Harris v AAL Aviation Limited and Commonwealth of Australia

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST

S CI 2013 1434

RODNEY HARRIS	Plaintiff
v
AAL AVIATION LIMITED (ACN 008 642 886)	First Defendant
COMMONWEALTH OF AUSTRALIA	Second Defendant

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JUDGE:	Lansdowne AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	14 November 2014 and subsequent written submissions
DATE OF JUDGMENT:	4 November 2015
CASE MAY BE CITED AS:	Harris v AAL Aviation Limited and Commonwealth of Australia
MEDIUM NEUTRAL CITATION:	[2015] VSC 602

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LIMITATION OF ACTIONS – Strike out - Postponement of the running of the limitation period for breach of contract - Whether concealment of the reasons for a breach of contract known to the plaintiff to have occurred is concealment of the right of action – Section 27(b) Limitation of Actions Act 1958.

ESTOPPEL – Strike out - Whether the plaintiff has pleaded any departure from a previous representation.

UNCONSCIONABLE CONDUCT– Strike out – Whether pleaded independently of estoppel – Whether damages are sought as a remedy.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J F Gordon	Maurice Blackburn Lawyers
For the First Defendant	Mr M Speakman SC	Johnson Winter & Slattery, Solicitors
For the Second Defendant	Miss K Harvey, solicitor	Australian Government Solicitor

TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

Allegations and causes of action in the statement of claim........................................................ 3

Terms of the contract of employment........................................................................................ 4
Negligent misrepresentation....................................................................................................... 4
Negligence..................................................................................................................................... 6
Deceit.............................................................................................................................................. 7
Breach of contract.......................................................................................................................... 7
Unconscionable conduct and estoppel...................................................................................... 8

Breach of contract............................................................................................................................... 9

Plea to which objection is taken................................................................................................ 12
Section 27 of the Limitation of Actions Act 1958........................................................................ 13
Submissions........................................................................................................................ 15
Legal principles................................................................................................................. 16
Discussion........................................................................................................................... 22
Conclusion.......................................................................................................................... 26

Unconscionable conduct and estoppel........................................................................................ 27

Independent causes of action or linked reply to limitation defence?................................. 28
Estoppel........................................................................................................................................ 30
Unconscionable conduct............................................................................................................ 35
Conclusion................................................................................................................................... 39

Conclusions and re-pleading......................................................................................................... 40

Breach of contract........................................................................................................................ 40
Unconscionable conduct and estoppel.................................................................................... 40
Mechanism for re-pleading....................................................................................................... 41

HER HONOUR:

Introduction

In this proceeding the plaintiff seeks damages as against the defendants in respect of superannuation he alleges he should have received by virtue of his employment but did not receive due to the conduct of the defendants.

The proceeding was commenced by generally indorsed writ filed on 22 March 2013. The plaintiff filed his statement of claim on 4 March 2014, nearly one year later. Appearances were filed by each defendant shortly thereafter, suggesting that service of the writ took place towards the end of the period for service.

The application before me was made by summons filed by the first defendant on 26 June 2014, by which summons the first defendant sought strike out of three aspects of the statement of claim. The summons was returnable before the judge managing the Major Torts List in July of 2014. Timetables were subsequently set by that judge as a consequence of which the matter came before me for hearing on 14 November 2014.

The summons was made returnable in a General Applications List and due to the press of other business was not called on for hearing until approximately 12.20pm. At that point, counsel for the plaintiff, opposing the summons, indicated that he was unable to remain for the afternoon for personal reasons. The Court sat into the lunch hour to hear the oral submissions put by counsel for the first defendant. By agreement, the submissions by the plaintiff in response and submissions in reply followed in writing. Prior to the submissions in response from the plaintiff, the first defendant prepared supplementary submissions in writing in response to an enquiry from me conveyed by my associate by email.

Regrettably, due to the press of other work I have been unable to deliver this judgment before now. I apologise to the parties for that delay.

After the summons was filed, but before it was heard, the plaintiff filed and served its reply. As a consequence, at the hearing of the summons two things occurred. First, the first defendant relied on an amended summons filed in Court without objection from the plaintiff. The amendments arose from the reply. Secondly, in oral submissions, counsel for the first defendant withdrew the objection to paragraph 51 of the statement of claim, having regard to paragraph 14 of the reply. The strike out application was as a result confined to two broad areas of the statement of claim.

The first objection relates to the plea of breach of a particular term of the plaintiff’s contract of employment. The breaches of that term pleaded at paragraph 80 of the statement of claim are that the plaintiff was not invited to join Commonwealth superannuation after a probationary period of three months, and was not invited to join the then applicable Commonwealth superannuation scheme until July 1978, which was almost ten years after he commenced employment.

The first defendant says that if these breaches occurred, which is not admitted, then any right of action accrued no later than July 1978, and accordingly is statute barred. The plaintiff in his reply has pleaded that the commencement of the running of the limitation period should be postponed due to fraud pursuant to s 27 of the Limitation of Actions Act 1958 (‘the Limitation Act'). The first defendant says that that plea cannot be made good, and so both the plea of breach and the reliance on s 27 should be struck out, with no leave to re-plead.

The first defendant puts a similar argument in respect of the plaintiff’s contention at paragraph 82 of the statement of claim that there was a breach of an express term of his contract of employment by reason of him having been induced in May 1982 to cease his membership of the Commonwealth superannuation scheme and join the TAA General Superannuation Plan. The first defendant says that if this breach occurred, which is not admitted, any right of action accrued at that time and reliance on s 27 of the Limitation Act cannot be made good.

The second area of objection is to the pleas at paragraphs 84 to 89 of the statement of claim of unconscionable conduct and estoppel, and similar allegations in the reply. The first defendant denies that any conduct of it as alleged in the statement of claim constitutes unconscionable conduct or creates an estoppel. Critically for the strike out application, the first defendant says that even if the actions of the first defendant were unconscionable, this unconscionable conduct could at most relieve the plaintiff from obligations that would otherwise bind him, it cannot impose additional obligations on the first defendant. Accordingly, the pleas in the statement of claim and reply of unconscionable conduct should be struck out without leave to re-plead.

In relation to estoppel, the first defendant says the plaintiff’s plea of estoppel must fail because there is no allegation that the first defendant has resiled from any representation it has previously made. It follows that the pleas in the statement of claim and reply of estoppel should be struck out without leave to re-plead.

For the reasons here set out, I accept the first defendant’s submissions and will strike out the portions of the statement of claim and reply to which objection is taken. There are three matters which I ask the parties to consider in the formulation of orders to give effect to these reasons, being strike out and redrafting of paragraph 5 of the statement of claim; the significance of the absence of objection to reliance on estoppel by reason of unconscionable conduct in the second paragraph 20 of the reply; and the mechanism by which the permitted re-pleading of the statement of claim is to take place. If the parties cannot agree on those matters, or other aspects of the orders, I will hear them further.

Allegations and causes of action in the statement of claim

The plaintiff commenced employment with the first defendant, then trading as TAA, on 17 October 1968 and later became an employee of QANTAS after QANTAS acquired all the shares in the first defendant. The plaintiff ceased to be employed by QANTAS on 17 August 2004, and turned 65 on 24 March 2009. These facts are agreed. The plaintiff pleads that he was employed in a permanent full time position. The first defendant denies that the plaintiff’s employment was as a permanent officer, and has largely put the plaintiff to proof of other pleaded aspects of his employment.

Terms of the contract of employment

The plaintiff alleges in paragraph 5(a) of the statement of claim that it was an express term, or alternatively an implied term, of his contract of employment that after a three months probationary period he would be invited to join ‘Commonwealth superannuation’ and would be engaged in a capacity that entitled him to join ‘Commonwealth superannuation’. That phrase is not a defined term, but appears to be accepted by the parties to refer to the Commonwealth Government superannuation scheme at the relevant time, being in 1968 the scheme pursuant to the Superannuation Act 1922 (Cth) and from 1976 the scheme pursuant to the Superannuation Act 1976 (Cth). The allegations in paragraphs 5(a) are not admitted.

In paragraph 5(b) of the statement of claim the plaintiff pleads ‘further implied terms’ of the contract of employment. The plaintiff no longer relies on paragraph 5(b)(i).[1] The first defendant does not admit the implied term pleaded at paragraph 5(b)(iii) that the first defendant would cooperate with the plaintiff ‘in order to implement the express terms of the employment contract’ and denies the other implied terms, which include alleged contractual obligations on the first defendant not to act ‘dishonestly’ (paragraph 5(b)(ii)), and to ‘act in good faith and honestly impart correct advice and information’ (paragraph 5(b)(iv)).
[1]T 6.30-T 7.6.

The plaintiff does not plead breach of these terms until paragraph 80 of the statement of claim. The form of that plea requires me to first touch on the alternative pleas of negligent misrepresentation (paragraphs 22- 58 of the statement of claim); negligence (paragraphs 59-68) and deceit (paragraphs 69-79).

Negligent misrepresentation

The plaintiff alleges that he was told by an officer of the first defendant at his employment interview on 17 October 1968 that after a probationary period of three months he would be invited to join ‘the Commonwealth Government Superannuation Scheme.’ The substance of the representation is the same as the first limb of the term pleaded at paragraph 5(a). Together with the offer of employment, this representation is pleaded to be the First Representation. The first defendant does not admit the First Representation.[2]
[2]Paragraphs 4, 22 and 23 of the statement of claim and defence of the first defendant respectively.

