Lighthouse Corporation Limited v Republica Democratica de Timor Leste (No 3)
[2021] VSC 478
•10 August 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
COMMERCIAL LIST
S CI 2016 04287
BETWEEN:
| LIGHTHOUSE CORPORATION LIMITED (IBC 051 557) & ANOR (according to the Schedule of Parties) | Plaintiffs |
| and | |
| REPUBLICA DEMOCRATICA DE TIMOR LESTE & ANOR (according to the Schedule of Parties) | Defendants |
| (by original proceeding) | |
| AND BETWEEN: | |
| REPUBLICA DEMOCRATICA DE TIMOR LESTE & ANOR (according to the Schedule of Parties) | Plaintiffs |
| and | |
| LIGHTHOUSE CORPORATION LIMITED (IBC 051 557) & ORS (according to the Schedule of Parties) | Defendants |
| (by counterclaim) |
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JUDGE: | M Osborne J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 15 July 2021; 4 August 2021 |
DATE OF JUDGMENT: | 10 August 2021 |
CASE MAY BE CITED AS: | Lighthouse Corporation Limited & Anor v Republica Democratica de Timor Leste & Anor (No 3) |
MEDIUM NEUTRAL CITATION: | [2021] VSC 478 |
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APPLICATION for summary dismissal pursuant to r 23.01 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’) and ss 62 and 63 of the Civil Procedure Act 2010 in respect of counterclaim seeking declaratory relief only against individual in circumstances where relief is also sought by the counterparty for orders avoiding a contract and associated declaratory relief – Whether counterclaim against individual for declaratory relief produces any foreseeable consequences or has utility - Application for strike out parts of counterclaim pursuant to rule 23.02 of the Rules alleging post-contravention conduct where such contravening conduct is not relied upon as founding a claim for relief under s 87(1A) of the Trade Practices Act 1974 (‘the TPA’) but only for the purposes of s 87(1D) of that Act – Application for strike out of parts of counterclaim alleging post-contravention conduct where the post-contravention conduct is said to be time-barred by operation of s 87(1CA) of the TPA – Meckiff v Simpson [1968] VR 62 at 69; Wheelahan v City of Casey (No 12) [2013] VSC 316; Babcock & Brown DIF III Global Co-Investment Fund LP v Babcock & Brown International Pty Ltd (No 2) [2017] VSC 556; Uber Australia Pty Ltd v Andrianakis (2020) 396 ALR 331; Rowe v Ausnet Electricity Services (No 5) [2015] VSC 8; Goldsmith v Sandilands (2002) 190 ALR 370; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564; Lifeplan Australia Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (No 2) [2017] FCAFC 99; Telstra Corporation Limited v Singtel Optus Pty Ltd (No 2) [2014] VSC 108; Gregg v Tasmanian Trustees Ltd (1997) 73 FCR 91 considered.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs/First, Second and Third Defendants by Counterclaim | Mr C Young QC with Mr P Annabell | Johnson Winter and Slattery |
| For the Defendants/Plaintiffs by Counterclaim | Mr P Solomon QC with Mr J Kay Hoyle | DLA Piper Australia |
HIS HONOUR:
Introduction
On or about 22 October 2010, the plaintiffs and first and second defendants by counterclaim, Lighthouse Corporation Limited and Lighthouse Corporation Pty Ltd (for convenience, collectively ‘Lighthouse’), entered into a fuel supply agreement with the first and second defendants and plaintiffs by counterclaim, Republica Democratica de Timor Leste (‘the Democratic Republic of Timor Leste’) and Estado da Electricidade Agua e Urbanizaco, a constituent subdivision or agency of the Democratic Republic of Timor Leste (for convenience, collectively ‘Timor Leste’).
In this proceeding, commenced on 21 October 2016, Lighthouse alleges that Timor Leste wrongfully repudiated the fuel supply agreement; Lighthouse claims damages as a result.
The original defence and counterclaim
On 1 February 2021, Timor Leste filed its defence and counterclaim. The defence and counterclaim is lengthy, comprising some 770 paragraphs and 193 pages. As is customary, the defence and counterclaim are contained in the one document and the counterclaim section incorporates by reference parts of the defence.
