Business Service Brokers Pty Ltd v Optus Mobile Pty Ltd (No 4)
[2022] VSC 774
•9 December 2022 (oral reasons); 14 December 2022 (written reasons)
| 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 |
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JUDGE: | Connock J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 6 and 9 December 2022 |
DATE OF JUDGMENT: | 9 December 2022 (oral reasons); 14 December 2022 (written reasons) |
CASE MAY BE CITED AS: | Business Service Brokers Pty Ltd v Optus Mobile Pty Ltd & Ors (No 4) |
MEDIUM NEUTRAL CITATION: | [2022] VSC 774 |
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PRACTICE AND PROCEDURE – Application by defendants for extension of time to file counterclaim – Supreme Court (General Civil Procedure) Rules 2015 (Vic), rr 3.02, 14.04 – Extension of time – Delay – Explanation for delay – Common issues between claim and proposed counterclaim – Separate proceeding proposed to be commenced if extension refused – Whether proper basis for proposed counterclaim – Proposed counterclaim to include a defendant to the proposed counterclaim who is not a party to the proceeding – Limitation of Actions Act 1958 (Vic), s 30 – Undertaking by proposed plaintiffs by counterclaim regarding running of time for limitation of actions purposes – Discretionary factors – Extension of time granted – Civil Procedure Act 2010 (Vic), s 27 – Implied undertaking not to use documents – Hearne v Street (2008) 235 CLR 125 – Harman undertaking – Application to be released from Harman undertaking.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms G Schoff KC with Mr M Tehan | Danaher Moulten |
| For the Defendants | Mr D Collins KC with Mr D McAloon | Clayton Utz |
HIS HONOUR:
Introduction and summary
By their summons the defendants (Optus Entities or defendants) seek:
(a) an order pursuant to r 3.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Rules) extending the time within which they are permitted to file and serve a proposed counterclaim, being a claim based on an alleged fraudulent misrepresentation (Optus Counterclaim), against the plaintiff (TeleChoice or plaintiff) and a non-party director of TeleChoice, Mr Ehab Abdou, outside the time prescribed by r 14.04 of the Rules (Extension Application);
(b) alternatively, an order that the Optus Entities be released from the implied undertaking referred to in Hearne v Street[1] insofar as it applies to the following documents (collectively, Undertaking Documents):
[1](2008) 235 CLR 125.
(i) a ‘Draft Telstra Heads of Agreement’ and a ‘Draft Telstra Agreement’, each between Telstra and TeleChoice (Draft Telstra Documents);
(ii) the witness statement of Mr Abdou dated 23 December 2020 and filed in this proceeding (Abdou Witness Statement)
for the purpose of commencing a separate proceeding by writ against TeleChoice and Mr Abdou and making a claim by a statement of claim that is substantially in the same form as the Optus Counterclaim (Undertaking Application).
During the hearing on 6 December 2022, and after the court drew attention to the terms and operation of s 27 of the Civil Procedure Act 2010 (Vic) (CP Act), the Optus Entities expanded their alternative application to include an (oral) application pursuant to s 27(3) of the CP Act for an order releasing them from their obligation under s 27(1) of the CP Act not to use documents disclosed pursuant to s 26 of the CP Act, insofar as that obligation applied to the Undertaking Documents (Section 27 Application).[2]
[2]TeleChoice responsibly did not take any issue with the application being made orally during the course of the hearing.
TeleChoice opposed the Extension Application but ultimately did not oppose the Undertaking Application or the Section 27 Application.[3]
[3]TeleChoice’s position on these two alternative applications was that it neither opposed nor consented to the applications.
The Optus Entities relied upon the affidavit of Mr Paul James sworn 9 September 2022 (James Affidavit) and their written submission. TeleChoice relied upon an affidavit of Ms Lillian Seifen sworn 11 November 2022 (Seifen Affidavit) and its written submission. The written submissions of the parties were supplemented by oral submissions made at the hearing by senior counsel for each of the parties.[4] Neither the plaintiff nor the defendants sought to cross-examine the deponents.
[4]I have read and had regard to the affidavit evidence and submissions, to which no objection was taken.
For the reasons that follow, I have concluded that:
(a) subject to counsel for the Optus Entities confirming their proposed undertaking to the court that they will not rely on s 30 of the Limitation of Actions Act 1958 (Vic) (Limitation Act) against Mr Abdou, or contend that the section operates in respect of the Optus Counterclaim against him,[5] an order should be made extending the time within which the Optus Entities may file and serve the Optus Counterclaim; and
(b) given the conclusion referred to in sub-paragraph (a) above, it is not necessary to determine the (alternative) Undertaking Application or Section 27 Application.
[5]And the imposition of terms to similar effect, which I discuss further later in these reasons.
Introductory observations
Before proceeding further it is convenient to largely restate some of the brief introductory observations I made in Business Service Brokers Pty Ltd v Optus Mobile Pty Ltd[6] (Strike Out Reasons) regarding the previous business relationship between the parties that forms the backdrop for the dispute the subject of this proceeding.
[6][2021] VSC 310, [2]–[7].
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 Optus Entities under the business name ‘TeleChoice’. The majority of TeleChoice outlets were operated by TeleChoice franchisees.
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 is alleged by the plaintiff to be the 2008 Master Agreement, the 2008 Master Dealer Agreement, the First Side Letter, and the Second Side Letter[7] (Final Dealer Appointment).
[7]It is also alleged to have been partly oral.
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 by TeleChoice to be the ‘Intended Telstra Appointment’ was not further pursued by TeleChoice.
The Final Dealer Appointment had a five-year term, and 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 the end of March 2013. The business relationship between TeleChoice and the Optus Entities ceased from that time.
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 and claimed misleading representations 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 claimed by TeleChoice are substantial. The Optus Entities deny that they are liable to the plaintiff as alleged or at all.
The extended and somewhat challenged procedural history of this proceeding was addressed in the Strike Out Reasons and in my 31 May 2022 reasons addressing TeleChoice’s amendment application, through which it sought and obtained leave to file and serve the fourth further amended statement of claim (Amendment Reasons),[8] to which I refer but will not recite here.
[8][2022] VSC 283. See, in particular, the procedural chronology annexed to the Amendment Reasons.
As referred to in the Amendment Reasons, over the course of the proceeding to date there have been at least 14 or 15 draft or filed versions of the plaintiff’s statement of claim. The current pleading is the plaintiff’s fourth further amended statement of claim (August 2022 Statement of Claim) filed 15 August 2022, which was filed and served pursuant to orders made on 12 August 2022.
