Business Service Brokers Pty Ltd v Optus Mobile Pty Ltd
[2021] VSC 310
•31 May 2021
IN THE SUPREME COURT OF VICTORIA Not Restricted AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S ECI 2017 00289
BUSINESS SERVICE BROKERS PTY LTD (ACN 069 049 994) Plaintiff v OPTUS MOBILE PTY LTD (ACN 054 365 696) (and others according to the Schedule) Defendants ---
JUDGE:
Connock J
WHERE HELD:
Melbourne
DATE OF HEARING:
27 and 28 April 2021 (Further material received 7 May 2021)
DATE OF JUDGMENT:
31 May 2021
CASE MAY BE CITED AS:
Business Service Brokers Pty Ltd v Optus Mobile Pty Ltd & Ors
MEDIUM NEUTRAL CITATION:
[2021] VSC 310
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PRACTICE AND PROCEDURE — Supreme Court (General Civil Procedure) Rules 2015 rr 23.01, 23.02 — Civil Procedure Act 2010 (Vic) ss 62, 63, 64, 65 — Pleadings — Strike out application — Stay application — Abuse of process — Summary judgment application by defendants — Summary judgment — General principles — Embarrassing allegations — Pleadings as procedural tools — Alleged fishing for cause of action — Insufficient notice of case required to be met.
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APPEARANCES:
Counsel Solicitors For the Plaintiff Ms G Schoff QC
with Mr M TehanDanaher Moulton For the Defendants Mr D Collins QC Clayton Utz TABLE OF CONTENTS:
Introduction and Summary............................................................................................................. 1
Affidavits and Submissions............................................................................................................ 6
Principles and Observations – Strike out, stay, and summary judgment applications...... 6
..... Pleadings and r 23.02 strike out applications – principles and observations...................... 6
..... Stay of proceedings under r 23.01 – principles and observations....................................... 12
..... Summary judgment – principles and observations............................................................... 15
Defendants’ Applications.............................................................................................................. 19
Part A: Paragraphs 12, 16, 19, 29, 30, 31, 32, 33, 34 and 36 of the Third FASOC – Stay/dismissal application under r 23.01, alternatively, summary judgment application under r 22.16 and ss 62 and 63 of the CPA......................................................................................................... 20
Part A.1 – The paragraphs the subject of the challenge............................................... 20
Part A.2 – Defendants’ submissions............................................................................... 22
Part A.3 – Plaintiff’s submissions.................................................................................... 23
Part A.4 – Consideration................................................................................................... 25
A.4.1 Introduction................................................................................................ 25
A.4.2 Further observations regarding the pleading of the Telstra Revenue Claims................................................................................................................ 26
A.4.3 Disposition of the r 23.01 and summary judgment applications........ 32
Part B: Paragraphs 12, 16, 19, 29, 30, 31, 32, 33, 34 and 36 of the Third FASOC – Strike out application under r 23.02 of the Rules............................................................................ 36
Part B.1 – The paragraphs the subject of the challenge................................................ 36
Part B.2 – Defendants’ submissions................................................................................ 36
Part B.3 – Plaintiff’s submissions..................................................................................... 38
Part B.4 – Consideration................................................................................................... 38
Part C: Paragraph 46 – Request for further particulars of each reference to ‘dealer’ in the 2008 Master Agreement and 2008 Master Dealer Agreement relied upon by the plaintiff 44
Part D: Paragraph 49 – Stay application under r 23.01, alternatively, summary judgment application under r 22.16 of the Rules and ss 62 and 63 of the CPA.......................... 45
Part E: Paragraph 49 – Strike out application under r 23.02 of the Rules.......................... 46
Part E.1 – Remaining paragraph 49 controversy.......................................................... 46
Part E.2 – Defendants’ submissions................................................................................ 47
Part E.3 – Plaintiff’s submissions..................................................................................... 49
Part E.4 – Consideration................................................................................................... 51
Part F: Paragraphs 53A(b) and (c) of the Third FASOC – Strike out application under r 23.02 of the Rules.............................................................................................................................. 58
Part F.1 – Paragraphs 53A(b) and (c).............................................................................. 58
Part F.2 – Defendants’ submissions................................................................................ 58
Part F.3 – Plaintiff’s submissions..................................................................................... 59
Part F.4 – Consideration................................................................................................... 60
Part G: Paragraphs 58, 59, 60, 61, 65 and 66 of the Third FASOC – Strike out application under r 23.02 of the Rules............................................................................................................... 62
Part G.1 – Paragraphs 58, 59, 60, 61, 65 and 66.............................................................. 62
Part G.2 – Consideration – not necessary to determine............................................... 66
Part H: Paragraphs 120–124 of the Third FASOC – Strike out application under r 23.02 of the Rules.............................................................................................................................................. 68
Part H.1 – Paragraphs 120–124........................................................................................ 68
Part H.2 – Defendants’ submissions............................................................................... 69
Part H.3 – Plaintiff’s submissions.................................................................................... 70
Part H.4 – Consideration.................................................................................................. 71
Part I:Alleged delay by the defendants in bringing the application................................. 77
Part I.1 – Plaintiff’s submissions...................................................................................... 77
Part I.2 – Defendants’ submissions................................................................................. 78
Part I.3 – Consideration.................................................................................................... 79
Conclusion, Summary, and Proposed Orders............................................................................ 83
ATTACHMENT 1............................................................................................................................ 86
Procedural Chronology............................................................................................................. 86
ATTACHMENT 2............................................................................................................................ 95
Extracts from Third FASOC...................................................................................................... 95
ATTACHMENT 3.......................................................................................................................... 124
Sheet ‘B’...................................................................................................................................... 124
Schedule.......................................................................................................................................... 125
HIS HONOUR:
Introduction and Summary
1 These reasons address an application by the defendants (defendants or Optus Entities) for orders staying or dismissing, alternatively giving summary judgment in respect of, or alternatively striking out, various claims made by the plaintiff (TeleChoice or plaintiff) against the defendants in this proceeding.
2 TeleChoice operated a national business providing mobile and internet services to individuals and businesses from retail outlets exclusively for products and services offered by the defendants under the business name ‘TeleChoice’. The majority of TeleChoice outlets were operated by TeleChoice franchisees.
3 Optus first appointed TeleChoice as an ‘Optus Premium Dealer’ in 2001 and the appointment was renewed from 1 April 2005 for a period of three years. It was further renewed from 1 April 2008 for a period of five years pursuant to what has been alleged by the plaintiff in its third further amended statement of claim (Third FASOC) to be the 2008 Master Agreement, the 2008 Master Dealer Agreement, the First Side Letter, and the Second Side Letter[1] (Final Dealer Appointment).
[1]It is also alleged to have been partly oral. Third FASOC [19A].
4 In the lead up to the Final Dealer Appointment TeleChoice had been communicating with Telstra about the possibility of switching from Optus to become a Telstra dealer for Telstra’s mobile and internet services from April 2008. This became known to the Optus Entities and discussions and other negotiations occurred between representatives of TeleChoice and the Optus Entities, ultimately resulting in TeleChoice remaining an Optus dealer for a further five years which TeleChoice says was pursuant to the alleged Final Dealer Appointment. What is alleged in the Third FASOC to be the ‘Intended Telstra Appointment’ was not further pursued by TeleChoice.
5 On 28 September 2012 the Optus Entities gave notice to TeleChoice terminating the 2008 Master Agreement and the 2008 Master Dealer Agreement with effect from March 2013 and the business relationship between them ceased from that time.
6 In this proceeding the plaintiff seeks to pursue substantial damages claims against the Optus Entities relating to the Final Dealer Appointment and alleged events leading up to it, including alleged communications between TeleChoice and the Optus Entities regarding the Intended Telstra Appointment, and Optus matching the amounts and benefits that TeleChoice alleges it would have received if it had pursued the Intended Telstra Appointment rather than the Final Dealer Appointment. The damages currently claimed by the plaintiff in the Third FASOC are alleged to exceed $100 million. The Optus Entities deny that they are liable to the plaintiff, as alleged or at all.
7 To date the proceeding has had a lengthy and somewhat complex procedural history, as is in part apparent from the chronology compiled by the parties, reproduced as Attachment 1 to these reasons (Procedural Chronology). The latest chapter in this procedural history is the application the subject of these reasons
8 By their summons filed on 1 March 2021 the defendants challenge various aspects of the plaintiff’s claim, with the orders sought including stay orders, summary judgment on some claims, and orders striking out various parts of the Third FASOC. The relief sought was set out in a table in the defendants’ written submissions as follows.
Paragraph of TFASOC
Relief sought
12, 16, 19, 29, 30, 31, 32, 33, 34 and 36
• An order pursuant to r 23.01, alternatively r 22.16 and s 62 of the Civil Procedure Act 2010 (Vic) that the claims made in these paragraphs be stayed on the basis that they are frivolous and an abuse of process or, alternatively, judgment be entered for the defendants dismissing the claims comprised in those paragraphs.
• Further and alternatively, an order pursuant to r 23.02 that these paragraphs and their particulars be struck out on the basis that they may prejudice, embarrass or delay the fair trial of the proceeding.
46
An order that the plaintiff provide further and better particulars of the references in the 2008 Master Agreement and the 2008 Master Dealer Agreement referred to in this paragraph.
49
• An order pursuant to r 23.01, alternatively r 22.16 and s 62 of the Civil Procedure Act 2010 (Vic) that, to the extent that paragraph 49 makes claims referable to dealer codes 00017, 00067, 00087, 14121, 39425, TM300, TM360 and 40434, those claims be stayed on the basis that they are frivolous and an abuse of process or, alternatively, judgment be entered for the defendants dismissing the claims comprised in that paragraph
• Further and alternatively, an order pursuant to r 23.02 that the particulars to paragraph 49 (other than the particulars at subparagraphs (b), (c) and (e), but including the words “Examples of Dealer Code Policy Breach Conduct include”) be struck out on the basis that they may prejudice, embarrass or delay the fair trial of the proceeding.
53A(b) & (c)
58 & 59
60 & 61
65 & 66
120–124
An order pursuant to r 23.02 that these paragraphs and their particulars be struck out on the basis that they may prejudice, embarrass or delay the fair trial of the proceeding.
9 Each part of the application in the above table is addressed below in Parts A to I of the section of these reasons headed ‘Defendants’ Applications’.
10 There was also an opposed application before the court by the plaintiff for leave to amend the Third FASOC so as to include a further substantial damages claim for what in substance was described as an additional alleged underpayment of commissions claim in respect of commissions and other amounts said to have been not paid by the defendants during the term of the Final Dealer Appointment. Ultimately that leave application was not pursued at the hearing. This occurred because on the second day of the hearing the plaintiff informed the court that it proposes to pursue a broader application for leave to amend which has not yet been finalised, filed or served.[2] The court was informed that this broader application will now include but not be limited to the additional underpayment claim.
[2]Which is not to ignore the draft summons that was provided to the court and the defendants shortly before court commenced on the second day of the hearing on 28 April 2021.
11 The defendants’ application has succeeded in large part. For the reasons that follow:
(a) The defendants’ application for orders staying, dismissing, or giving summary judgment in respect of, the claims the subject of paragraphs 12, 16, 19, 29, 30, 31, 32, 33, 34 and 36 of the Third FASOC should be refused.
