supreme Court Rules, pt 13 r 5
Strathfield Planning Scheme Ordinance
Land and Environment Court Rules, pt 6 r 2, pt 10 r 1

CASES CITED: Dart v Norwich Union Life Australia Ltd [2002] FCAFC 34;
Foodbarn Pty Limited v Solicitor General (1975) 32 LGRA 157;
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125;
Lindon v The Commonwealth (No 2) (1996) 70 ALJR 541;
Lizzio v Ryde Municipal Council (1983) 155 CLR 211;
Shannon v Lee Chun (1912) 15 CLR 257;
State of Queensland v JL Holdings Pty Limited (1997) 189 CLR 146;
The Commonwealth v Verwayen (1990) 170 CLR 394;
Westfield Management Ltd & Ors v Direct Factory Outlets Homebush Pty Limited & Ors [2003] NSWLEC 258

DATES OF HEARING: 02/11/2004

DATE OF JUDGMENT: 12/15/2004

LEGAL REPRESENTATIVES:

APPLICANTS
Mr S Gageler SC with Ms S Pritchard and Mr J B Maston instructed by Speed and Stracey
FIRST RESPONDENT
Mr S D Rares SC with Mr R P L Lancaster instructed by Gilbert and Tobin
SECOND RESPONDENT
Mr C J Leggat with Mr Mr T To instructed by Watkins Tapsell
THIRD RESPONDENT
Mr A Galasso instructed by Gadens Lawyers
FOURTH RESPONDENT
Mr D J Hammerschlag SC with Mr J E Robson instructed by Deacons
FIFTH RESPONDENT:
Mr G Newport instructed by Harris Hyde Page

JUDGMENT:

THE LAND AND ENVIRONMENT COURT
OF NEW SOUTH WALES

PAIN J

15 DECEMBER 2004

MATTER NO 40871 of 2002

WESTFIELD MANAGEMENT LIMITED
GPT MANAGEMENT LIMITED
CENTRO PROPERTIES LIMITED
STOCKLAND TRUST MANAGEMENT LIMITED

Applicants

DIRECT FACTORY OUTLETS HOMEBUSH PTY LIMITED

First Respondent

Second Respondent

PERFUMANIA PTY LIMITED T/AS THE PERFUME CONNECTION

Third Respondent

Fourth Respondent

FOAD HADDAD & RONDA HADDAD T/AS FLORENTINE EYEWEAR

JUDGMENT NO 3

1 Her Honour: These proceedings concern the use of Level 3 of premises at Underwood Road, Homebush as a factory outlets centre (“the premises”). On 7 November 2002 the Applicants commenced Class 4 proceedings against five Respondents, being Direct Factory Outlets Homebush Pty Ltd, the head lessee of the premises, and four sub-lessees of parts of the premises. The Applicants allege that certain uses by the sub-lessees of those parts of Level 3 which they lease are in breach of Condition 11 of a development consent issued on 30 May 2000 by Strathfield Municipal Council.

2 On 17 June 2004 the hearing of the Applicants’ Class 4 proceedings as against the First, Second and Fourth Respondents commenced before me. On 25 June 2004, following my judgment in Westfield Management Ltd & Ors v Direct Factory Outlets Homebush Pty Limited & Ors [2003] NSWLEC 258, I made formal orders striking out the Further Amended Application and Further Amended Points of Claim as against the First, Second and Fourth Respondents, and gave directions for:

3 On 12 August 2004 the Applicants filed a Notice of Motion seeking leave to file the Second Amended Application Class 4 and the Second Amended Points of Claim. I will refer to these pleadings as the first version. Following the filing of the Applicants’ Notice of Motion all the Respondents filed Notices of Motion in response. The orders sought in the Respondents’ Notices of Motion can be summarised as follows:

4 At the hearing the Applicants sought leave to rely on a substantially amended form of the Second Amended Application Class 4 and the Second Amended Points of Claim which were attached to their submissions in reply to the Respondents’ submissions on the first version of the pleadings. That was the second version of the pleadings. I gave the Applicants leave to file the second version for the purposes of this hearing subject to the making of appropriate costs orders. A further oral application to amend was made during the Applicants’ oral submissions in reply by inserting in par 22, 23, 24 of the Second Amended Points of Claim the words “or alternatively, any non-trivial series of sales” after the words “any sale”. I will refer to the amended pleadings which the Applicants relied on by the end of the hearing as the third version of the Second Amended Application Class 4 and the Second Amended Points of Claim. I granted the Applicants leave to file the third version for the purposes of this hearing subject to the making of appropriate costs orders and leave also being given to the Respondents to file any further written submissions in relation to the third version by 4 pm on 5 November 2004.