The proposed Optus Counterclaim is not conceptually complex. At its core is a deceit claim based on an allegation that in July 2007 TeleChoice, through its director Mr Abdou, falsely represented to the Optus Entities that it had finalised negotiating the terms of an agreement with Telstra that it proposed to enter into with Telstra imminently or in a couple of days, when in fact Telstra and TeleChoice had not finalised negotiating the terms of the agreement (Finalised Terms Representation). It is alleged that TeleChoice and Mr Abdou knew that the Finalised Terms Representation was false and that the Optus Entities only became aware of the falsity in April 2021. It is also alleged that the Optus Entities were induced by the Finalised Terms Representation to enter into the Final Dealer Appointment with TeleChoice on terms more favourable to TeleChoice than otherwise would have been the case, which is said to have caused loss to the Optus Entities.
For ease of reference the terms of the original form of the proposed Optus Counterclaim are set out in Annexure A to these reasons. Shortly before the hearing the Optus Entities informed the court and the parties of a proposed revision to paragraph 2 of the proposed counterclaim, which is reproduced as Annexure B to these reasons.[9]
[9]References in these reasons to the Optus Counterclaim are references to the counterclaim in its revised form unless otherwise indicated.
The Optus Entities’ submissions
Optus filed an appearance on 15 February 2018, and it was common ground that the time by which any counterclaim was to be filed by the Optus Entities had long since passed. The Optus Entities submitted that the day by which any counterclaim was to be filed and served was 19 March 2018. This was not disputed by TeleChoice. Consequently, the Optus Entities submitted that if they are to bring the Optus Counterclaim they needed an order extending the time within which the counterclaim could be filed.
It was submitted that it was a matter for the discretion of the court as to whether the time ought to be extended and that the overriding principle was what the interests of justice required in any given case.[10] The Optus Entities submitted that in this context regard was usually had to matters such as: the length of the extension sought; the reason for needing the extension; any prejudice that granting the extension would cause to another party; the effect of the granting of the extension upon the proceeding and possibly other cases in the list; and ways of mitigating any such prejudice or any adverse effects. Reference was also made to considerations under the CP Act, including facilitating the just, efficient, timely and cost-effective resolution of the real issues in dispute, and the court’s powers under the CP Act to achieve this.[11]
[10]Reference was made to Jackamarra v Krakouer (1998) 195 CLR 516, [30], [66] and State of Victoria v Davies [2003] VSCA 65, [23] by way of example.
[11]See, for example, CP Act ss 7, 8, 9.
As to the length of the delay, the Optus Entities acknowledged that the length of the extension required was substantial but submitted that it was not until around 27 April 2021 that Optus became fully aware of the falsity of the Finalised Terms Representation alleged to have been made by TeleChoice and Mr Abdou. The Optus Entities submitted that prior to becoming fully aware of the falsity of the representation it would have been improper for them to file or seek leave to file the counterclaim as they could not have been satisfied that they had a proper basis to plead the deceit claim against TeleChoice or Mr Abdou.
In making this submission reference was made to, among other things, pleaded allegations by TeleChoice in its claim regarding what Mr Abdou is alleged to have said to Mr O’Sullivan of the Optus Entities in July 2007. These pleaded allegations included statements that ‘TeleChoice had done a deal with Telstra’ and ‘The deal is done, but we haven’t signed yet. We’re signing in a couple of days’. Reliance was also placed upon a statement in the Abdou Witness Statement that in about early July 2007 Mr Abdou told Mr O’Sullivan that ‘TeleChoice had done a deal with Telstra, that it would cease to be an Optus dealer at the end of March 2008’ and that TeleChoice signing the agreement with Telstra was ‘imminent’ and TeleChoice would be ‘signing in a couple of days’.[12]
[12]See Abdou Witness Statement, [33]–[34]. These statements appear in paragraphs 53 and 54 of Mr Abdou’s revised witness statement filed 10 October 2022.
It was submitted that the Optus Entities’ knowledge of the falsity of the Finalised Terms Representation arose by reason of TeleChoice’s senior counsel making submissions on 27 April 2021 in connection with the strike out application the subject of the Strike Out Reasons. In substance this was said to have occurred through TeleChoice’s submission at that time that it was quite plain that there was no allegation in TeleChoice’s claim that negotiations with Telstra were completed, or that an agreement had been finally negotiated, and that what was being dealt with in TeleChoice’s claim was not a ‘finalised agreement’ but ‘draft terms of an agreement that was in the process of being negotiated’.[13] This was said to sit in tension with the statements made by Mr Abdou that a deal had been done and signing was imminent or to occur in a couple of days.
[13]See transcript (27 April 2021): T68–69.
It was further submitted that the precise nature of the final allegations to be made by TeleChoice in its claims, and how TeleChoice puts its case, remained the subject of argument and uncertainty until after the hearing and determination of the amendment application in May 2022 and the later filing of the August 2022 Statement of Claim. It was said that it had become clear that it is no longer alleged by TeleChoice that all of the terms had been negotiated with Telstra, and that the alleged Finalised Terms Representation made by TeleChoice and Mr Abdou to the Optus Entities was false and known to be so.
The Optus Entities submitted that, having regard to the procedural history and the chronology of the proceeding, the delay in raising the counterclaim since 27 April 2021 was ‘… relatively modest, and explained …’ given the following:
(a) TeleChoice’s statement of claim remaining in a state of flux until it filed the August 2022 Statement of Claim.
(b) The proposed counterclaim first being provided to TeleChoice on 28 July 2022.
(c) Optus having investigated whether it had a basis to file a counterclaim during the period 13 August 2021 and 28 July 2022, with the 13 August 2021 date being the date on which the Optus Entities first received the first version of the proposed fourth further amended statement of claim.
(d) The taking of various steps by the Optus Entities, including: seeking advice from senior counsel in the period August–September 2021; conferring with relevant witnesses on 28 June 2022 after the Amendment Reasons were delivered; and not making a decision on whether to pursue the proposed counterclaim until it was known whether TeleChoice’s ‘matching’ revenue representation claims against the Optus Entities would proceed, which it was said only became apparent after the publication of the Amendment Reasons in May 2022.
The Optus Entities also referred to other factors, including: the fact that pleadings were yet to be closed; the events forming the basis for the allegations made by TeleChoice having occurred during the period 2006 to 2013; TeleChoice not commencing the proceeding until 15 December 2017; the proceeding being stayed until 16 September 2019 after TeleChoice was ordered to pay security for costs on 31 August 2018; and the history of the proceeding as revealed by the procedural chronology referred to in the Strike Out Reasons, the Amendment Reasons, and the time taken by TeleChoice to finalise the August 2022 Statement of Claim following the delivery of the Amendment Reasons.
The Optus Entities submitted that it was plain that there was a proper basis to make the Optus Counterclaim based on the alleged fraudulent Finalised Terms Representation and that there was a reasonable belief in the allegations based on the factual and legal material available.[14] They also submitted that a proper basis was apparent from the particulars in the Optus Counterclaim, emphasising, among other things, that TeleChoice had never withdrawn the allegation in its claim and the Abdou Witness Statement that Mr Abdou told Mr O’Sullivan of the Optus Entities that TeleChoice ‘had done a deal with Telstra’ and that TeleChoice signing the agreement with Telstra was ‘imminent’, and that it would be ‘signing in a couple of days’.