(b) The defendants’ alternative application to strike out the claims the subject of paragraphs 12, 16, 19, 29, 30, 31, 32, 33, 34 and 36 should largely succeed. At this point the particulars to paragraph 16, including ‘Annexure A’ and ‘Sheet B’ (referred to below), and to paragraphs 19, 30, 31, 33, 34 and 36, should be struck out. TeleChoice should have the opportunity to seek to reformulate its allegations regarding the alleged Telstra revenue and loss.
(c) It is not necessary to require that further particulars of paragraph 46 be provided and no order to that effect will be made.
(d) Given the concessions properly made by TeleChoice:
(i) Paragraph (d) of the particulars to paragraph 49 should be struck out.
(ii) The claims relating to dealer codes 00037, 00057, 00077, 00097, 39425, 00017, 00067, 00087, and 14121 in the particulars to paragraph 49 should be struck out.
(iii) No order is now sought, or should be made in any event, staying, dismissing, or giving judgment in respect of the remaining claims in the particulars to paragraph 49 regarding dealer codes TM300, TM350, TM360, TM900, 40434 and 40831 (Remaining Changed Codes).[3]
[3]Subject to confirming that these codes have been correctly transcribed.
(iv) The claims in the particulars to paragraph 49 relating to the Remaining Changed Codes should not be struck out at this point.
(v) TeleChoice should be directed to provide a schedule of proper particulars of the customers the subject of the Remaining Changed Codes that a claim is being made in respect of and that it is currently able to identify, including such of the 203 additional customers (referred to later in these reasons) in respect of whom a claim is sought to be made.
(vi) Following the completion of such discovery or related processes as are agreed or directed, TeleChoice should be directed to provide an updated schedule of further particulars to paragraph 49 giving proper particulars of any additional customers in respect of whom a claim is made regarding the Remaining Changed Codes.
(vii) The reference to expert reports in the particulars to paragraph 49 should be struck out.
(e) Paragraphs 53A(b) and (c) should not be struck out. TeleChoice should be directed to provide further and better particulars of paragraph 53A(b) in the manner referred to in these reasons.
(f) Given the concessions properly made by TeleChoice, paragraphs 56, 57, 58, 59, 60, 61, 65 (in part), 66 and 67 should be struck out. This is without prejudice to TeleChoice’s right to seek leave to further amend the Third FASOC so as to include properly pleaded claims of the character referred to in these paragraphs.
(g) Paragraphs 117 to 124 should be struck out. This is without prejudice to TeleChoice’s right to seek leave to further amend the Third FASOC so as to include properly pleaded claims of the character referred to in these paragraphs.
(h) Any consequential amendments to the Third FASOC (including the prayer for relief) should be made to take into account the issues addressed and conclusions reached in these reasons.
Affidavits and Submissions
12 The material relied upon by the parties was extensive, including many affidavits, nearly 2,000 pages of documents, plus voluminous lengthy sets of Excel spreadsheets said to relate to a range of different matters. The defendants relied on affidavits of their solicitors Mr James,[4] Mr McRostie,[5] Mr Mathie[6] and affidavits of the defendants’ commission analyst, Mr Wong.[7] The plaintiff relied on several affidavits of its Chief Operating Officer, Ms Seifen.[8] Neither party sought to cross-examine any of the deponents.
[4]Sworn 28 February 2019.
[5]Sworn 31 July 2020 and 19 March 2021.
[6]Affirmed 5 March 2021.
[7]Sworn 31 July, 4 September and 6 November 2020, and 3 March 2021.
[8]Sworn 11 August, 18 September, and 13 November 2020, and 9, 19 and 26 March 2021.
13 Each of the parties filed written submissions, which were supplemented orally over a two-day hearing.
Principles and Observations – Strike out, stay, and summary judgment applications
14 There was no dispute between the parties regarding well-known principles and observations addressed in earlier cases regarding the function of pleadings, and stay, summary judgment, and strike out applications under rr 21.03, 22.16[9] and 23.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Rules). It is convenient to collect together and address relevant principles and observations regarding these matters before turning to each aspect of the defendants’ application.
[9]And ss 62 and 63 of the CPA.
15 Given the varying applications it was and remained necessary to recognise that affidavit material is admissible in connection with the applications under s 62 of the Civil Procedure Act 2010 (Vic) (CPA) and rr 22.16 and 23.01 of the Rules, but is not admissible in relation to the strike out applications under r 23.02 of the Rules.[10]
[10]It was common ground that regard could be had to documents referred to in the pleading when considering an application under r 23.02 of the Rules.
Pleadings and r 23.02 strike out applications – principles and observations
16 Rule 23.02 of the Rules provides:
Where an indorsement of claim on a writ or originating motion or a pleading or any part of an indorsement of claim or pleading—
(a)does not disclose a cause of action or defence;
(b)is scandalous, frivolous or vexatious;
(c)may prejudice, embarrass or delay the fair trial of the proceeding; or
(d)is otherwise an abuse of the process of the Court—
the Court may order that the whole or part of the indorsement or pleading be struck out or amended.
17 Relevantly, paragraph (c) confers upon the Court a power to order that the whole or part of a pleading be struck out (or amended) if it may prejudice, embarrass or delay the fair trial of the proceeding. The Full Court in Meckiff v Simpson said of a predecessor to r 23.02(c):[11]
As is shown by numerous authorities on this Rule, which takes its place in an order dealing with pleadings generally, matter in a pleading will be struck out under this Rule only where there is some defect in the pleading attacked, eg where the pleading is unintelligible, ambiguous, vague or too general, so as to embarrass the opposite party who does not know what is alleged against him. The Rule is one to ensure compliance with the rules of pleading and nothing else.
[11][1968] VR 62, 70 (Winneke CJ, Adams and Gowans JJ).
18 In Wheelahan v City of Casey (No 12) (‘Wheelahan’), John Dixon J referred to the principles to be applied as follows:[12]
[12][2013] VSC 316, [25] (footnotes included).
(a)Order 13 of the Rules set out the relevant requirements of a sufficient pleading while r 23.02 provides the grounds on which the sufficiency of a pleading may be impugned;
(b)the function of a pleading in civil proceedings is to alert the other party to the case they need to meet (and hence satisfy basic requirements of procedural fairness) and further, to define the precise issues for determination so that the court may conduct a fair trial;[13]
[13]The function of defining issues for trial is required from an early stage. Otherwise, discovery and other interlocutory process are likely to be misdirected: Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd & Ors (1996) ATPR 41-522 per Burchett J at 42,679.
(c)the cardinal rule is that a pleading must state all the material facts to establish a reasonable cause of action (or defence).[14] The expression ‘material facts’ is not synonymous with providing all the circumstances. Material facts are only those relied on to establish the essential elements of the cause of action;[15]
[14]A reasonable cause of action or defence is one with a real chance of success, assuming the correctness of the allegations of fact in the challenged pleading.
[15]Australian Automotive Repairers’ Association (Political Action Committee) Inc v NRMA Insurance Ltd [2002] FCA 1568, [13], citing Bruce v Oldhams Press Ltd [1936] 1 KB 697, 712–713.
(d)as a corollary, the pleading must be presented in an intelligible form — it must not be vague or ambiguous or inconsistent.[16] Thus a pleading is ‘embarrassing’ within the meaning of r 23.02 when it places the opposite party in the position of not knowing what is alleged;
[16]In Environinvest Ltd v Pescott [2011] VSC 325 (‘Environinvest’), the pleading was struck out because it was confusing, often circular, sometimes inconsistent and contained no coherent narrative.
(e)the fact that a proceeding arises from a complex factual matrix does not detract from the pleading requirements. To the contrary, the requirements become more poignant;[17]
[17]SMEC Australia Pty Ltd v McConnell Dowell Constructors (Aust) Pty Ltd (No 2) [2011] VSC 492, [8] (‘SMEC’).
(f)pleadings, when well-drawn, serve the overarching purpose of the Civil Procedure Act 2010 (Vic);[18]
[18]Ibid [9].
(g)a pleading which contains unnecessary or irrelevant allegations may be embarrassing — for example, if it contains a body of material by way of background factual matrix which does not lead to the making out of any defined cause of action (or defence), particularly if the offending paragraphs tend to obfuscate the issues to be determined;[19]
(h)it is not sufficient to simply plead a conclusion from unstated facts.[20] In this instance, the pleading is embarrassing;
(i)every pleading must contain in a summary form a statement of all material facts upon which the party relies, but not the evidence by which the facts are to be proved (r 13.02(1)(a));
(j)the effect of any document or purport of any conversation, if material, must be pleaded as briefly as possible, and the precise words of the document or the conversation must not be pleaded unless the words are themselves material (r 13.03);[21]
(k)particulars are not intended to fill gaps in a deficient pleading. Rather, they are intended to meet a separate requirement — namely, to fill in the picture of the plaintiff’s cause of action (or defendant’s defence) with information sufficiently detailed to put the other party on guard as to the case that must be met.[22] An object and function of particulars is to limit the generality of a pleading and thereby limit and define the issues to be tried;[23]
(l)a pleading should not be so prolix that the opposite party is unable to ascertain with precision the cause of action and the material facts that are alleged against it;[24]
(m)extensive cross-referencing of facts in a pleading may render parts of the pleading unintelligible;[25]
(n)in an application under r 23.02, the court will only look at the pleading itself and the documents referred to in the pleading;[26]
(o)the power to strike out a pleading is discretionary. As a rule, the power will be exercised only when there is some substantial objection to the pleading complained of or some real embarrassment is shown;[27] and
(p)if the objectionable part of the pleading is so intertwined with the rest of the pleading so as to make separation difficult, the appropriate course is to strike out the whole of the pleading.[28]
[19]Ibid [28]–[31]. In SMEC, Vickery J remarked (at [5]) that good pleading calls for ‘judgment and courage to shed what is unnecessary’.
[20]Trade Practices Commission v David Jones (Australia) Pty Ltd (1985) 7 FCR 109, 114.
[21]In Gunns Ltd v Marr [2005] VSC 251 (‘Gunns’), Bongiorno J remarked (at [52]) that the paragraphs in the pleading ‘contain quotations from newspapers, websites and correspondence which are inappropriate in form’.
[22]Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279, 286 (Mason CJ and Gaudron J).
[23]Clarke v Great Southern Finance Pty Ltd [2010] VSC 473, [9] (‘Clarke’).
[24]Knorr v CSIRO (No 2) [2012] VSC 268.
[25]In Gunns, Bongiorno J noted (at [20]) that the particulars to the amended statement of claim under attack incorporated allegations of approximately 40 other paragraphs, requiring the defendants to navigate through a labyrinth of allegations. His Honour refused leave to file the amended statement of claim in the proposed form.
[26]Rule 23.04 and Day v William Hill (Park Lane) Ltd [1949] 1 KB 632.
[27]Clarke [2010] VSC 473, [11].
[28]Davy v Garrett (1878) 7 Ch D 473.
19 In Babcock & Brown DIF III Global Co-Investment Fund, LP v Babcock & Brown International Pty Ltd (No 2) (‘Babcock & Brown (No 2)’),[29] Hargrave J referred to aspects of the principles set out in Wheelahan and added the following observation:
To this summary, I would add that the Court should consider the pleading under a challenge as a whole and adopt a partial case management approach to pleading objections, rather than accepting technical objections when the true nature of the case to be met is clear from reading the pleading as a whole and there is no embarrassment to filing a responsive pleading. Such an approach accords with the discretionary nature of the power to strike out and with the overarching purpose under the Civil Procedure Act. However, in cases alleging dishonesty or fraud, precise pleadings with full particulars are required.