5 On 2 November 2004 the Third and Fifth Respondents, who were not active parties in the proceedings in relation to which I gave judgment on 25 June 2004, sought orders that the previous Class 4 Application and Points of Claim be struck out as against them. On 2 November 2004 I formally made those orders.

6 Part 10 r 1 of the Land and Environment Court Rules provides that:

(1) The Court may, at any stage of any proceedings, on the application of any party or without any such application, order, on terms, that any document filed in the proceedings be amended in such manner as the Court thinks fit.

(2) All such amendments shall be made so as to lead to the determination of the real questions raised by or otherwise depending on the proceedings, or the correction of any defect or error in any proceedings, or the avoidance of a multiplicity of proceedings.

…

7 The Court’s powers to stay or summarily dismiss proceedings are contained in Pt 13 r 5 of the Supreme Court Rules, which applies to Class 4 proceedings in the Land and Environment Court by reason of Pt 6 r 2 of the Land and Environment Court Rules. Part 13 r 5 of the Supreme Court Rules provides that:

(1) Where in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings:

(a) no reasonable cause of action is disclosed,

(b) the proceedings are frivolous or vexatious, or

(c) the proceedings are an abuse of the process of the Court,

the Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings.

(2) The Court may receive evidence on the hearing of an application for an order under subrule (1).

8 In relation to its motion to replead on the basis of the third version of the Second Amended Application Class 4 and the Second Amended Points of Claim, the Applicants argued that the right to amend pleadings should be liberally given and that the Land and Environment Court is not a court of strict pleading. Further, the Applicants argued that in applying Pt 10 r 1 of the Land and Environment Court Rules, it is relevant to have regard to the authorities decided in relation to Pt 20 r 1 of the Supreme Court Rules which is in similar terms. In this regard the Applicants referred to the following introductory note to Pt 20 in Ritchie’s Supreme Court Practice at [20.0.0]:

Liberal use of the power to amend is one of the hallmarks of the modern judicial system. Generally speaking, amendments ought to be allowed if they give rise to an arguable cause of action or matter of defence. This is especially so if the only prejudice that the amendment would cause to other parties would be adequately compensated for by an order for costs or by the imposition of appropriate terms. The power to permit amendment is very wide and in general a party who seeks to amend will be permitted to do so to enable the real questions in dispute between the parties to be tried: McGee v Yeomans [1977] 1NSWLR 273 at 280.

9 The Applicants also relied on the decision of Barton, O'Connor and Isaacs JJ in Shannon v Lee Chun (1912) 15 CLR 257 and the decisions of Dawson, Gaudron and McHugh JJ in State of Queensland v JL Holdings Pty Limited (1997) 189 CLR 146 at p153.

10 In the third version of the Second Amended Class 4 Application declarations and orders are sought against the Second, Third, Fourth and Fifth Respondents to the effect that:

(a) over a specified period sales of merchandise have been made which are in breach of the relevant development consent and are in contravention of s 76A of the Environmental Planning and Assessment Act 1979 (“the EP&A Act”); and

(b) the Respondents be restrained from using their respective tenancies as a shop.

No orders are sought against the First Respondent.

11 The core part of the Applicants’ case as set out in the third version of the Second Further Amended Points of Claim is contained in par 21-24 which read as follows:

What the consent permits:

21. In referring to and defining a “factory outlets centre” by reference to “primary function” and in referring to “other activities … otherwise associated with or ancillary to the primary function”, Condition 11 of the Consent on its true construction permits the use of the whole and each part of Level 3 only for:

(a) the discounted sale of surplus stock, out of season stock (previously offered for sale on a retail basis), factory seconds and the like; and

(b) activities associated with or ancillary to the discounted sale of surplus stock, out of season stock (previously offered for sale on a retail basis), factory seconds and the like.

22. In providing “it does not include a shop”, Condition 11 of the Consent on its true construction excludes the use of the whole or any part of Level 3 for any sale ( or alternatively, any non-trivial series of sales- ) by retail of goods, merchandise or materials that is not a discounted sale of surplus stock, out of season stock (previously offered for sale on a retail basis), factory seconds and the like.