[14]Relying in part on s 18 of the CP Act and the decision in Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 5) [2014] VSC 400, [87] (Dura No 5).
With respect to Ms Seifen’s evidence that, ‘… at one stage, Mr Shiner and Mr Martinelli [on behalf of Optus] came to TeleChoice’s office and I showed them a copy of the Draft Telstra Agreement …’, the Optus Entities submitted that this evidence did not establish that there is no proper basis for the Optus Counterclaim. It was submitted that these statements were no more than allegations made by TeleChoice which, if established, would be relevant to, but not determinative of, questions of inducement, reliance and loss. It was further said that, at its highest, such evidence could rise no higher than creating a suspicion of the existence of deceit or fraud by TeleChoice, but that this was not sufficient to defeat the Optus Entities’ proposed deceit claim[15] and that these would be matters for determination at trial.
[15]Reference was made to Hayward v Zurich Insurance Co Plc [2017] AC 142 and Clerk & Lindsell on Torts (Thomson Reuters, trading as Sweet & Maxwell, 23rd ed, 2020), 1364 [17–37].
Additional submissions of the Optus Entities included the following:
(a) If the extension of time was not granted, it would be open to the Optus Entities to file and serve a fresh proceeding raising the same claim, which they intended to do, and any fresh proceeding would not be an abuse of process.
(b) In the context of s 30 of the Limitation Act, the Optus Entities submitted that even if it was assumed to apply to Mr Abdou, s 30 would not give rise to any difficulty or prejudice to Mr Abdou. This was said to be because the Optus Entities accepted that, absent the limitation period stopping running because of the alleged deceit by TeleChoice and Mr Abdou, the six-year limitation period for the deceit claim would have expired before the commencement of this proceeding in December 2017. Consequently, so it was said, any ‘back dating’ of the date of the commencement of the Optus Counterclaim to the date of commencement of this proceeding could not give rise to any claimed prejudice by the operation of that section even if it was assumed to apply to Mr Abdou. In this context it also became apparent that if the Optus Counterclaim proceeds, or a fresh proceeding is issued, and TeleChoice or Mr Abdou seek to rely upon the six‑year limitation period, the Optus Entities anticipate relying upon s 27 of the Limitation Act to contend that the commencement of the relevant limitation period did not start until the Optus Entities became aware of the alleged fraud in April 2021.
(c) In any event, the Optus Entities informed the court that they proposed to give an undertaking not to rely upon s 30 of the Limitation Act in respect of Mr Abdou or contend that, upon its proper construction, it applied to Mr Abdou. It was further submitted that any extension of time should be granted on terms that the counterclaim against Mr Abdou is deemed to have been commenced at the time the counterclaim is filed. In connection with the proposed undertaking to be given by the Optus Entities regarding s 30 of the Limitation Act and the proposal that the extension order be made on terms regarding the date of commencement of that counterclaim against Mr Abdou, the Optus Entities also relied on observations in Australia & New Zealand Banking Group Ltd v Larcos[16] and Philip Morris Ltd v Bridge Shipping Pty Ltd.[17]
[16](1987) 13 NSWLR 286 (Rogers J).
[17][1994] 2 VR 2 (Ashley J).
(d) It was submitted that TeleChoice’s reference to paragraph 58 of the Strike Out Reasons, in which I observed that TeleChoice’s statement of claim at that time revealed, in substance, that negotiation of all of the terms of the agreement with Telstra had not been concluded or been finalised, assisted the Optus Entities’ position on this application and their contention that there was a proper basis for the Optus Counterclaim. This, so it was said, was because if that was so it sat in complete tension with the alleged Finalised Terms Representation made by TeleChoice through Mr Abdou.
(e) The Optus Entities contended that extending the time for the filing of a counterclaim would have a negligible effect on the duration of the trial, the setting of a trial date, or the conduct of the trial, and that these considerations were outweighed in any event. In this context reference was made to the procedural history, with emphasis being placed upon TeleChoice’s challenges and uncertainties with its pleading and the many remaining steps required to be undertaken before the proceeding is ready for trial. It was further submitted that extending the time for the filing of the counterclaim would see the just determination of all issues between the parties and avoid multiplicity of proceedings, which was said to be consistent with a just outcome, the overarching purpose under the CP Act, and the court’s obligations in relation to the same under the CP Act.
(f) It was said that it is not now put by Ms Seifen in her affidavit, or by TeleChoice in the August 2022 Statement of Claim, that the terms of the agreement with Telstra had been finalised at the time Mr Abdou is said to have made the Finalised Terms Representation to Mr O’Sullivan. This was submitted to be ‘telling’ and firmly supportive of the existence of a proper basis for the Optus Counterclaim.
(g) If a separate proceeding was required to be commenced to pursue the Finalised Terms Representation claim against TeleChoice it was submitted that it would be inevitable that the separate proceeding would have to be heard together or consolidated with this proceeding. It was said that creating a circumstance where a separate proceeding was needed would not well serve the parties’ or the court’s obligations under the CP Act or be a just result. It was also said that no question of Anshun estoppel would arise at this stage and that this could only arise or fall for consideration at a later point if any counterclaim or separate proceeding had not been commenced prior to the hearing and determination of TeleChoice’s claims in this proceeding.
With respect to the Undertaking Application and the Section 27 Application, it was submitted by the Optus Entities that it was only necessary for the court to deal with those applications if the Extension Application was not successful. Reference was also made to many of the well-known authorities addressing applications to be released from the implied undertaking.[18]
[18]These included: Harman v Secretary of State for the Home Department [1983] 1 AC 280; Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217, 224–225 (Wilcox J); Mobil Oil Australia Ltd v Guina Developments Pty Ltd [1996] 2 VR 34, 37–38 (Hayne JA); British American Tobacco Australia Services Ltd v Cowell (No. 2) (2003) 8 VR 571, [19] (Phillips, Batt and Buchanan JJA); Spalla v St George Motor Finance Ltd [2004] FCA 1014, [38]–[39] (Ryan J); Hearne v Street (2008) 235 CLR 125, [96] and [107] (Hayne, Heydon and Crennan JJ); Northbuild Construction Pty Ltd v Discovery Beach Project Pty Ltd (No 4) [2011] 1 Qd R 145, [44]–[47] (Chesterman JA); Laen Pty Ltd v At the Heads Pty Ltd & Ors [2011] VSC 315, [6], [10], [12] (Davies J); Findex Group Ltd v iiNet Ltd [2019] NSWSC 1198, [45] (Ward CJ); Clare Hazell-Wright v 32 Domain Pty Ltd [2020] VSCA 129, [19] (Tate, McLeish and Hargrave JJA); Nicholson, In the matter of Endeavour Securities (Australia) Limited (in liq) [2020] FCA 1773, [21] (Derrington J).