The plaintiff alleges that shortly after he had completed the three month probationary period, he made enquiry of an officer of the first defendant about his invitation to join Commonwealth superannuation, and was told that there was a moratorium on superannuation, and no new applicants were being accepted. This is pleaded as the Second Representation. These allegations are not admitted.[3] The plaintiff pleads that he made similar enquiries of officers of the first defendant on at least three further occasions between January 1969 and July 1978, and on each occasion was told that he was still not entitled to join Commonwealth superannuation; that nothing had changed in relation to the acceptance of new applicants; and that he could not join. These are pleaded as the Further Representations. None of these allegations are admitted.[4]
[3]Paragraphs 24 and 25 of the statement of claim and defence.
[4]Paragraphs 26 and 27 of the statement of claim and defence.

The plaintiff alleges that he was told by an officer of the first defendant in about July 1978 that he could now join Commonwealth superannuation, and after a medical examination, did so from 9 August 1978. These allegations are not admitted.[5]
[5]Paragraphs 28 and 29 of the statement of claim and defence.

The next factual matters alleged by the plaintiff are that in May 1982 an officer of the first defendant approached him, and made various representations to him (‘the TAA Scheme Representations’) to the effect that the superannuation scheme established for TAA employees (‘TAA Superannuation’) was a better option for him than Commonwealth superannuation, and that in reliance on these representations the plaintiff terminated his membership of Commonwealth superannuation and joined TAA Superannuation. None of these allegations are admitted.[6]
[6]Paragraphs 34 and 35 of the statement of claim and defence.

The plaintiff then pleads various matters, including that each of the representations was incorrect but was relied on by the plaintiff to his detriment. Objection was initially taken to paragraph 51 of the statement of claim, which relates to the accuracy of the first representation, but the first defendant has withdrawn that objection on the basis of sufficient cure by means of paragraph 14 of the reply.[7]
[7]T 5.14-31.

Negligence

The same core factual allegations are also cast in addition or in the alternative in terms of breach of duty owed by the first defendant as employer to the plaintiff, its employee, in paragraphs 59-68 of the statement of claim. I will touch on this cause of action briefly as no objection is taken in this application to any of its pleaded elements.

The duty is pleaded, in the broad, to be to avoid causing the plaintiff foreseeable economic loss by reason of the first defendant’s acts or omission with respect to the availability of Commonwealth superannuation and the comparative benefits of Commonwealth superannuation and TAA Superannuation.[8] The breach is pleaded to encompass multiple variations of the facts, including what would seem to be true alternatives- the actual imposing of a moratorium or delay on accepting applications for Commonwealth superannuation (paragraph 60(a)-(d)) and the making of incorrect representations that there was such a moratorium (paragraph 60(e)-(f))- as well as a failure to properly advise the plaintiff or refer him to another organisation for advice. It appears that causation and loss are intended to be pleaded at paragraphs 61 - 68. These paragraphs include allegations to the effect that the plaintiff was eligible to join Commonwealth superannuation at points in time earlier to July 1978.
[8]Paragraph 59 of the statement of claim.

The first defendant denies the duty pleaded;[9] denies that the plaintiff would have eligible to join Commonwealth superannuation (relating to causation and loss);[10] and otherwise does not admit the allegations in negligence.
[9]Paragraph 59 of the defence.
[10]Paragraphs 61 and 42 of the defence.

Deceit

I will deal with this plea in a little more detail. There is no objection to the pleading of it in the statement of claim in this application, but it is relevant to the pleas of unconscionability and estoppel to which objection is taken.

The plaintiff alleges in the alternative to the claims for negligent misrepresentation and negligence arising from the Second Representation and Further Representations that those representations were made either with the first defendant’s knowledge that they were false, or recklessly or carelessly as to whether they were false or not.[11] He pleads that the Second and Further Representations were made with the intention that they be relied upon; they were so relied upon; and as a consequence the plaintiff suffered loss.[12]
[11]Paragraph 69 of the statement of claim.
[12]Paragraphs 70-75 of the statement of claim.

The response from the first defendant is to deny that the plaintiff would have been eligible to join Commonwealth superannuation prior to August 1978 in any event, and otherwise not to admit the allegations, including the allegation of knowledge or recklessness as to falsity. The allegations of knowledge or recklessness as to falsity of the representations are not denied.[13]
[13]Paragraphs 69 -75 of the defence.

The plaintiff also pleads an additional or alternative cause of action in deceit in respect of the TAA Scheme Representations. The first defendant puts the plaintiff to proof, but does not deny the pleaded knowledge or recklessness as to falsity of the representations.[14]
[14]Paragraphs 76-79 of the statement of claim and defence respectively.

Breach of contract

The plaintiff pleads in paragraph 80 that each of the First Representation, the Second Representation, the Further Representations, the ‘scheme of invitation, delay and quotas and/or any moratorium…on joining Commonwealth superannuation’ and the consequent delay in the plaintiff joining Commonwealth superannuation were, either cumulatively or alternatively, breaches by the first defendant of the terms of the plaintiff’s contract of employment.

The plea of breach does not within the body of paragraph 80 identify which term of the contract was said to have been so breached. The term is identified only in the particulars to the paragraph, and by description, not by reference back to the pleading of the term in paragraph 5. The particulars are divided into particulars of stated terms (plural) described as ‘express’, and particulars of the implied term of trust and confidence. The terms said to have been breached in the particulars are not co-extensive with the terms pleaded at paragraph 5 as to content, nor, in the case of the claimed breach of ‘express terms of the contract’ as to description as ‘express’.

Particular (a) to paragraph 80 describes a claimed breach of ‘the express terms of the contract’ by reason of the facts that:

(i) the Plaintiff was not (after concluding a short probationary period of 3 months) invited to join Commonwealth superannuation; and

(ii) the Plaintiff was not invited to join Commonwealth superannuation until July 1978.

Particular (b) to paragraph 80 refers to breach of ‘the implied term of trust and confidence’.

Paragraph 82 of the statement of claim[15] pleads that the TAA Scheme Representations were a breach of the contract of employment. The term in question is not identified. Particular (a) to paragraph 82 refers to a breach of the ‘express terms of the contract’ in that
[15]There is no paragraph 81.

(i) in May 1982, the Plaintiff was induced to cease membership of the Commonwealth superannuation and to join the TAA General Superannuation Plan;

(ii) the Plaintiff was excluded from the benefits of the Commonwealth superannuation scheme to which he was contractually entitled.

Unconscionable conduct and estoppel

The plaintiff pleads at paragraph 84 that he was at the time of the Second and Further Representations at a special disadvantage viz a viz the first defendant which ‘seriously affected his ability to respond to the Representations in his own best interests’ and as a consequence the Second and Further Representations ‘and their effect in delaying the Plaintiff’s membership of the Commonwealth superannuation’ constitute:

(i) an alteration of the position that the Plaintiff would have taken but for the Second and Further Representations; and/or

(ii) unconscionable conduct by the First Respondent.

I will read the words ‘First Respondent’ as intending to read ‘First Defendant’.

In paragraph 85, the plaintiff pleads that he ‘is thus entitled to be relieved of the consequences of that failure to act in his own best interests and the First Defendant should be estopped from benefitting from its conduct’. In paragraph 86, the plaintiff pleads that ‘as a consequence’ he should have received superannuation benefits calculated as if he had joined Commonwealth superannuation in January 1969 and the first defendant should be estopped from asserting to the contrary, or from taking advantage of the plaintiff’s alteration of his position in consequence of the unconscionable conduct.

The plaintiff makes similar pleas in respect of the TAA Scheme Representations in paragraphs 87-89.

In answer to paragraphs 84 and 87, the first defendant denies that any conduct by it alleged in the statement of claim constitutes unconscionable conduct or creates an estoppel. In further answer to each of these paragraphs, the first defendant says that they fail to disclose an estoppel against, or unconscionability on the part of, the first defendant entitling the plaintiff to any relief and should be struck out.

I will now discuss the particular objections taken in detail.

Breach of contract

The first defendant takes objections to the drafting of the whole of paragraphs 80 and 82. These objections are that the breach is not pleaded in the body of the paragraphs but in the particulars; the body of each paragraph contains irrelevant material; and the plea of breach is insufficiently related to the express terms as pleaded.

Specific limitation objection is taken to the pleas of breach of ‘express’ terms in each of Particulars (a) to paragraphs 80 and 82. The first defendant has pleaded a limitation defence to the whole of the statement of claim[16] but is content for this defence to the causes of action in tort and the cause of action for breach of implied terms as specified in paragraph 5(b) of the statement of claim to be determined at trial. The first defendant accepts that the concealment matters relied upon by the plaintiff in reply to the limitation defence to these causes of action raise triable issues of fact.[17]
[16]Paragraph 95 of the defence.
[17]T 23.12-23; First Defendant’s Supplementary Submissions dated 19 November 2014 at [1.3].

In respect of the pleas of breach of ‘express’ terms, however, the first defendant says that cure of drafting issues would be futile. The cause of action for breach of contract is statute barred, as it arose on breach, and a basis for postponement of the running of the limitation period pursuant to s 27 of the Limitation Act cannot be made out in relation to breaches known to the plaintiff to have occurred at the time.