23. By reason of the exclusion pleaded in paragraph 22

a person contravenes s 76(1) of the Act and fails to comply with Condition 11 of the Consent if that person uses any part of Level 3 for any sale (or alternatively any non-trivial series of sales) by retail of goods, merchandise or materials that is not a discounted sale of surplus stock, out of season stock (previously offered for sale on a retail basis), factory seconds and the like.

(a) a discounted sale of surplus stock, out of season stock (previously offered for sale on a retail basis), factory seconds or the like; or

(b) a sale that is ancillary to a discounted sale of surplus stock, out of season stock (previously offered for sale on a retail basis), factory seconds or the like.

12 Condition 11 of the development consent is set out at par 19 of the Points of Claim. Condition 11 states that:

The use of the premises shall comply at all times with the following definition:

"factory outlets centre” means a building or place the primary function of which is used for the discounted sale of surplus stock, out-of-season (previously offered for sale on a retail basis), factory seconds and the like, at one or more outlets. It does not include a shop, supermarket, hypermarket, discount department store, a building or place used for personal services (including hairdressers, barbers, beauty parlours and the like), a travel or real estate agency, a bank, an insurance or financial institution, or other commercial premises, a newsagency, a bulk grocery store, a building or place at which food items are sold or other activities not otherwise associated with or ancillary to the primary function of the building or place. It may include automatic teller machines.

13 The Points of Claim allege that sales of merchandise which are not:

14 The Applicants argued that Condition 11 should be interpreted on the following two bases:

15 In relation to the positive consent to certain uses contained in the first sentence, the Applicants’ counsel argued that the only permissible uses are those encapsulated by the primary function, that is, the discounted sales of surplus, out of season and factory seconds stock or an activity associated with the primary function, for example, a full price sale which is ancillary to the dominant use of discounted sales. The Applicants argued that one retail sale for full price, which is not ancillary to this permissible use, is not permissible and is therefore a breach of Condition 11. Alternatively, the Applicants argued that any non-trivial series of sales, which is not ancillary to this permissible use, is not permissible and is therefore a breach of Condition 11. The Applicants argued that the sale of full price goods which are ancillary to the primary function are, however, permissible. For example, the sale of a new belt at full price in a tenancy devoted to retailing, inter alia, discounted trousers, would be permissible.

16 In relation to the negative prohibition contained in the second sentence, the Applicants’ counsel argued that not trivial full price sales, which are not ancillary retail sales, are prohibited because such sales mean that the premises are being used as a “shop” which use is beyond the scope of Condition 11. The Applicants argued that all the Applicants have to show in order to establish that the Respondents have breached this prohibition on shops is that the use of the premises for the purpose of full price retail sales, which are not ancillary sales, is sufficiently large to be considered an independent use. In this regard the Applicants relied on the decisions of the Court of Appeal in Foodbarn Pty Limited v Solicitor General (1975) 32 LGRA 157 (“Foodbarn”) and the High Court in Lizzio v Ryde Municipal Council (1983) 155 CLR 211 (“Lizzio”) where concepts of dominant and ancillary and separate uses were considered.

17 The Applicants contend that in referring to and defining a “factory outlets centre” by reference to its “primary function” and in referring to “other activities … otherwise associated with or ancillary to the primary function”, Condition 11, on its true construction, only permits the use of the whole and each part of Level 3 for:

18 The Applicants contend that in providing “it does not include a shop”, Condition 11 excludes the use of the whole or any part of Level 3 for any sale by retail of goods, merchandise or materials that is not a discounted sale of surplus stock, out of season stock (previously offered for sale on a retail basis), factory seconds and the like. Further and in the alternative, the Applicants contend that a person contravenes s 76A(1) of the EP&A Act and fails to comply with Condition 11 of the development consent if that person uses any part of Level 3 for any sale (or alternatively, any non-trivial series of sales) by retail of goods, merchandise or materials that is neither:

The Respondents’ Submissions
Leave to Replead

19 The Respondents submitted that as the Applicants continue to be unable to adequately plead their case as against each Respondent the Applicants should not be given leave to replead. The Respondents relied on The Commonwealth v Verwayen (1990) 170 CLR 394 to argue that leave should not be given to the Applicants to amend their pleadings in accordance with the third version of the Second Amended Application Class 4 and the Second Amended Points of Claim as any such amendment would be futile as bad in law. The Respondents also argued that the Applicants should not be granted leave to replead as the Applicants have failed to address the defects identified in my judgment of 25 June 2004.