Although it was submitted that it was possible that the implied undertaking did not apply to the Undertaking Documents, it was said that it was at least arguable that it did apply, and that the Optus Entities considered it to be responsible for them to seek to be released from the implied undertaking and any applicable obligation under s 27(1) of the CP Act. In this context emphasis was placed upon, among other things: TeleChoice voluntarily putting the Draft Telstra Documents in issue by referring to them in its pleading; the documents having been in evidence in the Strike Out Application; the close connection between the claims that would be made in the separate proceeding (if it were to be commenced) and the claims that are made by TeleChoice in this proceeding; the Draft Telstra Documents pre-existing this litigation; and the fact that the Draft Telstra Documents would be discoverable and required to be produced in any separate proceeding in any event.
The Optus Entities submitted that it was clear that the extension of time should be ordered.
TeleChoice’s submissions
TeleChoice opposed the Optus Entities’ application for an extension of time within which to file the Optus Counterclaim. In its written submission TeleChoice submitted that the proposed counterclaim made allegations of fraud which did not meet the strict bar for pleading such allegations, and that discretionary considerations, including the delay in bringing the claim and the inadequacy of the explanation for the delay, weighed against the success of the application. It was said in TeleChoice’s written submission that any such claim made in a separate proceeding would suffer from the same deficiencies as the Optus Counterclaim and therefore no special circumstances existed that would make it appropriate for the Optus Entities to be released from the implied undertaking.[19]
[19]As earlier noted, TeleChoice’s position about the Undertaking Application was later recalibrated so that it neither opposed nor consented to the application.
Emphasis was placed upon the requirement that an allegation of fraud be pleaded specifically and with particularity.[20] It was submitted that neither of the matters on which the Optus Entities relied to found their falsity allegation were sufficiently specific to support such an allegation, meaning that there was no proper basis for the claim. In this context TeleChoice submitted, among other things, that the particulars in paragraph A of paragraph 3 of the Optus Counterclaim (that the Draft Telstra Documents were incomplete and include numerous handwritten annotations) did not ipso facto lead to the conclusion that TeleChoice and Telstra had in fact not finalised the negotiation of the terms of the agreement, or lead to the conclusion that TeleChoice and Telstra did not intend to execute an agreement imminently or within a couple of days. Consequently, it was submitted that the particulars do not support the inference sought to be drawn from them. It was submitted that the status of the Draft Telstra Documents does not ‘inexorably lead’ to the particular inference that is sought to be drawn. It was said further that it is necessary for the Optus Entities to properly identify a matter from which it can be inferred that the Finalised Terms Representation was false, rather than being potentially one of a number of available inferences.
[20]Relying upon, for example, Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486 [26]; Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563, 573.
This aspect was further emphasised during oral submissions. It was submitted that the fact that the Draft Telstra Documents were incomplete does not show that the alleged Finalised Terms Representation was false, and therefore these particulars cannot make good or support the allegation of falsity in paragraph 3 of the Optus Counterclaim. This was also said to establish that there was no proper basis for the fraud or falsity allegation.
In this context it was submitted that the particulars in paragraph B of the particulars to paragraph 3 suffered similar challenges. It was put that there had not been a change of position by TeleChoice, with reliance being placed upon earlier versions of the statements of claim and an observation made in paragraph 58 of the Strike Out Reasons to the effect that the substance of TeleChoice’s allegation in its then current form was:[21]
… really to the effect that TeleChoice had negotiated itself into a position where Telstra was willing to appoint TeleChoice as a dealer for five years from 2008 and that, although the negotiation of all the terms had not concluded or been finalised, the negotiations regarding the terms were advanced and had reached the stage as reflected in the draft Telstra agreements referred to in the particulars to paragraph 9 … the Telstra documents each expressly referred to as drafts and, as their terms demonstrate are not finalised or complete. As TeleChoice submitted, what was being addressed in paragraph 9, was an intended appointment that did not proceed, not a concluded agreement or negotiation.
[21][2021] VSC 310, [58] (Connock J).
To the extent that a claimed change of position was relied upon for establishing the alleged falsity of the Finalised Terms Representation, it was contended that this could not assist the Optus Entities because there was no change of position, which was said to be reinforced by the above observation in the Strike Out Reasons. In the course of the submissions regarding the absence of a proper basis, senior counsel for TeleChoice also contended that the terms of the Draft Telstra Documents revealed that the essential terms had been determined. Thus it was said that the particulars relied upon in paragraph 3 of the Optus Counterclaim could not support the allegation of falsity in that paragraph.
TeleChoice further submitted that, given the evidence of Ms Seifen referred to above, the Optus Entities could not make good the allegation of falsity or the allegation of inducement in paragraph 6 of the Optus Counterclaim, and that this was a separate reason why it could not be established that there was a proper basis for the deceit claim. TeleChoice submitted that this was a ‘dispositive point’ on this application. Reference was also made to the recent proposed revision to paragraph 2 of the counterclaim[22] and it was submitted that this late revision further supported the contention that the court could not be satisfied that there was a proper basis for the Optus Counterclaim.
[22]Reproduced as Annexure B to these reasons.
As to paragraph 4 of the Optus Counterclaim and the alleged knowledge of TeleChoice and Mr Abdou, it was submitted that the reliance upon the particulars to paragraph 3 of the Optus Counterclaim as part of the particulars of knowledge in paragraph 4 revealed further challenges for the Optus Entities. In substance this was said to be because the fact of the documents being incomplete and including handwritten annotations could not support an allegation of knowledge of falsity on the part of TeleChoice or Mr Abdou at the time the alleged Finalised Terms Representation was made. It was also emphasised that the drafting of the pleadings and alleged change of position referred to in sub‑paragraph B of the particulars to paragraph 3 occurred many years after the making of the alleged Finalised Terms Representation and therefore could not support an inference of the relevant knowledge on the part of Mr Abdou or TeleChoice at the time in July 2007.
With respect to s 30 of the Limitation Act, senior counsel for TeleChoice accepted that the section would apply to TeleChoice if the counterclaim proceeded, although understandably TeleChoice did not submit that any relevant prejudice for TeleChoice would follow from this particular matter in the context of the Extension Application. As to the section’s application to Mr Abdou, TeleChoice agreed with the position taken by the Optus Entities and submitted that the course proposed by the Optus Entities was an appropriate one if the Extension Application was successful. That is, TeleChoice agreed with the Optus Entities that it would be appropriate to make any extension order subject to terms that the counterclaim against Mr Abdou be taken to commence from the date on which it was filed, and that, in addition, an undertaking could and should be given by the Optus Entities that they would not contend that s 30 of the Limitation Act applied to Mr Abdou or rely upon it against him.