[29][2017] VSC 556, [15].
20 The principles set out in Wheelahan and Babcock & Brown (No 2) were recently endorsed by the Court of Appeal in Uber Australia Pty Ltd v Andrianakis,[30] and Hargrave J’s approach in Babcock & Brown (No 2) was also reinforced:[31]
[H]is Honour noted that, in considering pleading objections on the ground that the pleading is embarrassing, the Court should stand back and consider the pleading as a whole and in that light ask: does the case alleged give clear notice of the case to be met at trial?[32]
This modern approach to applications to strike out pleadings on the ground that they are embarrassing is reflected in this Court’s decision in CA Ballan,[33] where the Court stated that, while important, pleadings are primarily used ‘to help the parties define the real issues in dispute’, while bearing in mind that pleadings are ‘procedural tools only’.[34]
[30][2020] VSCA 186, [35]–[37], [50]–[52] (Niall, Hargrave and Emerton JJA).
[31]Ibid [53]–[54].
[32]Babcock & Brown (No 2) [2017] VSC 556, [17].
[33](2017) 55 VR 62.
[34]Ibid 71 [21].
21 In CA & CA Ballan,[35] the Court of Appeal said as follows regarding strike out applications in the post-CPA era:
[35]At CA & CA Ballan Pty Ltd v Oliver Hume (Australia) Pty Ltd [2017] VSCA 11, [21]–[28] (Redlich, Tate and Ferguson JJA).
When will a pleading be struck out?
21Pleadings are important. Primarily, they are used to help the parties define the real issues in dispute. But it is prudent to bear in mind that they are procedural tools only.
22On a strike out application, it is usually assumed that the matters pleaded can be established.
23The Agents relied upon cases such as General Steel Industries Inc v Commissioner for Railways (NSW) (‘General Steel’) as authority for the proposition that there is a high threshold to be overcome if a pleading is to be struck out. In that case, Barwick CJ observed that a plaintiff should not be denied the right to prosecute a claim unless it was clearly demonstrated that there was no cause of action. The Chief Justice referred to various expressions that had been used to describe the test for disposing of a proceeding summarily — phrases such as: ‘so obviously untenable that it cannot possibly succeed’; ‘manifestly groundless’; ‘so manifestly faulty that it does not admit of argument’; ’discloses a case which the Court is satisfied cannot succeed’; ‘under no possibility can there be a good cause of action’; ‘be manifest that to allow them (the pleadings) to stand would involve useless expense.’
24Care should be exercised in applying such terms now. The case of General Steel and like authorities pre-date the Civil Procedure Act. That legislation introduced a test of ‘no real prospect of success’ for when summary judgment may be given. A pleading that would not survive a summary judgment application will be struck out, for to allow it to go forward would be futile. According to Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd: a prospect which is not ‘real’ is ‘fanciful’; although the ‘no real prospect of success’ test in s 63(1) of the Civil Procedure Act is more liberal than the common law test of ‘hopeless’ or ‘bound to fail’, there may not be much difference between them in practice; and, properly understood, a real question to be tried is one which realistically might result in the Agents to an application for summary judgment succeeding in the proceeding. The correct test to apply in the present case is whether the amendments raise a claim that has no real prospect of success, in the sense of being fanciful.
25It is still the case, however, that the effect of striking out a statement of claim if no right to re-plead is granted brings the proceeding to a peremptory end. In this regard, the older authorities provide some salutary warnings. As Dixon J said in Dey v Victorian Railways Commissioners:
A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.
26In the same case, Latham CJ took what might be viewed as a slightly more robust approach. His Honour said:
If, as a result of argument, the court reaches a clear decision which could not be altered by any evidence which could be adduced at the trial, then it is proper in the interests of both parties to dismiss the action instead of allowing the parties to incur completely useless expense.
27Picking up on his Honour’s reference to evidence, the effect that it may have at trial cannot be underestimated. Experience tells that evidence at trial can shape the case in ways that have not been anticipated despite the best efforts of litigants and their legal advisers. As Whelan JA observed in Mutton v Baker:
Even if it is said that an issue is purely a question of law, the court should not strike out a claim on this basis if it is conceivable that some factual matter could emerge at trial which might alter the analysis.
28In General Steel Barwick CJ referred to the passage from Dixon J’s judgment in Dey that we have set out above. The Chief Justice then stated:
Although I can agree with Latham CJ in the same case when he said that the defendant should be saved from the vexation of the continuance of useless and futile proceedings, in my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff’s claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed.[36]
[36]Footnotes omitted.
22 As is apparent from the observations of Dixon J in Rowe v Ausnet Electricity Services (No 5),[37] the following observation of Gleeson CJ in Goldsmith v Sandilands[38] regarding one of the duties of the court in this context warrants extraction:[39]
1. It sometimes happens, in the course of litigation, that counsel will start a hare. The response of the opposing counsel may be to pursue it. One of the duties of a trial judge is to control the proceedings, to exclude irrelevancy, and to maintain proper limits upon the extent to which the parties and their lawyers will be permitted to raise and investigate matters that are of only marginal significance.
2. The facts in issue in a civil action case emerge from the pleadings, which, in turn, are framed in the light of the legal principles governing the case. Facts relevant to facts in issue emerge from the particulars and the evidence. The function of particulars is not to expand the issues defined by the pleadings, but "to fill in the picture of the plaintiff's cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial"[1]. The function of evidence is to advance, or cut down, the case of a party in accordance with the rules of statute or common law that determine the nature of the information a court will receive. The primary rule of evidence is that a court will receive, and will only receive, evidence that is relevant to the issues as defined by the pleadings. Evidence is relevant if it could rationally affect, directly or indirectly, the assessment of the probability of the existence of a fact in issue in the proceeding[2]. The general rule that relevant evidence will be received is qualified by other rules based upon considerations of justice, or practicality. One such qualification limits investigation of collateral matters.
[37][2015] VSC 8, [11].
[38][2002] HCA 31, [1]–[2].
[39]And is statutorily reinforced by the court’s obligations under the CPA.
Stay of proceedings under r 23.01 – principles and observations
23 Rule 23.01(1) of the Rules provides:
Where a proceeding generally or any claim in a proceeding—
(a)is scandalous, frivolous or vexatious; or
(b)is an abuse of process of the Court—
the Court may stay the proceeding generally or in relation to any claim or give judgment in the proceeding generally or in relation to any claim.
Pursuant to r 23.04(1), evidence on an application under r 23.01 shall be admissible for any party by affidavit or, if the Court thinks fit, orally.
24 It has been said, in relation to a predecessor of r 23.01(1), that any distinction between whether a proceeding or claim is ‘scandalous, frivolous or vexatious’ or ‘an abuse of process of the Court’ is now ‘largely irrelevant’.[40] In Karlsson v Griffith University, Wright J explained the overlapping nature of these concepts, in relation to r 13.4 of the Uniform Civil Procedure Rules 2005 (NSW), as follows:[41]
[40]Knight v Bell [2000] VSCA 48, [12] (Ormiston JA).
[41][2020] NSWSC 365, [87]–[90].
“Frivolous” in this context includes proceedings that a plaintiff has no reasonable prospects of successfully prosecuting or that are untenable, groundless or faulty: Spencer [(2010) 241 CLR 118] at [59]. Proceedings which are foredoomed to fail, and “frivolous” in that sense, include proceedings where no reasonable cause of action is disclosed.
“Vexatious”, in this and similar contexts, refers to proceedings that are productive of serious and unjustified trouble or harassment: Regie Nationale des Usines Renault SA v Zhang (2002) 210 CLR 491; [2002] HCA 10 at [25] (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ).
Further, frivolous or vexatious proceedings can also be instances of proceedings that are an abuse of process: Walton v Gardiner (1993) 177 CLR 378 at 393 (Mason CJ, Deane and Dawson JJ); [1993] HCA 77 .
In Ridgeway v the R (1995) 184 CLR 19; [1995] HCA 66 at [32], Gaudron J explained at 74–5:
The powers to prevent an abuse of process have traditionally been seen as including a power to stay proceedings instituted for an improper purpose, as well as proceedings that are ‘frivolous, vexatious or oppressive’. This notwithstanding, there is no very precise notion of what is vexatious or oppressive or what otherwise constitutes an abuse of process. Indeed, the courts have resisted, and even warned against, laying down hard and fast definitions in that regard. That is necessarily so. Abuse of process cannot be restricted to ‘defined and closed categories’ because notions of justice and injustice, as well as other considerations that bear on public confidence in the administration of justice, must reflect contemporary values and, as well, take account of the circumstances of the case. That is not to say that the concept of ‘abuse of process’ is at large or, indeed, without meaning. As already indicated, it extends to proceedings that are instituted for an improper purpose and it is clear that it extends to proceedings that are ‘seriously and unfairly burdensome, prejudicial or damaging’ or ‘productive of serious and unjustified trouble and harassment’. (footnotes omitted)
25 This Court also has an inherent power to stay a proceeding, or any part of a proceeding, that is an abuse of process. The onus of satisfying the court that there is an abuse of process is a heavy one and rests on the party alleging it.[42]
[42]Ascot Vale Self Storage Pty Ltd (in liq) v Nom de Plume Pty Ltd [2019] VSC 794, [97]; Treasury Wines Estates Ltd v Melbourne City Investments Pty Ltd (2014) 45 VR 585, 599 [62] (Kyrou JA).
26 In Michael Wilson & Partners Ltd v Nicholls, Gummow ACJ, Hayne, Crennan and Bell JJ stated:[43]
As the majority pointed out in Batistatos v Roads and Traffıc Authority (NSW),[44] “[w]hat amounts to abuse of court process is insusceptible of a formulation comprising closed categories”. In Ridgeway v The Queen, Gaudron J noted[45] that the concept extended to proceedings “instituted for an improper purpose”, and to proceedings that are “seriously and unfairly burdensome, prejudicial or damaging”[46] or “productive of serious and unjustified trouble and harassment” (74). In Rogers v The Queen, McHugh J concluded[47] that, although the categories of abuse of process are not closed, many cases of abuse can be identified as falling into one of three categories: “(1) the court’s procedures are invoked for an illegitimate purpose; (2) the use of the court’s procedures is unjustifiably oppressive to one of the parties; or (3) the use of the court’s procedures would bring the administration of justice into disrepute.
[43](2011) 244 CLR 427, 452 [89]. Abuse of process in a different context was also recently addressed by Nettle J in Re Golding [2020] HCA 38, [11].
[44](2006) 226 CLR 256, 265 [9] (Gleeson CJ, Gummow, Hayne and Crennan JJ).
[45](1995) 184 CLR 19, 74–5.
[46]Hamilton v Oades (1989) 166 CLR 486, 502.
[47](1994) 181 CLR 251, 286.
27 In Kermani v Westpac Banking Corporation, Robson AJA (Neave and Harper JJA agreeing) outlined the principles relating to stay applications on the grounds of abuse of process.[48] Those principles relevantly included the following:[49]
[48](2012) 36 VR 130, 153–155 [97].
[49]Ibid.