20 The Respondents’ submissions regarding the failure of the third version of the pleadings to address the defects identified in my judgment of 25 June 2004 and the futility of the amendments which the Applicants seek to make were not separated out from the Respondents’ arguments in relation to whether the proceedings should be summarily stayed or dismissed. As I have set out the Respondents’ arguments in relation to the Respondents’ applications for a permanent stay or summary dismissal of the proceedings below I do not repeat them in relation to this ground.

21 The Respondents argued that the Applicants’ case as currently pleaded in the third version of the Second Further Amended Points of Claim:

primary function

“shop”

“factory outlets centre”

in whole and each part

associated with or ancillary to”

22 The Respondents argued that where a development consent is granted to use land for a purpose subject to conditions, the concepts of “dominant” and “ancillary” use as considered in Foodbarn cannot be imported into the construction of the conditions of the development consent.

23 The Respondents argued that the Applicants’ arguments on the construction of Condition 11 necessitates interpreting “factory outlets centre”, being a building or place, as constraining “…each part of…” that building or place. The Respondents argued that this is not the meaning of “factory outlets centre” used or implied by Condition 11. The Respondents submitted that once it is accepted that Condition 11 does not operate so that each part of the factory outlets centre must satisfy the criteria specified in the first sentence of Condition 11 then the Applicants’ case as pleaded in the third version of its pleadings must fail.

24 The Respondents argued that the Applicants’ argument that Condition 11 prohibits shops from operating within each part of the factory outlets centre was flawed as it is clear that the Strathfield Planning Scheme Ordinance (“the SPSO”), under which the development consent was granted, does not prohibit shops within the relevant zone. Rather, cl 22 and the land use table contained in the SPSO makes it clear that certain categories of “shops” are permissible provided, inter alia, the Council is satisfied that the shops are “appropriately located in the zone” and the conditions in cl 61GA(3) of the SPSO are satisfied.

25 In any event the Respondents argued that even if the Applicants’ argument that shops are prohibited within every part of the factory outlets centre is correct, a single sale of goods does not establish use as a shop as regularity of sales is necessary to establish a use: Lizzio. Further, the Respondents argued that there is no legal basis grounded in any other part of the development consent, or in any legislative provision or the applicable case law, on which the Applicants can rely to support their argument that “shop” as referred to in Condition 11 can be categorised on the basis of “any non-trivial series of sales”. Further, the Respondents argued that the term “any non-trivial series of sales” cannot assist the Applicants’ case as the Applicants fail to provide any basis, such as volume or value for example, by which the Court can assess what “non-trivial” sales or a “series of sales” is. Consequently the Respondents argued that the third version of the Second Further Amended Points of Claim does not articulate any issue capable of judicial determination.

26 In addition to the above, the Respondents argued that all the necessary parties had not been joined to the proceedings, as the other tenants using Level 3 of the factory outlet centre have not been joined as parties. The Respondents argued that the other tenants are required to be joined as their legal rights may be adversely affected by any findings which the Court makes as to the proper construction of Condition 11 of the development consent.

27 The Applicants argued that the Respondents had not established that the tests contained in Pt 13 r 5 of the Supreme Court Rules, as propounded in the relevant authorities, had been met so that the proceedings should be summarily stayed or dismissed. In this regard the Applicants relied on the following comments made by Kirby J in Lindon v The Commonwealth (No 2) (1996) 70 ALJR 541 at p 544 to 545:

1. It is a serious matter to deprive a person of access to the courts of law for it is there that the rule of law is upheld, including against Government and other powerful interests. This is why relief … is rarely and sparingly provided;

2. To secure such relief, the party seeking it must show that it is clear, on the face of the opponent's documents, that the opponent lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious;

3. An opinion of the Court that a case appears weak and such that it is unlikely to succeed is not, alone, sufficient to warrant summary termination. Even a weak case is entitled to the time of a court. Experience teaches that the concentration of attention, elaborated evidence and argument and extended time for reflection will sometimes turn an apparently unpromising cause into a successful judgment;

28 The Applicants’ detailed submissions in reply to the Respondents’ motions for summary stay or dismissal were not separated out from the Applicants’ arguments in relation to whether they should be given leave to replead. As I have set out above the arguments the Applicants made in support of their motion for leave to replead in some detail, I do not repeat them in relation to this ground.