In his written submissions in response, the plaintiff concedes that there are drafting problems with paragraphs 80 and 82 and proposes an alternative formulation. Importantly, the plaintiff also appears to withdraw the description of the term pleaded to have been breached in paragraph 82 as ‘express’. If this is indeed the plaintiff’s intention, then the first defendant would still seek strike out of the paragraph, but would not oppose leave to redraw it, confined to breach of implied terms only.[18] I will return to the issue of leave to re-plead later in this judgment.
[18]Plaintiff’s Submissions Opposing Strike Out Application dated 20 November 2014 (‘Plaintiff’s Submissions’) at Section 2; First Defendant’s Submissions in Reply at [5].

The plaintiff submits that the Court should not dismiss reliance on 27 of the Limitation Act in reply on an interlocutory application, relying on comment to that effect by Warren J (as she then was) in Di Sante v Camando Nominees Pty Ltd.[19] Certainly Her Honour did not do so in that case, but that was because factual findings were necessary before it could be determined if the section was made out. Warren J held that she should not dismiss reliance on the section at an interlocutory stage unless it was plain that the plaintiff’s case was ‘hopeless’. In subsequent authority, the Court of Appeal has held that the lesser standard of no real prospect of success now imported by s 63 of the Civil Procedure Act 2010 applies to summary determination, including where the objection is that no cause of action is shown, and the defect cannot be cured by amendment.[20] I will apply the no real prospect of success test.
[19][2000] VSC 211, at [53]-[56].
[20]Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [2013] VSCA 158 per Warren CJ and Nettle JA at [35].

The plaintiff does not quarrel with the first defendant’s submission that the cause of action for breach of contract arises on breach. The submission is plainly correct. Accordingly, resolution of the limitation objections to paragraphs 80 and 82 in their current formulation turns on whether or not an argument for postponement of the running of the limitation period based on s 27 of the Limitation Act has any prospect of success. If it does, then it may be that the paragraphs should still be struck out on drafting grounds, but it would be appropriate to grant leave to re-plead. If trial of the issue in so far as it relates to the term that the plaintiff would be invited to join Commonwealth superannuation after his probation period would be futile, however, even assuming the pleaded facts to be made out, then no leave to re-plead in relation to breach of that term should be given.

Before considering the application of s 27 it is necessary to identify the precise content of the plea to which objection is taken. Because of the way paragraphs 5 and 80 of the statement of claim have been drafted, this is not a simple matter of a distinction between express and implied terms. The safer way to draw the distinction is having regard to the content of the term, as pleaded in particular (a) to paragraph 80.

Plea to which objection is taken

Paragraph 5 of the statement of claim, which pleads the terms of the contract reads as follows (excluding particulars):

At all material times:

(a) it was an express term, alternatively an implied term, of the Plaintiff’s contract of employment with the First Defendant, that:

(i) the Plaintiff would (after concluding a short probationary period of 3 months), be invited to join Commonwealth superannuation; and

(ii) be engaged in a capacity that entitled him to join Commonwealth superannuation.

(b) There were further implied terms of the Plaintiff’s contract of employment with the First Defendant that:

(i) the First Defendant would not conduct itself in a manner likely to destroy or seriously damage the relationship of mutual trust and confidence between the employer and employee by acting to delay or deny the Plaintiff the benefits of his contract of employment; and/or

(ii) the First Defendant would not act capriciously, arbitrarily, unreasonably or dishonestly in conformance with the objects of the contract of employment; and/or

(iii) the First Defendant would cooperate with the employee in order to implement the express terms of the employment contract;

(iv) The First Defendant would act in good faith and honestly impart correct advice and information regarding the terms of the employment contract and the benefits of his employment, when it undertook, or was requested by the Plaintiff, to do so;

(v) When implementing the terms of the contract of employment, or when imparting advice and information regarding the terms of the employment contract and the benefits of his employment, the First Defendant would disclose any conflict of interest between its own interests and those of the Plaintiff;

(“the implied term of trust and confidence”).

In the first defendant’s oral submissions in support of the application, it identified its limitation objection by reference to the content of the impugned term, not by reference to paragraph 5(a). It objected to the plea of breach of the term that the plaintiff ‘was promised super and didn’t get it’, because ‘by his own admission he knew (that he had not been invited to join).[21] In Particular (a) to the plea of breach at paragraph 80 this term is described as an express term. In the plea as to its creation, however, in paragraph 5(a) of the statement of claim, it is pleaded as an express term, or, in the alternative, as an implied term. Further, the term is pleaded in paragraph 5 in the singular, but with two limbs, whereas breach is pleaded in Particular (a) to paragraph 80 of express terms in the plural, but only as to the first limb of the term pleaded in paragraph 5 (a).
[21]T 23.27.

The first defendant notes these matters in its submissions in reply,[22] but did not take objection in its oral submissions in support of the amended summons to the drafting of paragraph 5(a). Accordingly, I have not heard from the plaintiff in response. It may be that the plaintiff intended to describe at least the first limb of the term pleaded at paragraph 5(a) (which is the term said to have breached) as express. Certainly this would sit more comfortably with the inclusion of that term within the First Representation i.e. what the plaintiff was told at his employment interview. For the purposes of the objection, I will consider the content of the term in question, not whether or not it was express or implied.
[22]First Defendant’s Submissions in Reply at [6].

Given these drafting inconsistencies as between the pleading of the terms and the pleading of breach, I would propose to also strike out paragraph 5, but allow re-pleading, consistently with these reasons. If either party opposes strike out of paragraph 5, the intention being to allow re-pleading, I will give the parties an opportunity to be heard.

I turn now to the application of s 27 of the Limitation Act.

Section 27 of the Limitation of Actions Act 1958

The section relevantly provides as follows:

27 Postponement of limitation periods in case of fraud or mistake
Where, in the case of any action for which a period of limitation is prescribed by this Act—
(a)the action is based upon the fraud of the defendant or his agent or of any person through whom he claims or his agent; or
(b)the right of action is concealed by the fraud of any such person as aforesaid; or
(c)the action is for relief from the consequences of a mistake—

the period of limitation shall not begin to run until the plaintiff has discovered the fraud or the mistake, as the case may be, or could with reasonable diligence have discovered it…

The first issue that arises is which paragraph of s 27 is said to apply. Plainly, paragraph (c) is not applicable. The uncertainty is in relation to paragraphs (a) and (b).

The plaintiff has pleaded reliance on the section in his reply, at paragraph 19(c) and the second paragraph 20, at subparagraph (a) and (b)((v). In each of those instances, the plaintiff pleads reliance on both paragraphs of s 27. For example, the reply states at 19(c)(B)(vi) that ‘The Plaintiff is entitled to the benefit of section 27(a) and/or (b) of the Limitation of Actions Act 1958’ (emphasis added).

The first defendant in its oral submissions in chief and in its written Supplementary Submissions makes it plain that it considered only s 27(b) to be relied upon, not both paragraphs.[23] If this was incorrect, in my view it was incumbent on the plaintiff to correct the misapprehension, and to do so at as early a stage as possible. The plaintiff has not done so. He does not seek in his submissions in response to save reliance on s 27 by reliance on s 27(a), and although he does not expressly specify in his written submissions which paragraph he relies upon, the content of his submissions sits more readily with paragraph (b). In particular, the portions of previous decisions cited by the plaintiff in those submissions relate to the various equivalents to s 27(b), not s 27(a), and the argumentative text refers to awareness of a right of action, not to an action based on fraud. The first defendant in its submissions in reply makes it plain that it considers only paragraph (b) to be in contention.[24]
[23]T 22.1-7; First Defendant’s Supplementary Submissions at [1.4(a)].
[24]First Defendant’s Submissions in Reply at [12], [13] and [18].

For these reasons I consider that notwithstanding the form of pleading adopted in the reply, the plaintiff seeks only to rely on s 27(b) in relation to breach of the term that he would be invited to join Commonwealth superannuation. For the reasons that follow, I will strike out the whole of paragraphs 80 and 82 of the statement of claim, and paragraph 19(c) of the reply. If in due course the plaintiff seeks to re-plead the reply in reliance on s 27(a) he will need to specifically seek leave to do so, in the absence of consent to the amendment.

Submissions

The first defendant’s submission in support of its summons in relation to s 27(b) is a simple one, and turns on the meaning of ‘right of action’. The paragraph is only available if the’ right of action’ is concealed by fraud of the first defendant. The right of action for breach of contract accrues on breach. The term here said to be breached is that the plaintiff would be invited to join Commonwealth superannuation after completing probation. On his own pleaded account, the plaintiff must have been aware of this breach from when it first occurred until he was eventually invited to join Commonwealth superannuation. The first breach occurred in January 1969, when he made enquiry of the first defendant about being invited to join Commonwealth superannuation, having completed his probationary period, and was told that there was a moratorium and no new applicants were being accepted.[25] As he was not invited to join until July 1978, the plaintiff must have been aware of the continuing breach of this term until that time.
[25]Paragraphs 24-25 of the statement of claim.

The plaintiff’s statement of claim in fact goes further. Not only was he not invited to join before July 1978, he pleads that he was expressly told on at least three further occasions in the period 1969 to July 1978 that he was still not entitled to join.[26] Plainly, the first defendant submits, the plaintiff must have been aware of the breach of the term of the contract that he would be invited to join Commonwealth superannuation. Accordingly, whatever the reasons for the failure to invite him to join Commonwealth superannuation, or the reasons for his failure to institute proceedings within the limitation period running from the breach and, in particular whether or not those reasons were motivated by fraud, or were a product of fraud in the necessary sense, his right to bring an action was not concealed by that fraud.
[26]Paragraphs 26-27 of the statement of claim.