(1)The court possesses an inherent jurisdiction to stay its proceedings as an abuse of process if the proceedings are unjustifiably oppressive and vexatious or manifestly unfair or otherwise bring the administration of justice into disrepute among right-thinking people: Walton v Gardiner;[50] Rogers v R[51] and PNJ v R;[52] Jeffrey & Katauskas Pty Ltd v SST Consulting Pty Ltd.[53]
(2)The jurisdiction should only be exercised in exceptional cases or sparingly with the utmost caution: Jago v District Court (NSW).[54]
(3)The jurisdiction to stay for abuse of process is not limited to cases where the proceedings have been brought for an improper purpose or where there is no possibility of the court affording the affected party a fair hearing: Walton v Gardiner;[55] Rogers v R.[56]
(4)The circumstances in which abuse of process may arise are extremely varied and the courts have refrained from limiting the circumstances to fixed categories: Hunter v Chief Constable of the West Midlands Police;[57] Rogers v R;[58] Batistatos v Roads and Traffic Authority (NSW).[59]
(5)In considering whether to grant a stay as an abuse of process, the court should undertake a weighing process involving a subjective balancing of a variety factors and considerations: Walton v Gardiner.[60]
…
[50](1993) 177 CLR 378.
[51](1994) 181 CLR 251.
[52](2009) 252 ALR 612; 83 ALJR 384.
[53](2009) 239 CLR 75.
[54](1989) 168 CLR 23, 76 (Gaudron J).
[55](1993) 177 CLR 378.
[56](1994) 181 CLR 251.
[57][1982] AC 529.
[58](1994) 181 CLR 251.
[59](2006) 226 CLR 256.
[60](1993) 177 CLR 378, 398 (Mason CJ and Deane and Dawson JJ).
28 The factors and considerations to be weighed and balanced include the requirements of fairness to the parties, the public interest and the need to maintain public confidence in the administration of justice.[61]
[61]Project 28 Pty Ltd (Formerly Narui Gold Coast Pty Ltd) v Barr; Project 28 Pty Ltd (Formerly Narui Gold Coast Pty Ltd) v Tim Barr Pty Ltd & Ors [2005] NSWCA 240, [62] (Ipp JA, Hodgson JA and Campbell AJA agreeing); Ascot Vale Self Storage Pty Ltd (in Liq) v Nom de Plume Pty Ltd [2019] VSC 794, [95] (Riordan J).
Summary judgment – principles and observations
29 Sections 61 and 62 of the CPA permit a plaintiff or defendant in a civil proceeding to apply for summary judgment on the ground that a claim or defence, or part of a claim or defence, has no real prospect of success. Section 63 of the CPA provides that, subject to s 64 of the CPA, a court may give summary judgment in a civil proceeding if it is satisfied that a claim, defence or counterclaim, or part of a claim, defence or counterclaim, has no real prospect of success.
30 Section 64 of the CPA provides that:
Despite anything to the contrary in this Part or any rules of court, a court may order that a civil proceeding proceed to trial if the court is satisfied that, despite there being no real prospect of success the civil proceeding should not be disposed of summarily because–
(a)it is not in the interests of justice to do so; or
(b)the dispute is of such a nature that only a full hearing on the merits is appropriate.
31 Section 65 of the CPA provides that the summary judgment provisions of the CPA are in addition to and do not derogate from any powers a court has under rules of court in relation to the summary disposal of any civil proceeding. The ability to stay or dismiss a proceeding is also a feature of the court’s inherent jurisdiction to prevent the abuse of its processes.[62]
[62]Burton v Shire of Bairnsdale (1908) 7 CLR 76, 92 (Isaacs J). See also the discussion of r 23.01 of the Rules above.
32 Part 2 of ord 22 (rr 22.03–22.15) sets out the procedure for applications by a plaintiff and pt 3 of ord 22 (rr 22.16–22.23) sets out the procedure for applications by a defendant.
33 As observed in Silver Chef Rentals Pty Ltd v Makong Australia Pty Ltd,[63] the principles applicable to the grant of summary judgment are well established. It is convenient to draw upon the following helpful summary of Sloss J in that case:[64]
[63][2019] VSC 703, [49]–[60].
[64]Which was drawn in part from a summary in Padella Pty Ltd v Elliott [2018] VSC 301, [19]–[28] (Matthews JR).
53In Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd,[65] the Court of Appeal stated the relevant test to be applied in determining an application for summary judgment made under ss 61 and 63, as follows:[66]
[65](2013) 42 VR 27; (2013) VSCA 158.
[66]Ibid, at 40 [35] (per Warren CJ and Nettle JA, Neave JA agreeing in part (at 42 [40]–[42])).
(a)the test for summary judgment under s 63 of the [CPA] is whether the respondent to the application for summary judgment has a “real” as opposed to a “fanciful” chance of success;
(b)the test is to be applied by reference to its own language and without paraphrase or comparison with the “hopeless” or “bound to fail test” essayed in [General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125];
(c)it should be understood, however, that the test is to some degree a more liberal test than the “hopeless” or “bound to fail” test essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent’s case is not hopeless or bound to fail, it does not have a real prospect of success;
(d)at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.
54Section 7(1) of the CPA sets out its overarching purpose, which is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute. Section 9 of the CPA requires the Court to have regard to these purposes in making any order or giving any direction in a civil proceeding.
55Where a plaintiff in a civil proceeding seeks to bring an application for summary judgment under s 61 of the CPA, it must be made in accordance with Order 22 of the Rules.[67]
[67]Rule 22.03 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic).
…
58The requirements set out in rr 22.04 and 22.05 were considered by the Court of Appeal in Hausman v Abigroup Contractors Pty Ltd.[68] In relation to an affidavit in support of an application for summary judgment, the Court of Appeal stated that what ‘must be verified are the facts necessary to establish a good cause of action’.[69] Once the plaintiff has established the elements of its cause of action, there is ‘something akin’ to a shifting of the evidential burden to the defendant.[70]
[68](2009) 29 VR 213; [2009] VSCA 288 (Hausman).
[69]Ibid, at 225 [60].
[70]See footnote 13 in the reasons of the Court of Appeal in Hausman, where it was stated:
‘Whether there is in fact such a burden upon a plaintiff, once the prerequisites for summary judgment have been satisfied, is a difficult question. Rule [22.05] requires a defendant, who is the subject of an application, in proper form, for summary judgment, to “show cause” why such judgment should not be granted. It may be that this imposes upon a defendant an evidential burden, or something akin thereto’.
59With regard to the equivalent of what is now r 22.05, the Court of Appeal stated as follows:[71]
[71]Hausman, at 225–226 [62]–[65] (citations omitted).
[62]... Assuming the plaintiff’s application is properly made, there will be judgment for the plaintiff unless the defendant shows cause against the application to the satisfaction of the court. The Rule provides that the defendant can show such cause ‘by affidavit or otherwise’.
[63]The defendant must satisfy the Court that, in respect of the claim to which the application for judgment relates, a question ought to be tried, or there ought for some other reason to be a trial of that claim. The Court, if so satisfied, will give the defendant leave to defend and the proceeding will continue to trial in the ordinary way. The Court will normally require an affidavit by, or on behalf of, the defendant before it will be satisfied that the defendant is entitled to leave to defend. The standard of diligence required of the defendant in preparing a case in opposition to the application, especially if under pressure of time, is perhaps not as high as that required in preparing for trial.
[64]Nonetheless, the defendant is required to use reasonable diligence to put before the Court, albeit in a summary form, all the evidence relied on in the defence. In that regard, it would generally be regarded as an injustice to the plaintiff to introduce for the first time, on appeal, evidence which was readily available for the hearing of the application, but was not produced. An affidavit filed by the defendant may contain a statement of fact based on information and belief.
[65]The authorities suggest that an affidavit in opposition to an application for summary judgment must provide sufficient particulars to enable the defence case to be properly understood. A bald denial that the defendant is indebted to the plaintiff will not suffice. The affidavit should, so far as practicable, deal specifically with the plaintiff’s claim and the facts set out in the supporting affidavit to establish that claim. It should state clearly and concisely what the defence is, and identify the facts relied upon in support of that defence.
60Those principles from Hausman extracted above remain good law since the advent of the CPA.[72]
[72]Innovateq Australia Pty Ltd v Barnes [2016] VSC 618, [11] (Ierodiaconou AsJ), referring to Capital One Securities Pty Ltd v Soda Kids Holdings Pty Ltd [2012] VSC 163 and to Portbury Development Pty Ltd v Ottedin Investments Pty Ltd [2012] VSC 490.
34 The observations of the High Court regarding summary judgment under ss 62 and 63 of the CPA in Trkulja v Google LLC[73] are also worth extracting:
[73][2018] HCA 25, (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ). See also Bodycorp Repairers Pty Ltd v Holding Redlich [2018] VSCA 17, [127]–[130] (Whelan and Santamaria JJA and T Forrest AJA).
19.At relevant times, r 8.09 provided in substance that a defendant could apply before entering an appearance, whether conditional or unconditional, to set aside a writ or its service.
20.Section 63 of the Civil Procedure Act2010 (Vic) provides in substance that a court may give summary judgment in favour of a defendant on the defendant’s application, if satisfied that the plaintiff’s claim or part of that claim “has no real prospect of success”.
21.In Agar v Hyde[74], this Court essayed the test for determination of an application to set aside service of a proceeding out of Australia, pursuant to Pt 10 r 6A of the Supreme Court Rules 1970 (NSW), on the ground that the claims made in the proceeding had insufficient prospects of success to warrant putting an overseas defendant to the time, expense and trouble of defending them. The plurality concluded that the test should be the same as the test for summary judgment propounded in Dey v Victorian Railways Commissioners[75] and General Steel Industries Inc v Commissioner for Railways (NSW)[76]: a party should not be denied the opportunity of placing his or her case before the court in the ordinary way, with the advantage of the usual interlocutory processes, unless there is a high degree of certainty about what would be the ultimate outcome of the proceeding if allowed to go to trial in the ordinary way.
22.Subsequently, in Spencer v The Commonwealth[77], this Court considered whether the test for summary judgment prescribed by s 31A of the Federal Court of Australia Act 1976 (Cth), namely, that the court is satisfied that the other party has “no reasonable prospect of successfully prosecuting the proceeding or … part of [it]”, differs from the test espoused in Dey and General Steel. All members of the Court except Heydon J emphasised that the power to dismiss an action summarily should not be exercised lightly[78] but Hayne, Crennan, Kiefel and Bell JJ added that the evident legislative purpose revealed by the text of s 31A would be defeated if its application were read as confined to cases of a kind falling within the test in Dey and General Steel[79].
23.In Victoria, the test for summary judgment is prescribed by s 62 of the Civil Procedure Act: whether the plaintiff’s claim has “no real prospect of success”. Consistently with Spencer, the view taken in Victoria is that the power to dismiss an action summarily is not lightly to be exercised but that, like the test applicable to s 31A of the Federal Court of Australia Act, the “no real prospect of success” test is to some degree more liberal than Dey and General Steel. It permits of the possibility of cases in which, although the plaintiff’s case is not “hopeless” or “bound to fail”, it does not have a real prospect of succeeding[80].
[74](2000) 201 CLR 552 at 575–576 [56]–[60] per Gaudron, McHugh, Gummow and Hayne JJ; [2000] HCA 41.