29 There are numerous authorities in relation to the exercise of the Court’s discretion to allow a party to amend its pleadings, as the Applicants essentially seek to do. In Shannon v Lee Chun (1912) 15 CLR 257 Isaacs J stated at p 265 to 266 that:

There is not only a power, but even an imperative duty cast by the legislature on the Court, to let no formality stand in the way of solid justice. The Court is directed to make every amendment, and at all times, so as to enable it to do what is right between the parties, and in the fairest and fullest manner possible to arrive at a determination of the substantial matter in dispute. …

30 In The Commonwealth v Verwayen (1990) 170 CLR 394 Dawson J stated at p 456 that:

In granting leave to amend, a court is concerned with the raising of issues and not with their merits. Of course, an amendment which is futile because it is obviously bad in law will not be allowed. But it is no ground for refusing an amendment that it raises a claim or defence which ought not to succeed. That will be an issue upon trial. An amendment may, however, be refused because it is made at such a late stage that neither costs nor an adjournment can compensate the other side for the failure to raise the issue at an earlier stage.

31 In State of Queensland v JL Holdings (1997) 189 CLR 146 the High Court considered the principles applying to the exercise of the Court’s discretion in relation to an application made to amend pleadings and Dawson, Gaudron and McHugh JJ stated at p 155 that:

Justice is the paramount consideration in determining an application such as the one in question. Save in so far as costs may be awarded against the party seeking the amendment, such an application is not the occasion for the punishment of a party for its mistake or for its delay in making the application.

32 I consider that while the authorities support a liberal approach to the Court’s discretion to allow amendments provided there is not injustice caused to the defendants, a key factor in my determination must be whether the amended pleadings disclose a reasonable cause of action. Further, the history of this matter, which shows numerous substantial amendments of the pleadings, must be taken into account in determining whether the application to replead ought be granted. That history and the current amendments are also highly relevant to a consideration of the Respondents’ applications for a stay or summary dismissal so that, in my view, while the tests to be applied to each motion are different, all the notices of motion need to be considered together.

33 The test to be applied in determining whether proceedings should be summarily dismissed as disclosing no reasonable cause of action was described in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 where Barwick CJ stated at p 129 to 130:

It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action — if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal — is clearly demonstrated. The test to be applied has been variously expressed; “so obviously untenable that it cannot possibly succeed”; “manifestly groundless”; “so manifestly faulty that it does not admit of argument”; “discloses a case which the Court is satisfied cannot succeed”; “under no possibility can there be a good cause of action”; “be manifest that to allow them” (the pleadings) “to stand would involve useless expense”.

At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or “so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument”; “so to speak apparent at a glance”.

…

I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff’s claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed.

34 In my judgment dated 25 June 2004 I stated at [22], [23] and [25] that:

A core issue which arises from the application of Condition 11 on the Applicants’ case as I now understand it, is how the terms “primary function”, ‘”factory outlets centre” and “shop” are to operate within the terms of the condition and, possibly, the Strathfield Planning Scheme Ordinance.

There is, for example, simply no reference in the current pleadings to “primary function” or “shop”. I am still not entirely clear on the legal argument the Applicants seek to rely on in distinguishing between a shop and a factory outlet, or what transpires if both activities take place in the same tenancy given the provisions of Condition 11. It is essential that these matters are resolved in order to enable the Court to determine the legal framework in which the material facts are to be considered.

While I accept the Applicants’ argument that this is not a court of strict pleading, I am of the view that it is nevertheless expected and clearly desirable that the Applicants’ case be sufficiently pleaded to make clear the basis on which the case is to proceed. Further, if the case were to proceed on the basis of the present Points of Claim as opposed to the oral submissions put by the Applicants I would be unable to assess the relevance of the evidence to be presented. This is one of the key reasons why the Applicants must articulate their case better in writing. The reference in General Steel at 129 that to allow pleadings “to stand would involve useless expense” applies in this context.

The case now pleaded by the Applicants focuses on Condition 11 and, from that perspective, the pleadings may well reflect the Applicants’ case to a greater extent than the previous pleadings which I struck out. I am not sure, however, that all the concerns I expressed in my earlier judgment have been overcome.