Although lengthy, the defence is entirely orthodox; it alleges that the entering into of the fuel supply agreement was induced by misrepresentations (‘the pre-contractual misrepresentations’), which entitled Timor Leste at law to rescind the agreement. The pre-contractual misrepresentations are alleged to have been made on Lighthouse’s behalf by three individuals: Albert Jacobs (‘Mr Jacobs’), Lighthouse’s sole director; Sean Magee (‘Mr Magee’), a director of an entity named the Asia Growth Funds Management Group; and James Podaridis (‘Mr Podaridis’), Lighthouse’s general counsel. The pre-contractual misrepresentations are alleged to have been knowingly false. Timor Leste purports to have rescinded the fuel supply agreement on 19 August 2011.
In the counterclaim, Timor Leste, among other things:
(a) incorporates by reference the pre-contractual misrepresentations and alleges that they constitute misleading and deceptive conduct (‘the pre-contractual misleading and deceptive conduct’) contrary to s 52 of the Trade Practices Act 1974 (Cth) (‘the TPA’); and
(b) in addition and as a result of their knowing falsity, that the making of the pre-contractual misrepresentations constitutes unconscionable conduct (‘the pre-contractual unconscionable conduct’) contrary to s 51AC(1) of the TPA; and
(c) by counterclaim seeks orders that, by reason of the contraventions of the TPA so arising (collectively ‘the pre-contractual contravening conduct’), it is entitled to relief under the TPA avoiding the fuel supply agreement (‘the avoidance relief’) and associated declarations of contravening conduct against Lighthouse (‘the declaratory relief’).
No claim for damages under the TPA is made. This part of the counterclaim too, is entirely orthodox.
Where the counterclaim is arguably unorthodox is that, in addition to the relief sought against Lighthouse under the TPA, Timor Leste also seeks declaratory relief against Messrs Jacobs, Magee, and Podaridis on the basis that each is alleged to have been a person involved, within the meaning of s 75B of the TPA, in the alleged contraventions by Lighthouse of the TPA (‘the personal declaratory relief’). Aside from costs, no other relief is sought against Messrs Jacobs, Magee and Podaridis.
The other unorthodoxy in the counterclaim arises as Timor Leste also pleads a series of misrepresentations allegedly made after the entering into of the fuel supply agreement on 22 October 2010 (‘the post-contractual misrepresentations’), which are also alleged to have been knowingly false and which are said to constitute unconscionable conduct contrary to s 51AC of the TPA (‘the post-contractual unconscionable conduct’). In the counterclaim, Timor Leste seeks declaratory relief against Lighthouse in respect of the post-contractual unconscionable conduct and like declarations against Messrs Jacobs, Magee, and Podaridis on the basis that, again, each is said to have been involved, within the meaning of s 75B of the TPA, in the post-contractual unconscionable conduct by Lighthouse. The relief sought in respect of the post contractual unconscionable conduct, whether against Lighthouse or the individuals, is confined to declarations (and costs).
The post contractual misrepresentations are significant in number; there are some 50 or so and each post contractual misrepresentations is separately alleged. There are also an equivalent number of paragraphs alleging the true facts said to belie each relevant representation, as well as additional paragraphs raising allegations of knowing falsity.[1]
[1]In all there is something in the order of 250 paragraphs which relate to the post-contractual conduct.
The Lighthouse summons
On 21 May 2021, Lighthouse[2] issued a summons seeking orders pursuant to ss 62 and 63 of the Civil Procedure Act 2010 (Vic) (‘the CPA’), that:
[2]The same solicitors act for both Mr Jacobs and Lighthouse. It is more accurate to describe the summons as one issued by both Mr Jacobs and Lighthouse, but for convenience reference is only made to Lighthouse, including in relation to the oral and written submissions made in support.
