Traderight (NSW) Pty Ltd (ACN 108 880 968) & Ors v Bank Of Queensland Limited (ACN 009 656 740) (No 7) and 15 related matters [2011] NSWSC 1265 (31 October 2011)

Last Updated: 13 December 2011

Supreme Court New South Wales

Case Title:	Traderight (NSW) Pty Ltd (ACN 108 880 968) & Ors v Bank Of Queensland Limited (ACN 009 656 740) (No 7) and 15 related matters
Medium Neutral Citation:	[2011] NSWSC 1265
Hearing Date(s):	21 October 2011
Decision Date:	31 October 2011
Jurisdiction:
Before:	Ball J
Decision:	OMB Parties have leave to amend their pleadings to address the issues referred to in this judgment.
Catchwords:	PROCEDURE - civil - pleadings - strike out; application to - question whether cause of action statute barred cannot be decided on pleadings - no utility in striking out other causes of action based on same facts -whether paragraphs should be struck out on the basis that they have a tendency to cause prejudice, embarrassment or delay
Legislation Cited:	Australian Securities and Investments Commission Act 2001 (Cth) Civil Procedure Act 2005 (NSW) Industrial Relations Act 1996 (NSW) Trade Practices Act 1974 (Cth) (now the Competition & Consumer Act 2010) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Traderight & Ors v Bank of Queensland (No 6) [2011] NSWSC 972
Texts Cited:
Category:	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; 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
- Counsel:	N A Cotman SC (OMB Parties) R D Glasson (OMB Parties) S Couper QC (Bank Parties) J V Gooley (Bank Parties) G A F Connolly (Bank Parties)
- Solicitors:	McCabe Terrill Lawyers (OMB Parties) HWL Ebsworths (Bank Parties)
File number(s):
Publication Restriction:

JUDGMENT

1. On 31 August 2011, I delivered a judgment ( Traderight & Ors v Bank of Queensland (No 6) [2011] NSWSC 972) in which I ordered that various paragraphs of a number of statements of claim that had been filed by the parties I described in that judgment as the "OMB Parties" should be struck out. I gave leave to the OMB Parties to file amended statements of claim. By a motion filed on 17 October 2011, the defendants to those statements of claim (the Bank Parties ) seek to strike out a number of the amended paragraphs.

2. As in the case of the previous strike out application, the argument proceeded by reference to two pleadings. One was the further amended statement of claim filed in the proceedings commenced by Best Deal Pty Limited and Mr Jones. The other is the second further amended statement of claim filed in the proceedings commenced by Jude Financial Services Pty Ltd and Mr and Mrs Gardner.

3. The factual background, so far as it is relevant to the strikeout application is set out in my earlier judgment. It is not necessary to repeat it here.

4. The strike out application concerns 6 claims. They are:

(a) the claim that after the relevant OMB branch was opened the Bank Parties made certain representations which caused the OMB Parties to continue to trade and, in doing so, suffer further loss;

(b) the claim that the Bank Parties engaged in misleading or deceptive conduct by silence after the relevant branch was opened;

(c) the claim for psychiatric injury said to have been suffered by some of the individual OMB Parties as a result of misleading or deceptive conduct or unconscionable conduct of the Bank Parties, or misrepresentations made by the Bank Parties, prior to the opening of the relevant branch;

(d) the claim that the Bank Parties engaged in unconscionable conduct in contravention of s 51AC or s 51AA of the Trade Practices Act 1974 (Cth) (now the Competition & Consumer Act 2010) (the TPA ) and s 12CC of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act ) after the opening of the relevant branch;

(e) the claim that BOQ engaged in unconscionable conduct in contravention of s 51AC of the TPA by dealing with the plaintiffs differently from the way in which it dealt with other like OMB Parties;

(f) the claim under s 106 of the Industrial Relations Act 1996 (NSW) ( IR Act ).

The claims based on silence and the different treatment of OMB Parties

5. The pleading that the Bank Parties engaged in misleading or deceptive conduct by silence and the pleading that BOQ engaged in unconscionable conduct by treating the relevant OMB Parties differently from the way it treated other OMB Parties raise new claims which go outside the leave I granted on 31 August 2011. The Bank Parties submitted that they would be prejudiced by those amendments. In those circumstances, I indicated during the course of hearing the current application that I thought it was appropriate that the OMB Parties file a motion and supporting evidence seeking leave to make the relevant amendments. I gave directions for that to be done and for the Bank Parties to file evidence in reply and listed the matter for further argument. Consequently, those amendments can be put to one side.

