Neilson Investments (Qld) Pty Ltd v Spud Mulligan's Pty Ltd
[2003] QCA 207
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- Neilson Investments (Qld) Pty Ltd v Spud Mulligan's Pty Ltd[2003] QCA 207
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Neilson Investments (Qld) Pty Ltd v Spud Mulligan's Pty Ltd[2003] QCA 207
Neilson Investments (Qld) Pty Ltd v Spud Mulligan's Pty Ltd[2003] QCA 207
SUPREME COURT OF QUEENSLAND
PARTIES: | |
FILE NO/S: | |
Court of Appeal | |
PROCEEDING: | General Civil Appeal |
ORIGINATING COURT: | |
DELIVERED ON: | 23 May 2003 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 30 April 2003 |
JUDGES: | de Jersey CJ, Williams and Jerrard JJA Separate reasons for judgment of each member of the Court, each concurring as to the order made |
ORDER: | Appeal dismissed with costs to be assessed |
CATCHWORDS: | PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PRACTICE UNDER RULES OF COURT – AMENDMENT – where counsel sought leave to amend statement of claim to rely on s 75B Trade Practices Act – whether amendment amounted to a fresh cause of action – whether limitation period exceeded CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – EXEMPTION CLAUSES – where respondents executed deed prospectively releasing appellants from liability – where liability accrued prior to execution of deed – whether appellants released from liability Bankruptcy Act 1966 (Cth), s 82(2) Trade Practices Act 1974 (Cth), s 52, s 75B, s 82 Aliferis v Kyriacou (2000) 1 VR 447, approved Collins v Hertfordshire County Council [1947] KB 598, considered Marshall v London Passenger Transport Board [1936] 3 All ER 83, considered Nella v Kingia Pty Ltd (1986) ATPR 40-723, approved Patterson v Richards [1963] VR 179, considered |
COUNSEL: | A P J Collins for the first, second, third and fourth appellants M Stewart SC, with P E Smith, for the first and second respondents |
SOLICITORS: | Shera Jones Paras for the first, second, third and fourth appellants Paul Everingham & Co for the first and second respondents |
[1] de JERSEY CJ: The appellants appeal against judgments given against them, under s 82 of the Trade Practices Act, for damages for misleading and deceptive conduct.
[2] The first, third and fourth appellants were the directors of a company named Spud Mulligans Pty Ltd ("the franchisor"), and the second appellant was employed as its salesman. On 22 December 1995 the franchisor entered into an agreement with the first respondent company ("the franchisee") under which the franchisee was to conduct a food outlet and restaurant at Caboolture. After trading at a loss for about 14 months, the franchisee abandoned the operation in January 1997. Late that year, the franchisee and its directors, the second respondents, commenced proceedings claiming damages, against the franchisor, its directors and the second appellant salesman.
[3] Two short issues arise on the appeal. The first is whether the learned trial Judge's discretion to permit amendment of the statement of claim miscarried. The second is whether His Honour correctly concluded that liability for the claims he upheld had not been released by operation of a particular deed.
[4] As at the commencement of the trial, the statement of claim alleged pre-contractual representations made by means of documentation provided to the second respondents by the franchisor, and oral representations made by the appellants. The pleading alleged the appellants acted as agents of the franchisor. It was alleged the representations were false, misleading and deceptive and that there was no reasonable ground for any of them. The pleading claimed damages under s 82 against the franchisor and the appellants severally.
[5] Early in the course of the trial, counsel for the appellants queried, before the learned Judge, whether the respondents were seeking to hold the appellants liable on the basis of s 75B of the Trade Practices Act. Section 82, which was referred to in the pleading, provides for recovery by action against any person "involved in" the contravention of, as relevant here, s 52 of the Act. Section 82 thereby invites reference to s 75B, which sets out when a person is to be considered "involved in" a contravention: essentially, for present purposes, by being knowingly concerned in or aiding or abetting the contravention. In response, Counsel for the respondents said he was relying on s 75B, and later sought leave to amend the statement of claim to set forth reliance on that section expressly. The learned Judge provisionally granted leave to amend, confirmed in his ultimate reasons for judgment.