“Primary Function”

35 There is no express definition given to the terms "factory outlets centre” or “primary function” in the third version of the Second Amended Application Class 4 and the Second Amended Points of Claim. In oral and written submissions the Applicants argued that their construction of “primary” is “dominant” and “associated and ancillary to” means “subservient to”. It appears, however, by implication from the pleadings and from the Applicants’ submissions that the Applicants’ primary case is that the definition of “primary function” as alleged in par 21-24 is that any sale of retail goods that is not discounted surplus or factory seconds (or alternatively, any non-trivial series of sales) is not within the “primary function” of the factory outlets centre. The Applicants’ primary argument was based on a single sale, suggesting that the meaning of “primary function” which the Applicants argued for is “exclusive” rather than “dominant”, as the First Respondent’s barrister submitted. As the Respondents argued, the ordinary meaning of “dominant” could not rationally entail the consequence that a single retail sale at full price is a contravention of the consent. I agree that such an interpretation should be rejected as simply not open on the wording of Condition 11.

36 The Applicants’ alternative argument that any non-trivial series of sales of retail goods that are discounted, surplus or factory seconds is not within the “primary function” of the “factory outlets centre”, is conceivably more in keeping with the meaning of “primary” function being “dominant” if a relevant measure was identifiable. However, as the Respondents argued, it is not self-evident that a non-trivial series of sales is a legally determinable or relevant guide to whether the “primary function” test, if that means “dominant”, is being infringed. Without some indication from the Applicants about how this is to be measured this alternative ground does not disclose an arguable case.

37 Further, contradictory oral submissions were made by the Applicants’ counsel that it is accepted that some types of retail full price sales are not prohibited because certain full price sales can be ancillary to the dominant purpose of discounted sales. It is not clear how such an argument can sit with either the single sale approach or the non-trivial series of sales approach. This conflict in the written and oral submissions once again raises the issue of what is meant by “primary function” in the Applicants’ case.

“Associated and ancillary to”

38 It follows from my comments above in relation to “primary function” that it is unclear what is the relevant means by which those activities which are “associated and ancillary to” the primary function can be identified.

“Factory Outlets Centre” and “Building or Place”

39 The Applicants’ case is also based on the contention that the whole and each part of the “factory outlets centre” must comply with the primary function referred to in the first sentence of Condition 1. The words “each part of” do not appear in Condition 11. The key issue raised by the use of these words in the pleadings is what is meant by the phrase “building or place” referred to in the first sentence of Condition 11. The Respondents argued that cannot be the meaning of “factory outlets centre”.

40 The Applicants relied on s 4 of EP&A Act which defines “building” to include “part of a building”. Section 11 of the Interpretation Act 1987 provides that:

Words and expressions that occur in an instrument have the same meanings as they have in the Act, or in the relevant provisions of the Act, under which the instrument is made.

41 “Instrument” is defined by s 3 of the Interpretation Act 1987 as “means an instrument (including a statutory rule) made under an Act, and includes an instrument made under any such instrument.” In Wechsler v Auburn Council (1997) 130 LGERA 134 Talbot J held that a development consent was an instrument within the meaning of s 3 of the Interpretation Act 1987.

42 This does not however address the issue of whether s 6 of the Interpretation Act 1987 applies so that the term “factory outlets centre”, which arguably relates to the whole of Level 3, is to be regarded as changing the context so that the definition of “building” contained in the EP&A Act should be held not to apply. Section 6 of the Interpretation Act 1987 states that:

Definitions that occur in an Act or instrument apply to the construction of the Act or instrument except in so far as the context or subject-matter otherwise indicates or requires.

43 “Shop” is defined in the SPSO as meaning:

… a building or place used for or intended for use for the purpose of selling, exposing or offering for sale by retail goods, merchandise or materials, but does not include a building or place elsewhere specifically defined in this clause or a building or place used for or intended for use for a purpose elsewhere specifically defined in this clause …

44 With the third version of the pleadings the Applicants have introduced the concept that a “shop” is constituted by “a non-trivial series of sales”, the proof of which is sufficient to establish an independent use as a shop and therefore a breach of Condition 11 according to the Applicants. This Court in numerous cases has been called on to determine whether premises are being used as a shop, and a case which addresses such an issue is not a novel one. Whether or not a use constitutes a “shop” will often be a question of fact and degree depending on the circumstances of the case. The difficulty for the Applicants is that here such an argument must be considered within the context of Condition 11. To equate the concept of “shop” to a “non-trivial series of sales” constituting an independent use is not a basis founded in Condition 11 or the SPSO.