(a) there be summary judgment against Timor Leste in respect of the declaratory relief and the avoidance relief sought under the TPA;
(b) the third defendant by counterclaim (that is, Mr Jacobs) have summary judgment against Timor Leste on the counterclaim in the proceeding brought against him;
(c) pursuant to r 23.02 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’), that paragraphs 648–746, 755-759 and 761-763 of the defence and counterclaim be struck out as they:
(i) do not disclose a cause of action;
(ii) are scandalous, frivolous or vexatious; and/or
(iii) may prejudice, embarrass or delay the fair trial of the proceeding.
On 18 June 2021, Lighthouse filed an outline of submissions in support of its summons. Those submissions identified six critical issues arising from the summons:
(i) That the personal declaratory relief sought against Mr Jacobs has no foreseeable consequence and therefore lacks utility (‘Issue One’).
(ii) That the avoidance relief, insofar as it relied on s 87(1) of the TPA, was defective because s 87(1) was not a standalone provision and required ‘a proceeding instituted under Part VI of the TPA’. Lighthouse argued that s 87(1) was only enlivened where the party also claimed relief based upon another provision of Part VI of the TPA and submitted that this had not occurred (‘Issue Two’).
(iii) That Timor Leste could not rely on the TPA in respect of Lighthouse’s conduct as that conduct did not occur ‘in trade or commerce’, which is defined in that act as ‘trade or commerce within Australia or between Australia and places outside Australia’ (‘Issue Three’).
(iv) That Timor Leste could not rely on the TPA in respect of Lighthouse’s conduct as that conduct was extra-territorial, and to rely on extra-territorial conduct Timor Leste was required to obtain Ministerial consent pursuant to s 5(4) of the TPA, which it had not obtained (‘Issue Four’).
(v) That Timor Leste could not rely on the TPA as Timor Leste was not ‘a person’ (within the meaning of the TPA) who had suffered loss and damage, as it is a foreign state (‘Issue Five’).
(vi) That parts of the declaratory relief (including that sought against Mr Jacobs), insofar as they are sought under the TPA, are defective as the TPA does not apply to acts or omissions occurring on or after 1 January 2011,[3] and accordingly the allegations relating to conduct that occurred on or after 1 January 2011 (all of which are part of the post-contractual conduct) should be struck out or summary judgment should be given in respect of those allegations (‘Issue Six’).
[3]ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640, 644-5 [11] (French CJ, Crennan, Bell and Keane JJ).
On 30 June 2021, following receipt of Lighthouse’s submissions, Timor Leste filed an amended defence and counterclaim pursuant to rule 36.04 of the Rules (‘the amended defence and amended counterclaim’).
In the amended counterclaim, it was now pleaded that:
(a) Lighthouse, Mr Jacobs, Mr Magee and Mr Podaridis contravened ss 9 and 8A of the Fair Trading Act 1999 (Vic) (‘the FTA’) in respect of the pre-contractual contravening conduct (which are the equivalent state-based provisions corresponding to, respectively, ss 52 and 51AC of the TPA) and declarations are sought against them pursuant to s 158 of the FTA;
(b) the avoidance relief is no longer sought under s 87(1) of the TPA and reference to that section was deleted and replaced with a claim for relief sought under s 87(1A) of the TPA;
(c) in addition to their involvement in Lighthouse’s pre-contractual contravening conduct as previously alleged, Messrs Jacobs, Magee and Podaridis personally contravened ss 52 and 51AC(1) of the TPA as principals and related declarations are sought against them pursuant to those sections; and
(d) the post-contractual misrepresentations are maintained but are no longer alleged to constitute post-contractual unconscionable conduct; no declaration or other relief is sought with respect to the post-contractual misrepresentations (now referred to as ‘the post-contractual conduct’).
In sum, the amended defence and amended counterclaim sought new relief analogous to the avoidance relief and the declaratory relief but now pursuant to the FTA; clarified the relevant subsection in the TPA under which the avoidance relief was sought; sought additional personal declaratory relief against Messrs Jacobs, Magee and Podaridis; and deleted the claim that the post-contractual conduct was unconscionable and in contravention of the TPA.