The claim based on psychiatric injuries

6. The Bank Parties' only complaint in relation to the claim that a number of the plaintiffs suffered psychiatric injury as a consequence of the Bank Parties' conduct is that a claim for damages for personal injuries is now statute barred.

7. In my opinion, it is not appropriate to deal with that issue on a strike-out application.

8. Section 87F(1) of the TPA relevantly provides:

A Court must not award personal injury damages in a proceeding to which this Part applies if the proceedings commenced:

(a) after the end of the period of 3 years after the date of discoverability for the death or injury to which the personal injury damages would relate;

...

There is a question whether a claim for personal injuries can be brought for a breach of s 52 of the TPA. However, there is no doubt that a claim for damages for personal injuries can be brought in respect of conduct that amounts to unconscionable conduct in contravention of s 51AC or s 51AA of the TPA. Nor is there any doubt that s 87F applies to such a claim.

9. Section 87G of the TPA defines the expression "date of discoverability" in these terms:

(1) The date of discoverability for the death or injury is the first date when the plaintiff in the proceeding knows or ought to know each of the following:

(a) that the death or personal injury has occurred;

(b) that the death or personal injury was attributable to a contravention of this Act;

(c) that in the case of a personal injury - the injury was significant enough to justify bringing an action.

(2) For the purposes of subsection (1), the plaintiff ought to know a fact if the plaintiff would have ascertained the fact had the plaintiff taken all reasonable steps before the date in question to ascertain the fact.

In this case, there is a question when the relevant plaintiffs knew or ought to have known each of the matters set out in paras (a) to (c) of subsection (1). That issue cannot be determined on the pleadings and is only capable of being determined once the relevant parties have given evidence.

10. If a claim for personal injuries said to arise from unconscionable conduct cannot be struck out, there is no utility in striking out that claim insofar as it is based on the common law or s 52 of the TPA. For that reason, the strike out application so far as it concerns the claim for damages for psychiatric injuries must fail.

11. In giving the relevant OMB Parties leave to plead a claim for personal injuries, I was not intending to shut the Bank Parties out from raising a limitations defence. However, s 65(3) of the Civil Procedure Act 2005 provides:

Unless the court otherwise orders, an amendment made under this section is taken to have had effect as from the date on which the proceedings were commenced.

During the course of the hearing of the current application, I indicated that I thought the question whether an order should be made under s 65(3), and if so its terms, should be determined at the trial. Relevant to those questions is the extent to which the Bank Parties were on notice of the claim for personal injuries before the amendment was sought. Although I have made no specific order in relation to that matter, the parties should proceed on the basis that those questions will be dealt with at trial.

The claim based on post opening representations

12. The difficulties with the pleading of this claim in the earlier version of the statements of claim have largely been remedied. The OMB Parties properly plead the representations, that but for the representations they would have ceased operating the relevant branch and that they suffered loss and damage consisting of trading losses and contributions to working capital between the time they say they would have ceased operating the branch and the time when they actually did.

13. However, the Bank Parties still make two complaints in relation to the way in which this claim is pleaded. First, in each case, the relevant OMB Parties give as a particular of the loss and damage they suffered the following:

Alternatively, the Plaintiffs lost the opportunity to cease operating [the relevant branch at an identified time] and to avoid the aforesaid losses.

The "aforesaid losses" are the trading losses and contributions to working capital I have referred to. This particular of loss seems to add nothing to the others and the Bank Parties take objection to it on that ground.

14. Second, each relevant pleading retains a general pleading of loss and damage. So, for example, para 292 of the further amended statement of claim filed in the proceedings commenced by Best Deal pleads:

By reason of the facts and matters aforesaid, the Plaintiffs have suffered loss and damage and seek the payment of money in connection with the contract avoided as to the loss incurred.

Similarly, para 293 pleads:

By reason of the contraventions of the FTA [that is, the Fair Trading Act ], TPA and ASIC Act pleaded above, the Plaintiffs have suffered loss and damage.

The OMB Parties then give particulars of the claimed loss and damage. The particularised loss and damage include all the loss and damage suffered by the relevant OMB Parties as a consequence of entering into the agreements by which they established an OMB Branch. On its face, the OMB Parties claim as damages for breach of the specific representations said to have been made after the relevant OMB Branch was opened all the loss they have suffered as a consequence of establishing and operating that branch. It is clear, however, that that claim is misconceived. Mr Cotman SC, who appeared for the OMB Parties, denied that that was the OMB Parties' intention and submitted that the pleading was sufficiently clear as it is.