[75](1949) 78 CLR 62 at 90–91 per Dixon J; [1949] HCA 1.
[76](1964) 112 CLR 125 at 130 per Barwick CJ; [1964] HCA 69.
[77](2010) 241 CLR 118; [2010] HCA 28.
[78](2010) 241 CLR 118 at 131 [24] per French CJ and Gummow J, 141 [60] per Hayne, Crennan, Kiefel and Bell JJ.
[79](2010) 241 CLR 118 at 140 [56], 141 [60].
[80]Lysaght Building Solutions Pty Ltd (t/as Highline Commercial Construction) v Blanalko Pty Ltd (2013) 42 VR 27 at 39 [29] per Warren CJ and Nettle JA (Neave JA agreeing at 40 [36]); Bodycorp Repairers Pty Ltd v Holding Redlich [2018] VSCA 17 at [127]–[129].
Defendants’ Applications
35 It is convenient to deal with the defendants’ applications in the manner they were referred to by the defendants in the table set out in their written submission that is reproduced earlier in these reasons, which is also how they were addressed in written and oral submissions by the parties. For ease of reference, relevant paragraphs of the Third FASOC and its Annexure A are reproduced as Attachment 2 to these reasons.
Part A: Paragraphs 12, 16, 19, 29, 30, 31, 32, 33, 34 and 36 of the Third FASOC – Stay/dismissal application under r 23.01, alternatively, summary judgment application under r 22.16 and ss 62 and 63 of the CPA
Part A.1 – The paragraphs the subject of the challenge
36 As is apparent from Attachment 2 to these reasons, the pleaded claims in the above paragraphs relate to alleged: misleading and deceptive conduct, breaches of contract, breaches of a collateral contract, and an alleged ‘equitable estoppel’.
37 Each of these claims is said by the defendants to be founded upon the premise that in 2006 and 2007 TeleChoice had negotiated with Telstra ‘the terms of an agreement pursuant to which TeleChoice would be appointed a Telstra dealer for a five-year term commencing on about 15 April 2008 (Intended Telstra Appointment)’.[81] The defendants emphasised that the particulars of the allegation refer to only two draft incomplete and annotated documents, defined as the ‘Draft Telstra Heads of Agreement’ and the ‘Draft Telstra Agreement’ (collectively, Telstra Documents), and that, despite detailed and repeated requests for additional particulars of any other terms relied upon, no attempt has been made by TeleChoice to rely on any other source for the terms of the Intended Telstra Appointment.
[81]Third FASOC [9].
38 In varying ways each of the claims in these paragraphs seeks damages or equitable compensation in an amount equal to what TeleChoice alleges is the amount of revenue that it would have earned had it taken up the Intended Telstra Appointment rather than proceeded with the Final Dealer Appointment. Briefly:
(a) The misleading conduct claim (paragraphs 12–19A) is based on an alleged representation by the Optus Entities in 2007 that if TeleChoice entered into a further dealer appointment with the Optus Entities the revenue earned by TeleChoice under that further dealer appointment would be the same as the revenue that would have been earned by TeleChoice under the Intended Telstra Appointment. This is defined as the ‘Revenue Representation’. The particulars of this alleged representation include references to a forecast of revenue prepared by TeleChoice and provided to the Optus Entities in about July 2007 (July 2007 Forecast) and a financial summary subsequently prepared by Optus and provided to TeleChoice on 22 August 2007.
(b) The breach of contract claim (paragraphs 29–31) is based upon an alleged ‘oral and express and implied’ term ‘… that the Optus Entities agreed to pay to TeleChoice during the term of the Final Dealer Appointment the same revenue as TeleChoice would have earned under the Intended Telstra Appointment …’.
(c) The breach of collateral contract claim (paragraphs 32–34) is based upon an alleged collateral contract that, in consideration for TeleChoice entering into a further dealer appointment with the Optus Entities, they would pay to TeleChoice during the further dealer appointment the same revenue as TeleChoice would have earned under the Intended Telstra Appointment.
(d) The equitable estoppel claim (paragraphs 35–36) is based upon the alleged reliance on the Revenue Representation and the alleged assumption by TeleChoice, said to be induced by the Optus Entities, that the revenue it would earn under the Final Dealer Appointment would be the same as the revenue TeleChoice would have earned under the Intended Telstra Appointment.
(e) In paragraph 16 of the Third FASOC it is alleged that during the Final Dealer Appointment TeleChoice earned $258,464,733 in revenue from Optus and that had ‘… TeleChoice entered into the Intended Telstra Appointment, it estimates that it would have earned approximately $100,400,674 more in revenue than it did under the Final Dealer Appointment’. The particulars state that the ‘basis for TeleChoice’s estimate …’ is set out in Annexure A to the pleading, which in turn states that the ‘figures underlying’ the revenue estimate of $358,865,407 are set out in a spreadsheet entitled ‘Sheet B’ (Sheet B) and forming part of Annexure A to the Third FASOC. As previously mentioned, Annexure A to the Third FASOC has been reproduced as part of Attachment 2 to these reasons. Sheet B is reproduced as Attachment 3.
(f) In the particulars of the alleged Telstra revenue in TeleChoice’s Annexure A, TeleChoice also states that ‘… where a revenue category is the equivalent between Telstra and Optus (for example in respect of ‘activations’), TeleChoice has assumed that it would have achieved the same quantity of the relevant category under the Intended Telstra Appointment as it did under the Final Dealer Appointment, and has then applied the relevant amount which would have been payable under the Intended Telstra Appointment to that quantity (using the same amount payable per connection as was contained in the July 2007 Forecast)’.[82]
[82]Annexure A to the Third FASOC [5a.]
Part A.2 – Defendants’ submissions
39 The defendants submitted that the claims the subject of the paragraphs referred to above should be stayed or dismissed, alternatively, that summary judgment should be given in favour of the defendants for each of them. Senior counsel for the defendants confirmed that the stay/dismissal contention and the alternative summary judgment contention were each based upon the submission that the claims have no real prospect of success, it being also submitted that they were without a proper basis and ‘hopeless’. In this context, and in substance, it was submitted that:
(a) Each of the claims is founded upon an allegation that had TeleChoice been appointed on the terms of the Intended Telstra Appointment as recorded in the Telstra Documents, TeleChoice ‘… would have earned ascertainable revenue in excess of that which it earned under the Final Dealer Appointment’.
(b) TeleChoice relies on only the Telstra Documents which make clear that: (i) many terms, including those regarding remuneration, had not been agreed or specified; and (ii) some terms regarding remuneration ‘… are expressed so that the remuneration would be less than provided under the terms of the Final Dealer Appointment’.[83]
[83]Examples were referred to in paragraphs 11(a)–(d) of the defendants’ written submissions and also addressed during the hearing.
(c) How the Alleged Telstra Revenue is derived from the Telstra Documents is not explained and no attempt has been made to identify the relevant terms of the Telstra Documents pursuant to which the calculations have been performed. The defendants are unable to discern how the estimated revenue has been calculated and this remains so despite repeated and detailed requests for particulars in answer to which no further particulars have been provided.
(d) The Telstra Documents do not include finalised terms that would enable the remuneration that would have been received under the Intended Telstra Appointment to be calculated.
(e) In any event, the Telstra Documents do not provide a basis for an allegation that greater remuneration would have been received than was received under the Final Dealer Appointment.
(f) The revenue items listed in Sheet B do not correspond with an entitlement to revenue at a rate or rates that can be identified in the Telstra Documents.
(g) The amount of the alleged Telstra revenue appears in part to be based on activation/connection numbers in TeleChoice’s July 2007 Forecast, which does not form part of the Telstra Documents.
(h) Because paragraphs 19, 30, 31, 33, 34 and 36 all rely upon the particulars to paragraph 16, and are therefore similarly affected, they have no real prospect of success.
Part A.3 – Plaintiff’s submissions
40 At a general level TeleChoice asserted that all of the defendants’ complaints the subject of the summons were baseless and should be dismissed. It contended that the Third FASOC put the defendants on notice of the case it has to meet, sufficiently defines the issues for determination, and that any claimed embarrassment on the part of the defendants was not substantial or real. Emphasis was also placed on the alleged delay in bringing the applications (which is addressed in Part I below). As will become apparent later in these reasons, TeleChoice’s position was refined in some respects during the two-day hearing, which included concessions responsibly made by senior counsel for TeleChoice.
41 With respect to this stay/dismissal/summary judgment aspect of the defendants’ application, TeleChoice submitted that issues regarding the extent to which the terms of the Intended Telstra Agreement were finalised or not agreed, and whether or not the terms provided for non-identical or less remuneration than under the terms of the Final Dealer Appointment, were ‘quintessential matters for trial’. These were said to be all matters for evidence and cross-examination in connection with the question of whether there was ‘… a sufficiently concluded agreement (if one is even required for the purposes of TeleChoice’s claim given the nature of the claim) ...’. It was further submitted that it was to be kept in mind that the Intended Telstra Appointment was just that — intended — and that no written contracts with Telstra were executed or alleged to have been.
42 TeleChoice contended that in July and August 2007 it and the Optus Entities ‘… went on … to operate from a shared understanding about the basis on which revenue would be earned by TeleChoice under the Intended Telstra Appointment’. This was said to be reflected by TeleChoice providing the July 2007 Forecast and the Optus Entities responding with the Financial Summary, which it was submitted demonstrated how the Final Dealer Appointment could match the revenue figures in the July 2007 Forecast.
43 TeleChoice submitted that the position being unclear was not an issue raised at the time the discussions occurred in July and August 2007, and it said further that any lack of clarity or uncertainty does not give rise to a basis ‘to meet the high bar of summary dismissal.’
44 With respect to the criticisms of the particulars in TeleChoice’s Annexure A (including Sheet B), TeleChoice submitted that the explanation in Annexure A[84] was sufficient for the defendants to comprehend the case that they have to meet. It was said that the quantum will ultimately be the subject of expert evidence and that the ‘estimate’ in Annexure A is sufficient because it identifies the source of the relevant Optus and Telstra figures and the method by which they have been calculated. TeleChoice contended that, ‘critically’, the estimate was based upon the shared mutual understanding about the revenue that would be earned by it under the Intended Telstra Appointment, referring also to Ms Seifen’s affidavit evidence regarding the preparation of the July 2007 Forecast.
[84]Reproduced as part of Attachment 2 and Attachment 3 to these reasons.
45 TeleChoice’s position remained that the paragraphs in question contained sufficient detail to establish that TeleChoice has a proper basis to make its claim and that the defendants have sufficient notice of the case that they are required to meet.
Part A.4 – Consideration
A.4.1 Introduction
46 I do not accept the defendants’ submission that, at this point, one or more of the claims referred to in the paragraphs identified above (Telstra Revenue Claims) have been demonstrated or established to be ‘hopeless’,[85] or to have no real prospect of success, and should therefore be permanently stayed or dismissed pursuant to r 23.01, or that summary judgment should be given in respect of them.
[85]As was contended by senior counsel for the defendants during oral submissions — but recognising that such language does not reflect the applicable test, as is evident from the principles and observations in relation to r 23.01 and ss 62–64 of the CPA earlier set out.
47 Further, even if there had been force in the defendants’ contention that one or more of the Telstra Revenue Claims had been demonstrated to have no real prospect of success, in the exercise of my discretion I would not at this point have stayed or dismissed such claims pursuant to r 23.01 of the Rules or given summary judgment in relation to them.
