Beaumont v Chang

1. [1]

   HER HONOUR: This notice of motion involves a review of the Registrar’s decision in allowing two amendments to a pleading. It is of short compass.

2. [2]

   By notice of motion filed 12 September 2014, the defendants seek an order that pursuant to Rule 49.20 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) the decision of Registrar Kenna made on 25 August 2014 be set aside on review, and that there be substituted in lieu of that decision that the plaintiffs be granted leave to file the further amended statement of claim (“FASC”) in the form as sought by the plaintiffs in the affidavit of their solicitor, Mr Agosta, made on 26 June 2014 (being part of annexure C to that affidavit) but excluding lines 2 and 3 of subpara 23B(a)(xiii); or alternatively, in the event that the further amended statement of claim has been filed then lines 2 and 3 of subpara 23B(a)(xiii) be struck out. On 25 August 2014, the Registrar granted leave to the plaintiffs to file and serve a FASC.

3. [3]

   The first plaintiff is an ophthalmic surgeon Paul Ernest Beaumont (“Dr Beaumont”) and the second plaintiff is Dr Beaumont’s family corporate trustee, Brimbella Pty Ltd atf Judith Beaumont Settlement Trust (“Brimbella”). The first defendant is also an ophthalmic surgeon, Andrew Alexander Chang (“Dr Chang”) and the second defendant is a corporate trustee associated with Dr Chang, Jaza Pty Ltd ACN 096 790 402 (“Jaza”). For convenience, I shall refer to the plaintiffs as “Dr Beaumont” and the defendants as “Dr Chang” except where the identity of the separate entities is required.

4. [4]

   A bundle of documents that were before the Registrar (and in the Registrar’s decision) was handed up. Dr Beaumont relied upon a further affidavit of Peter Zipkis dated 5 May 2015.

Background

1. [5]

   Drs Beaumont and Chang are ophthalmic surgeons who formerly shared surgery and office space (“the surgery”) in Macquarie Street, Sydney. Brimbella is the alleged assignee of causes of action said to have been held by Dr Beaumont’s former service company PBPL. Jaza is Dr Chang’s service company.

2. [6]

   On 31 July 2006, Dr Beaumont alleges he was refused entry to the premises and as a consequence has sustained loss. Dr Beaumont claims damages under the Trade Practices Act 1974 (Cth), as it was at the time the alleged causes of action arose, for unconscionable conduct in connection with the supply of services in trade and commerce. Dr Beaumont also claims damages for breach of contract between Dr Beaumont and PBPL. It is only the unconscionable conduct issue that is relevant to this application.

The pleadings of the FASC

1. [7]

   On 10 August 2011, Dr Beaumont filed a statement of claim. On 12 June 2012, an amended statement of claim was filed. These pleadings concerned whether or not Dr Beaumont is entitled to damages for breach of contract, since Dr Chang’s conduct represented a repudiation of the contract between them.

2. [8]

   On 27 June 2014, Dr Beaumont filed a notice of motion seeking leave to file a FASC (the motion before the Registrar). This pleading proposed to add the issue of whether or not Dr Beaumont is entitled to damages as a result of unconscionable conduct by Dr Chang that is in breach of s 51AC of the Trade Practices Act.

3. [9]

   The conduct said to be unconscionable (“the Conduct”) is pleaded at paragraphs 9-17 and 21-22 of the FASC. It can be summarised as follows:

The hearing of the motion before the Registrar

1. [10]

   On 25 August 2014, the Registrar heard this motion and gave ex tempore reasons for her judgment.

2. [11]

   After much discussion between the parties concerning the amendments, all amendments were consented to, except for lines (2) and (3) of subpara 23B(a)(xiii). They read:

3. [12]

   In other words, Dr Beaumont alleged that Dr Chang informed former patients that he [Dr Beaumont] had retired or was ill and also informed former referring Doctors that Dr Beaumont had retired.

4. [13]

   Mr Freeman of counsel appeared for Dr Beaumont and Mr Tregenza of counsel appeared for Dr Chang. [The same counsel appeared before me on the review application].