On 1 July 2021, Timor Leste filed written submissions which responded to each of the six issues raised by Lighthouse. Given the manner in which the application has developed, it is only necessary to refer to three of those issues: Issue One (the personal declaratory relief); Issue Two (the relevant subsection for the avoidance relief); and Issue Six (the relevance of the post-contractual conduct).
In respect of Issue One, Timor Leste submitted that the relief sought against Mr Jacobs has foreseeable consequence and is of utility. Timor Leste argued that as a sovereign state it has a real interest in ensuring public vindication of its reputation in respect of the conduct of Mr Jacobs, whom it alleged had perpetrated a fraud against Timor Leste. Timor Leste submitted that declaratory relief was available in respect of reputational matters.
In respect of Issue Two, Timor Leste submitted that the amendment of the avoidance relief from a reliance on s 87(1) to s 87(1A) was one of legal form only, such as to put beyond doubt the fact that Timor Leste was advancing a claim under s 87(1A). Timor Leste submitted that the amendment resolved Issue Two.
In respect of Issue Six, Timor Leste accepted that the TPA did not apply to acts or omissions occurring on or after 1 January 2011, and that acts or omissions occurring on or after that date are governed by the Australian Consumer Law (‘ACL’), being Schedule 2 to the Competition and Consumer Act 2010 (Cth). More pertinently, Timor Leste clarified that the post-contractual conduct was only relied upon for the purposes of supporting Timor Leste’s claim for avoidance relief; particularly for a remedial order under ss 87(1A) and 87(2) of the TPA that the fuel supply agreement be avoided as and from 22 October 2010.
In that respect, Timor Leste submitted that the post-contractual conduct was relevant only for the purposes of the Court’s consideration as to whether to make an order pursuant to ss 87(1A) and 87 (2) of the TPA declaring the fuel supply agreement void. In respect of the relevance of the post-contractual conduct to the grant of such relief, Timor Leste relied upon s 87(1D) of the TPA. Timor Leste accepted that the post-contractual conduct was not relevant to the Court’s assessment of whether there had been a contravention of the TPA arising from the pre-contractual conduct; that is, it was only relevant to what order should be made, once the pre-contractual misleading and deceptive conduct and/or the pre-contractual unconscionable conduct had been established. Nor did Timor Leste press any claim for declaratory relief with respect to the post-contractual conduct and its prayer for relief was amended accordingly.
On 8 July 2021 Lighthouse filed written submissions in reply. First, Lighthouse disputed that there was utility in the Court granting personal declaratory relief against Mr Jacobs because Timor Leste would achieve reputational vindication. Secondly, Lighthouse submitted that Timor Leste’s reliance on s 87(1A) of the TPA in respect of the avoidance relief, in lieu of s 87(1), had the consequence that those aspects of the avoidance relief claim were time barred. It relied upon s 87(1CA) of the TPA, which provides:
An application under sub-section (1A) may be made at any time within six years after the day on which the cause of action that relates to the conduct accrued.
Thirdly, and in respect of the reliance upon the post-contractual conduct, Lighthouse accepted that in determining whether to make an order under s 87(1A)) of the TPA[4]), the Court is entitled to have regard to matters arising after the contravention which enlivens the power to grant relief. However, given the clarification in Timor Leste’s position that it did not claim any relief (including the declaratory relief) in respect of the post-contractual conduct, Lighthouse submitted that those parts of the pleading were not material facts relevant in respect of any counterclaim and as such should be struck out.
[4]Assuming of course for the sake of argument that the claim for relief was not time barred.
Lighthouse’s submissions also responded to Issue Three (whether the conduct complained of occurred in trade or commerce), Issue Four (the question of extra-territorial application and the necessity or otherwise of consent from the Minister) and Issue Six (whether Timor Leste was a person within the meaning of the TPA).
Ultimately, at the hearing of the summons only the following matters were pressed:[5]
[5]Lighthouse made clear that it still intended to rely on the matters in Issue Three, Issue Four, and Issue Five at trial.