[6] The question of amendment was potentially significant in part because if the effect of the amendment was to add a fresh cause of action, the expiration of the three year time limitation prescribed by s 82 of the Trade Practices Act would, by the time of the amendment, have well and truly passed by. The Judge rejected the contention that the amendment added a new cause of action, saying it "might more conveniently [be] categorized as the addition of particulars of facts already pleaded".
[7] I respectfully agree with that view. A claim for damages in respect of misleading and deceptive conduct was, in the pleading, expressly raised against each appellant personally. The representations founding that claim, and their falsity, were alleged. Those allegations were made in the context of a claim, similarly based, against the franchisor. It must reasonably have been assumed that the respondents were relying on the appellants' having been knowingly concerned in, or having aided or abetted, the franchisor's contravention, in terms of s 75B. In my view, specifying that circumstance, and specifying certain other factual allegations, as did occur, through the process of amendment, involved no more than particularizing a cause of action already raised.
[8] His Honour's exercise of discretion in allowing the amendment could not otherwise be successfully challenged. The amendment simply made explicit something which should reasonably have been assumed, and there was in any event no basis for concluding that the appellants would be relevantly prejudiced were the amendment to be allowed.
[9] I turn to the second issue. The franchisor sold its operation to a company named CFX Pty Ltd in about August 1996. On 16 October 1996 the respondents executed the deed by which it is contended they released the appellants from liability in respect of these claims. By that deed, the franchisor effectively assured the franchisee that the franchisor's assignee would continue to perform the obligations of franchisor, and then provided, in cl 3 (the franchisor being referred to as the "vendor"):
"3. RELEASE OF VENDOR
3.1The Franchisee hereby releases to the full extent permitted by law the Vendor and its respective agents, employees and contractors from all actions, claims, demands, suits, losses, damages, costs and expenses of every kind which the Franchisee may hereafter have against the Vendor in respect of or in any way arising from the Franchise Agreement provided that the Vendor shall remain liable for:-
3.1.1 any non performance of its obligations contained in the Franchise Agreement and incurred to the Completion Date;
3.1.2 any non performance of those obligations contained in the Franchise Agreement which the Vendor is, pursuant to the terms of the Master Franchise, undertaking in its capacity as National Franchisor."
[10] The instant claims had accrued by December 1995, which was about nine months before the franchisor's assignment of its rights and obligations to CFX, and about 11 months prior to the respondents' execution of the deed of 16 October 1996. The learned Judge concluded that those claims therefore fell outside the scope of cl 3.1, because it released only claims the franchisee may "hereafter" have against the franchisor, that is, after 16 October 1996. The Judge additionally concluded that the claims were in any event not "in respect of or in any way arising from the franchise agreement", and that the clause was not apt to release liability for contravention of the Trade Practices Act.
[11] It suffices for the disposition of the appeal to record agreement with His Honour's view that the provision did not operate to release the franchisor, its agents and employees from liability for claims which had, as here, already accrued. There is no reason to read the provision other than literally, and doing so does not render it commercially unrealistic – as was contended.
[12] Releasing the franchisor from liability for accrued non-contractual claims, as at the time of execution of the deed, would not have sat comfortably with the confirmation in cl 3.1.1 of the deed that the franchisor was nevertheless to remain liable for accrued contractual claims. The deed dealt specifically with accrued contractual claims (preserving them) and what one might style non-contractual claims which may thereafter nevertheless arise out of the contract (releasing them). Why assume an intention also to release (non-contractual) claims arising out of the contract which had already accrued? Absence of reference to them is in that context not inconsistent with a view that they were to remain extant, and there would be no commercial oddity about that position. There being no express reference to such accrued liability as was involved here, there was in my view no warrant for not following the literal approach to the construction of the clause adopted by His Honour.
[13] In my view, neither of the grounds pursued on the hearing of the appeal should be sustained. I would dismiss the appeal, with costs to be assessed.
[14] WILLIAMS JA: I have had the advantage of reading the reasons for judgment of the Chief Justice wherein the relevant facts are set out. I agree with his reasons and the conclusions he has reached and only wish to add some brief observations of my own.