Both “Shop” and “Factory Outlets Centre” in the Same Tenancy

45 When asked by the Court if a certain tenancy could be both a shop and a factory outlet the response from the Applicants’ counsel was yes. The Applicants in oral and written submissions argued that the concepts of “dominant” and “subservient” and “separate” uses as referred to in Foodbarn could be applied in relation to the terms in Condition 11 and I assume that is why the question I asked was answered in the affirmative. However the answer given by the Applicants renders the nature of the Applicants’ case unclear. It would appear that the use intended to be restrained is that part of the use which is a shop. Arguing that a single full price (not ancillary) sale can constitute a shop cannot be correct. Alternatively the Applicants argued the independent (not ancillary) full price non-trivial series of sales part of the tenancy can be a shop. But whether a non-trivial series of sales is a shop is not at all clear, as already identified at par 44. To use this as the basis for arguing that part of the tenancy is a shop does not, in my view, provide a legally determinable issue, given the wording of Condition 11.

46 The use of Level 3 is defined by, and must be in accordance with, the development consent conditions including Condition 11. The difficulty for the Applicants’ case as argued is that it seeks to rely on the concept of “dominant” and “subservient” and “independent” as defined in cases such as Foodbarn which deal with broad general principles which arguably have no application in the context of Condition 11. The failure to clearly and consistently define the key terms in Condition 11 of “primary function”, “shop”, “factory outlets centre” in the pleadings and/or in oral submissions means that the Applicants’ pleadings do not disclose their case and my observations in [22] and [23] of my previous judgment still apply.

Condition 11 As a Whole

47 I have not been provided with sufficient argument by all the parties to enable me to finally determine the meaning of Condition 11. Nor is it necessary for the purposes of dealing with these applications that I do so. Nor do I need to resolve whether all necessary parties, being the other 66 tenants on Level 3, have been joined in this case.

48 The concerns I expressed in my previous judgment continue to apply. It is clear from the analysis of the shortcomings of the Applicants’ pleadings that no reasonable cause of action is disclosed on the current pleadings and the tests identified by Barwick CJ in General Steel as set out above in par 32 have been satisfied. It is clear that Pt 13 r 5(1)(a) of the Supreme Court Rules has been met as no reasonable cause of action is disclosed in the third version of the Second Amended Application Class 4 and the Second Amended Points of Claim.

Conclusion

49 The question then arises as to whether I should summarily dismiss or stay the proceedings under Pt 13 r 5(1) of the Supreme Court Rules. A stay of proceedings is not the equivalent of a dismissal and may later be removed if proper grounds to do so are demonstrated. In contrast, an order for dismissal will finally dispose of the proceedings.

50 The third version of the Second Amended Application Class 4 and the Second Amended Points of Claim are the latest in a series of amendments made by the Applicants in proceedings commenced by them on 7 November 2002. Substantive amendments to the Class 4 application filed in November 2002 were made on 7 March 2003, 26 September 2003 and 16 July 2004. That Class 4 application was then struck out in June 2004. As already indicated in this judgment there have been two changes to the Second Further Amended Application and Second Further Amended Points of Claim the subject of the Applicants’ motion to replead, the first amendment being particularly substantial.

51 I agree with the Second Respondent’s submissions that, given the history of this matter, there can be no suggestion that the Applicants have had insufficient time to formulate their case. The Applicants are very large commercial entities with considerable financial resources, unlike all the Respondents, and have had the advice of several experienced counsel and an experienced solicitor. Despite this the new pleadings have disregarded my observations in my earlier judgment on the first strike out application. In my view, the Applicants conduct can be properly characterised as “giving rise to an unfair and oppressive use of the processes of the Court”: Dart v Norwich Union Life Australia Ltd [2002] FCAFC 34.

52 Under Pt 13 r 5(1) of the Supreme Court Rules the Court has a discretion to either stay or summarily dismiss proceedings. I consider that, in the circumstances, I should summarily dismiss the proceedings. As set out above, the Applicants have failed to properly articulate their case despite being given numerous opportunities to do so. Given this, I do not think the Applicants should be permitted to continue this litigation further.

