ACN 070 037 599 Pty Ltd v McEwan & Ors [2007] QSC 165

1 [2007] QSC 165 SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION MACKENZIE J No 4550 of 2004 ACN 070 037 599 PTY LTD Plaintiff and SUSAN MCEWAN Second Plaintiff and LARVIK PTY LTD (ACN 010 185 350) First Defendant and RONALD MALCOLM STANDORD Second Defendant BRISBANE ..DATE 19/06/2007 JUDGMENT -- 1 of 8 -- 19062007 T(1)1/CGE(BNE) M/T BRIS5 (Mackenzie J) 2 JUDGMENT 1 10 20 30 40 50 60 HIS HONOUR: This is an application, if leave be necessary, for leave to amend the statement of claim in terms of an amendment made in the further amended statement of claim delivered 31st October 2006. There are also directions sought which I understood were not controversial for the purposes of these reasons. In the first two versions of the statement of claim there was a pleading that in or about March 2000 the second plaintiff met the second defendant in his capacity as representative of the first defendant at her home. The further amended defence of the defendants filed on the 18th January 2005 admitted that a meeting took place between the second plaintiff and the second defendant in his capacity as a director of the first defendant at the second plaintiff's home but denied that the meeting was in March. It was alleged that it was at 9.30 a.m. on Thursday, 13th April 2000. It is further alleged by the plaintiffs that at that meeting a representation was made that if the second plaintiff bought a business situated in a kiosk on common property of the community titles scheme, the first defendant was able to and would grant a long-term lease over the kiosk. There was a claim for damages essentially based on the premise that the first plaintiff would not have completed the purchase contract, commenced or completed the fit-out of the kiosk or purchased the right to operate the business, but for the representations. -- 2 of 8 -- 19062007 T(1)1/CGE(BNE) M/T BRIS5 (Mackenzie J) 3 JUDGMENT 1 10 20 30 40 50 60 The quantum of about $235,000 under that head consisted of expenses in setting up and operating the business and operating losses in conducting it. A claim was also made that by reason of the same misleading representation, the second plaintiff sold a parcel of land. The damages claim in that regard was for the difference between the sale price and current value. I interpolate that there is evidence before me not yet reflected in any pleading that a real estate agent had been contacted to list the property no later than 29 January 2000 and that a contract was entered into on 1st March 2000. It was also pleaded by the plaintiffs that in or about early 2000 the second plaintiff commenced to investigate the prospect of opening an ice cream business. The further amended defence said that the defendants did not know and could not admit when she commenced to investigate the prospect of opening the business but said that the first contact they had had with her in relation to the prospect of establishing an ice cream business in the kiosk was in about February 2000. There was no particularisation of the nature or content of that contact, although there is an affidavit on behalf of the second defendant, not yet reflected in a pleading, that he did not speak to the second plaintiff personally until 12 April 2000. The affidavit deposes that prior to 12th April 2000 he did not know who the potential assignee was and when he found out the meeting was arranged on 13th April 2000. -- 3 of 8 -- 19062007 T(1)1/CGE(BNE) M/T BRIS5 (Mackenzie J) 4 JUDGMENT 1 10 20 30 40 50 60 The further amended statement of claim, in a passage that is critical to this application, contains an amendment alleging that in mid-February 2000 the second plaintiff phoned the second defendant to speak to him about the kiosk. It was alleged that on that occasion she spoke to the second defendant and informed him, inter alia, that she would need a longer term lease than the remaining three years. It is alleged that the second defendant told the second plaintiff that there would be no problem with granting a longer term lease. The further amended statement of claim continues that relying on one or both of the representations in mid-February 2000 or April 2000 she entered into the contract to purchase the business. The further amendment is opposed because it is submitted the amendments are statute barred and therefore require leave pursuant to UCPR 376[4]. It is submitted that the proposed amendments to allege contact in February 2000 are in response to the allegations by the defendants in the further amended defence to the effect that on 14th April 2000 the second plaintiff completed the sale of the land pursuant to a written contract dated 1st March 2000. It was submitted that as the pleading stood at the time of the further amended defence, the only representations were those made at the meeting of 13th April 2000 by which time the contract had become unconditional obliging the second plaintiff to proceed with the transaction. It followed from that, it was submitted, that the plaintiff could not have -- 4 of 8 -- 19062007 T(1)1/CGE(BNE) M/T BRIS5 (Mackenzie J) 5 JUDGMENT 1 10 20 