[15] The Claim and Statement of Claim in its original form made it clear that the respondents were seeking damages pursuant to s 82 of the Trade Practices Act 1974 against the personal defendants. In paragraph 3 thereof it was alleged that those personal defendants “acted as agents of” the corporate defendant. There was, it is true, no specific reference to s 75B of the Act, nor were the matters giving rise to personal liability by operation of that section specifically pleaded. But it must have been clear to the appellants that the respondents could only succeed at trial if they established matters within s 75B.
[16] What happened at the outset of the trial was that the Statement of Claim was amended to include particulars indicating how each of the personal defendants was caught by s 75B. The amendment did not give rise to any new cause of action; it merely provided further and better particulars of the existing cause of action. Section 75B does not give rise to liability independently of s 82: Nella v Kingia Pty Ltd (1986) ATPR 40-723 per Toohey J.
[17] The considerations relevant to determining whether a proposed amendment sets up a new cause of action or merely provides further and better particulars of an existing cause of action were considered in Marshall v London Passenger Transport Board [1936] 3 All ER 83 and Collins v Hertfordshire County Council [1947] KB 598. Those decisions were considered and applied by Sholl J in Patterson v Richards [1963] VR 179 particularly at 188. The approach adopted in those cases is, in my view, consistent with the reasoning of the High Court in Doonan v Beacham (1953) 87 CLR 346, Mummery v Irvings Pty Ltd (1956) 96 CLR 99 at 110 and Katsilis v The Broken Hill Co Pty Ltd (1977) 52 ALJR 189 at 201.
[18] In my view the approach of the learned Chief Justice to the relevance and effect of clause 3 of the Deed executed on 16 October 1996 is to be preferred. But, as the reasons of Jerrard JA establish, there are also other ways in which the same conclusion could be reached.
[19] It follows that the appeal should be dismissed with costs to be assessed.
[20] JERRARD JA: I have read the reasons for judgment of the Chief Justice and respectfully agree with his reasons on the first issue raised on the appeal, and with the result reached on the second. On that latter issue I reach the same result but by different reasoning, which I now describe.
[21] In my respectful judgment, the effect of the Deed of Release was to release the Franchisor from:
● accrued and non accrued claims in respect of or in any way arising from the Franchise Agreement; but excepting
● the accrued contractual claims described in 3.1.1; and
● the accrued and non accrued claims described in 3.1.2.
If, as the learned Chief Justice considers, only non accrued claims in respect of or in any way arising from the Franchise Agreement are excluded, then there appears no need for clause 3.1.1 and no work for it to do.
[22] However, the claims which succeeded below are claims under the Trade Practices Act in respect of and arising out of the pre-contractual oral and written representations made by the defendants. Those are not accurately described as claims in respect of the Franchise Agreement; and the fact that the respondents suffered damage when, in reliance on those pre-contractual representations, the respondent company entered into the Franchise Agreement does not mean that its directors’ claims in any way arose from that Franchise Agreement. The only claim which did arise from the agreement was a claim which the respondent company pursued for breach of contract, and in which the learned trial judge found it unnecessary to assess damages. That claim was caught by the release in the Deed.
[23] The issue for consideration in this commercial document, (namely whether claims pleading damage suffered by misleading and deceitful pre-contractual representations are claims in respect of, or which arise from, the contract subsequently entered into), is similar to that issue dealt with in a context admittedly different to the extent of it being the interpretation of a statute, in judgments considering s 82(2) of the Bankruptcy Act 1966 (Cth). That section provides that:
“Demands in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust are not provable in bankruptcy.”
[24] The most recently stated intermediate appellate position is that of the Victorian Court of Appeal in Aliferis v Kyriacou (2000) 1 VR 447, in which all members of the court held that the test for deciding if a demand against a bankrupt was within that exclusion or not was whether a contract or promise constituted an essential element of the cause of action (against the bankrupt)[1]. The court rejected a test which looked to the “underlying transaction[2]”. That approach is relevant to the proper construction of clause 3.1 in this Deed, and supports what I consider is the natural meaning of the term and which excludes statutory claims based on misleading pre-contractual conduct from its reach.
[25] In the result I agree with the orders proposed by the Chief Justice.