48 This is not to deny the force of most of the observations made by the defendants regarding the inadequate, confusing, and unclear manner in which allegations regarding the Telstra revenue that it is alleged would have been earned, and related issues of loss and damage, have been pleaded. In their current form, the particulars to paragraph 16, including those in paragraphs 2 and 5 of Annexure A to the Third FASOC and Sheet B, and to paragraphs 19, 30, 31, 33, 34 and 36, do not provide sufficient notice of the claim that is to be met and they are embarrassing, and materially so. As indicated in Part B below when addressing the defendants’ alternative r 23.02 strike out application, the appropriate course is to strike out the particulars referred to and provide TeleChoice with a further opportunity to properly articulate its claim.
49 I elaborate below regarding my conclusions in relation to the defendants’ r 23.01 and summary judgment application. In so doing I remain mindful of the principles and observations relevant to such applications referred to earlier, including the caution required before terminating claims summarily,[86] and the High Court’s recent observations regarding summary dismissal of a claim being a power not lightly to be exercised.[87] Given the circumstances and the somewhat complex nature of the relevant Telstra revenue and loss related aspects of the Telstra Revenue Claims, such caution resonates appropriately in this case.
A.4.2 Further observations regarding the pleading of the Telstra Revenue Claims
[86]As, for example, was reinforced by the Court of Appeal Lysaght Building Solutions (2013) 42 VR 27; [2013] VSCA 158 [53].
[87]Trkulja v Google LLC [2018] HCA 25 [20]–[23].
50 Before turning to the particular Telstra revenue and loss issues primarily relied upon by the defendants in this part of its application, it is necessary to make some further observations regarding the structure and content of these parts of the pleading so as to facilitate proper consideration of the defendants’ contentions, but in a context that has proper regard to the pleading as a whole. These observations are also materially relevant to the defendants’ (alternative) r 23.02 strike out application addressed in Part B below.
51 The defendants considered the ‘Revenue Representation’ in paragraph 12 to be the ‘foundation’ for the various claims comprising the Telstra Revenue Claims, also drawing attention to the manner in which the Intended Telstra Appointment is pleaded in paragraph 9, and its role in relation to the Revenue Representation. It is therefore convenient to look to the Revenue Representation misleading and deceptive conduct claim paragraphs first, which are reproduced as part of Attachment 2 (paragraphs 12–19A[88]). A review of these paragraphs reveals, among other things that:
[88]Noting also the terms of paragraph 9 in relation to the Intended Telstra Appointment.
(a) The terms of the alleged Revenue Representation are clear enough, it being in substance an alleged representation that if TeleChoice entered into the further dealer appointment with the Optus Entities,[89] the revenue earned by TeleChoice would be the same as the revenue that would have been earned by Telstra under the Intended Telstra Appointment — which, in turn, is alleged and defined in paragraph 9.
[89]Which is alleged to be the Final Dealer Appointment. See, for example, paragraphs 18 and 19A of the Third FASOC.
(b) The timing of the Revenue Representation is pleaded and the particulars to paragraph 12 address how it is said to be oral, in writing and to be implied or inferred.
(c) It is alleged to have been a continuing representation and, insofar as it relates to future matters it is made clear that TeleChoice relies on the deeming provisions in s 51A of the Trade Practices Act 1974 (Cth) until 31 December 2010 and s 4 of the Australian Consumer Law set out in Schedule 2 of the Competition and Consumer Act 2010 (Cth) after that date.
(d) TeleChoice pleads that it relied on the Revenue Representation and, ceased ‘negotiations’ with Telstra, did not enter into the Intended Telstra Appointment, and entered into the Final Dealer Appointment instead.
(e) The Revenue Representation is alleged to be misleading and deceptive or likely to mislead and deceive because the revenue earned under the Final Dealer Appointment was not the same as the revenue that would have been earned under the Intended Telstra Appointment, and given the absence of reasonable grounds, it is said to be deemed to be misleading insofar as it relates to a future matter.
(f) The suffering of loss and damage ‘by’ the alleged contravening conduct is pleaded as a material fact in paragraph 19 and the particulars of the loss refer back to paragraph 16 (referred to above), the particulars to which state that the basis for the ‘estimate’ of loss is set out in Annexure A to the Third FASOC (reproduced as part of Attachment 2).
(g) As previously mentioned, the ‘figures underlying’ the estimate of Telstra revenue that would have been earned are said to be set out in the spreadsheet described as Sheet B. Paragraphs 3, 3A and 4 of Annexure A provide further particulars of the sources of the Optus figures in Sheet B. Paragraphs 5 (a) to (c) contain particulars of how the Telstra revenue figures in paragraph 2 of Annexure A and Sheet B are ‘derived’. The particulars to paragraph 16 also state that further particulars may be provided after discovery and the exchange of expert reports.
52 Putting to one side for the moment the pleaded allegations regarding alleged Telstra revenue, loss and quantum in paragraph 16 and its particulars (which are deficient), when the pleading is considered as a whole and the approach to pleading assessment spoken of by Hargrave J in Babcock & Brown (No 2)[90] and endorsed by the Court of Appeal in Uber Australia[91] is taken, although the pleading could be improved, it is evident that the substance of the nature of the misleading and deceptive conduct claim being made is otherwise sufficiently clear.
[90][2017] VSC 556 [15].
[91][2020] VSCA 186 [53]–[54] (Niall, Hargrave and Emerton JJA).
53 Again putting to one side for the moment the deficient pleaded allegations regarding Telstra revenue, loss and quantum, a review of the pleading of the balance of each of the Telstra Revenue Claims reveals that the result is substantially the same. This is apparent from the relevant paragraphs, which are reproduced in Attachment 2. Although the pleading of these claims could also be improved, each of the breach of contract claim (paragraphs 29–31), the collateral contract claim (paragraphs 32–34), and the estoppel claim (paragraphs 35 and 36), is otherwise[92] sufficiently clearly pleaded to put the defendants on notice of the substance of the claim that is to be met.
[92]That is, putting to one side the allegations in paragraph 16 regarding the alleged Telstra revenue, loss and quantum.
54 To make the above observations about the Telstra Revenue Claims in their current form is to say nothing about the ultimate merits or otherwise of such claims, or whether it is sound for TeleChoice to pursue one or more of them. Subject to addressing the application currently before me, that is a matter for others to consider.
55 I turn to the pleaded allegations relating to Telstra revenue, loss and quantum, and in particular, paragraph 16 and its particulars. It is to be noted in this context that, on the claims as currently pleaded, the Telstra revenue that it is said would have been earned by TeleChoice, and its quantum, is not only relevant to TeleChoice’s alleged loss and damage. It is also central to: the allegation that the Revenue Representation was misleading and deceptive or likely to mislead and deceive; the allegations of breach of contract, alternatively breach of collateral contract; and the alleged equitable obligation to ‘fulfil’ the Revenue Representation. These matters further underscore the importance of the parties — and the court — being able sufficiently to understand the case that is to be met by the defendants.
56 It is apparent from the defendants’ submissions that it is the alleged Telstra revenue and related loss allegations that lay at the heart of the defendants’ r 23.01 stay/dismissal application and their (alternative) summary judgment application.[93] The defendants’ focus really starts with the allegation regarding the Intended Telstra Appointment in paragraph 9 of the Third FASOC (reproduced in Attachment 2), to which I refer. Central to that focus is the observation that Telstra Documents referred to in the particulars to paragraph 9 are the only particulars of the Intended Telstra Appointment and therefore, it is said, as pleaded, comprise its four walls. It was said that the claimed Telstra revenue that it is alleged would have been earned is not (and cannot be) tied back to the terms of these incomplete and draft Telstra Documents — and even if it could in part, it would not result in greater revenue having been earned in connection with various matters given the operation of some of the terms in question.
[93]As they are for the alternative r 23.02 strike out application addressed in Part B below.
57 This is said to be supported by, among other things, TeleChoice’s failure (despite detailed requests) to identify the particular terms of the Telstra Documents relied upon[94] to calculate the particular revenue amounts, or to state how it is calculated by reference to such terms. The defendants also point to Annexure A to the Third FASOC, and in particular paragraphs 2 and 5 thereof, and Sheet B (comprising Attachment 3 to these reasons). In further support of their position it is said that it is apparent from Annexure A and Sheet B that the alleged Telstra revenue that would have been earned that is referred to in paragraph 16 of the Third FASOC is in fact based in various ways upon TeleChoice’s own 2007 forecast document (the July 2007 Forecast), and not the Telstra Documents. This, so it is said, further demonstrates that the revenue claim based on the Telstra Documents said to comprise the four walls of the Intended Telstra Appointment has not been and cannot be substantiated by reference to the terms of the Telstra Documents.[95] That being so, it is said that the Telstra Revenue Claims can be seen to be ‘hopeless’, or without any real prospect of success, and should therefore be stayed or dismissed under r 23.01, or the subject of summary judgment orders.
(a)continued to receive call commission in respect of TeleChoice customers in respect of whom call commission would otherwise have remained payable (being customers who would have remained on a TeleChoice Dealer Code until they were associated with a non-TeleChoice Dealer Code (in a manner not in breach of the Final Dealer Appointment) or were no longer Optus customers);
(b)in all likelihood recontracted those TeleChoice customers after the prohibition period had expired and thereby would have derived activation commission and management fees in respect of those customers; and
(c)further, by reason of the foregoing sub-paragraphs, the resulting activations would have counted towards TeleChoice’s targets to achieve its 2011/12 and 2012/13 Outcome Payments (as referred in paragraphs 88 to 91 below).
[NOTE: Paragraph 54 omitted from this extract.]
BREACHES ARISING FROM THE CLAUSE 11.4 CLAWBACKS
55It was an express term of the Master Dealer Agreement that:
(a)where:
(i)TeleChoice does not comply with the procedures set out in the dealer bulletins for proposed activations; or
(ii)Optus Mobile has reason to believe that any activations were made in circumstances involving fraud of which TeleChoice knew or ought to have known,
Optus Mobile:
(b)is not obliged to pay commission to TeleChoice for those activations;
(c)may require TeleChoice to pay to Optus Mobile the amount of any bad debt incurred by Optus Mobile; and
(d)may require TeleChoice to pay to Optus Mobile, in respect of activated mobile telephones, the amount of any hardware subsidy,
(Clause 11.4).
56As pleaded at paragraph 47, it was a term of the Final Dealer Appointment that the Optus Entities would exercise any discretions, including the discretion in Clause 11.4, reasonably and in good faith and, not engage in actions that would deprive TeleChoice of the benefit of the Final Dealer Appointment (General Good Faith Term).
57Further and alternatively, it was a term of the Final Dealer Appointment that the Optus Entities (including Optus Mobile) would act in good faith in assessing whether there had been a failure by TeleChoice to comply with any alleged procedures for activations set out in dealer bulletins so as to give rise to an entitlement to claw back payments from TeleChoice in reliance on Clause 11.4 (Compliance Good Faith Term).
PARTICULARS
The Compliance Good Faith Term was to be implied at law.