The plaintiff says in his submissions in response that he now ‘appreciates…facts previously concealed’ which ‘enabled (him) to understand’ that his exclusion from Commonwealth superannuation was ‘an actionable breach of his employment contract rather than some application of a discretionary delay which occasioned no actionable breach’.[27] In elaboration of this submission, the plaintiff contends that:

…one available (and in the circumstances likely) interpretation of the facts is that the Plaintiff was led to believe by the statements made to him about the imposition of a moratorium etc that his employer had every right to do what it did and delay the joinder. That is the plaintiff’s case- that AAL sought to have him believe the joinder and its timing was a matter within its absolute discretion and it could vary the contractual term at its will…In other words, unless the First Defendant can establish in this application that the plaintiff must have appreciated that the conduct evidenced by the statements necessarily conveyed to the Plaintiff that the First Defendant was in breach of the employment contract, then… the claim should not be struck out.[28]

[27]Plaintiff’s Submissions at the first paragraph in Section 3.

[28]Plaintiff’s Submissions at page 5, final paragraph to page 6.

In my view these submissions are not correct for several reasons. These are broadly the reasons advanced by the first defendant in its reply submissions, but I will here express them in my own words. In doing so, I will first discuss the key authorities to which the parties referred in submissions. None of those authorities are directly on point i.e. relating to postponement of the limitation period in the case of breach of a term of a contract when the fact of breach is known. They give significant guidance, but in the context of various torts, not contract.

Legal principles

The starting point is the words of s 27(b) itself. The paragraph requires that ‘the right of action’ is concealed by the ‘fraud’ of, here, the first defendant. ‘Right of action’ is not exhaustively defined in the Limitation Act, save that by virtue of s 3(7) of that Act it includes ‘cause of action’. In Smith v Browne[29] Kaye J adopted English authority as to the meaning of a ‘cause of action’. He adopted the definition proffered by Lord Esher MR in Read v Brown[30] that ‘(a) cause of action is constituted by all facts necessary for a plaintiff to prove, if traversed, in order to support his right to judgment’[31] and also cited with approval the description of a cause of action given by Diplock LJ, as he then, was as ‘a factual situation the existence of which entitles one person to obtain from the court a remedy against another’.[32]
[29][1974] VR 842, at 847.
[30](1888) 22 QBD 128, at 131.
[31]Subsequently approved by the Privy Council in Trower and Sons Ltd v Ripstein [1944] AC 254, at 263.
[32]Letang v Cooper [1965] 1 QB 232, 242-3.

The reference to entitlement in the second of these definitions, in my view shows that the word ‘right’ as opposed to ‘cause’ does not add any gloss to the word ‘cause’.

The plaintiff has made reference[33] to an earlier High Court decision, Maxwell v Murphy,[34] in support of his preferred construction of the words ‘right of action’ as importing an awareness of the availability of a remedy for a wrong, as well as awareness of the wrong. I do not consider that case to be of assistance. The statutory cause of action there in question was expressed in terms of remedy. The cause of action had been extinguished by lapse of time and the issue at stake was whether it was revived by subsequent legislative enlargement to the limitation period. The Court held by majority that it had not been so revived. In my view, that case turns on its own facts. In particular, the cause of action here in question, breach of contract, is not dependent on the availability of the remedy of damages. A breach alone gives rise to the cause of action, and only nominal damages may arise.
[33]Plaintiff’s Submissions at page 3, third paragraph.
[34](1957) 96 CLR 261.

I will approach this application on the basis that a ‘right of action’ in contract is constituted by the necessary facts to make out the elements of the cause of action- being contract and breach alone.

Both parties have taken me to Commonwealth v Cornwell[35] (‘Cornwell’), a decision of the High Court. That case bears some resemblance to the facts of this case, in that it also concerned a plaintiff who contended that he had been kept out of Commonwealth superannuation for a period of time by the actions of an officer of his employer, the Commonwealth. At trial in the Supreme Court of the Australian Capital Territory (‘ACT’) the plaintiff was successful in proving his case in negligent misrepresentation. He was unsuccessful in relation to breach of contract, the trial judge holding that that cause of action was statute barred, and in relation to estoppel, the trial judge holding that the estoppel there alleged could not found an independent cause of action. An appeal to the Court of Appeal of the ACT was unsuccessful. On appeal to the High Court, the Commonwealth argued that the claim in tort, negligent misrepresentation, was also statute barred because the plaintiff’s damage had crystallised no later than when he eventually did join Commonwealth superannuation. The Court dismissed the appeal, holding by majority (Gleeson CJ, Gummow, Kirby, Hayne, Heydon and Crennan JJ; Callinan J dissenting) that the plaintiff only sustained actual loss on his retirement, which was less than six years prior to the commencement of the proceeding. The gravamen of the case thus turns on when loss by way of superannuation not received is sustained, for the purposes of actions in tort. Those questions may be relevant at trial, but are not relevant to this application.
[35](2007) 229 CLR 519.

The respondent in Cornwell had raised by notice of contention the question of postponement of the running of the limitation period, pursuant to the ACT equivalent provision to s 27(b) of the Limitation Act. In view of the decision of the majority to the effect that the limitation period had not expired, it was unnecessary for the Court to consider the notice of contention and the issue of postponement. The Court made reference to the fact that the respondent alleged that there had been a ‘systemic course of misinformation to employees of the appellant, including the respondent, by middle and senior management and over a long period of time’.[36] As the trial judge had made no clear findings on these allegations, which went to whether or not ‘fraud’ in the relevant sense had occurred, the majority declined to supplement its conclusion regarding the limitation period by any determination of the notice of contention.[37] The majority did make some comment as to the meaning of ‘fraud’, and the phrase ‘deliberately concealed’, which appears in the ACT legislation, but not in s 27 of the Limitation Act. Given the differences in the legislation, and the absence of conclusion on the issue, I do not discuss that comment further.
[36]229 CLR 519, at 533.
[37]229 CLR 519, at 533-534.

Section 27(b) of the Limitation Act was considered in two Victorian decisions relied upon by the plaintiff, Levy v Watt and anor), at trial[38] and on appeal[39] (‘Levy v Watt’), and Skrijel v Mengler and ors,[40] (‘Skrijel v Mengler’). These decisions relate to causes of action in tort, respectively conversion in Levy and Watt, and conspiracy and misfeasance in public office in Skrijel v Mengler.
[38][2012] VSC 539, Habersberger J.
[39][2014] VSCA 60.
[40][1998] VSC 71, Eames J.

In Levy v Watt the Court of Appeal approved the judgment of the trial judge that s 27(b) extends to concealment of the identity of a tortfeasor, even if the plaintiff is aware of the existence of the tort. That was also the ratio of Skrijel v Mengler, which was cited with approval in Levy v Watt.[41] That issue does not arise in this case. There were also observations in Levy v Watt about the meaning of ‘fraud’ and ‘concealed’, which for completeness I will set out, although there is no issue about the meaning or application of those terms in this application. Santamaria JA, with whom Warren CJ and Tate JA agreed, noted with approval in the body of the judgment the meaning of ‘fraud’ adopted in the English case Bartlett v Barclays Bank Trust Co Ltd (No 1),[42] (‘Bartlett’) citing Kitchen v Royal Air Force Association.[43]The plaintiff here relies on those English authorities. In Bartlett, Brightman J said:

‘Fraud,’ in the context of (the UK equivalent to s 27(b)), does not mean common law fraud or deceit. But it does seem to envisage conduct which, if not fraudulent in the more usual sense, is unconscionable having regard to the relationship between the parties: see Kitchen v Royal Air Force Association. ‘Fraud’ is used in the equitable sense to denote conduct by the defendant or his agent such that it would be against conscience for him to avail himself of the lapse of time.[44]

[41][2014] VSCA 60 at [83]per Santamaria JA with whom Warren CJ and Tate JA agreed.

[42][1980] Ch 515.

[43][1958] 1 WLR 563.

[44][1980] Ch 515, at 537 (citation omitted).

Santamaria JA also cited in a footnote observations to the same effect in relation to ‘fraud’ and also in relation to ‘concealed’ by Megarry VC in Tito v Waddell (No 2)[45] as follows:

The term ‘concealed fraud’ is still often used to describe this head. This is misleading, in that it suggests that this head applies only when it is fraud that is concealed, and that any process of concealment suffices, whereas in fact the head applies whatever the right of action, though not unless the process of concealing the right of action is shown to be fraudulent. ‘Fraudulent concealment’ thus seems to me to be the preferable term. For most purposes it is a sufficiently accurate description of the words in section 26(b) of the Act of 1939: ‘the right of action is concealed by the fraud’ of the persons in question, namely, ‘of the defendant or his agent or of any person through whom he claims or his agent’: see section 26(a). As I have indicated, the word ‘fraud’ is here used in a sense which embraces conduct or inactivity which falls far short of fraud at common law: see, e.g., Kitchen v Royal Air Force Association; King v Victor Parsons & Co. Indeed, as the authorities stand, it can be said that in the ordinary use of language not only does ‘fraud’ not mean ‘fraud’ but also ‘concealed’ does not mean ‘concealed’, since any unconscionable failure to reveal is enough.