30 40 50 60 suffered any loss as a consequence of the alleged representation. It is asserted in the defendants' submission that there is no explanation given for why the alleged representation in mid-February 2000 is now being raised for the first time. It is also asserted, without any specific supporting material, that the defendants are prejudiced by the allegation. It is also pointed out that the second plaintiff had listed the property for sale on the basis that the affidavit filed on behalf of the defendants on or about 29th January 2000 before the alleged representation. It was also pointed out that the second defendant had no direct contact with the second plaintiff until 13th April 2000, according to the affidavit filed on his behalf. The thrust of the submission on behalf of the defendants is that the telephonic representations alleged in February 2000 are distinct from those alleged at the meeting on 13th April 2000 and cannot be described as further particulars of the original alleged representation in April 2000. It is said to be a different representation with different consequences and accordingly is a new course of action requiring a grant of leave. It is also submitted that the new course of action does not arise out of substantially the same facts as the course of action for which the relief was originally claimed, nor is it otherwise appropriate to give leave to make the amendment, when the second plaintiff has not sworn as to the -- 5 of 8 -- 19062007 T(1)1/CGE(BNE) M/T BRIS5 (Mackenzie J) 6 JUDGMENT 1 10 20 30 40 50 60 basis of why the allegation is only now being raised, and when the second defendant denies any personal contact with the second plaintiff prior to 13th April 2000. The applicants in their submissions submitted that there were three issues: the first was whether the amendments objected to added a new course of action; the second was whether they were outside the limitation period, in any event; the third was, if so, whether a grant of leave to amend was appropriate. With regard to the first of these, it was submitted by the plaintiffs that there is not a new course of action raised. The authorities relied on as supporting that conclusion are set out in the written submission of the plaintiffs. With regard to the second issue, it was submitted that it is not clearly the case that the second plaintiffs have suffered damage prior to 30th August 2000 such that a course of action was complete before that date making the amendments out of time. The focus of the argument was on the statements in Wardley Australia Limited v. Western Australia 1992 175 CLR 514 at 537 and 533. The principle relied on was that, although the land was sold in March 2000, the second plaintiff's loss did not become ascertainable until it became apparent that the lost opportunity to benefit from the increase in value of the land outweighed any benefits to her from taking up occupation of the lease and setting up her business there. It was submitted -- 6 of 8 -- 19062007 T(1)1/CGE(BNE) M/T BRIS5 (Mackenzie J) 7 JUDGMENT 1 10 20 30 40 50 60 that since it could not clearly be said that the amendments were made out of time the limitation issue should be determined at trial. I have come to the conclusion that I should not find that it is clearly established that the proposed amendments are statute barred. As the pleadings stand, there is a pleading in paragraph 5 of the amended defence that the first contact with the second plaintiff in relation to the prospect of establishing the business and the kiosk was in about February 2000. What the content of the contact was is not discussed. Whether it is accepted that the further step that that contact included any representations of the kind alleged by the second plaintiff is made out is an issue that can only be determined at trial. If it is not determined in favour of the plaintiff, the action in so far as it is based on that representation fails. On the other hand, in the contact of what may possibly be found to be a continuing negotiation about establishing the business and the kiosk, it is difficult to conclude in an application at this time that the amendments objected to involve a new course of action which is outside the limitation period. Accordingly, I am not persuaded that I ought to make an order in terms of paragraph 1 of the application, nor to give leave. There are factual issues that need to be resolved to clarify those issues. -- 7 of 8 -- 19062007 T(1)1/CGE(BNE) M/T BRIS5 (Mackenzie J) 8 JUDGMENT 1 10 20 30 40 50 60 In view of the basis of the conclusion in that regard, it seems appropriate that the costs of and incidental to the application be costs in the cause. The application in so far as it relates to leave being given is therefore, at this stage, refused and costs of and incidental to the application are costs in the cause. Now, did you have directions that you wanted to give in this regard? ... HIS HONOUR: Yes, all right. I will amend it to say that the application is adjourned to the trial Judge. ... HIS HONOUR: I make an order in terms of the draft initialled by me and placed with the papers. ----- -- 8 of 8 --