58During the term of the Final Dealer Appointment, in purported reliance on Clause 11.4 of the 2008 Master Dealer Agreement, the Optus Entities:
(a)clawed back payments that had been made to TeleChoice on the basis that TeleChoice had not complied with the procedures set out in purported dealer bulletins for proposed activations (Alleged Non-Compliance Claw Backs); and
(b)clawed back payments from TeleChoice, and deducted amounts of bad debt allegedly incurred by Optus Mobile, or hardware subsidies
hadpreviously paid by Optus Mobile, where it had reason to believe that activations were made in circumstances involving fraud of which TeleChoice knew or ought to have known (Alleged Fraud Claw Backs).
PARTICULARS
During the term of the Final Dealer Appointment, Optus Mobile clawed back or otherwise deducted on account of Alleged Non-Compliance Claw Backs and Alleged Fraud Claw Backs,
more than $1.7 million of monies$1,350,839.39 paid or payable to TeleChoice.The Alleged Fraud Claw Backs included where:
(i)the Optus Entities had allegedly investigated a customer account and concluded that the customer had committed ‘fraud’, in addition to TeleChoice being alleged by Optus to not have complied with procedures set out in purported dealer bulletins for that customer’s activation; and
(ii)the Optus Entities alleged that subsequent to the activation being procured by TeleChoice, the customer failed to pay a bill to Optus on account of that activation, in addition to TeleChoice being alleged by the Optus Entities to not have complied with procedures set out in purported dealer bulletins for that customer’s activation.
Further particulars will be provided after discovery and subpoenas have been issued and complied with.The Alleged Non-Compliance Claw Backs which TeleChoice alleges were wrongfully made are contained in a table annexed to this Statement of Claim as Annexure B.
The Alleged Fraud Claw Backs which TeleChoice alleges were wrongfully made are contained in a table annexed to this Statement of Claim as Annexure C.
59The Alleged Non-Compliance Claw Backs were made in circumstances where any alleged non-compliance was without proper basis or trivial.
PARTICULARS
The Alleged Non-Compliance Claw Backs included where:
(i)a customer’s identification documents were alleged by the Optus Entities to not have been uploaded by TeleChoice to the Optus portal, or not uploaded by TeleChoice to the Optus portal by the time stipulated by the Optus Entities (iScan Process);
(ii)the Optus Entities alleged that fewer than 100 points of identification documents were provided by TeleChoice to Optus in respect of a customer (Identification Process);
(iii)the Optus Entities alleged that TeleChoice did not take or otherwise retain copies of payment cards in a manner that was ‘PCI compliant’ (PCI Process); and
(iv)Optus described the alleged conduct of TeleChoice in respect of procuring the customer activation as:
(a) ‘Non-compliant ID scan’;
(b) ‘Invalid Data Entered’;
(d) ‘Data Doesn’t Match ID’;
(e) ‘DL Expired’;
(f) ‘Name Captured Incorrectly’;
(g) ‘Invalid Primary ID’;
(h) ‘D/L# Not Entered’;
(i) ‘Not PCI Compliant’;
(j) ‘No ID Retained’;
.(v)the Alleged Non-Compliance Claw Backs that were made in respect of alleged bad debts were made in circumstances where Optus Mobile had not, in fact, written off the alleged bad debts, and/or where Optus Mobile was subsequently paid all or part of the alleged bad debts by the customers concerned and did not account to TeleChoice for the corresponding amount previously clawed back from TeleChoice.
60The Alleged Fraud Claw Backs were made in circumstances where Optus Mobile did not have or assert any proper basis to believe that either:
(a)the relevant Activation was made in circumstances involving fraud; or
(b)TeleChoice knew or ought to have known that the relevant Activation was made in circumstances involving fraud.
PARTICULARS
The emails sent by the Optus Entities to TeleChoice notifying TeleChoice of the Alleged Fraud Claw Backs did not assert any act or omission on the part of TeleChoice or a customer which constituted fraud, nor did they reveal any investigations conducted by Optus to demonstrate any alleged fraud or basis for the Optus Entities’ belief that TeleChoice knew or ought to have known that the relevant Activation had been made in circumstances involving fraud.
Further, the bulk of the Alleged Fraud Claw Backs were notified by Optus to TeleChoice after the Notice of Termination on 28 September 2012.
Further particulars may be provided after discovery.
61Further or alternatively, in each instance of an Alleged Fraud Claw Back, if the relevant Activation was made in circumstances involving fraud (which is denied), TeleChoice did not know and could not have known, at the time of procuring the customer activation, of the fraud.
6251. Further or alternatively, Optus Mobile clawed back payments from TeleChoice the Alleged Non-Compliance Claw Backs that were made in respect of alleged bad debts were made in circumstances where:
(a)Optus Mobile had not, in fact, written off the alleged bad debts, and/or
(b)where Optus Mobile was subsequently paid all or part of the alleged bad debts by the customers concerned and did not account to TeleChoice for the corresponding amount previously clawed back from TeleChoice by Optus Mobile.
PARTICULARS
By correspondence in about early 2013, TeleChoice sought confirmation from the Optus Entities (including through its lawyers Minter Ellison) that amounts it sought to claw back from payments to TeleChoice alleged to be on account of ‘bad debts’ had in fact been written off by Optus as bad debts. The Optus Entities failed to provide any such confirmation. A copy of that correspondence is in the possession of TeleChoice’s solicitors and may be inspected by appointment.
Further particulars may be provided after discovery and subpoenas have been issued and complied with and the exchange of expert reports.
6352. Further or alternatively, it was a term of the MDA Master Dealer Agreement that Optus Mobile must provide TeleChoice with such training as the Optus Entities considered appropriate to enable TeleChoice to comply with any dealer bulletins provided by the Optus Entities which set out procedures for activations (Master Dealer Agreement, clauses 4(f) and 17.1).
6453. During the term of the Final Premium Dealer Appointment, Optus Mobile did not provide training to TeleChoice to enable it to comply with any dealer bulletins provided by the Optus Entities which set out procedures for activations.
PARTICULARS
During the term of the Final Dealer Appointment no training was provided by Optus to TeleChoice directed to compliance with any dealer bulletins provided by the Optus Entities which set out procedures for activations.
65Further or alternatively, Clause 11.4 is unenforceable as a penalty or should be read down, to the extent that it would otherwise entitle the Optus Entities to claw back or otherwise claim payments from TeleChoice in circumstances where the alleged non-compliance with procedures set out in the dealer bulletins for proposed activations was trivial and the sum would be out of all proportion to the interests of the Optus Entities which it is the purpose of the clause to protect.
PARTICULARS
The failure to comply with procedures by TeleChoice did not necessarily result in any loss to the Optus Entities or cause any detriment to their legitimate financial or business interests. Instances of Alleged Non-Compliance Claw Backs which did not result in any loss or detriment include where TeleChoice had allegedly not complied with the iScan Process, Identification Process or PCI Process or where the customer continued to be an Optus customer despite the alleged non-compliance.
Further particulars will be provided after discovery.
66To the extent that any of the Alleged Non-Compliance Claw Backs were made in circumstances where the alleged non-compliance was trivial and did not give rise to any loss or detriment to the Optus Entities or their legitimate interests, such sums were penalties and would be out of all proportion to the interests of Optus which it is the purpose of the clause to protect.
67Further or alternatively, in making the Alleged Non-Compliance Claw Backs and the Alleged Fraud Claw Backs in the circumstances alleged above, the Optus Entities breached the General Good Faith Term and the Non-Compliance Good Faith Term.
68As a result of the Optus Entities’ breaches of contract in respect of the Alleged Non-Compliance Claw Backs and Alleged Fraud Claw Backs, TeleChoice has suffered loss or damage.
PARTICULARS
TeleChoice’s loss and damage is the amount clawed back by Optus in respect of the Alleged Non-Compliance Claw Backs and Alleged Fraud Claw Backs.
Further particulars to be provided after discovery and exchange of expert reports.
[NOTE: Paragraphs 69 to 116 omitted from this extract.]
INDUCING BREACH OF CONTRACT BY TELECHOICE FRANCHISEES
117During the term of the Final Dealer Appointment, TeleChoice entered into or continued franchise agreements with its franchisees (the Franchise Agreements).
PARTICULARS
The Franchise Agreements are in writing. A copy of each of the Franchise Agreements is in the possession of solicitors for TeleChoice and may be inspected by appointment.
118There were terms of the Franchise Agreements, amongst others, to the following effect:
(a)that the franchisee must act in good faith towards TeleChoice;
(b)that the franchisee must disclose to TeleChoice any information of which the franchisee is aware of which may assist TeleChoice to enhance or improve its business, or which is likely to prejudice TeleChoice’s business; and
(c)that the franchisee, its directors, associated entities, relatives and guarantors are restrained from engaging in a competing business during the term of the Franchise Agreement, and for a period after the end of the Franchise Agreement,
(collectively, the Franchise Agreement Terms).
119At all material times, the Optus Entities were aware of the Franchise Agreements and the Franchise Agreement Terms.
PARTICULARS
Pursuant to clause 5.2(f) of the 2008 Master Dealer Agreement, TeleChoice was required to obtain Optus’ written approval to appoint any franchisee in respect of the business.
Pursuant to clause 4.3(a) of the 2008 Master Agreement, TeleChoice was required to enter into a written contract appointing a franchisee as an Optus Premium Dealer on terms which were approved by Optus in writing.
Similar clauses were contained in the 2001 and 2005 Master Dealer Agreements.
Throughout the terms of the First Dealer Appointment, Second Dealer Appointment and Final Dealer Appointment, Optus approved the appointment of TeleChoice franchisees. In the premises, it is to be inferred that Optus knew of the Franchise Agreements and the Franchise Agreement Terms.
120From about early 2013, the Optus Entities engaged in a course of conduct (by themselves and through their agent M8 Telecom) whereby they spoke to then franchisees of TeleChoice, their directors, associated entities, relatives and guarantors in an attempt to procure that those parties enter into agreements with Optus and/or M8 Telecom to sell or otherwise promote Optus products and services, either through the operation of retail stores known as ‘Optus Local Stores’ or by means of a ‘small and medium business channel partner’ dealer code (Solicitation Conduct).
PARTICULARS
The TeleChoice franchisees, directors and guarantors included Gaurav Bhatia, Sonja Bhatia, Puneet Patel, Charlie Assad, Mona Assad, Priscilla Boumelhem, Danis Lal, Anita Lal, Robin Durham, Karl Hockey, Jon Balmer and Emad Captan.
TeleChoice refers to the witness statements and outlines of evidence of Priscilla Boumelhem, Charlie Assad and Gaurav Bhatia.
Further particulars will be provided after discovery and subpoenas have been issued and complied with.
121The Solicitation Conduct induced then franchisees of TeleChoice and their guarantors to breach the Franchise Agreement Terms and thereby, to breach the Franchise Agreements.
PARTICULARS
These franchisees were among TeleChoice’s highest performing franchisees.In breach of the Franchise Agreement Terms, Gaurav Bhatia and Sonja Bhatia failed to disclose to TeleChoice their discussions with Optus and M8 Telecom in respect of a small and medium business dealer code to connect customers to Optus services and a store known as ‘Optus Local Altona Gate’ which they opened and operated.
In breach of the Franchise Agreement Terms, Puneet Patel failed to disclose to TeleChoice his discussions with Optus and M8 Telecom and opened a store known as ‘Optus Local Stanhope Gardens’ and ‘Richmond Marketplace’.
