Westfield Management Ltd & Ors v Direct Factory Outlets Homebush Pty Ltd & Ors - [2005] NSWCA 403

NEW SOUTH WALES COURT OF APPEAL

CITATION: Westfield Management Ltd. & Ors. v. Direct Factory Outlets Homebush Pty. Ltd. & Ors. [2005] NSWCA 403

FILE NUMBER(S):
41188/04

HEARING DATE(S): 27 October 2005

JUDGMENT DATE: 23/11/2005

PARTIES:
Westfield Management Pty. Ltd., GPT Management Pty. Ltd. Centro Properties Ltd., Stockland Trust Management Limited - claimants
Direct Factory Outlets Homebush Pty. Ltd. - 1st opponent
Sanity Music Stores Pty. Ltd. - 2nd opponent
Perfumania Pty. Ltd. t/a The Perfume Connection - 3rd opponent
Colorado Group Ltd. t/a Mathers Shoes - 4th opponent
Foad Haddad & Rhonda Gibson Haddad t/a Florentine Eyewear - 5th opponent

JUDGMENT OF: Mason P Hodgson JA McColl JA

LOWER COURT JURISDICTION: Land & Environment Court

LOWER COURT FILE NUMBER(S): LEC40871/02

LOWER COURT JUDICIAL OFFICER: Pain J

COUNSEL:
Mr. S. Gaegler SC with Ms. S. Pritchard for claimants
Mr. S. Rares SC with Mr. R. Lancaster for 1st opponent
Mr. C.J. Legatt SC with Mr. T. To for 2nd opponent
Mr. A. Galasso for 3rd opponent
Mr. J. Robson SC with Mr. A. Galasso for 4th opponent
Mr. G. Newport for 5th opponent

SOLICITORS:
Speed & Stracey, Sydney for claimants
Gilbert & Tobin, Sydney for 1st oppnent
Watkins Tapsell, Kirrawee for 2nd opponent
Gadens, Sydney for 3rd opponent
Deacons, Sydney for 4th opponent
Harris Freidman Hyde Page, Sydney for 5th opponent

CATCHWORDS:
ENVIRONMENTAL LAW
PROCEDURE - Pleadings - Whether reasonable cause of action disclosed - Whether pleading otherwise acceptable - Whether summary dismissal of proceedings justified.

LEGISLATION CITED:

DECISION:
1. Leave to appeal granted, Notice of Appeal to be filed within 14 days. 2. Appeal allowed, orders made on 24 December 2004 and 15 April 2005 set aside. 3. Second Further Amended Points of Claim further amended by substituting for pars.[21] to [24] the pars.[21] to [24A] filed by the claimants pursuant to leave granted by the Court of Appeal on 27 October 2005. 4. The opponents to pay one-half of the claimants’ costs of the Notices of Motion dealt with on 24 December 2004 and 15 April 2005. 5. The opponents to pay the claimants’ costs of the application for leave and the appeal, and to have a certificate under the Suitors’ Fund Act if otherwise eligible.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 41188/04
LEC 40871/02
MASON P
HODGSON JA
McCOLL JA
Wednesday 23 November 2005

WESTFIELD MANAGEMENT LTD. & ORS. V. DIRECT FACTORY OUTLETS HOMEBUSH PTY. LTD. & ORS.

