New South Wales Supreme Court CITATION : Street & 7 Ors v Luna Park Sydney Pty Limited & 3 Ors [2007] NSWSC 588 HEARING DATE(S) : 7 June 2007 JURISDICTION : Equity Division JUDGMENT OF : Brereton J EX TEMPORE JUDGMENT DATE : 7 June 2007 DECISION : Evidence objected to rejected CATCHWORDS : EVIDENCE – on claim for damages for misleading and deceptive conduct – where plaintiff claims to have purchased property in reliance on misrepresentation as to use of adjoining amusement park and in particular location and operation of thrill rides – whether evidence of noise experience when park opened after purchase completed admissible – measure of damages for misleading conduct – rule in Potts v Miller – EVIDENCE – on claim for injunction to restrain use of amusement park in contravention of Crown Lands Act s 114 and Plan of Management – where by statute no remedy is available in respect of emissions of noise from park and such emission is not a nuisance – whether evidence of noise relevant to discretion to grant injunction (CTH) Trade Practices Act 1974 ss 52, 80, 82, 87 LEGISLATION CITED : (NSW) Crown Lands Act 1989 s 114 (NSW) Luna Park Site Act 1990 ss 8, 19A (NSW) Luna Park Site Amendment (Noise Control) Act 2005 HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 Smith New Court Securities Limited v Scrimgeour Vickers (Asset Management) Ltd [1997] AC 254 CASES CITED : Potts v Miller (1940) 64 CLR 282 Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281 Street & Ors v Luna Park Sydney Pty Ltd & Ors [2006] NSWSC 230 Bonett v Barron and Dowling Property Group Pty Ltd (2006) 203 FLR 179 Joan Street (first plaintiff) Ros Dwyer (second plaintiff) Michael Hesse (third plaintiff) Glen Eight Pty Ltd (fourth plaintiff) Susan Hesse (fifth plaintiff) PARTIES : Robert Simkin (sixth plaintiff) Glen Federick Billington (seventh plaintiff) Fiona Jeanette Billington (eighth plaintiff) Luna Park Sydney Pty Ltd (first defendant) Metro Edgley Pty Ltd (second defendant) Peter Hearne (third defendant) Warwick Doughty (fourth defendant) FILE NUMBER(S) : SC 2267/05 Mr T Alexis SC w Ms P M Sibtain (plaintiffs) COUNSEL : Mr T G Parker SC w Mr J A Potts (first & second defendants) Mr J R Clarke (third & fourth defendants) Wise Legal SOLICITORS : Clayton Utz Esplins IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BRERETON J Thursday, 7 June 2007 2267/05 Joan Street & Ors v Luna Park Sydney Pty Limited & Ors JUDGMENT (ex tempore) 1 HIS HONOUR: The defendant takes objection to paragraphs 20 to 27 inclusive of the affidavit of Michael Hesse sworn 31 March 2005, in which Mr Hesse sets out, in substance, (1) a description of the noise that the Ranger and other rides create when operated in the area north of Coney Island, the times at which that noise occurs and the quality of some of the noise that is occasioned - for example, whether it is mechanical noise or screaming of patrons; (2) his personal subjective reaction to that noise, and (3) actions he has taken in response to the exposure of his property to that noise. The defendants submit that evidence that constitutes an objective description of the noise and noise level that emanates from the relevant area, evidence of the subjective reactions of the residents to that noise, and evidence of the actions they have taken in response to that noise, is irrelevant and ought not be admitted. 2 I am dealing with this objection as a "test ruling" in respect of what has been called the defendants' "noise objection", which objection is taken to a considerable body of the plaintiffs' affidavit evidence. However, I am doing so in the case of Mr and Mrs Hesse only, and on the basis that, if I were to reject it in their case, but subsequently to hold that what I will for convenience call "lay noise evidence" were admissible in another plaintiff's case, the plaintiffs would be regarded as being at liberty to re-tender the lay noise evidence of Mr and Mrs Hesse, as corroborating the evidence relied on in the other plaintiff's case. Whether it will be admissible or not for that purpose, I do not decide at this stage; for present purposes, I focus on the case brought by Mr and Mrs Hesse. 3 In their case, it is significant that, having now sold their apartment, they do not bring a claim for an injunction to restrain contravention of (NSW) Crown Lands Act 1989, s 114, nor do they bring a claim for injunctive relief under (CTH) Trade Practices Act 1974. Their claim is solely for damages under Trade Practices Act, s 82. Accordingly, the question is whether, in the circumstances of this case, evidence of the Hesses' actual experience of noise emanating from the relevant area within the park, and their subjective reactions and responses to it, is admissible on a claim by them for damages occasioned by the allegedly misleading and deceptive conduct of Metro Edgely Pty Limited constituted by the lodgement of the Development Application and Statement of Environmental Effect, on certain contents of which the Hesses say they relied in purchasing their apartment. 