As to other discretionary matters said to weigh against the Extension Application, TeleChoice submitted that:
(a) The contention that the Optus Entities first became aware of the alleged falsity of the Finalised Terms Representation in April 2021 was untenable given that Ms Seifen’s evidence showed that Optus representatives saw the Draft Telstra Documents in 2007.
(b) Given that the solicitors for the Optus Entities have had access to the Draft Telstra Documents since December 2019, the Optus Entities could have formed a view about the status of those documents at any time since then.
(c) The delay was significant and underscored by previous complaints made by the Optus Entities regarding the time that has been taken by TeleChoice to finalise TeleChoice’s claim, including the August 2022 Statement of Claim.
(d) Optus appeared to have made a forensic decision to hold back its counterclaim until determining whether or not its complaints about TeleChoice’s pleading would succeed. It was said that, because the defendants’ complaints in relation to TeleChoice’s representation claim did not succeed, Optus has now decided to proceed with the counterclaim, which was said to be a forensic or strategic decision.
(e) Allowing the counterclaim to be filed would open up a new front in the proceeding. It was contended that, although there would be overlap regarding liability questions in the Optus Counterclaim with those arising in respect of TeleChoice’s claim, the damages question was quite distinct. TeleChoice submitted that it would need to address the counterfactual on the Optus Counterclaim with lay and expert evidence. In this context reference was made to: the need to obtain further instructions from its own witnesses; potentially calling evidence from those involved in the negotiations between Telstra and TeleChoice at the time; the need for further discovery; and the need to respond to lay and expert evidence regarding any claimed loss and damage. It was contended that the scope of the proceeding would be enlarged, would involve a new claim, and would cause unacceptable delay.
Although in its written submissions TeleChoice had originally opposed the Undertaking Application, shortly before the hearing TeleChoice informed the court and the Optus Entities that its position had changed and that it neither opposed nor consented to the Optus Entities being released from the implied undertaking, which was said to be a matter for the court. During the hearing TeleChoice confirmed that this remained its position in relation to the Undertaking Application, and also its position on the Section 27 Application. That said, senior counsel for TeleChoice stated that this did not mean that TeleChoice accepted that the issue of any fresh proceedings by the Optus Entities if the Extension Application was unsuccessful would not or could not amount to an abuse of process. TeleChoice submitted that the decision of ASIC v Lindberg (No 2)[23] relied upon by the Optus Entities was distinguishable, and stated that TeleChoice’s position was that it reserved all its rights in relation to any fresh proceeding should such a proceeding be commenced. TeleChoice understandably acknowledged that the question of whether any fresh proceeding could or would amount to an abuse of process was not a matter for determination on this application and that it could and should only be assessed in the light of the relevant circumstances at the time if such a proceeding was commenced.
[23][2010] VSCA 19.
The end point for TeleChoice was its contention that the application by the Optus Entities for an extension of time within which to file a counterclaim against TeleChoice or Mr Abdou should be dismissed.
Consideration and disposition
Although the issues arising on this application warranted appropriate pause for thought, after weighing the relevant considerations, and on the evidence and submissions before me, I consider it to be more than sufficiently clear that the Optus Entities should be granted an extension of time within which to bring the Optus Counterclaim against TeleChoice and Mr Abdou. As was submitted was appropriate by both the Optus Entities and TeleChoice, this will be subject to the Optus Entities providing a satisfactory undertaking with respect to the application of s 30 of the Limitation Act to Mr Abdou, and the imposition of a term to the effect that the Optus Counterclaim against Mr Abdou will be taken to have commenced from the time of the filing of the counterclaim. I elaborate further below as to why I consider that the Extension Application should succeed.
Whilst it is trite that fraud allegations are serious allegations and that they are required to be adequately and appropriately pleaded, I accept the Optus Entities’ submissions that they have established that there is a proper basis for the Finalised Terms Representation claim that is the subject of the Optus Counterclaim.[24] As mentioned, the proposed deceit counterclaim is conceptually straightforward and I refer to my earlier observations on this topic, and also to Annexures A and B to these reasons. Given the contested factual issues that will arise at trial in relation to TeleChoice’s misrepresentation claim and the Optus Counterclaim, it is desirable to limit the discussion of these matters on this application. That said, I observe as follows in this context:
[24]As to the meaning of ‘proper basis’, see in this context CP Act s 18 and Dura No 5 [2014] VSC 400, [87].
(a) The Finalised Terms Representation allegation is addressed in revised paragraph 2 of the Optus Counterclaim as set out in Annexures A and B to these reasons. It is alleged that Mr Abdou said words to this effect to Mr O’Sullivan on about 5 July 2007 in a telephone conversation. It is alleged by TeleChoice in its own claim, and in the Abdou Witness Statement, that Mr Abdou informed the Optus Entities in July 2007 that TeleChoice had done a deal with Telstra, that the deal is done but we haven’t signed yet, and that signing is imminent and we are signing in a couple of days.
(b) A review of the Draft Telstra Documents reveals that, as is alleged by the Optus Entities, these documents do not, on their face, reveal that all the terms being negotiated between Telstra and TeleChoice had been finalised.
(c) TeleChoice does not in its claim, or in its evidence or submissions on this application, contend that all of the terms of its proposed agreement with Telstra had in fact been negotiated and finalised at the time TeleChoice is alleged to have made the Finalised Terms Representation and decided to enter into the Final Dealer Appointment with the Optus Entities rather than pursuing what TeleChoice describes as the ‘Intended Telstra Appointment’. That position does not change even if it is assumed that essential terms had been agreed — although that is another live factual issue for later determination at trial.
(d) I do not accept that the particulars to paragraph 3 of the Optus Counterclaim are not sufficiently capable of supporting the allegation that TeleChoice and Telstra had not finalised negotiating the terms of the ‘Alleged Telstra Agreement’ or the allegation that TeleChoice did not intend to execute the ‘Alleged Telstra Agreement’ in a couple of days, or was about to execute it. In substance this is because, on their face, the Draft Telstra Documents are incomplete and include numerous notes which is material capable of supporting the inferences referred to — as is the fact that TeleChoice does not allege that it had finalised all of the terms of the proposed agreement with Telstra. This remains the position even if it is assumed that there has been no relevant change of position by TeleChoice in its pleaded case regarding the Draft Telstra Documents.