15. In my opinion, the two issues identified with the pleading of the post opening representations are minor and, if they were the only two issues concerning the amended statements of claim, I do not think it would be appropriate to strike out those paragraphs and give the OMB Parties leave to replead. However, as I will explain shortly, there are other difficulties with the amended pleadings which will need to be rectified. In those circumstances, the matters I have identified should be rectified at the same time.

Unconscionable conduct claim

16. Again, the further amended statement of claim filed in the proceedings commenced by Best Deal serves as an example of this type of claim. Paragraph 259 pleads:

The Contracts and Arrangements were unconscionable because they were the product of and/or the Plaintiffs were induced to enter into them by reason of the Pre Opening Representations, which representations were misleading and deceptive and/or unconscionable.

17. Three points may be made about this paragraph. First, in the earlier version of this paragraph of the statement of claim (which was struck out) there was a problem with the expression "Contracts and Arrangements" because it was defined very broadly to include "any other related documents in respect of the establishment, financing, operation and termination of the [relevant] OMB Branch". That problem has been rectified. Paragraph 255 now defines the expression "Contracts and Arrangements" to mean the specific documents by which Best Deal became an OMB Party. Secondly, para 259 pleads that the contracts and arrangements were unconscionable rather than that the Bank Parties engaged in unconscionable conduct. Thirdly, and related to the second point, it is pleaded that the Contracts and Arrangements were unconscionable because they were induced by representations which were misleading or unconscionable. The further amended statement of claim pleads elsewhere why the representations were misleading, but it does not give particulars of why the representations were unconscionable. Nonetheless, it is reasonably clear that what is alleged is that the Bank Parties engaged in unconscionable conduct by making the representations about which complaint is made. In those circumstances, I do not think para 259 should be struck out.

18. Paragraph 259A then pleads:

The Contracts and Arrangements became unconscionable and/or were causative of unconscionable conduct as a basis of dealing with the Plaintiffs by reason of the operation of the Contracts and Arrangements by reason of the following:

(a) the misleading conduct and inducement referred to in paragraph 259 above;

(b) the Plaintiffs:

(i) suffered loss and damage by reason of the establishment and operation of the Toronto OMB: and

(ii) continued operating the business at a loss,

(c) the Maroubra Junction and Hurstville Representations;

(d) the Competitiveness Issues Representations;

(e) the General Comments and Representations;

(f) the Working Capital Loan Representations; and

(g) the matters in [certain identified paragraphs, which consist almost entirely of allegations that the Bank Parties engaged in misleading and deceptive conduct by silence]

and the Plaintiff's loss was, to the extent it was funded by the Bank, both owed to and secured to the Bank over assets of the Plaintiffs, otherwise were losses funded by the assets of the Plaintiffs or the unpaid work and services of the Plaintiffs, and the Toronto OMB was conducted and losses were incurred to the actual benefit of the Bank.

The representations referred to in para (c), (d), (e) and (f) are particular representations said to have been made after the relevant OMB Branch was opened. Their precise terms are not relevant to this application.

19. In my opinion, para 259A should be struck out under UCPR r 14.28 on the basis that it has a tendency to cause prejudice, embarrassment or delay. It is very difficult to understand what the introductory words mean. If what the plaintiffs allege is that, by making the representations referred to in subparas (c) to (f) and by engaging in the conduct referred to in subpara (g) (to the extent that the plaintiffs are permitted to plead those paragraphs), the Bank Parties engaged in unconscionable conduct, they should say so specifically, so that the Bank Parties can properly understand the case they have to meet. If the claim is pleaded in that way, it will be necessary for the plaintiffs to identify what loss they say flowed from the identified unconscionable conduct.

The IR Act claim

20. The issues in relation to this claim are raised by the second further amended statement of claim filed in the Jude proceedings.

21. In the version of the statement of claim filed in the Jude proceedings that was the subject of my judgment on 31 August 2011, the plaintiffs pleaded that the Pre Opening Representations and various representations made after opening which were together defined as the "Post Opening Representations" constituted an arrangement by which work was performed in an industry within the meaning of s 106 of the IR Act. In striking out the relevant paragraphs, I pointed out (at [45]) that the pleading of the claim based on the Post Opening Representations under s 106 of the IR Act was defective because the pleading did not identify clearly what the relevant arrangement or arrangements were, what was unfair about that arrangement or those arrangements and what compensation was claimed in respect of each such arrangement.