(a) that the personal declaratory relief sought against Mr Jacobs had no foreseeable consequence for the parties and otherwise lacked utility and as such Mr Jacobs should be entitled to summary dismissal;
(b) that the paragraphs in the counterclaim which related to the post-contractual conduct should be struck out given that they were not relied upon for the purposes of establishing any contravention of the TPA and instead were only relied upon for the purposes of s 87(1D) of the TPA in the context of the appropriateness or otherwise of relief arising from the pre-contractual contravening conduct;
(c) relatedly to (b), that in any event reliance by Timor Leste on the TPA for the purposes of its claims in respect of the post contractual conduct was time-barred and, as such, those claims should be the subject of summary dismissal.
Principles – summary judgment and strikeout
Accordingly, the Court was asked to exercise both its jurisdiction under ss 62 and 63 of the CPA to grant summary dismissal and its jurisdiction under r 23.02 of the Rules to strike out parts of the amended counterclaim.
The relevant tests to be applied are not controversial. The Court may grant summary dismissal where a counterclaim (or part of a counterclaim) has no real prospect of success.[6] The prospect of success must be ‘real’ as opposed to ‘fanciful’.[7] The power should be exercised in accordance with the overarching purpose set out in s 7 of the CPA to facilitate the just, efficient, timely and cost-effective resolution of the issues in dispute.[8]
[6]CPA ss 62 and 63.
[7]Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd (2013) 42 VR 27, 40 [35] (Warren CJ and Nettle JA); Roo Roofing Pty Ltd v Commonwealth [2017] VSC 31 [5] (John Dixon J).
[8]CPAs 7; Taylor v Minister for Education [2021] VSC 23, [9] (Richards J); Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd (2013) 42 VR 27, 42 [42] (Neave JA).
Rule 23.02 of the Rules reads:
Where an indorsement of claim on a writ or originating motion or a pleading or any part of an indorsement of claim or pleading—
(a) does not disclose a cause of action or defence;
(b) is scandalous, frivolous or vexatious;
(c) may prejudice, embarrass or delay the fair trial of the proceeding; or
(d) is otherwise an abuse of the process of the Court—
the Court may order that the whole or part of the indorsement or pleading be struck out or amended.
Relevantly, r 23.02(c) confers upon the Court a power to order that the whole or part of a pleading be struck out (or amended) if it may prejudice, embarrass or delay the fair trial of the proceeding. The Full Court of this Court in Meckiff v Simpson said of a predecessor to r 23.02(c):[9]
As is shown by numerous authorities on this rule, which takes its place in an order dealing with pleadings generally, matter in a pleading will be struck out under this Rule only where there is some defect in the pleading attacked, e.g. where the pleading is unintelligible, ambiguous, vague or too general, so as to embarrass the opposite party who does not know what is alleged against him. The rule is one to ensure compliance with the rules of pleading and nothing else.
[9][1968] VR 62 at 69, 70 (Winneke CJ, Adams and Gowans JJ).
In Wheelahan v City of Casey (No 12) (‘Wheelahan’), John Dixon J referred to the principles to be applied as follows:[10]
[10][2013] VSC 316, [25].
(a)Order 13 of the Rules set out the relevant requirements of a sufficient pleading, while r 23.02 provides the grounds on which the sufficiency of a pleading may be impugned;
(b)the function of a pleading in civil proceedings is to alert the other party to the case they need to meet (and hence satisfy basic requirements of procedural fairness) and further, to define the precise issues for determination so that the court may conduct a fair trial;
(c)the cardinal rule is that a pleading must state all the material facts to establish a reasonable cause of action (or defence).[11] The expression ‘material facts’ is not synonymous with providing all the circumstances. Material facts are only those relied on to establish the essential elements of the cause of action;
[11]A reasonable cause of action or defence is one with a real chance of success, assuming the correctness of the allegations of fact in the challenged pleading.