4 The damages to which a plaintiff who makes good a case of misleading and deceptive conduct under Trade Practices Act, s 52, is entitled under s 82, are those damages which result from the misleading and deceptive conduct; in that respect it is important to recognise that there is a distinction between the damage resulting from the conduct complained of, and damage resulting from falsification of the representation, the making of which constituted the relevant conduct. At least generally speaking, damage in a s 52/s 82 case, as in a fraud case, corresponds with the detrimental change of position of the person deceived in reliance on the conduct complained of. 5 In this case, the change of position was the purchase of the relevant property, as it normally is in a fraud or s 52 case. In those circumstances, the ordinary rule is that damages are measured by the difference between the price actually paid for the property and its true value, that true value being determined on the assumption that the transaction was not affected by the conduct complained of, and that all relevant matters relating to the value of the property were known at the time of the purchase [Potts v Miller (1940) 64 CLR 282; Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281]. As Bergin J has recently said, in Bonett v Barron and Dowling Property Group Pty Ltd (2006) 203 FLR 179, the High Court's loosening of the tether tying the rule in Potts v Miller to the assessment of loss or damage under Trade Practices Act, s 82, in HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640, does not mean that it is appropriate to measure the loss in such a case on the basis of the difference between the value of the property as purchased and the value it would have had if the misrepresentations had been true. 6 I accept, as Lord Steyn said in Smith New Court Securities Limited v Scrimgeour Vickers (Asset Management) Ltd [1997] AC 254 at 284 - in a passage that was cited with approval in HTW Valuers – that while, for the purpose of applying the rule in Potts v Miller, the date of valuation is usually the date of the transaction, it need not always be that date, and it may be appropriate in some cases to select a later date. However, whatever date is selected, it is chosen for the ultimate purpose of assessing what is a sum representing the financial loss "flowing directly from his alteration of position under the inducement of the fraudulent representations of the defendants". The same applies to damages under Trade Practices Act, s 82, for a contravention of s 52 of that Act. 7 The plaintiffs wish to advance a case that they would not have purchased the property at all but for the conduct complained of, and that their damage is to be measured, not at the date of purchase of the property, but at the date of sale, by comparing what they then received on sale of the property, with what they say it would then have been worth had it been unaffected by noise. That is a case which would involve comparing the position which in fact has ensued, with the position which would have pertained had the relevant representations been true. As the passage to which I have referred in Bonett v Barron and Dowling Property Group illustrates, that is not the correct approach to measuring damages in a case such as this. 8 Were I of the view that the contrary were arguable, I would not exclude evidence that might inform the assessment of damages on that basis, but counsel for the plaintiffs has, at least at this stage, been unable to draw to my attention any authority which would assist me to conclude that it was arguable that the assessment of damages under s 82 in the present context should have regard to the value of the property on the assumption that the alleged misrepresentations were true. As presently advised, I am of the view that authority binding on this court compels the conclusion that such an approach to the assessment of damages would be unsustainable, and that evidence which was tendered on the basis that it informed such an approach would be irrelevant. 9 It makes not the slightest difference that it is the plaintiff's case that they would never have purchased the subject property but for the conduct complained of, as distinct from that they would have purchased it only for a reduced price. In many fraud or s 52 cases a purchaser will say that he, she or it would never have purchased had they known the true position. Even so, having purchased, the asset may prove to be worth no less than what they paid for it, in which case they have suffered no loss, despite reliance on misleading and deceptive conduct and despite the fact that they would not have embarked on the purchase but for that conduct. Accordingly, I do not think that any approach other than that authorised by Potts v Miller is warranted, just because the plaintiffs say that they would not have purchased at all. 10 As presently advised, it seems to me that, were the court to accept that the defendants