5. [14]

   What was left for the Registrar to determine was whether the amendments in lines (2) and (3) in subpara 23B(a)(xiii) should be permitted. Counsel for Dr Chang objected to these amendments on the basis that firstly, they pleaded evidence rather than material facts in breach of UCPR 14.7 (the evidence issue); and secondly, that they provided insufficient particulars in breach of UCPR 15.3 (the particulars issue).

The relevant pleading rules

1. [15]

   UCPR 14.7 reads:

2. [16]

   UCPR 15.3 relevantly reads:

3. [17]

   Overall, the parties made the same submissions before the Registrar as they made on review. For convenience, I shall summarise them later in this judgment.

4. [18]

   Before I examine the Registrar’s decision, I should briefly set out the law on the topic of unconscionable conduct.

Unconscionable conduct

1. [19]

   The Trade Practices Act has been repealed and unconscionable conduct is now covered in ss 20 and 21 of the Australian Consumer Law. However, ss 51AB and 51AC of the Trade Practices Act apply to conduct that took place up to and including 31 December 2010, so are the relevant provisions here as the alleged conduct had occurred by 2006.

2. [20]

   Sections 51AB and 51AC relevantly read:

3. [21]

   In Hurley v McDonalds Australia Ltd [1999] FCA 1728; (2000) ATPR 41-741, Heerey, Drummond & Emmett JJ stated (at [22]) in respect of ss 51AB and 51AC of the Trade Practices Act:

4. [22]

   In Tonto Home Loans Australia Pty Ltd v Tavares [2011] NSWCA 389, Allsop P said at [291]:

5. [23]

   In Fairlight AU Pty Ltd v Peter Vogel Instruments Pty Ltd [2013] FCA 1280, Edmonds J held at [16]:

6. [24]

   Finally, in Australian Competition and Consumer Commission v Lux Distributors Pty Ltd [2013] FCAFC 90 stated at [23]:

The decision of the Registrar

1. [25]

   On 25 August 2014, after outlining the facts and considering the submissions of the parties, the Registrar in her ex tempore reasons for judgment stated:

2. [26]

   In summary, the Registrar allowed the amendments contained in lines (2) and (3) because the allegations of the representations:

Review of a decision of a registrar

1. [27]

   UCPR 49.19 governs applications for review of a decision of a registrar. It reads:

2. [28]

   In Tomko v Palasty (No 2) (2007) 71 NSWLR 61; [2007] NSWCA 369 Hodgson JA (with whom Ipp JA agreed) stated (at [6]-[8]):

3. [29]

   Basten JA in Tomko at [52](4)(a) stated:

4. [30]

   Tomko was discussed in detail by Rein J in Noun v Pavey [2013] NSWSC 846. As this review concerns a decision about the ongoing management of these proceedings (not one that terminates it), I adopt the reasoning of his Honour at [18]:

The grounds for review

1. [31]

   Dr Chang’s grounds for review are that the two lines added are:

2. [32]

   These are the same issues that were in dispute before the Registrar.

(a) Evidence not material facts?

1. [33]

   So far as this issue is concerned, Dr Chang submitted that the two lines do not give a statement of the intent that Dr Chang is alleged to have had in order to act unconscionably, but that rather, they merely show how Dr Beaumont seeks to prove that intent.

2. [34]

   Dr Chang further submitted that in breach of UCPR 14.7, lines (2) and (3) are evidence, not material facts. Counsel for Dr Chang argued that no date or periods during which the representations were made are identified in the FASC. He said that Dr Beaumont alleged that Dr Chang had told the recipients of these representations that Dr Beaumont had retired, and that that makes it clear that the representations relied upon by Dr Beaumont occurred after Dr Beaumont’s exclusion from the surgery on 31 July 2006. Dr Chang submitted that the representations are not material facts because they could only have been made after the alleged unconscionable conduct occurred.

3. [35]

   By way of response to the lack of particularity with dates, Dr Beaumont has a fallback position. It is that if a date is required to be pleaded in [22] of the FASC, that paragraph should be amended to insert the words “On and after 31 July 2006”.

4. [36]

   As Dr Beaumont’s counsel explained, as these representations were allegedly made by Dr Chang, investigations are continuing as to whom they were made and when. Even when this information is gathered, the recipients may not be prepared to provide affidavits. The dates “on or after 31 July 2006” may be able to be better particularised with an end date once this evidence is gathered.