Judgment

MASON P: I agree with Hodgson JA.
HODGSON JA: On 15 December 2004, Pain J in the Land & Environment Court made orders in class 4 proceedings in which the claimants had sought declarations and injunctions against the first opponent (Direct), the second opponent (Sanity), the third opponent (Perfumania), the fourth opponent (Colorado) and the fifth opponent (Haddad) in relation to their use of Level 3 of premises at 3-5 Underwood Road, Homebush (Level 3). The orders made by the primary judge were that the claimants’ Notice of Motion seeking leave to file amended pleadings be dismissed, that the proceedings be summarily dismissed and that certain costs be paid by the claimants.
The claimants seek leave to appeal from that decision. The application for leave has been heard on the basis that, if leave is granted, the appeal will be dealt with without further argument.
CIRCUMSTANCES
On 30 May 2000, Strathfield Municipal Council issued a Development Consent in relation to Level 3, which granted consent for the use of Level 3 as a “factory outlet centre”. Condition 11 of the Development Consent provided as follows:
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.
On 7 November 2002, the claimants commenced class 4 proceedings in the Land & Environment Court against the opponents, claiming that certain uses of the premises were not in accordance with Condition 11 of the Development Consent.
On 17 June 2004, the hearing of the proceedings against Direct, Sanity and Colorado commenced. After the case had been opened on behalf of the claimants, there were applications for the striking out of pleadings and/or the summary dismissal of the proceedings.
On 24 June 2004, Pain J gave a judgment striking out the claimants’ pleadings, but declining to make an order for summary dismissal of the proceedings.
On 12 August 2004, the claimants filed a Notice of Motion seeking leave to file further amended pleadings. The opponents put on Notices of Motion seeking summary dismissal. It was these various Notices of Motion that gave rise to the decision appealed from.
On 15 April 2005, the primary judge made further costs orders. Neither the Summons for Leave to Appeal nor the draft Notice of Appeal explicitly refer to these orders; but it seems clear that they would have to be set aside if the orders of 15 December 2004 are set aside.
EFFECT OF DEVELOPMENT CONSENT
Level 3 is zoned industrial under the Strathfield Planning Scheme Ordinance; and use of a building in that zone for the purposes of a shop or shops is prohibited, except that consent for such use may be given in certain circumstances.
“Shop” is defined in the Ordinance as follows:
“Shop” means a building or place used 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 or intended for use for a purpose elsewhere specifically defined in this clause or for a roadside stall.
There is no definition of “factory outlet centre”.
The consent granted on 30 May 2000 is the only operative consent in relation to Level 3.
In my opinion, it is clear that it is at least arguable that Condition 11 bears the following interpretation:
1.The first sentence is satisfied (at least as regards Level 3 as a whole) if the primary function of the whole of Level 3 is use for the discounted sale of surplus stock, out-of-season (previously offered for sale on a retail basis), factory seconds and the like; and that may be the case even if some individual shops have a different use.
2.However, the second sentence does prohibit certain uses of individual shops, and in particular prohibits use of individual shops as a shop other than for the discounted sale of surplus stock, out-of-season (previously offered for sale on a retail basis), factory seconds and the like, or other activities associated with or ancillary to the primary function of Level 3.
I am not deciding that this is the correct interpretation of Condition 11, but in my opinion it is plainly open, particularly having regard to the reference to “a travel or real estate agency”, “a newsagency”, “automatic teller machines”, and “other activities not associated with or ancillary to the primary function of the building or place”.
If that construction is correct, then use of a single shop for the sale of goods, merchandise or materials which is not the discounted sale of surplus stock, out-of-season, factory seconds and the like, and is not associated with or ancillary to such discounted sale would be in breach, even if there is also a use of that shop (perhaps even a predominant use of that shop) for the discounted sale of surplus stock, out-of-season, factory seconds and the like: see Foodbarn Pty. Limited v. Solicitor-General (1985) 32 LGRA 157.
SECOND FURTHER AMENDED POINTS OF CLAIM
In pars. 21 to 24 of the pleadings before the primary judge, the claimants advanced the following construction of Condition 11:
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 76A(I) 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.
24.          Further or in the alternative, by reason of limited scope of the permission pleaded in paragraph 21, a person contravenes s 76A(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 neither:
(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.
In pars.27 to 30 of this pleading, the claimants alleged conduct of the second to fifth opponents which was said to be use, and therefore development, in contravention of the Environmental Planning & Assessment Act, because it was not in accordance with the consent of 30 May 2000. It is sufficient to set out the allegation in par.27 concerning Sanity:
27. The Second Respondent uses and has at all material times used shop 62 for making sales by retail of goods, merchandise or materials that are neither:
(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)sales that are ancillary to discounted sales of surplus stock, out of season stock (previously offered for sale on a retail basis), factory seconds or the like.
Particulars
The Second Respondent uses and has, over the period 13 September 2001 to date, used shop 62 for the retail sale of:

