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Sliding Doors; the Impact of Section 5D(3)

On 17 June 2019, the Supreme Court of New South Wales handed down the decision of PPK Willoughby Pty Ltd v Baird [2019] NSWSC 705 about whether evidence should be excluded from the plaintiff’s claim for misleading and deceptive conduct under section 5D (3) of the Civil Liability Act 2002 (NSW) (“the subsection”).

The plaintiff’s claim was for separate causes of action in “negligence” and “misleading and deceptive conduct”.  Previously, the Court had applied the subsection to exclude affidavit evidence of a director of the plaintiff company in relation to the negligence claim (PPK Willoughby Pty Ltd v Baird [2019] NSWSC 704). There was some debate as to whether the affidavit of a director, as a non-party, was captured by the subsection.  Ultimately, the Court decided that the purpose of the affidavit was to advance the plaintiff’s case and that the plaintiff, as a corporate entity, could only give evidence through a natural person. As such, the Court found that if the evidence was relevant to the proceedings then it was captured by the subsection; the relevant evidence was therefore excluded.

In this decision, the Court acknowledged that the claim for misleading and deceptive conduct was a separate cause of action and therefore examined whether the same affidavit should be excluded by the same subsection.

In its finding, the Court referred to a line of authorities that predominantly, but not unanimously, provided that the subsection operated to exclude relevant evidence in cases of negligence only.

The Court noted that an apparent absurdity would exist where evidence was excluded from a negligence action but not from an action for misleading and deceptive conduct. Nevertheless, it pointed to the unambiguous words of the subsection and found that it did not operate to exclude the same evidence in relation to the misleading and deceptive conduct claim.

It is unlikely this will be the last litigation on this issue. In the meantime, defendants should be wary of overreliance on the subsection as it will only operate to exclude evidence in relation to allegations of negligence.

Liability limited by a scheme approved under the Professional Standard Legislation

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