5. [37]

   Counsel for Dr Beaumont submitted that the paragraphs plead material facts and not the evidence to support the material facts.

6. [38]

   Counsel for Dr Beaumont’s approach was that regardless of whether or not sufficient particulars had been provided, that was not a basis upon which the Registrar was able to deny him the opportunity to amend his claim, and that rather, Dr Chang could make a request for further particulars after the amendments were granted. Dr Beaumont submitted that Dr Chang’s position ignores the authorities on unconscionable conduct, which illustrate that the principles relating to unconscionable conduct are expressed in broad terms, and that unconscionable conduct is incapable of precise definition.

7. [39]

   Counsel for Dr Beaumont submitted that a plaintiff is required to plead facts which meet the description of “misconduct”, “unfair” or “unreasonable”, and that that is why Dr Beaumont has pleaded the facts which are now disputed. Dr Beaumont highlighted that the cases he referred to demonstrate that unconscionable conduct is wide ranging and is incapable of precise definition. Dr Beaumont submitted that these decisions illustrate how the proposition of Dr Chang that Dr Beaumont cannot plead material facts, because it is said to be really “evidence” supporting the claim of unconscionable conduct, is without merit.

8. [40]

   In Kirby v Sanderson Motors Pty Ltd (2001) 54 NSWLR 135; [2002] NSWCA 44, Hodgson JA (Mason P and Handley JA agreeing) said at [20]–[21], with respect to the requirement for a pleading to state material facts:

9. [41]

   It is my view that lines (2) and (3) set out material facts. The range of unconscionable conduct is wide and can include bullying and thuggish behaviour, undue pressure and unfair tactics, taking advantage of vulnerability or lack of understanding, trickery or misleading conduct. These are the alleged actions of Dr Chang that form part of the unconscionable conduct. These lines are not a new cause of action. A finding of unconscionable conduct requires an examination of all the circumstances. These false representations are some of the circumstances that go towards making a finding of unconscionable conduct. The pleading in these lines are material facts. They are not evidence.

(b) Insufficient particulars?

1. [42]

   The thrust of Dr Chang’s argument was that there are insufficient particulars provided to meet the requirements of UCPR 15.3, and that consequently, the Registrar erred by concluding that the sufficiency of particulars in the FASC did not have to be determined at the time of the hearing, but that Dr Chang could seek particulars of the representations. Dr Chang argued that by doing so, the Registrar did not have regard for the requirement that there must be a sufficient pleading of the representations.

2. [43]

   Counsel for Dr Chang submitted that each representation alleged by Dr Beaumont forms part of the allegation that Dr Chang engaged in the alleged unconscionable conduct, and that because Dr Beaumont has not identified the recipient of the communication, a sufficient means of identifying the recipient or the date or approximate date of the representations, it has not pleaded a representation.

3. [44]

   Dr Chang submitted that rather, Dr Beaumont merely alleges, in an open-ended fashion, that representations at large were made to former patients and referring doctors, without identifying them either in the pleading or in a separate document referred to in the pleading. Counsel for Dr Chang further argued that, contrary to UCPR 15.1, Dr Chang is left in a position where he does not know the case the pleading requires him to meet.

4. [45]

   In support of this proposition counsel for Dr Beaumont replied upon Southern Cross Exploration NL v Fire & All Risks Insurance Co (1985) 2 NSWLR 340 at 349F to 351F:

5. [46]

   Dr Beaumont’s position was that a failure to provide sufficient particulars is not a valid objection to an amendment. In a letter to Dr Chang’s solicitors from Dr Beaumont’s solicitors dated 20 May 2014, they advise as follows:

6. [47]

   The nature of the representation allegations that form part of the unconscionable conduct have been pleaded. As foreshadowed in the above letter, evidence by way of affidavits will be provided in due course. The representations were alleged to have been made by Dr Chang himself. It is my view that sufficient particulars have been provided so that Mr Chang knows the case he has to meet.

7. [48]

   I agreed with the decision of the Registrar. The orders made by Registrar Kenna on 25 August 2014 are affirmed. The defendants’ notice of motion filed 12 September 2014 is dismissed.

8. [49]

   Costs are discretionary. Costs usually follow the event. The defendants are to pay the plaintiff’s costs as agreed or assessed on an ordinary basis