New release singles, albums, movies (CDs and DVDs) and music DVDs; Top 40 singles;
Chart movies, albums and music DVDs;
Range stock;
Non-discounted Non- Range stock;
Campaign stock;
Non-discounted Accessories;
Non-discounted stock;
Stock which is in demand at normal retail prices and does not need to be cleared;
Stock which is delivered direct to shop 62 by music, movie and other distributors/suppliers (including stock which is not supplied at a discount);
Stock which the Second Respondent subsequently replenishes by re-ordering from music, movie and other distributors/suppliers;
Stock which is not discontinued by either the Second Respondent, the manufacturer and/or distributor/supplier;
Stock which is referred to in the Second Respondent's current network catalogues and advertisements;
Stock which is generally available at the Second Respondent's and others ordinary retail shops; and
Stock (including that of the above types) identified and/or referred to in the schedules/summaries exhibited to the affidavit of Peter Speed sworn 19 December 2003 and in the affidavits of Christopher Hillman sworn 12 February 2004, Madelaine Stracey sworn 18 February 2004 (at para 1), Ray ltaoui sworn 5 May 2004 (at paras 9 to 24, 30) and Ray ltoaoui (sic) sworn 16 June 2004 (at paras 4 to 15).
The Second Respondent promotes and has, over the period 13 September 2001 to date, promoted shop 62 as a place where ordinary shop sales are made; it participating in network sales, promotions and advertisements; it using signage and displays consistent with retail shops (including the Second Respondent's other shops) which make ordinary shop sales; it not being identified as a factory outlet.
The Second Respondent otherwise operates and has, over the period 13 September 2001 to date, otherwise operated shop 62 as a shop - for making ordinary shop sales - as set out in the affidavit of Christopher Hillman sworn 12 February 2004.

There was no allegation in the pleading that the primary function of Level 3 as a whole was other than use for the discounted sale of surplus stock, out-of-season, factory seconds and the like; and there were no orders sought against Direct.
DECISION OF PRIMARY JUDGE
The essential reasoning of the primary judge is set out in pars.[34] to [52] of her judgment:
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 11. 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.
I do not need to finally resolve this issue here. I simply note that this part of the case appears arguable. The difficulty for the Applicants’ application is that I have found that the current pleadings, as augmented by oral submissions, fail to identify the core of the Applicants’ approach to “primary function”. A finding that the case on “whole or each part” is arguable does not overcome this fundamental difficulty in my view.
“Shop”
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 …
There is no reference to this definition in the third version of the Second Amended Points of Claim. In the second version of the pleadings, particularly par 22, a shop can be identified by a single sale. For the reasons already articulated above in relation to “primary function” and as a matter of commonsense that cannot be correct.
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.
ERROR