(e) I also note in this regard that the Optus Entities no longer propose to rely upon the particulars to paragraph 3 in support of the knowledge allegation in paragraph 4, which was a matter confirmed by senior counsel for the Optus Entities at the hearing. But even if that were not so it would not matter. This is because of my view that the matters referred to in paragraphs A and B of the particulars to paragraph 4 are sufficient to support an inference of knowledge of the kind referred to.[25]
(f) Mr Abdou was a key person integrally involved with the TeleChoice and Telstra negotiations on behalf of TeleChoice at the time, and with the discussions with the Optus Entities in July 2007. In my view, together with the other matters relied upon by the Optus Entities in paragraphs A and B of the particulars to paragraph 4, this does provide a sufficient basis for it to be inferred for present purposes that, whatever was the true position about the negotiations with Telstra at the time, Mr Abdou was a person who had knowledge of it through his role and position. Again, I recognise that these will be matters of fact that need to be determined later at trial.
(g) I do not accept that, on the material before me on this application, Ms Seifen’s evidence in her affidavit establishes that the court cannot be satisfied that there is a proper basis for the allegation of falsity or the allegation that the Optus Entities were induced to enter the Final Dealer Appointment by the Finalised Terms Representation the subject of the Optus Counterclaim. Whilst I accept that Ms Seifen’s evidence raises questions regarding the state of any knowledge or possible suspicion on the part of the Optus Entities at the time, these are matters of contested fact to be determined in due course in light of all the relevant evidence about the circumstances at that time. It is neither possible, necessary nor desirable to determine such matters on this application. I also observe that Ms Seifen’s evidence reveals that no copies of the documents were provided, and that the extent to which the documents were shown to the Optus Entities is not clear. In so doing I also take into account the absence of any evidence on this application from any representative of the Optus Entities that were involved at the time. I am also cognisant of the contention made by the Optus Entities regarding the need for more than a suspicion in the deceit context in order to defeat an inducement or falsity allegation, although these will again be matters for consideration at trial when the contested factual matters are addressed.
[25]And an allegation of recklessness, noting also the form of the Draft Telstra Documents referred to in paragraph 3. It would also be permissible to make reference to the incomplete nature of the Draft Telstra Documents in the particulars to paragraph 4 in the manner referred to in the particulars to paragraph 3.
I note also that the Optus Counterclaim is said by experienced senior counsel to have a proper basis and that it has been drafted and settled by the same member of senior counsel, although even if that was not the case or this consideration is put to one side, the result would not change.
The end point on this topic is that I do not accept TeleChoice’s submission that the Optus Entities have not established that there is a proper basis for the Finalised Terms Representation allegation and the other allegations the subject of the deceit claim in the Optus Counterclaim. I am satisfied that it has been established that, on the factual and legal material available to the Optus Entities, there is a proper basis for the Optus Counterclaim.[26]
[26]See CP Act s 18 and also Dura No 5 [2014] VSC 400, [87].
I add for completeness that, although it was submitted that the revision to paragraph 2 of the Optus Counterclaim made shortly before the hearing further supported the absence of a proper basis, in the circumstances I did not find that submission persuasive. It is to be recognised that the application is in respect of the Optus Counterclaim as revised and not the earlier version of it. In addition, the revision does not change the fact that, at its core, the Optus Counterclaim relates to what is an alleged misrepresentation regarding the finalised nature of the terms agreed between TeleChoice and Telstra in an agreement that was to be executed imminently or in a couple of days. The revision also continues to rely in part upon TeleChoice’s pleaded statements of Mr Abdou regarding these matters.
With respect to the explanation for the delay and TeleChoice’s submission that the explanation is unsatisfactory or untenable, I make the following observations.
I am mindful of the discretionary nature of this application, the need for my discretion to be exercised judicially having regard to the relevant circumstances, the need to be guided by what is just in all of the circumstances, the terms of the court’s and the parties’ obligation under the CP Act, and the terms of the overarching purpose in s 7 of the CP Act.
I accept that the explanation for the delay is one of the relevant matters to be taken into account, as I have. It is apparent that there is a contest between the parties as to whether the Optus Entities knew or ought to have known of the alleged falsity of the alleged Finalised Terms Representation at an earlier time than April 2021, whether it be in July 2007 or, for example, in December 2019 when the Draft Telstra Documents were provided to Optus in the course of this litigation. This, however, is a contested factual matter that is not capable of final resolution on this application, noting also that the evidence put forward in the James Affidavit and its exhibits was not evidence that TeleChoice sought to challenge or cross‑examine Mr James about, and noting further that the issue will fall to be determined at trial in the context of any limitation of action issues that are raised, which it seems almost inevitable will occur given the timing issues and the Optus Entities’ statements at the hearing that they will be relying on s 27 of the Limitation Act. I also refer to my earlier observations regarding Ms Seifen’s evidence.
Further, a review of the history of the proceeding does reveal, as the Optus Entities contended, that TeleChoice’s pleading was in a state of flux until a period after the delivery of the Amendment Reasons on 31 May 2022, including TeleChoice’s revenue representation claim. It may also be observed that Mr James’ evidence and the submissions made by the Optus Entities in the context of the same do explain how the delay has emerged. I add that, given the close factual overlap regarding the Finalised Terms Representation in the Optus Counterclaim and TeleChoice’s revenue representation claim, in my view it was not, in the particular circumstances of this case, unreasonable for the Optus Entities to wait for it to be determined by the court whether or not TeleChoice’s revenue representation claim would proceed before finally deciding whether it would seek an extension of time within which to bring the Optus Counterclaim that it now seeks to proceed with.
Of course, that does not mean that the counterclaim could not have been advanced earlier which, as TeleChoice submitted, is a matter to be weighed in the balance. Even on the submissions of the Optus Entities, it knew of the issue in early 2021. That said, even if it was assumed to be the case that the Optus Entities could or should have been alive to the issue in December 2019 when the Draft Telstra Documents were provided to their solicitors, that is one of the factors to be weighed in the balance and would not in the circumstances of this case result in a different outcome. As various authorities have emphasised, it is important to keep in mind that central aspects of the overarching purpose include, amongst others, the obligation to facilitate the just and effective resolution of the real issues in dispute between the parties. In my view, and keeping the close overlap between the allegations in mind, allowing the extension of time will serve this object, noting also the intention of the Optus Entities to commence a separate proceeding if the Extension Application fails, the stage of this proceeding, that the matter has not yet been set down for trial, and that many interlocutory trial preparation steps remain to be completed.
As to other factors said to be relevant to the exercise of discretion, it will be apparent that I have concluded that, having regard to all of the circumstances and taking into account the overarching purpose and the court’s obligation with respect to the same, I consider it to be appropriate and sufficiently efficient to the just and effective resolution of the real issues in dispute to grant a time extension to the Optus Entities to allow the Optus Counterclaim to be brought forward. I make the following further observations regarding these additional discretionary matters.
At a factual level, there is a material overlap between TeleChoice’s claim, including its revenue representation claim, and the factual issue about the Finalised Terms Representation said to have been made by TeleChoice and Mr Abdou. So much was understandably acknowledged by TeleChoice, who also recognised, as is the fact, that the key factual witnesses on this representation issue will be the same people involved with TeleChoice’s representation claim. This is apparent from TeleChoice’s pleaded case and the proposed Optus Counterclaim in any event.