In breach of the Franchise Agreement Terms, Charlie Assad, Mona Assad and Priscilla Boumelhem failed to disclose to TeleChoice their discussions with Optus and M8 Telecom in respect of a small and medium business dealer code to connect customers to Optus services and a store known as ‘Optus Local Burwood’ which they opened and operated.
In breach of the Franchise Agreement Terms, Danis Lal and Anita Lal failed to disclose to TeleChoice their discussions with Optus and M8 Telecom in respect of a store known as ‘Optus Local Baulkham Hills’.
In breach of the Franchise Agreement Terms, Robin Durham failed to disclose to TeleChoice his discussions with Optus and M8 Telecom in respect of stores known as ‘Optus Local East Village’ and ‘Optus Local Zetland’.
In breach of the Franchise Agreement Terms, Karl Hockey and Jon Balmer failed to disclose to TeleChoice their discussions with Optus and M8 Telecom in respect of a small and medium business dealer code to connect customers to Optus services.
In breach of the Franchise Agreement Terms, Emad Captan failed to disclose to TeleChoice his discussions with Optus and M8 Telecom in respect of a store known as ‘Optus Local Stud Park’.
Further particulars will be provided after discovery and subpoenas have been issued and complied with.
122The Solicitation Conduct constituted an inducement by the Optus Entities to the franchisees to breach their Franchise Agreement Terms causing TeleChoice loss and damage.
PARTICULARS
TeleChoice incurred the costs of maintaining stores that the relevant franchisees had abandoned, including rental expenses, as well as lost commissions that would have otherwise been made from connections that relevant franchisees would have made pursuant to their contracts with TeleChoice.
123Further or alternatively, by engaging in the Solicitation Conduct the Optus Entities breached the General Good Faith Term in the Final Dealer Appointment.
124TeleChoice has suffered loss or damage by reason of the Optus Entities’ Solicitation Conduct.
[NOTE: Paragraphs 125 to 155 omitted from this extract.]
ANNEXURE A – PARTICULARS TO PARAGRAPH 16
1.During the term of the Final Dealer Appointment, TeleChoice derived revenue of approximately
$258,141,311$258,464,733 from Optus. The figures underlying that amount, subject to two adjustments identified in paragraphs 4(b) and 4(c) below, are set out in a spreadsheet entitled “Sheet B” which was provided by TeleChoice’s solicitors to Optus’s solicitors on 15 October 2020, and which is attached hereto and marked “Sheet B”.2.Had TeleChoice entered into the Intended Telstra Appointment, it estimates that it would have derived revenue of approximately $358,865,407 from Telstra. The figures underlying that estimate are set out in the spreadsheet entitled “Sheet B.”
which was provided by TeleChoice’s solicitors to Optus’s solicitors on 15 October 2020.3.The Optus figures referred to in paragraph 1 of these particulars are derived from:
a.the Payment Summaries provided to TeleChoice by Optus on a monthly basis during the term of the Final Dealer Appointment; and
b.the amounts paid to TeleChoice by Optus in respect of marketing fees, conference fees and annual branding funds.
3A. The sources of the Optus figures in Sheet B are:
a.in respect of the line item “New Activations”, the total of the “count” and “amount” figures for the following line items in the Payment Summaries provided by Optus for the relevant year:
“New Activations”
“Port In Activations”
“Transfer In Activations”
“Migration In Activations”
“Yes Thanks”
“Total Business Caps”
“New Activations (GA)”
“SMB”
b.in respect of the line item “Deactivation”, the total of the “count” and “amount” figures for the line items in the Payment Summaries provided by Optus for the relevant year:
“New Deactivations”
“Deactivations (GA & DA)”
“Deactivations”
“Mobile Deactivations (Clawbacks)”
“Yes Sim 5 Non Tolling”
c.in respect of the line item “Digital Advance”, the total of the “count” and “amount” figures for the following line items in the Payment Summaries provided by Optus for the relevant year:
“Digital Advance”
“DA Deactivations”
“Digital Advance (DA)”
d.in respect of the line item “Other Activation”, the total of the “count” and “amount” figures for the following line items in the Payment Summaries provided by Optus for the relevant year:
“Data Activations”
“Local Telephony”
“Other”
“LAT Telephony”
“LAD Telephony”
“HSD Broadband NET (Adds - Deacts)”
“LAT Telephony NET (Adds - Deacts)”
“LAD Telephony NET (Adds - Deacts)”
“DTV NET (Adds - Deacts)”
e.in respect of the line item “Airtime”, the total of the “count” and “amount” figures for the following line items in the Payment Summaries provided by Optus for the relevant year:
“Airtime”
“SMB Fixed Trailing”
“TBC Airtime”
“Mobile Airtime”
“SMB Fixed Airtime”
“Mobile Broadband Trailing Commission”
f.in respect of the line item “Value Added Services”, the total of the “count” and “amount” figures for the following line items in the Payment Summaries provided by Optus for the relevant year:
“Insurance”
“Extended Warranty”
“Surepage”
“Long Distance”
“VOIP”
“Pay Tv”
“Blackberry Activations”
“MIPS”
“Satellite (OBS / MSAT)”
“Optus Digital Media”
“ODM Premium Voice”
“Service Transactions”
“ODM Smart Safe”
“ODM Office Apps”
“Pay Television”
g.in respect of the line item “Handset subsidy / stock rebate”, the total of the “count” and “amount” figures for the following line items in the Payment Summaries provided by Optus for the relevant year:
“Handset Subsidy”
“Handset Reconciliations”
h.in respect of the line item “Adjustments”, the total of the “count” and “amount” figures for the following line items in the Payment Summaries provided by Optus for the relevant year:
“Adjustments”
“Non Tolling (MAR12) BYO $10”
“Non Tolling (MAR12) BYO $10 - Management Fee”
“Non Tolling (MAR12) BYO $10 - Co-op”
“Reconciliations”
i.in respect of the line item “Bonus”, the total of the “count” and “amount” figures for the line item “Bonus” in the Payment Summaries provided by Optus for the relevant year;
j.in respect of the line item “Wireless/Data Products”, the total of the “count” and “amount” figures for the following line items in the Payment Summaries provided by Optus for the relevant year:
“DA OMD Deductions”
“OWF Cancels”
“OWT Cancels”
“OWF Cancellations”
“OWT Cancellations”
“OMB Deactivations”
“OWT Deactivations”
“OWF Deactivations”
“OWF Activations”
“OWT Activations”
“OMB Activations’
“OWB”
“OWF”
“OWT”
“Broadband”
“Dial Up Internet”
“OWB Activations”
“OWB Cancels”
“OWB Cancellations”
“HSD Broadband”
“DSLD Broadband”
“DSLD Broadband NET (Adds - Deacts)”
k.in respect of the line item “Fixed Products”, the total of the “count” and “amount” figures for the following line items in the Payment Summaries provided by Optus for the relevant year:
“Fixed Adjustments”
“SMB Fixed Activations”
“SMB Fixed Acts”
l.in respect of the line item “Service Fee”, the total of the “count” and “amount” figures for the line item “Service Fee” in the Payment Summaries provided by Optus for the relevant year;
m.in respect of the line item “Co-op”, the total of the “count” and “amount” figures for the line item “Co-Op” in the Payment Summaries provided by Optus for the relevant year;
n.in respect of the line item “Clawback”, the total of the “count” and “amount” figures for the following line items in the Payment Summaries provided by Optus for the relevant year:
“Clawbacks”
“EFRM Clawbacks”
“BYO $10 Offer Deduction”
“BYO $10 Non Tolling Clawback”
“BYO $10 Non Tolling Co-op Clawback”
“BYO $10 Non Tolling Management Fee Clawback”
“Financial Services Clawbacks”
“Financial Services Clawback”
o.in respect of the line item “Deferred Payment Commission”, the total of the “count” and “amount” figures for the line item “Deferred Payment Comms” in the Payment Summaries provided by Optus for the relevant year;
p.in respect of the line item “Management Fee”, the total of the “count” and “amount” figures for the line item “Management Fee” in the Payment Summaries provided by Optus for the relevant year;
q.in respect of the line item “Marketing Contribution”, the total of the “count” and “amount” figures for the line item “Marketing Contribution (ex GST)” in the Payment Summaries provided by Optus for the relevant year;
r.in respect of the line item “Outcome Payment”, the total of the “count” and “amount” figures for the line item “Outcome Payment” in the Payment Summaries provided by Optus for the relevant year;
s.in respect of the line item “Marketing Contribution”, the total of the “count” and “amount” figures for the line item “Marketing Contribution (ex GST)” in the Payment Summaries provided by Optus for the relevant year;
t.in respect of the line item “Conference”, the total of the “count” and “amount” figures are calculated pursuant to clause 5.3 of the MA;
u.in respect of the line item “Branding”, the amounts that were payable annually by Optus to TeleChoice pursuant to clause 3.1 of the MDA.
4.Further, the Optus figures referred to in paragraph 1 of these particulars:
a.include the amount of $2,025,218 (excluding GST) which was deducted by Optus from its final commission payment to TeleChoice, and which is the subject of paragraphs 70 to 75 of this Third Further Amended Statement of Claim; and
b.adopt the figures in Sheet B, but add the amount of $883,422 (excluding GST), which represents the amount of $441,711 (excluding GST) which had been inadvertently deducted, instead of added, to the figures in Sheet B. That amount of $441,711 (excluding GST) was paid by Optus to TeleChoice as referred to in the letter dated 6 February 2015 from Optus to TeleChoice; and
c.adopt the figures in Sheet B, but deduct the amount of $500,000 (excluding GST) for the annual branding fund for the 2012/13 year, which was never paid by Optus (and which is the subject of paragraphs 76 to 82 of this Third Further Amended Statement of Claim), which was inadvertently added to Sheet B as having been received.
5.The Telstra figures referred to in paragraph 2 of these particulars are derived as follows:
a.where a revenue category is the equivalent between Telstra and Optus (for example, in respect of “activations”), TeleChoice has assumed that it would have achieved the same quantity of the relevant category under the Intended Telstra Appointment as it did under the Final Dealer Appointment, and has then applied the relevant amount which would have been payable under the Intended Telstra Appointment to that quantity (using the same amount per connection as was contained in the July 2007 Forecast); and
b.where a revenue category was included in the Intended Telstra Appointment but not in the Final Dealer Appointment (for example, in respect of Mobile Repayment Option), TeleChoice has adopted the same per connection figures and methodology as contained in the Intended Telstra Appointment and July 2007 Forecast.
c.in respect of the Mobile Repayment Option category, an 80% factoring was applied to the total net activations (ie “New Activations” plus “Digital Advances” minus “Deactivations”) under the Final Dealer Appointment to reflect TeleChoice’s achievement throughout the Final Dealer Appointment of 8 out of 10 connections being done with a handset.
ATTACHMENT 3
Sheet ‘B’
Schedule
S ECI 2017 00289
BUSINESS SERVICE BROKERS PTY LTD
(ACN 069 049 994)Plaintiff -and- OPTUS MOBILE PTY LTD
(ACN 054 365 696)First Defendant OPTUS INTERNET PTY LTD
(ACN 083 164 532)Second Defendant OPTUS NETWORKS PTY LTD
(ACN 008 570 330)Third Defendant OPTUS VISION PTY LTD
(ACN 066 518 821)Fourth Defendant
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