22. In my opinion, the amended pleading has not addressed this issue.

23. Paragraph 275 of the Jude second further amended statement of claim pleads that the contracts entered into by Jude were contracts or arrangements within the meaning of s 105 of the IR Act. Paragraph 276 pleads that the Pre Opening Representations were also arrangements within the meaning of s 105. Paragraph 276A then pleads:

By reason of the First and Second Variations and the First and Second Variation Representations, there arose an arrangement (which included the warranty in paragraph 259B above) between the Plaintiffs and the Bank, related or collateral to the Bankstown [sic Bathurst] OMB Agency Agreement, whereby if the Plaintiffs borrowed additional money from the Bank, gave additional securities to the Bank and continued to operate the Bankstown OMB for the benefit of the Bank, the Bankstown [sic Bathurst] OMB would become a viable business.

24. The "First Variation Representation" is pleaded in para 152 as being an implied representation made around 7 June 2006, when Mr Gardner's overdraft facility was increased to $200,000, that "the Bathurst OMB was a viable business and was capable of servicing such loans and cash flows". The "Second Variation Representation" is pleaded in para 187 as being an implied representation made on 13 October 2006, when Mr Gardner's overdraft facility was increased to $300,000, that "there were reasonable grounds to believe that if the Bathurst OMB employed a mobile lender or business development manager it would become a viable business and be capable of servicing the additional borrowing from trading cash flows".

25. It is not pleaded that the arrangements pleaded in para 276A were arrangements within the meaning of s 105, although that seems to be implicit.

26. Paragraph 277 then defines the contracts entered into by the plaintiff in connection with the Bathurst OMB branch, the Pre Opening Representations and the representations pleaded in para 276A as the "Arrangements".

27. Paragraphs 278 to 283 make allegations concerning the Pre Opening Representations and the contracts to which no objection is taken.

28. Paragraphs 284 and 285 plead that Mr Gardner and Mrs Gardner respectively performed work under the Arrangements.

29. Paragraph 286 then contains a pleading in relation to the Post Opening Representations (an expression which is no longer defined).

30. Paragraph 287 pleads that "the Arrangements were or are an unfair [sic] within the meaning of section 105 of the IR Act" for various identified reasons. Some of those are said to relate specifically to the Post Opening Representations. Paragraph 288 pleads that the Arrangements became unfair for various identified reasons and para 289 pleads that the Arrangements were unfair for additional identified reasons including a number which have been added by the amended pleading. Some of those relate to the First and Second Variation Representations.

31. The current pleading is defective because it retains the expression "Post Opening Representations", although that expression is no longer defined. The pleading in para 276A is not entirely satisfactory because the arrangement that is pleaded is not obviously one under which work was performed in an industry. More significantly, the pleading continues to lump the arrangement said to arise from the Pre Opening Representations and the actual contracts together with arrangements that are said to have arisen after the opening and pleads that that whole arrangement was unfair for reasons some of which cannot possibly relate to what happened post opening. If the plaintiffs allege that some arrangement arose post opening that was unfair and is a basis for obtaining compensation independently of any other claim they make, then the plaintiffs must plead the precise arrangement, what makes that arrangement unfair and what compensation they are entitled to as a result of that unfair arrangement. To take the First Variation Representation as an example, presumably it is said that that representation was an arrangement by which work was performed in an industry because it induced Mr and Mrs Gardner to continue to work in the jobs that they had, that that arrangement was unfair because it was induced by misrepresentations and that consequently Mr and Mrs Gardner are entitled to compensation measured by reference to the loss they suffered by continuing to work for the period that they did. However, if that is the claim that the plaintiffs wish to make, it should be pleaded properly.

32. In my opinion, all those paragraphs of the claim based on s 106 of the IR Act to the extent that those paragraphs plead or relate to an arrangement that was made post opening should be struck out under UCPR r 14.28.

Orders

33. The OMB Parties should have leave to amend their pleadings to address the issues I have referred to in this judgment.

34. The parties should bring in short minutes of order which are consistent with this judgment. If there is any dispute concerning the terms of those short minutes of order, the matter should be re-listed by arrangement with my Associate for argument.

35. I will hear the parties in relation to costs.

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