[45][1977] 1 Ch 106, at 244-245.

Skrijel v Mengler is a decision on appeal from a Master on an interlocutory application for joinder. The joinder was resisted on the basis that the causes of action of conspiracy and misfeasance in public office were statute barred. In response, the plaintiff/respondent to the appeal relied on s 27(b) of the Limitation Act. Eames J ultimately held for him, although on different grounds to those relied upon by the Master, and dismissed the appeal.

The plaintiff in Skrijel v Mengler had been convicted and imprisoned on the basis of fingerprint evidence given by the proposed third defendant, a police officer. He contended at his trial and thereafter that he had been the victim of a conspiracy and that the fingerprint evidence was false, but only instituted proceedings after further facts claim to light in the course of an investigation into his allegations. Those facts suggested that the falsity of the evidence was at the hands of the proposed third defendant. The proposed new defendants, the police officer and the State of Victoria, contended that this new information was merely further evidence, that related to whether or not it was advisable to commence proceedings in respect of the causes of action which had already arisen to the plaintiff’s knowledge, and his prospects of success in such proceedings, and did not constitute elements of the cause of action. It appears that the Master accepted that the new facts did not go to the elements of the causes of action, because the judgment records that he held that it was arguable that the concealment of the means by which the cause of action may be proved could constitute concealment of the cause of action.[46]
[46][1998] VSC 71, at [25].

On appeal from the Master’s decision, Eames J did not agree that concealment of evidence was sufficient, but ultimately allowed the joinder on the basis that the new facts related to the identification of the proposed third defendant as the wrongdoer (assuming the plaintiff’s allegations of conspiracy and false evidence to be correct), and it was arguable that concealment of the identity of the wrongdoer was caught by s 27(b). As noted, that proposition has now been established by the Court of Appeal in Levy v Watt.

In the course of reaching this conclusion, Eames J analysed the distinction between facts constituting a cause of action and facts going only to merits or prospects of success. He accepted English authority to the effect that it is only if the facts essential to the cause of action are concealed by fraud (in the extended sense) that s 27(b) may apply. That analysis is highly pertinent to this application.

Eames J referred principally to C v. Mirror Group Newspapers,[47] and the earlier cases there considered and applied by the English Court of Appeal. One of the cases considered in C v Mirror Group Newspapers, Frisby v Theodore Goddard & Co,[48] (‘Frisby’) is particularly instructive.
[47][1997] 1 WLR 131.
[48]Supreme Court of Judicature, Court of Appeal (Civil Division) 27 February 1984, reported in The Times, 7 March 1984, and obtained from Westlaw.

Frisby concerned a suit against the plaintiff’s former solicitors. The court noted that the plaintiff knew that he had a right of action against the defendants as his former solicitors, ‘(h)owever his case was that it was impracticable to sue them at that time for it would have been his word against theirs.’[49] Sir John Donaldson held that ‘(a) right of action arises out of a basis set of essential facts’ which in a right of action for professional negligence are the solicitor/client relationship, the giving of negligent advice, and consequential damage. His Honour continued:

A right of action may be concealed by hiding one or more of these essential facts from the potential plaintiff. But that did not occur and the plaintiff did not suggest that it did. His complaint is that certain evidence was concealed which, he says, would have supported his right of action. This is something wholly different. Having a right of action and knowing you have it is one thing. Being able to prove it is another. Bridging this gap, when all or an important part of the evidence is or may be in the hands of the defendants, is the function of discovery.[50]
[49]At page 3 of the Westlaw transcript.
[50]At page 4 of the Westlaw transcript.

Discussion

I now apply these principles to the party’s submissions. For the purpose of this application, I assume that the plaintiff could prove at trial the matters pleaded in paragraph 19(c) of the reply, in particular that the reasons he was given as to why he could not join were false and were part of a scheme to prevent employees joining or remaining within Commonwealth superannuation for the first defendant’s financial benefit. I assume also that those matters would constitute fraud in the relevant sense for s 27(b). The critical issue in this application is whether the plaintiff has any prospect at trial of proving that those matters concealed from him his right of action for breach of contract.

I accept the contention of the first defendant that the plaintiff cannot make good that proposition at trial. Put in the simplest terms, none of the matters pleaded in paragraph 19(c) of the reply concealed the fact of breach. At most, they concealed the reasons for it, or discouraged the plaintiff from taking action on the breach. I can understand why the plaintiff may be aggrieved to later discover those matters, but, to use the language of Frisby, they are additional facts, not essential facts, and go to proof, not cause of action. I will now address the plaintiff’s submissions in detail.

First, the plaintiff’s submissions assume that s 27(b) may apply where the plaintiff knows the facts that constitute the cause of action, but does not, by reason of the fraud of the defendant, appreciate that those known facts give rise to a cause of action. He submits that s 27 (b):

goes beyond awareness of the events and refers to concealment of the “right of action”. Those words connote something more, namely awareness of the right to bring legal proceedings…to enforce the right the subject of the breach.[51]

[51]Plaintiff’s Submissions at page 3, second paragraph.

The plaintiff makes reference to the difference in the wording between the UK legislation and s 27(b) of the Victorian Act to support this submission. He appears to say awareness of the ‘right’ is additional to awareness of the facts. In my view, he is incorrect, and his submission is inconsistent with the line of UK authority, which was adopted by Eames J in Skrijel v Mengler and applied to s 27(b).

The UK provision that was considered in the case on which Eames J principally relied, C v. Mirror Group Newspapers, is s 32(1)(b) of the Limitation Act 1980 (UK). It provides for the postponement of the limitation period where ‘any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant’. The section, as Eames J noted,[52] is on its face arguably a more favourable provision for a plaintiff than s 27(b) of the Limitation Act, as it might have been thought at first blush that this section would extend to facts by way of further proof, as well as core facts.
[52][1998] VSC 71 at [48].

Nevertheless, the UK cases show that the reference to ‘any fact relevant to ..the right of action’ has been read down to only those facts constituting the cause of action, being only those facts which the plaintiff must prove to establish a prima facie case, and does not extend to extra facts that make the prospect of success greater. In other words, relevant ‘facts’ and the ‘right of action’ have been held to mean the same in the UK authorities, which have been applied to s 27(b) in Victoria. I see no basis for departing from that construction, or for adding a gloss that the word ‘right’ imports a requirement of subjective appreciation of the availability of the action.

There is no doubt that the plaintiff knew between January 1969 and July 1978 that he had not been invited to join Commonwealth superannuation. He knew what he had been told when he was employed. Assuming for the purposes of this application that the statement that he would be invited to join Commonwealth superannuation became a contractual term, it follows that the plaintiff knew all the sufficient facts to give rise to an action for breach of that term. The necessary facts for a cause of action for breach of that contractual term had occurred, and to the plaintiff’s knowledge.[53]
[53]I make no comment as to whether or not knowledge of the facts is required, as it was here present and so the issue does not arise.

Secondly, the plaintiff’s submissions conflate the merits or prospects of success of the right of action, with its existence. As held in Skrijel v Mengler, what must be concealed for s 27(b) to apply are facts essential to the cause of action. No question of identity of the wrongdoer arises in this case, as it did in that case and in Levy v Watt. The plaintiff here knew the facts essential to the cause of action- contracting party, contractual term, and breach of it. Discovering that the reasons he had been given for the breach were false, and that the first defendant may have had a dishonest design not to invite further employees to join Commonwealth superannuation, would have added to the strength of his claim for breach of contract, and been relevant to his decision whether or not to commence a proceeding. They were not, however, essential to the claim. They are in the nature of evidence, not material fact, as distinguished in Skrijel v Mengler and the cases there cited.

The plaintiff’s written submissions in response make it plain that the further facts he claims were concealed by the first defendant until after expiration of the limitation period running from breach were relevant not to the existence of the right of action, but to his decision to institute proceedings. His submission is that:

It would have been a brave litigant and employee, who, without more, issued a writ for breach of their employment contract possessed only of (the facts of the term and the breach), in light of the statements made to him that conveyed the First Defendant’s (apparent) absolute right to delay the joinder in variation of the employment terms. Whatever legal rights had been vested in the Plaintiff, the ‘right of action’ was concealed by the conduct.[54]

[54]Plaintiff’s Submissions at page 6, first full paragraph.

It is clear that the plaintiff contends that the concealed facts arguably postpone the running of the limitation period not because they are elements of the cause of action, but because they made his case stronger. Matters going only to the merits are not, on the authority of Skrijel v Mengler and the cases there cited, within s 27(b).

The same analysis applies to reliance by the plaintiff for the purposes of s 27(b) on the misrepresentations he says were made to him when he made enquiry about superannuation after his probation ended. These misrepresentations are relied on for multiple purposes- as causes of action in tort, as breaches of the term that he would be invited to join Commonwealth superannuation (paragraph 80 of the statement of claim), and also, in the plaintiff’s submissions, as explanations for his failure to act on the breaches of contract when they occurred.

The plaintiff states in his submissions that it is his case that ‘AAL sought to have him believe the joinder and its timing was a matter within its absolute discretion and it could vary the contractual term at its will’.[55] It is plain that this conduct by AAL can only relate to what happened after the contract of employment was created. The plaintiff has pleaded in paragraph 5(a)(i) and in the First Representation at paragraph 22 that he was told that he that he would be invited to join Commonwealth superannuation, not that he may be i.e. that it was a discretionary decision for his employer. The formulation of the plaintiff’s case in his submissions appears to concede this i.e. that the contractual term was that he would be invited to join, but that he was later led to believe, presumably at the time of the Second Representation and Further Representations, that the first defendant could vary that term unilaterally.
[55]Plaintiff’s Submissions at page 5, final paragraph.