In a number of places, the primary judge says the pleading disclosed no arguable case or no reasonable cause of action: see for example, pars.[36] and [48]; and it was for that reason, not because of mere unclarity of the pleading, that the primary judge summarily dismissed the proceedings.
In my opinion, this was an error: Condition 11 is pleaded; and on the arguable construction of Condition 11 that I have identified above, pars.[27] to [30] allege uses by the second to fifth opponents that are not in accordance with the consent.
Because there are difficulties in the construction of Condition 11, it can be contended that, in order to avoid surprise, the pleading should, in addition to setting out Condition 11 itself, set out the construction of it for which the claimants contend; and the primary judge held in effect that the construction alleged in pars.[21] to [24] was an untenable construction. In my opinion, this is a different question from the question whether the pleading discloses a cause of action; although I accept that this could give rise to a ground for striking out the pleading because it is misleading or confusing or embarrassing or potentially productive of surprise.
These considerations give rise to the questions whether the error I have identified vitiates the discretionary decision, whether this Court should grant leave to appeal, and whether the result in any event is shown to have been wrong.
SUBMISSIONS
Mr. Rares SC for Direct submitted that the pleading was deficient because it did not expose the claimants’ case in an intelligible way, so that the opponents could understand what it was; and he referred to Nowlan v. Marson Transport Pty. Ltd. [2001] NSWCA 346, 53 NSWLR 116, at [28]. In those circumstances, it was open to the primary judge to find the pleading deficient; and in circumstances where the claimants had not properly articulated their case, after being given many opportunities to do so, it was within the discretion of the primary judge to dismiss the proceedings, on the basis of oppression. No error of the kind referred to in House v. The King (1936) 55 CLR 499 was shown.
Mr. Leggat SC for Sanity submitted that the considerations advanced by Mr. Rares carried particular force in relation to a decision such as this, which was an interlocutory and discretionary decision on a matter of practice and procedure. Leave to appeal should be refused unless substantial injustice would otherwise be caused, and this would not be so in this case where the claimants could commence fresh proceedings. One of the primary judge’s reasons was that she would be unable to assess the relevance of evidence, and the appeal court should not disregard the primary judge’s professed inability on this matter.
Mr. Leggat also submitted that the proceedings should be dismissed because of deficiency of parties. Determination of the issues raised by the claimants would involve a determination of the meaning of Condition 11, and would thereby have a substantial effect on the other numerous tenants of Level 3; so that they were necessary parties to the proceedings. Mr. Leggat referred to Pegang Mining Co. Ltd. v. Choong Sam [1969] 2 MLJ 52, Corporate Affairs Commission of NSW v. Transphere Pty. Ltd. (1988) 15 NSWLR 596 at 608, and News Ltd. v. Australian Rugby Football League Ltd. (1996) 64 FCR 410 at 523-7.
Mr. Galasso for Perfumania submitted that because Condition 11 was not clear in its effect, it was insufficient to plead facts alleged to amount to a contravention, without identifying the branch or interpretation of Condition 11 in respect of which there was said to be a breach, or in what respect the conduct alleged was a breach of Condition 11. He submitted that the pleadings spoke with embarrassing ambiguity, so that the opponents did not know what case they had to meet.
Mr. Robson SC for Colorado submitted that clarity was particularly important in relation to potentially long and expensive litigation with an impact on the livelihood of the opponents.
IDENTIFICATION OF CASE TO BE MET
I accept the submission that, by reason of the problems in the construction of Condition 11, it would be an appropriate exercise of discretion to require the claimants to set out with clarity the interpretation of Condition 11 they allege, and the respect in which they say the conduct relied on as being a breach of Condition 11 is such a breach.
The pleading as it existed before the addition in pars.[22], [23] and [24] of the words “or alternatively any non-trivial series of sales” could possibly have been considered misleading or confusing or embarrassing or potentially productive of surprise, in that it suggested that the claimants were relying on an interpretation of Condition 11 such that a single sale could put one of the opponents in breach. However, when during the oral argument before the primary judge the words I have identified were added, in my opinion it became tolerably clear that the allegation was that Condition 11 prohibited use of individual shops for the purpose of selling goods by retail otherwise than by way of permissible discount sales or sales associated with or ancillary to permissible discount sales. This view was strongly supported by the terms of the allegations of breach to which I have referred. It was also tolerably clear that there was no allegation of breach in relation to Level 3 considered as a whole.