…
(f)pleadings, when well-drawn, serve the overarching purpose of the Civil Procedure Act 2010 (Vic);
(g)a pleading which contains unnecessary or irrelevant allegations may be embarrassing — for example, if it contains a body of material by way of background factual matrix which does not lead to the making out of any defined cause of action (or defence), particularly if the offending paragraphs tend to obfuscate the issues to be determined;
…
(l)a pleading should not be so prolix that the opposite party is unable to ascertain with precision the cause of action and the material facts that are alleged against it;
…
(n)in an application under r 23.02, the court will only look at the pleading itself and the documents referred to in the pleading;
(o)the power to strike out a pleading is discretionary. As a rule, the power will be exercised only when there is some substantial objection to the pleading complained of or some real embarrassment is shown;
…
(citations omitted; underline added)
In Babcock & Brown DIF III Global Co-Investment Fund LP v Babcock & Brown International Pty Ltd (No 2) (‘Babcock & Brown (No 2)’), Hargrave J referred to aspects of the principles set out in Wheelahan and added the following observation:[12]
To this summary, I would add that the Court should consider the pleading under a challenge as a whole and adopt a practical case management approach to pleading objections, rather than accepting technical objections when the true nature of the case to be met is clear from reading the pleading as a whole and there is no embarrassment to filing a responsive pleading. Such an approach accords with the discretionary nature of the power to strike out and with the overarching purpose under the Civil Procedure Act. However, in cases alleging dishonesty or fraud, precise pleadings with full particulars are required.
[12][2017] VSC 556, [15].
The principles set out in Wheelahan and Babcock & Brown (No 2) were endorsed by the Court of Appeal in Uber Australia Pty Ltd v Andrianakis.[13] Hargrave J’s approach in Babcock & Brown (No 2) was also reinforced in that case.[14]
[13](2020) 396 ALR 331, 344-5 [35]–[37], 349-50 [50]–[52] (Niall, Hargrave and Emerton JJA).
[14]Ibid, 350 [53]–[54].
As is apparent from the observations of Dixon J in Rowe v Ausnet Electricity Services (No 5),[15] the following observation of Gleeson CJ in Goldsmith v Sandilands regarding one of the duties of the court in this context warrants extraction (and finds statutory reinforcement in the Court’s obligations under the CPA):[16]
1. It sometimes happens, in the course of litigation, that counsel will start a hare. The response of the opposing counsel may be to pursue it. One of the duties of a trial judge is to control the proceedings, to exclude irrelevancy, and to maintain proper limits upon the extent to which the parties and their lawyers will be permitted to raise and investigate matters that are of only marginal significance.
2.The facts in issue in a civil action case emerge from the pleadings, which, in turn, are framed in the light of the legal principles governing the case. Facts relevant to facts in issue emerge from the particulars and the evidence. The function of particulars is not to expand the issues defined by the pleadings, but “to fill in the picture of the plaintiff’s cause of action with information sufficiently detailed to put the defendant on his guard as to the case he has to meet and to enable him to prepare for trial”. The function of evidence is to advance, or cut down, the case of a party in accordance with the rules of statute or common law that determine the nature of the information a court will receive. The primary rule of evidence is that a court will receive, and will only receive, evidence that is relevant to the issues as defined by the pleadings. Evidence is relevant if it could rationally affect, directly or indirectly, the assessment of the probability of the existence of a fact in issue in the proceeding. The general rule that relevant evidence will be received is qualified by other rules based upon considerations of justice, or practicality. One such qualification limits investigation of collateral matters.
(citations omitted; underline added)
[15][2015] VSC 8, [11].
[16](2002) 190 ALR 370, 371 [1] – [2].
Declaratory relief in respect of Mr Jacobs
It is well established that the Court has an inherent power to grant declaratory relief. Although the Court’s discretion to grant declaratory relief is unfettered, the power is ‘constrained by the considerations which mark out the boundaries of judicial power’ and is subject to the following established principles:[17]
[17]Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, 582; see also Director of Consumer Affairs Victoria v Mecon Insurance Pty Ltd [2016] VSC 42, [22] (Elliott J).
(a) the declaration ‘must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions’;[18]
(b) there must be a ‘proper contradictor’, that is, a person who has ‘a true interest to oppose the declaration sought’;[19] and
(c) declaratory relief will not be granted where the ‘declaration will produce no foreseeable consequences for the parties’.[20]
[18]Ibid, 582.