What the plaintiff was later led to believe, and his reliance on it, goes in contract to his reasons for not taking action for breach of the contractual term at the time of the breach; it does not go to the existence of that breach. In other words, the Second and Further Representations may provide explanations for the plaintiff not taking action, as well as constituting a breach (or giving rise to an action in tort), but they cannot show that the continuing breach was concealed. The plaintiff must have known, and indeed in his reply he concedes that he did know,[56] that he had not been invited to join Commonwealth superannuation as promised.
[56]Reply paragraph 19(c)(ii).

Conclusion

For these reasons, I do not consider that the plea of breach of the term of the contract that the plaintiff would be invited to join Commonwealth superannuation after the completion of his probationary period can survive the limitation defence.

The plaintiff has proposed an alternative formulation of paragraph 80 which he submits would meet the drafting objections taken to it. If its limitation objection fails, the first defendant in reply makes a suggested correction to this alternative formulation, necessary because of the description of the superannuation term in paragraph 5(a) as express, or, in the alternative, implied.[57]
[57]First Defendant’s Submissions in Reply at [2]-[3].

The plaintiff’s alternative formulation continues to allege breach of the term that the plaintiff would be invited to join Commonwealth superannuation. As I do not consider that plea can survive the limitation defence it would not be appropriate to give leave for this alternative formulation, even with the suggested correction. I will strike out the whole of paragraph 80.

Objection is also taken to the plea of breach of contract arising from the TAA Scheme Representations in so far as that is pleaded in paragraph 82 to be a breach of an express term. The plaintiff says in response that the paragraph was intended to plead breach of implied terms only, and proposes to re-plead it. I accept the first defendant’s submission in reply[58] that the concession is unclear, because in paragraph 5(a) of the statement of claim the term to the effect that the plaintiff would be invited to join Commonwealth superannuation is described as express, or, in the alternative, implied. If this ambiguity is clarified, the first defendant withdraws its objection.
[58]First Defendant’s Submissions in Reply at [4]-[6].

I will strike out the whole of paragraph 82. I will not in these reasons sanction the amended form proposed by the plaintiff, because of the objections to it taken by the first defendant, which have force. Nor will I adopt the corrected formulation proposed by the first defendant. Both the first defendant’s objections, and its suggested corrections, assume paragraph 5 stays in its current form. As earlier noted, subject to any objection to this course from either party, I think the better course is for paragraph 5 to also be re-pleaded, and paragraphs 80 and 82 to be re-pleaded consistently with both the re-pleaded paragraph 5, and these reasons.

I will also strike out paragraph 19(c) reply which relies on s 27 of the Limitation Act.

Unconscionable conduct and estoppel

Unconscionable conduct and estoppel are pleaded at paragraphs 84-89 of the statement of claim. It is not clear from the pleading whether they are intended to be pleaded as causes of action distinct from each other. Indeed, the plaintiff appears to suggest in his submissions in response that they are not intended to be causes of action at all, let alone independent causes of action, but instead are linked, estoppel being the remedy for the unconscionable conduct, and both being pleaded in response to an anticipated limitation defence. Consistently with this stated intention, unconscionable conduct and estoppel are intermingled to some degree in the reply at paragraph 19 (d) and the first paragraph 20, with estoppel alone pleaded at paragraph 19 (b) of the reply. The first defendant assumed in his submissions in chief that that the two were pleaded as causes of action and as distinct from one another, and made distinct challenge to each of them. The first defendant seeks that the whole of paragraphs 84-89 of the statement of claim, and paragraph 19 and the first paragraph 20 of the reply be struck out.

I will first consider the two doctrines as linked, and responsive to the limitation defence.

Independent causes of action or linked reply to limitation defence?

The plaintiff says that he ‘seeks to estop the First Defendant from gaining from its unconscionable conduct at the Plaintiff’s expense by arguing that the statute of limitations has expired’.[59] The plaintiff states that he relies on the claimed unconscionable conduct as an alternative to s 27 of the Limitation Act.[60] In other words, the plaintiff asserts that he pleads unconscionable departure from an earlier representation as a basis for the first defendant being estopped from reliance on the limitation defence.
[59]Plaintiff’s Submissions at page 6, final paragraph. See also page 7 final paragraph.
[60]Plaintiff’s Submissions page 8, first paragraph.

If this was the plaintiff’s intention, it sits oddly with the pleading of unconscionable conduct and estoppel in the statement of claim, as opposed to purely in the reply. Paragraphs 85, 86, 88 and 89 of the statement of claim appear to plead a cause of action. Nor does this stated intention sit entirely comfortably with the pleading in the reply. The conclusion to the first paragraph 20 of the reply pleads that:

…the pleaded conduct of the First Defendant amounted to unconscionable conduct and the First Defendant should be estopped from benefiting from such conduct by avoiding the payment of the full superannuation benefits under the Commonwealth superannuation schemes to which the Plaintiff was entitled; and further by pleading that the claim is statute-barred under the Limitation of Actions Act 1958. (emphasis to ‘further’ added).

The second portion of this asserted conclusion (after the semi-colon) is responsive to the limitation defence. The first portion of the asserted conclusion, however, (prior to the semi colon) appears to assert an entitlement to damages, quantified by reference to the ‘full superannuation benefits’ that the plaintiff did not receive due to the alleged unconscionable conduct of the first defendant. One reading of this plea, in conjunction with the pleading of unconscionable conduct in the statement of claim, is that the plaintiff asserts a cause of action by reason of unconscionable conduct whose remedy should sound in damages, being a cause of action that is independent of the other causes of action with that remedy that are pleaded.

The plaintiff’s submission as to the intention of paragraphs 84-89 and the corresponding paragraphs in the reply is more consistent with the approach taken by the plaintiff in the second paragraph 20 of the reply, at sub-paragraphs (v) on page 13 and (vi) on page 16. The first defendant does not seek strike out of this paragraph, only the first paragraph 20. In addition to the confusion introduced by the same numbering of both paragraphs, the plaintiff has also introduced confusion into the contents of the second paragraph 20 in the reply. It is presumably intended to reply to the general limitation defence pleaded at paragraph 95 of the defence, although it says it replies to paragraph 96. The reply to paragraph 96 (which pleads contributory negligence) is presumably in truth paragraph 21 of the reply.

Leaving these matters aside for the moment, the second paragraph 20 of the reply pleads facts relating to, and reliance on, both s 27 of the Limitation Act (again, both s 27(a) and s 27(b)) and estoppel. The reasons for the first defendant not objecting to this second paragraph 20 of the reply were not made explicit. In so far as that paragraph turns on s 27 of the Limitation Act, the absence of objection to it could be consistent with the concession by the first defendant that the limitation defence, in so far as it applies to causes of action other than for breach of the invitation to superannuation term of the contract, and the plaintiff’s reliance on s 27 of the Limitation Act in reply, raise triable issues. The second paragraph 20 also contains a separate plea of estoppel based on unconscionable conduct, however, in similar terms to the plea to which objection is taken in paragraph 19(d).

If, as the plaintiff now seems to say, unconscionable conduct is not relied upon as a cause of action in itself, then the paragraphs that can be read as pleading it as a cause of action should be struck out because they introduce confusion, and they do not need to be re-pleaded in the statement of claim. I would strike out paragraphs 84-89 of the statement of claim, and paragraph 19(d) of the reply, which relies on them, for this reason alone.

There are, however, substantive reasons why the paragraphs to which objection is taken should be struck out having regard to the necessary elements of estoppel and unconscionable conduct. These defects cannot be cured by re-pleading. I now turn to those defects.

Estoppel

The nub of the first defendant’s objection to the plaintiff’s reliance on estoppel is that the plaintiff has not identified any representation made by the first defendant, from which the first defendant now seeks to depart or resile.[61] The plaintiff pleads the various representations made by officers of the first defendant, but not that the first defendant subsequently sought to resile from them. The first defendant in its defence puts the plaintiff to proof of the representations, but does not deny them, and does not seek even now to resile from them. Indeed, the first defendant says that the plaintiff was not eligible to join Commonwealth superannuation before the time he was invited to do so, and to that extent affirms the effect of the Second and Further Representations i.e. that the plaintiff was not eligible to join at that time.
[61]T 38.

The plaintiff asserts in his submissions in response to the objection that he seeks to estop the first defendant from gaining from its unconscionable conduct, being departure by the first defendant from previous representations made by its officers.[62] In putting his case in this way, the plaintiff accepts that departure from an earlier representation is a necessary element of estoppel. He states the doctrine as follows (emphasis added):

The doctrine of estoppel operates to prevent the unconscionable departure by one party from the subject matter of an assumption which has been adopted by another party as the basis of a course of conduct, act or omission, which would operate to that other party’s detriment if the assumption be not adhered to for the purposes of the litigation.[63]

[62]Plaintiff’s Submissions final two paragraphs of page 6.

[63]Plaintiff’s Submissions page 6 second to last paragraph.