As regards the primary judge’s assertion that she could not assess the relevance of evidence, that assertion should be given weight; but before this Court, none of the opponents was able to give any example of evidence that would be admissible on one possible understanding of the claimants’ case and not admissible on another. There was a suggestion that evidence of a single full-price sale would fall into that category, but plainly evidence of a single full-price sale, if coupled with other evidence, would be admissible on any understanding of the claimants’ case.
For those reasons, even if the only question had been the striking out of the pleading, rather than dismissal of the proceedings, for my part I would not have struck out this pleading. That of itself would not enough to support a finding of House v. The King error in a decision to strike out the pleading; but error in the primary judge’s judgment has been identified, and the question under consideration is what this Court should do.
I would add that the claimants have submitted to this Court paragraphs which they would propose as replacing the pars.[21] to [24] of the pleading dealt with by the primary judge; and in my opinion, those paragraphs would remove any possible ambiguity or lack of clarity. The opponents have provided detailed criticisms of these paragraphs; but in my opinion (apart possibly from criticism directed at a particular that refers to the terms of the development application as an aid to construction of the consent) all the criticisms are matters for final argument in the case, not for an application to strike out pleadings.
SUFFICIENCY OF PARTIES
I have already stated that no order is sought against Direct on the basis that the use of the whole of Level 3 is in breach of Condition 11. The only orders sought are against the lessees of individual shops, based on allegations that the use of these particular individual shops is in breach of Condition 11.
In coming to a conclusion whether orders are justified in relation to individual shops, it will probably be necessary for the Court to give an interpretation of Condition 11; and it is possible that that interpretation could be such as to bear on the legality of the way other shops are being conducted. However, it is not the case, as it was in News Ltd. v. ARL, that orders are being sought against one party to a transaction which, by inhibiting that party’s conduct of the transaction, could affect other parties to the same transaction. Furthermore, there is no evidence that other shops are being conducted similarly to the way any of the opponents’ shops are being conducted.
In those circumstances, the suggestion that the proceedings are liable to be dismissed at this stage because of deficiency of parties has no substance.
CONCLUSION
For the reasons I have given, in my opinion the decision to wholly dismiss the proceedings was vitiated by error. The associated decision to strike out the pleading, although not itself vitiated by House v. The King error, was not in my view the correct discretionary decision; and in any event, any possible deficiency in the pleading can be rectified by adopting the substituted paragraphs which are now submitted. In my opinion, the dismissal of the proceedings would, if not corrected, involve substantial injustice; not only because of the costs involved, but also because, if the reasons for dismissal are not corrected, there is a substantial chance that further proceedings would run into similar difficulties. For those reasons, in my opinion this Court should grant leave to appeal and allow the appeal. The orders made on 24 December 2004 and the consequential orders made on 15 April 2005 should be set aside; and the pleading should be amended by substituting the new paragraphs.
A question arises as to the costs of the Notices of Motion dealt with on 24 December 2004 and 15 April 2005. Although for my part I would not have struck out the pleading, at least as it was amended during the hearing of the application before the primary judge, I think there is force in the contention that the opponents were not acting unreasonably in at least seeking clarification of it. However, it does seem to me that some of the submissions of the opponents, at first instance as well as before this Court, tended towards obfuscation rather than clarification. Taking a broad-brush approach, I think the appropriate order would be that the opponents pay one-half of the claimants’ costs of all of the Notices of Motion dealt with on those days.
So for those reasons, I propose the following orders:
1.Leave to appeal granted, Notice of Appeal to be filed within 14 days.
2.Appeal allowed, orders made on 24 December 2004 and 15 April 2005 set aside.
3.Second Further Amended Points of Claim further amended by substituting for pars.[21] to [24] the pars.[21] to [24A] filed by the claimants pursuant to leave granted by the Court of Appeal on 27 October 2005.
4.The opponents to pay one-half of the claimants’ costs of the Notices of Motion dealt with on 24 December 2004 and 15 April 2005.
5.The opponents to pay the claimants’ costs of the application for leave and the appeal, and to have a certificate under the Suitors’ Fund Act if otherwise eligible.
McCOLL JA: I agree with Hodgson JA.

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LAST UPDATED: 23/11/2005