had engaged in misleading and deceptive conduct, the assessment of the plaintiffs' damages would involve comparing the price they actually paid for their properties, with the true value of those properties at the date of the purchase. Particular facts, such as a change in value for extraneous reasons following purchase, might justify selection of a different date. But whatever date were selected, the comparator is the true value of the property, not the value it would have had had the misrepresentations been true. That true value – whether at the date of purchase or later – would be ascertained upon the hypothesis that the misleading conduct had not taken place, and that all relevant facts concerning the property were known. The question would be, what would the willing purchaser have paid for the property in the absence of the misleading conduct on which the plaintiffs say they relied. That would involve an evaluation of the impact, on the price that a purchaser would be prepared to pay, of knowledge that there was a risk or potential for noisy thrill rides to be located in the area north of Coney Island, but it would not involve attributing to such a purchaser knowledge of the actual level of that noise and its impact on residents adjoining the park as has actually transpired in the years after the purchase was completed. It would be wrong to attribute to a purchaser in 2000 or 2001 precise foresight of the actual levels of noise, and their subjective responses to it, several years later. 11 Moreover, to admit the lay noise evidence on the question of damages would run a very great risk of inviting the court to assess damages by comparing the price paid, not with the true position as it ought to have been known at the time of the purchase, but with the position as it has turned out to be some years later. The knowledge of a risk that noisy thrill rides might be located in the relevant area may not have had so great an impact on a potential purchaser as the full knowledge and experience that the plaintiffs now have of the situation as they have been exposed to it. Actuality is something more than apprehension. It would not be right to assess the impact on the price that would have been payable at the time of purchase by reference to what is now known to have happened, as distinct from by reference to knowledge of the potential or risk for noisy thrill rides to be located in the relevant area. 12 For those reasons, at least in the context of the Hesses' case, the lay noise evidence is not relevant and not admissible. That says nothing as to the potential admissibility of lay noise evidence on the question of discretion as to the granting or withholding of injunctive relief in connection with the Crown Lands Act, s 114, claim. It also says nothing as to its potential admissibility on a claim for injunctive or other relief under Trade Practices Act, ss 80 or 87. 13 In the affidavit of Michael Hesse sworn 31 March 2005, I reject paragraphs 20 to 27. At 2.45pm 14 HIS HONOUR: The defendants object to paragraphs 37 to 73 inclusive of the affidavit of Joan Paula Street sworn on 29 March 2005. Those paragraphs contain evidence, which Ms Street wishes to give, that falls into the categories of (1) a description of the quality and level of noise that emanates from the relevant part of the Luna Park site, (2) her personal subjective reaction to that noise, and (3) the actions she has taken in response to the exposure of her property to that noise. The objection is taken on the basis that it is said that such evidence is irrelevant to any fact in issue on Ms Street's cause of action. 15 Ms Street had purchased her property before the relevant development applications and statements of environmental effects were exhibited, and accordingly she does not bring a case of reliance upon any misleading or deceptive conduct said to have been engaged in by the defendants. Her case relies exclusively on Crown Lands Act, s 114, and she claims an injunction to the effect that the defendants be restrained from operating, or permitting the operation of, Luna Park, otherwise than in accordance with the Plan of Management, by locating and operating rides, and in particular "thrill rides", in the relevant area north of Coney Island. 16 The Plan of Management was required to be prepared by (NSW) Luna Park Site Act 1990, s 8. It is that Act that applies the Crown Lands Act to the Luna Park site. Crown Lands Act, s 114, provides that where a plan of management is adopted in respect of a reserve, the Reserve Trust shall carry it out and give effect to it, and no operations may be undertaken on or in relation to the reserve unless they are in accordance with the plan. It will be an issue later in the case, but it is unnecessary to decide at this stage, whether that provision is directed to the Reserve Trust only, or also to other occupiers and users. 