This statement of principle is unexceptionable. It is drawn from the significant recent authority on estoppel, Commonwealth v Verwayen[64] (‘Verwayen’).[65] In that case, a plaintiff sought to hold the Commonwealth of Australia, the defendant, to an earlier representation that it would not rely on a limitation defence. After making that representation, the Commonwealth was later granted leave to amend its defence to plead a limitation defence on payment of the plaintiff’s costs thrown away. The plaintiff in reply pleaded estoppel and waiver. In legal argument before the trial on that point, the plaintiff was unsuccessful on waiver and estoppel in relation to the limitation defence. On appeal to the Full Court, the plaintiff was unsuccessful on waiver, but successful on estoppel by majority. The appeal by the Commonwealth to the High Court was unsuccessful, again by majority. Of the majority judges, two decided in favour of the plaintiff on estoppel (Deane and Dawson JJ) and two on the basis of waiver (Toohey and Gaudron JJ).
[64](1990) 170 CLR 394.
[65]Per Deane J at 444. See also Mason CJ at 413.

The point of distinction between Deane J, in the majority in the result, and Mason CJ, in the minority in the result, in relation to estoppel lay not in articulation of the principle, but in its application to the facts. Both emphasised that the remedy provided by the equitable doctrine of estoppel must go no further than what is required by the requirements of good conscience.[66] Deane and Dawson JJ considered that on the facts the necessary remedy for the detriment suffered by the plaintiff by departure from the previous representation that the limitation defence would not be taken was to prohibit reliance on the defence. Mason CJ considered that payment of costs was sufficient remedy.[67]
[66]Deane J at 441 and 445 point 8 to 446; Mason CJ at 415-416.
[67]Deane J at 449; Dawson J at 461-462; Mason CJ at 416-417.

There is no dispute that the plaintiff here has not pleaded in his statement of claim any attempted or actual departure by the first defendant from any representation made by it (as opposed to failure to comply with the First Representation, or that the representations were false). In his submissions in response, the plaintiff seeks to articulate an implicit departure from the earlier representations that the plaintiff was not entitled to join Commonwealth superannuation prior to 1978.[68] The nature of this departure is not entirely clear. It seems to me to be one of two things. The plaintiff may be implying a departure simply by virtue of the first defendant taking the limitation defence now. This implied departure is that taking the defence must be an admission that the plaintiff was entitled to join Commonwealth superannuation, and so a departure from the earlier representation, because otherwise the defence would not be necessary.
[68]Plaintiff’s Submissions page 7, first two paragraphs.

I do not consider the submission correct, if this is what is meant by it. The first defendant does not deny that the First, Second or Further Representations were made, their content, or that the content was false. If the Court were to find that they were made, were not correct and the plaintiff has proved the other elements to make out a cause of action based on the representations, the first defendant seeks to rely on the limitation defence. Reliance on that defence in this way is not a departure from the earlier representations. The first defendant is entitled to both put the plaintiff to proof, and, if unsuccessful in that, to plead in the alternative a limitation defence which arises due to lapse of time. I accept the submission of the first defendant in reply that:

In pleading something in the alternative after proceedings commence, the first defendant does not seek to resile from a previous position; the first defendant had no previous position about what it would do (e.g. rely on a limitation defence) if the plaintiff were otherwise found entitled to join earlier than 1978…the first defendant’s previous position was that the plaintiff was not entitled to join earlier than 1978 and the first defendant has never resiled from that position.[69]

[69]First Defendant’s Submissions in Reply at [23].

An alternative interpretation of the plaintiff’s submission is that the plaintiff seeks to reinterpret the representations themselves, to add an implicit representation that there was no limitation period running because there was no breach. On the basis of this gloss to the original representations, the plaintiff contends that to now take the limitation defence is a departure from the original representations.

In my view, the plaintiff’s submission also fails on this reading. There is no dispute that no representation about the limitation period was made expressly. It is not pleaded here that the first defendant ever represented that it would not take such a defence, as the defendant did in Verwayen. This reading of the plaintiff’s submission depends on an implied representation about whether or not the limitation period was running or a limitation defence would be taken. No representation about the limitation period is currently pleaded to have been implied into the Second or Further Representations. On the pleaded facts and the plaintiff’s further and better particulars of his claim I do not consider that any such representation can be implied. The plain reading of the Second and Further Representations as pleaded in the statement of claim is that the plaintiff was told there was a moratorium that prevented him joining Commonwealth superannuation, not that he was ineligible or that the first promise was incorrect. This reading is supported by the answers to the first defendant’s request for further and better particulars.[70] For the reasons stated earlier in relation to breach of contract, the breach of the initial promise had occurred by the time of the Second Representation and continued to occur, and the limitation period had commenced to run as a matter of law. The officers of the first defendant said nothing either way about the running of that limitation period.
[70]Plaintiff’s Further and Better Particulars of the Claim in Response to Request of the First Defendant dated 28 August 2014, for example at [5(vi)] and [38].

In relation to the TAA Scheme Representations, the plaintiff pleads that an officer of the first defendant told him, amongst other things, that ‘the TAA scheme was a better option for him’ and that ‘it was in his interests to join the TAA scheme’.[71] This content is pleaded by the plaintiff to have been false. The plaintiff’s allegations are not admitted by the first defendant. The plaintiff says in his submissions in response that unless the first defendant admits that the benefits under the Commonwealth scheme outweighed the benefits under the TAA scheme it resiles from the representation as made.[72]
[71]Paragraph 34 (f) and (g) of the statement of claim.
[72]Plaintiff’s Submissions page 7 third paragraph.

Again, I consider this reasoning flawed because it treats putting the plaintiff to proof of the representation, and pleading in the alternative a statutory defence, as departure from the content of the earlier representation. For the same reasons as earlier stated in relation to the First, Second and Further Representations putting the plaintiff to proof of the representations is not resiling from them. Further, if the plaintiff proves his allegations, and the benefits that the plaintiff would have received had he remained in Commonwealth superannuation exceed those he received due to his transfer to the TAA scheme, it is not a departure from the earlier representation to the contrary for the first defendant to rely on a limitation defence. If available, that defence arises by virtue of the lapse of time, which is quite independent of the content of the earlier representation.

The first defendant gives a different answer in reply in respect of the TAA Scheme Representations.[73] I am not persuaded that it is correct, because it depends on the assertion that ‘it is not alleged that there was any representation that the first defendant would ensure (promise) that the plaintiff would be better off under the TAAGSP than under the CSS’. I think, on the contrary, that the pleaded representation is capable of being read that way. I prefer the reasoning I have set out above.
[73]First Defendant’s Submissions in Reply at [24].

The first defendant has not directly addressed in its submissions in reply the plaintiff’s claimed reliance on estoppel as an equitable alternative to reliance on s 27 of the Limitation Act. There is nothing in Verwayen, on which both parties rely, to show that estoppel relied on this way has different elements to estoppel used in any other adversarial manner. Indeed, both Mason CJ and Deane J in Verwayen were at pains to identify a unifying principle in relation to estoppel, however utilised.[74] The plaintiff has referred in a general way[75] to Spry, The Principles of Equitable Remedies, in support of his proposition that a court in equity will apply equitable rules and remedies in response to a limitation defence were appropriate, but has not quoted any particular passage or authority that in so doing the general elements of estoppel would not apply. I consider that they would.
[74]Mason CJ at 413; Deane J at 445, points 6 and 7.
[75]Plaintiff’s Submissions page 8, first paragraph.

For these reasons paragraphs 84-89 in the statement of claim and the paragraphs in the reply to which objection is taken that rely on estoppel are liable to be struck out for failure to plead a necessary element of estoppel, and that defect cannot be cured.

For completeness, I will also now deal with unconscionable conduct as a distinct plea within those paragraphs.

Unconscionable conduct

In relation to unconscionable conduct the first defendant’s argument is as follows. The object of the doctrine of unconscionable conduct is to relieve an innocent party, here the plaintiff, from the consequences of another party, here the first defendant, taking unconscientious advantage of him by reason of his special disadvantage vis a vis that other. Even if the plaintiff proves special disadvantage and that the first defendant took unconscionable advantage of that special disadvantage, that does not permit the substantive relief sought by the plaintiff. That relief is damages, and so would amount to a re-writing of the (employment) bargain between the plaintiff and the first defendant to impose additional obligations on the first defendant. The first defendant says that while the categories of unconscionable conduct that may occasion the setting aside of a bargain are not closed, the doctrine extends only to relieving a plaintiff of an obligation, not to imposing one on the defendant.[76]
[76]T 35.14-17; T 36.3-24.

As noted by the first defendant in its reply submissions,[77] the plaintiff in his submissions in response does not cavil with the proposition that the doctrine of unconscionable conduct is not a basis for the payment of damages. The plaintiff says that he does not seek damages for the unconscionable conduct, but merely relies on it to estop the first defendant from gaining at his expense by reliance on the limitation defence.
[77]First Defendant’s Submissions in Reply at [25].

The source of the modern application of the doctrine of unconscionable conduct is Commercial Bank of Australia Limited v Amadio[78] (‘Amadio’). The doctrine was there lucidly stated by Mason J (as he then was) and Deane J, in passages on which the first defendant relies.[79] In these statements of the doctrine, it is expressed as being available by way of relief from existing obligations, not in terms that allow for the creation of new obligations if unconscionable conduct is found. For example, Deane J stated (emphasis added) that:

Unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so.[80]

[78]151 CLR 447.