Whilst I accept that the introduction of the Optus Counterclaim will enlarge the scope of the proceeding and involve the introduction of the deceit claim by the Optus Entities, to some extent neither of the parties’ submissions on this topic were particularly persuasive. This is because, in my view, the Optus Entities’ submissions tended to understate the position and TeleChoice’s submissions tended to overstate the position. But whether or not that is so, having regard to the procedural history, the stage of the proceeding, the desirability of facilitating the just resolution of the issues in dispute, and all of the circumstances, such considerations do not in the end result in the balance being weighed against the grant of the time extension. I observe in this regard that it was only in August 2022 that TeleChoice’s statement of claim was finalised, that there remains lay evidence to be put on by the Optus Entities, and lay evidence in reply by TeleChoice — as well as many other pre-trial steps to be completed. It is readily apparent that the parties have not moved this proceeding along swiftly.
It is also the case that the proceeding has not been set down for trial and that this is still a material time away. In addition, notwithstanding the introduction of the Optus Counterclaim and the introduction of new issues regarding the counterfactual and damages, directions can be made to accommodate TeleChoice’s position and Mr Abdou’s position, including in relation to such evidence as needs to be filed and addressed to deal with the additional issues that will now arise. As I have said, and noting my proper basis conclusion, in the end the discretion is best guided by weighing what is just in all of the circumstances whilst taking into account the terms and operation of the CP Act. I regard this to be granting an extension of time within which the Optus Entities are permitted to bring the Optus Counterclaim.
This conclusion has also been arrived at taking into account the Optus Entities’ proposed undertaking with respect to s 30 of the Limitation Act insofar as it relates to Mr Abdou, and the proposed imposition of terms regarding the timing of commencement of that proceeding against Mr Abdou, as was suggested by the Optus Entities and supported by TeleChoice.
Because the position with respect to s 30 of the Limitation Act was a common position, and because on the application the Optus Entities stated and accepted that, absent any postponement of the commencement of the limitation period due to the alleged deceit, the six-year limitation period in respect of the Optus Counterclaim would have expired before the date of commencement of the current proceeding, it is not necessary to further address the topic of s 30 of the Limitation Act on this application.[27]
[27]Although I note that, had it been necessary to do so, it is an issue of some greater complexity than might first appear, as is in part evident from the history of the provision, legislation in some other States, and the content of Law Reform reports in the United Kingdom and Australia.
It follows from that which I have said regarding the Extension Application[28] that it is not necessary to determine the Optus Entities’ alternative Undertaking Application or its Section 27 Application. That said, and observing that these applications were not ultimately opposed by TeleChoice, had it been necessary to decide the applications it appears that they would have had reasonable prospects of success. This appears to be the case given the close connection between the issues in this proceeding and those that would be raised in the separate proceeding — and noting also TeleChoice’s reliance on the Draft Telstra Documents and the observations made in a number of the authorities regarding the implied undertaking, its operation, and the relevance of any proposed use of documents where the use is closely connected with the existing proceeding.[29]
[28]And the position of the parties.
[29]See, for example, the authorities referred to in footnote 18 above.
It will be apparent from that which I have said so far that I have not addressed the question of whether the bringing of a subsequent proceeding could or would amount to an abuse of process had the Extension Application been refused. This is because it is neither necessary nor desirable to address the topic given the outcome of the Extension Application. It is also plain, as was accepted by the parties, that any such contention could only fall to be determined in light of the relevant circumstances should such a separate proceeding be commenced. Those relevant circumstances would include the reasons for decision if the Extension Application had been refused.
Finally, I note that counsel for TeleChoice were appearing for TeleChoice only and that, understandably, Mr Abdou was not a party to the Extension Application. Although Mr Abdou is a director of TeleChoice, if he was aware of the application he did not seek to be heard in relation to it.
Conclusion and proposed orders
As mentioned, I have concluded that:
(a) Subject to counsel for the Optus Entities providing a satisfactory undertaking of the kind earlier discussed regarding Mr Abdou and s 30 of the Limitation Act, and making the extension order subject to a term that the counterclaim against Mr Abdou is to be taken to have been commenced against him at the time that it is filed, an order should be made extending the time within which the Optus Entities may file and serve the Optus Counterclaim.
(b) Given the conclusion reached regarding the Extension Application it is not necessary to determine the Undertaking Application or Section 27 Application made by the Optus Entities in the alternative to the Extension Application.
Subject to hearing from the parties regarding the precise form of orders, and addressing directions for the future conduct of the proceeding, I propose to make substantive orders on the Extension Application to the following effect:
(1)The time within which the defendants may file a counterclaim against the plaintiff and Mr Abdou that is substantially in the form referred to in order 2 below is extended to 20 December 2022.
(2)By 20 December 2022 the defendants file and serve on the plaintiff and on Mr Abdou a counterclaim substantially in the form of the counterclaim at pages 11 to 15 of Exhibit ‘PJJ 61’ to the affidavit of Paul James sworn 9 September 2022 but with the following revisions:
(iii) paragraph 2 of the counterclaim is to be substantially in the revised form attached to the email dated 5 December 2022 and sent to the chambers of Justice Connock at 3:14pm;
(iv) the first sentence of the particulars to paragraph 4 of the counterclaim may be deleted or substantially deleted; and
(v) paragraph ‘B’ of the particulars to paragraph 3 may be revised to include the words ‘does not allege’ in addition to or in substitution of the words ‘no longer alleges’ in the third line of that paragraph.
(3)The counterclaim against Mr Abdou shall be taken to have been commenced against him on and from the date and time that it is filed with the court.
Annexure ‘A’
The Proposed Counterclaim of the Optus Entities
S ECI 2017 00289 - Business Service Brokers Pty Ltd -v- Optus Mobile Pty Ltd & Ors
Unless otherwise stated, defined terms in the Fourth Further Amended Statement of Claim dated [X] July 2022 have the same meaning in this Counterclaim.
The second defendant by counterclaim (Mr Abdou) is and was at all material times one of the two directors of the first defendant by counterclaim, TeleChoice.
On or about 5 July 2007, each of TeleChoice and Mr Abdou represented to the Optus Entities that:
(a)TeleChoice and Telstra had finalised negotiating the terms of an agreement which was to commence on 15 April 2008 pursuant to which TeleChoice would become a dealer of Telstra products, rather than products sold by the Optus Entities, which was in writing and in a form ready for execution (Alleged Telstra Agreement); and
(b)TeleChoice intended to execute the Alleged Telstra Agreement within a couple of days, or alternatively, was about to execute the Alleged Telstra Agreement.
(Fraudulent Representation).
Particulars
The Fraudulent Representation was made orally.