53 The Respondents should have their costs in meeting all three versions of the Second Amended Class 4 Application and Second Amended Points of Claim. Some Respondents have sought costs on an indemnity basis but I will reserve this issue pending argument.

54 The Court makes the following orders:

1. The Applicants’ Notice of Motion dated 12 August 2004 is dismissed.

2. These proceedings are summarily dismissed.

3. The Applicants are to pay the costs thrown away by the Respondents in meeting the first, second and third versions of the Second Amended Application Class 4 and the Second Amended Points of Claim and the Applicants’ Notice of Motion dated 12 August 2004.

4. The question of whether the costs the subject of order 3 ought be payable on an indemnity basis is reserved.

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Citations

Westfield Management Limited v Direct Factory Outlets Homebush Pty Limited [No 3] [2004] NSWLEC 688

Most Recent Citation

Westfield Management Limited v Direct Factory Outlets Homebush Pty Limited [No 4] [2005] NSWLEC 168

Cases Citing This Decision

2

Satmell Holdings Pty Ltd v Blacktown City Council [2019] NSWLEC 94

Westfield Management Limited v Direct Factory Outlets Homebush Pty Limited [No 4] [2005] NSWLEC 168

Cases Cited

8

Statutory Material Cited

5

Westfield Management Ltd v Direct Factory Outlets Homebush Pty Limited [2003] NSWLEC 258

Shannon v Lee Chun [1912] HCA 52

Queensland v JL holdings Pty Ltd [1997] HCA 1

CITATION:	Westfield Management Limited & Ors v Direct Factory Outlets Homebush Pty Limited & Ors [No 3] [2004] NSWLEC 688
PARTIES:	APPLICANTS Westfield Management Limited GPT Management Limited Centro Properties Limited Stockland Trust Management Limited FIRST RESPONDENT Direct Factory Outlets Homebush Pty Limited SECOND RESPONDENT Sanity Music Stores Pty Limited THIRD RESPONDENT: Perfumania Pty Limited t/as The Perfume Connection FOURTH RESPONDENT Colorado Group Limited t/as Mathers Shoes FIFTH RESPONDENT: Foad Haddad & Ronda Haddad t/as Florentine Eyewear
FILE NUMBER(S):	40871 of 2002
CORAM:	Pain J
KEY ISSUES:	Practice and Procedure :- Application for summary dismissal or stay of proceedings - Whether Applicants' case as pleaded discloses a reasonable cause of action against the Respondents
LEGISLATION CITED:	Environmental Planning and Assessment Act 1979, s 4, s 76A Interpretation Act 1987, s 3, s 6, s 11 Supreme Court Rules, pt 13 r 5 Strathfield Planning Scheme Ordinance Land and Environment Court Rules, pt 6 r 2, pt 10 r 1
CASES CITED:	Dart v Norwich Union Life Australia Ltd [2002] FCAFC 34; Foodbarn Pty Limited v Solicitor General (1975) 32 LGRA 157; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; Lindon v The Commonwealth (No 2) (1996) 70 ALJR 541; Lizzio v Ryde Municipal Council (1983) 155 CLR 211; Shannon v Lee Chun (1912) 15 CLR 257; State of Queensland v JL Holdings Pty Limited (1997) 189 CLR 146; The Commonwealth v Verwayen (1990) 170 CLR 394; Westfield Management Ltd & Ors v Direct Factory Outlets Homebush Pty Limited & Ors [2003] NSWLEC 258
DATES OF HEARING:	02/11/2004
DATE OF JUDGMENT:	12/15/2004
LEGAL REPRESENTATIVES:	APPLICANTS Mr S Gageler SC with Ms S Pritchard and Mr J B Maston instructed by Speed and Stracey FIRST RESPONDENT Mr S D Rares SC with Mr R P L Lancaster instructed by Gilbert and Tobin SECOND RESPONDENT Mr C J Leggat with Mr Mr T To instructed by Watkins Tapsell THIRD RESPONDENT Mr A Galasso instructed by Gadens Lawyers FOURTH RESPONDENT Mr D J Hammerschlag SC with Mr J E Robson instructed by Deacons FIFTH RESPONDENT: Mr G Newport instructed by Harris Hyde Page