[79]Mason J at 461.2-462.5; Deane J at 474.1- 475.2 and 480.7- 481.2 relied on at T 37.

[80]151 CLR 447, at 474.

In Amadio, the party relying on the doctrine was seeking relief from enforcement of a guarantee. The doctrine is most usually invoked as a defence in this way, but it is not confined to use as a defence. In Mackintosh v Johnson and anor[81] the Court of Appeal considered the use of the doctrine by an elderly man to recover monies he had provided to a much younger erstwhile lover i.e. he sought repayment as a plaintiff, not just relief from an obligation to pay as a defendant, on the basis that the defendant unconscionably had taken advantage of his age and loneliness. The plaintiff succeeded at trial; the defendant on appeal. The Court of Appeal applied the principle as stated in Amadio, noting that the transactions that may be set aside in equity as a result of unconscionable conduct include gifts.[82] The Court considered other such cases, where gifts had been set aside on the basis of unconscionable conduct. In the instant case, however, the Court of Appeal held on the facts that the plaintiff had not been affected by a special disability at the time he made the payments to the defendant, and accordingly the judgment on the basis of unconscionable conduct could not stand.[83] They held that the correct characterisation of the payments was that they were gifts.
[81](2013) 37 VR 301.
[82](2013) 37 VR 301, at [13].
[83](2013) 37 VR 301 at [82]-[84].

The plaintiff has not taken me to any authority that illustrates the use of the doctrine to impose an additional obligation on the part of the party who has engaged in unconscionable conduct, and that use would be inconsistent with the statements of principle in Amadio. The doctrine was considered again by the High Court in Kakavas v Crown Melbourne Limited[84] (‘Kakavas’), and the plaintiff has referred me to certain passages of that case in his submissions in response. None of those passages, or the facts or judgement in Kakavas, show that the doctrine can be utilised to impose an additional burden on the party who has engaged in the unconscionable conduct.
[84][2013] HCA 25.

It follows that to the extent that the plaintiff seeks to rely on the doctrine in this way, the first defendant has shown that to be objectionable, and incapable of cure by re-pleading.

Even in the use for which the plaintiff now contends, solely in reply to the limitation defence, there may be difficulties. I express what follows provisionally, because I have not heard from the parties in relation to these matters. The principal difficulty is that the plaintiff’s argument may be circular. Even accepting that he does not seek damages directly by virtue of the doctrine of unconscionable conduct i.e. for that conduct per se, he seeks by the doctrine to avoid what would otherwise be a complete defence to his claim for damages by reason of various other causes of action. His claim is for damages against the defendants, not as against any superannuation fund, and he seeks relief from the consequences of the expiration of the limitation period, which would otherwise deny him the substantive relief of damages. Whether the unconscionable conduct is relied on as a cause of action, or in reply, the end result of that reliance may still be to seek to impose a new obligation on the first defendant.

The difficulty is compounded by the fact that the measure of damages the plaintiff seeks is not entirely clear on the material before me, and there may be inconsistency within what is pleaded and between that and what is asserted in the plaintiff’s submissions in response. Dealing first with the pleading, many paragraphs of the statement of claim plead or imply that damages are to be assessed as being the superannuation he should have received, but for the conduct of the defendants, but did not.[85] It may be asserted that this is the proper measure of damage in respect of those causes of action, if proved. Paragraphs 86 and 89, under the heading ‘Unconscionable Conduct and Estoppel’ also assert an entitlement to superannuation benefits not received. The preceding paragraph in each case pleads that the first defendant should be estopped from ‘benefitting from its conduct’.
[85]For example, paragraph 68 of the statement of claim.

The benefit that the first defendant obtained by virtue of its conduct cannot be, however, the superannuation that the plaintiff did not receive. Even if the plaintiff could show at trial that he was under a special disability, and the first defendant took unconscionable advantage of it, the first defendant did not thereby obtain the ultimate financial benefit of the superannuation that would otherwise have been the plaintiff’s. At the highest, the first defendant may have benefitted at the time only by retaining employer superannuation contributions not paid, or not paid in the higher amount required by Commonwealth superannuation, as compared with TAA Superannuation. This assumes that such employer contributions were required. If employer contributions were required, it might also be conceivably arguable that the first defendant thereby indirectly obtained the capitalised value of the contributions not paid. On no view, however, could it be said that the first defendant thereby obtained what the plaintiff might have obtained by way of superannuation. The superannuation entitlements of the plaintiff were governed by his membership of the terms of the various schemes, and affected by the preferable taxation treatment of superannuation.

In his written submissions in response the plaintiff appears to concede that the benefit obtained by the first defendant by its unconscionable conduct was superannuation contributions not required to have been paid.[86] The difficulty is that he does not identify where in the statement of claim or reply an employer obligation to pay superannuation contributions, on the plaintiff becoming a member of Commonwealth superannuation, and a decreased obligation to pay employer contributions after transfer to TAA Superannuation, is pleaded. Those matters are certainly not pleaded in paragraphs 84-89. Further, contributions not paid and their capitalised value is a different measure of damage to superannuation the plaintiff should have received, but did not. The two sums may also be different, given the preferential tax treatment of superannuation and the terms of the relevant superannuation schemes.
[86]Plaintiff’s Submissions page 6, final paragraph.

Conclusion

For all these reasons, I consider the plaintiff’s pleading of unconscionable conduct, as well as that of estoppel, (whether or not the two are intended to be distinct, or to be causes of action, or in reply) not just flawed, but fatally flawed.

I will strike out paragraphs 84-89 of the statement of claim, with no right to re-plead. I have, however, a hesitation in striking out paragraph 19 and the first paragraph 20 of the reply on that basis. That hesitation arises because the first defendant has not sought strike out of the second paragraph 20 of the reply which answers the general limitation defence, although that paragraph too relies in part[87] on estoppel by reason of unconscionable conduct to prevent the first defendant from relying on the limitation defence.
[87]Sub sub-paragraph (vi) to sub-paragraph (a) of paragraph 20, page 16 of the reply.

I am unable to determine on the material before me if the first defendant intended to draw a distinction between the reliance on estoppel in paragraph 19(d) and the first paragraph 20 of the reply, and in the second paragraph 20, and if so, on what basis. Alternatively, the absence of objection to estoppel in the second paragraph 20 may have been an oversight. I will give the parties the opportunity to discuss this issue further between themselves, and reflect an agreed outcome in the orders to be prepared to reflect these reasons. If they cannot agree on the point, I will hear them further.

Conclusions and re-pleading
Breach of contract

I will strike out the whole of paragraphs 80 and 82 of the statement of claim. The objection on limitation grounds to breach of the term that the plaintiff would be invited to join Commonwealth superannuation is sustained and is not capable of correction by re-pleading. The drafting objections taken should be capable of correction, but for the reasons indicated I will not in these reasons sanction either of the proposed specific forms of re-pleading. A significant reason for this approach is that I consider it would be desirable for the whole of paragraph 5 (as to the terms of the contract) to be re-pleaded as well, although I will hear the parties further on that suggestion if either objects to it.

In addition to the drafting objections to paragraph 80 articulated by the first defendant, I would reiterate the point I made in oral submissions, that the First Representation is pleaded in paragraph 80 as a breach, when it is the very mechanism by which the term was included into the contract- it cannot in that light be also a breach. The redrafted paragraph 80 should also avoid the current form of pleading breach by virtue of multiple matters, or on multiple occasions, most of which are expressed either additionally or in the alternative. It is currently impossible to determine what is said to constitute the breach or breaches, and whether that breach or breaches arose on the occasion of any or each of the pleaded matters or only by their cumulative effect.

Paragraph 19(c) of the reply fails because s 27(b) of the Limitation Act is not available to postpone the running of the limitation period for breach of the term that the plaintiff would be invited to join Commonwealth superannuation. It cannot be re-pleaded.

Unconscionable conduct and estoppel

I will strike out paragraphs 84-89 of the statement of claim, with no right to re-plead.

Subject to the inconsistency with the absence of objection to reliance on estoppel and unconscionable conduct in the second paragraph 20 in the reply, I would also strike out sub-paragraphs (b) and (d) of paragraph 19, and the first paragraph 20. In relation to paragraph 19 of the reply, the simplest course is to strike out the whole of the paragraph. If the denial in paragraph 19(a) is required, it may in due course be re-pleaded.

If the parties do not agree that paragraph 19 and the first paragraph 20 of the reply may not otherwise be re-pleaded (which turns only on the significance of the absence of objection to the second paragraph 20 of the reply), I will hear them further.

Mechanism for re-pleading

I will ask the parties to prepare draft orders to give effect to these reasons, and will hear them further if those orders are not agreed. Amongst the other matters to be included in those orders, they should make provision for the mechanism of re-pleading of the statement of claim, to the extent that is permitted. Given the many difficulties with the plaintiff’s pleading that have been exposed in the course of this application, I think the more desirable course in relation to re-pleading may be to require the plaintiff in the orders to first serve a draft amended statement of claim, and seek leave to amend if the amendments are not consented to, rather than give leave to re-plead in the absence of a draft document. The parties are at liberty to agree to the different course of giving leave to re-plead in the absence of a proposed re-pleaded document in the orders if they wish. The onus would then be on the first defendant to object to the re-pleaded statement of claim, rather than on the plaintiff to justify the amendments.

[2015] VSC 602

4 November 2015