Words to the effect of the Fraudulent Representation were said by Mr Abdou to Paul O’Sullivan (Mr O’Sullivan), the then Chief Executive Officer of the Optus Entities, during a telephone conversation on or about 5 July 2007.
The words said by Mr Abdou in the course of the telephone conversation were said in his capacity as a director of TeleChoice. Those words were said to Mr O’Sullivan in his capacity as Chief Executive Officer of the Optus Entities.
Contrary to the Fraudulent Representation:
(a)TeleChoice and Telstra had not finalised negotiating the Alleged Telstra Agreement; and
(b)TeleChoice did not intend executing the Alleged Telstra Agreement within a couple of days, or alternatively, was not about to execute the Alleged Telstra Agreement.
Particulars
It is to be inferred that TeleChoice and Telstra had been unable to agree the terms of an agreement pursuant to which TeleChoice would become a dealer of Telstra products from 15 April 2008 and the Alleged Telstra Agreement was not going to be executed within a couple of days, or was not about to be executed, from:
A. the Draft Telstra Heads of Agreement and Draft Telstra Agreement, which are incomplete and include numerous handwritten annotations; and
B. the fact that, contrary to allegations in previous statements of claim filed in this proceeding by TeleChoice, in its current statement of claim, TeleChoice no longer alleges that it had agreed with Telstra the terms of an agreement pursuant to which TeleChoice would become a dealer of Telstra products from 15 April 2008.
Each of TeleChoice and Mr Abdou knew the Fraudulent Representation was false and/or did not have a genuine belief that the Fraudulent Representation was true and/or was reckless as to whether the Fraudulent Representation was true.
Particulars
The Optus Entities refer to and repeat the particulars to paragraph 3 above.
The knowledge of:
A. Mr Abdou is to be inferred from the fact that he had primary responsibility for negotiating the Alleged Telstra Agreement on behalf of TeleChoice; and
B. TeleChoice is to be inferred from the fact that Mr Abdou is and was a director of TeleChoice at all material times.
Each of TeleChoice and Mr Abdou intended that the Optus Entities would be induced by, and act on, the Fraudulent Representation.
Particulars
The Optus Entities refer to and repeat the particulars to paragraph 4 above. The intention of each of TeleChoice and Mr Abdou is to be inferred from the following:
A. the Fraudulent Representation was made in circumstances where Telstra was the Optus Entities’ main competitor in supplying telecommunications products in Australia; and
B. on or about 6 July 2007, during an in-person meeting subsequent to the Fraudulent Representation having been made, Mr Abdou said to representatives of the Optus Entities (including Mr O’Sullivan) words to the effect that TeleChoice would earn a significantly greater amount of money under the Alleged Telstra Agreement than it was earning under the Second Dealer Appointment.
The words said by Mr Abdou during the in-person meeting on or about 6 July 2007 were said in his capacity as a director of TeleChoice. Those words were said to Mr O’Sullivan in his capacity as Chief Executive Officer of the Optus Entities.
Induced by, and acting on the basis of the Fraudulent Representation, the Optus Entities entered into the 2008 Master Dealer Agreement, as varied by the Second Side Letter, which included the following terms:
(a)the Optus Entities would pay to TeleChoice a “Management Fee” of $52 (ex GST) in accordance with cl 3 of Sch 2 to the 2008 Master Dealer Agreement and the Second Side Letter (Management Fee Term);
(b)the Optus Entities would pay to TeleChoice an “Annual Branding Fund” of $500,000 (ex GST) in accordance with cl 3 of Sch 7 to the 2008 Master Dealer Agreement (Annual Branding Fund Term);
(c)the Optus Entities would pay to TeleChoice a mobile phone handset rebate of 3% in accordance with cl 8.8 of the 2008 Master Dealer Agreement (Handset Rebate Term); and
(d)the Optus Entities would pay to TeleChoice a “Channel Performance Bonus (Outcome Payment)” of 8.75% in accordance with cl 9 of Sch 2 to the 2008 Master Dealer Agreement (Outcome Payment Term).
If it had not been for the Fraudulent Representation, the Optus Entities would have sought to negotiate a further Master Dealer Agreement with TeleChoice that included terms which were less favourable to TeleChoice than the 2008 Master Dealer Agreement, as varied by the Second Side Letter, by seeking to negotiate an agreement:
(a)which included a Management Fee Term which required them to pay TeleChoice a fee of less than $52 for the activation of each mobile phone service of the type contemplated by cl 3 of Sch 2 to the 2008 Master Dealer Agreement;
(b)that did not include the Annual Branding Fund Term or, alternatively, that included a term requiring them to pay TeleChoice less than $500,000 per annum in return for TeleChoice undertaking Branding Initiatives as defined in cl 3 of Sch 7 to the 2008 Master Dealer Agreement in the manner prescribed by that clause;
(c)that did not include the Handset Rebate Term or, alternatively, that included a term which required them to pay TeleChoice a rebate of less than 3% of the purchase price of products of the type mentioned in cl 8.8 of the 2008 Master Dealer Agreement which TeleChoice had purchased from the Optus Entities; and
(d)that did not include the Outcome Payment Term or, alternatively, that included a term which required them to pay a “Channel Performance Bonus (Outcome Payment)” at a rate less than 8.75% of the commissions specified in cl 9 of Sch 2 to the 2008 Master Dealer Agreement on the occurrence of the events specified in that clause.
As a result of the Fraudulent Representation, the Optus Entities lost the opportunity to negotiate a further Master Dealer Agreement with TeleChoice on terms which would have been more favourable to it than the 2008 Master Dealer Agreement, as varied by the Second Side Letter, with respect to the Management Fee Term, Annual Branding Fund Term, Handset Rebate Term and Outcome Payment Term.
Particulars
Particulars of loss or damage will be provided before trial.
AND OPTUS CLAIMS AS AGAINST TELECHOICE AND MR ABDOU:
A. Damages for deceit.
B. The costs of and incidental to the counterclaim.
C. Interest on damages.
D. Such further or other order as the Supreme Court of Victoria sees fit.
Dated: [X] July 2022
David Collins
Vince Murano
……………………………………………
Clayton Utz
Solicitors for the defendants / plaintiffs by counterclaim
Annexure ‘B’
Proposed Revised Paragraph 2 of the Counterclaim
On or about 5 July 2007, each of TeleChoice and Mr Abdou represented to the Optus Entities that
:TeleChoice and Telstra had finalised negotiating terms of an agreement which was to commence on 15 April 2008 pursuant to which TeleChoice would become a dealer of Telstra products, rather than products sold by the Optus Entities,which was in writing and in a form ready for execution(Alleged Telstra Agreement);,andwhich was to be executed in writinga. TeleChoice intended to execute the Alleged Telstra Agreementa.within a couple of days; and/or
b.imminently.
b.or alternatively, was about to execute the Alleged Telstra Agreement.
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
0
17
0