17 The Site Act was amended in 2005, by the Luna Park Site Amendment (Noise Control) Act 2005, which introduced s 19A, providing relevantly that no criminal proceedings, no civil proceedings at law or in equity, and no noise abatement action may be taken against any person with respect to the emission of noise from the Luna Park site, and that the emission of noise from the site does not constitute a public or private nuisance – except in respect of noise that exceeds 85 decibels at the closest residential facade. It is not suggested that the exception is applicable in the present case. 18 Ms Street's cause of action is pleaded in paragraphs 2.6-2.19 of the Fourth Amended Statement of Claim. The same cause of action is relied on by most of the other plaintiffs. 19 Nowhere in paragraphs 2.6-2.19 of the Statement of Claim does any reference to noise appear. In a judgment that I delivered on an interlocutory application on 6 April 2006 [[2006] NSWSC 230], I had to consider whether the Crown Lands Act claim was one "with respect to the emission of noise from the Luna Park site", such that it was barred by s 19A. I concluded (at [40]) that the emanation of noise from the thrill rides formed no part of that cause of action, which depended not upon noise but upon contravention of the plan as to the use of the Luna Park site. I added: The plaintiffs' argument, if correct, applies with equal force, whether the rides are noisy or generate no noise at all. 20 That circumstance – that the Plaintiffs' case if correct applies equally to silent rides as to noisy rides – demonstrates the irrelevance of noise to the Crown Lands Act cause of action. 21 In dealing with what was then put forward as an additional proposed claim in negligence for infliction of economic loss, I held (at [44]), as indeed had been conceded on behalf of the plaintiffs, that at least part of the damage the subject of the negligence claim was in respect of the exposure of the plaintiffs' property to noise emanating from the relevant thrill rides at Luna Park, and accordingly that that claim was a claim with respect to the emission of noise from Luna Park, and was barred by s 19A. 22 I see no reason to depart now from what I said in paragraph [40] of that judgment. The Crown Lands Act cause of action, as pleaded, is not a cause of action with respect to the emission of noise. Noise is irrelevant to that cause of action. Had there been another paragraph in the pleading, setting out the grounds upon which it was contended that the discretion to grant an injunction should be exercised in favour of doing so, and that one of those grounds was noise emanating from Luna Park, the cause of action would then have become one with respect to the emission of noise, because the emission of noise would have been a material fact on which the plaintiffs relied for the grant of the relief that they sought. Noise would in those circumstances have been pleaded as a relevant factor, bearing on the exercise of the discretion to grant or withhold relief. It was not so pleaded, and because it was not so pleaded, the cause of action as pleaded was not one with respect to the emission of noise. 23 It seems to me that as soon as the emission of noise from Luna Park is invoked as a reason for exercising the discretion to grant an injunction to restrain a breach of s 114, the proceedings then and thereupon become proceedings with respect to the emission of noise, which would be barred by s 19A. 24 There is another way, also, of looking at the matter. As I have sought to show, it is the Site Act that applies the Crown Lands Act to the Luna Park site, and requires the preparation of a plan of management [see s 8]. That same Act, as amended, provides that emission of noise from the site, except to the extent that it exceeds the 85 decibel threshold, does not constitute a nuisance, and that no criminal, civil or abatement remedy is available in respect of such emissions. 25 In those circumstances, if it were to come to exercising the discretion whether or not to grant an injunction effectively to enforce a plan of management, the emission of noise under 85 decibels could not be a relevant consideration, when there is a plain legislative determination that the emission of noise up to that level was not to be regarded as a nuisance and not to give rise to a remedy. 26 Accordingly, both on the ground that, if noise were invoked as a reason for granting an injunction, the proceedings would thereupon become proceedings with respect to the emission of noise and would be barred by s 19A(1), and also because having regard to the entire legislative context, it is clear that noise ought not be a relevant consideration in respect of granting or withholding an injunction, evidence of noise after the re-opening of the park in 2004 is not relevant to the Crown Lands Act claim. 27 It follows that, subject to any particular parts which the plaintiffs might wish to press on other grounds, I reject paragraphs 37 to 73 inclusive of Ms Street's affidavit ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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