[19]Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421, 437 (Gibbs J).
[20]Gardner v Dairy Industry Authority of New South Wales (1977) 18 ALR 55, 69 (Mason J); 71 (Aickin J).
Even where the above factors are present, the Court retains a residual discretion as to whether or not relief should be granted in a particular case.[21]
[21]Clarence City Council v Commonwealth of Australia (2020) 382 ALR 273, 297 [70] (Full Court).
The following factors are notable in Timor Leste’s claim for declaratory relief against Mr Jacobs:
(a) first, no relief other than the personal declaratory relief, is sought against Mr Jacobs;
(b) secondly, the claim for personal declaratory relief against Mr Jacobs arises in relation to past conduct (indeed, conduct which occurred some 10 to 11 years ago) and in circumstances where there is no ongoing relationship between Timor Leste and Mr Jacobs;
(c) thirdly, Timor Leste relies upon the same conduct as also constituting the pre-contractual contravening conduct of Lighthouse, and therefore seeks declarations in relevantly identical form against Lighthouse in respect of the same conduct;
(d) fourthly, Timor Leste relies upon the same conduct (as conduct of Lighthouse) in support of its assertion that it has rescinded the fuel supply agreement, or alternatively and relatedly that it is entitled to the avoidance relief under the TPA;
(e) fifthly, that the proceeding is essentially a dispute involving private rights, albeit that one of the parties is a foreign state.
Given the above, the utility of a declaration against Mr Jacobs alone is not easy to divine. It is difficult to envisage what foreseeable consequence would arise from personal declaratory relief against Mr Jacobs on its own. In that respect, Lighthouse submits that it will produce no foreseeable consequences for the parties.
Lighthouse relied upon Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (No 2) (‘Lifeplan’).[22]In that case the primary relief sought by the appellants was an account of profits in respect of a breach of fiduciary duty by former employees of the appellant. At trial the appellants also sought declarations that the respondent had knowingly assisted the former employees to breach the fiduciary duties they owed to the appellants. The primary judge refused to make the declaration, stating:[23]
… the declaration should nevertheless be refused because it will have no foreseeable consequences for the parties. There is nothing to suggest that the parties have an ongoing relationship. It may be taken that there is “disapproval” of Foresters’ conduct as identified in the principal reasons, but this case does not have a public interest element, for example, a misstatement in a disclosure document where a declaration will serve a purpose of correcting a falsehood or untruth.
(underline added)
[22][2017] FCAFC 99 (Allsop CJ, Middleton and Davies JJ).
[23]Ibid, [2].
The Full Federal Court upheld the primary judge’s decision not to grant the declaration stating as follows:[24]
In this case, the declaration sought … is not a declaration of right; it does no more than state the findings made against the respondent in a private law claim and has no practical effect in circumstances where the contravening conduct has ceased and the parties have no ongoing relationship. Whilst the appellants succeeded on appeal in establishing an entitlement to an account of profits by reason of the respondent’s contravening conduct, the remedy is in the order that the respondent account to the appellants for such profits quantified in the sum of $6,558,495. The declaration would have no foreseeable consequences for the parties and accordingly should not be made.
(underline added)
[24]Ibid, [3].
Timor Leste relied upon Ainsworth v Criminal Justice Commission (‘Ainsworth’).[25] In Ainsworth, the Criminal Justice Commission (‘CJC’) had published a report which included findings adverse to the appellant, Mr Ainsworth. The High Court considered an appeal against a decision of the Full Court of the Supreme Court of Queensland refusing Mr Ainsworth a grant of mandamus or certiorari in respect of the report. The High Court was not prepared to grant such relief on appeal, notwithstanding that the Court considered that Mr Ainsworth had been denied procedural fairness by the CJC.[26] Nonetheless, the Court considered that it would be of utility to make a declaration vindicating Mr Ainsworth’s reputation and declaring that the report had been made in a breach of procedural fairness.[27]
[25]Ainsworth (n 17).
[26]Ibid 579-80 (Mason CJ, Dawson, Toohey and Gaudron JJ), 595 (Brennan J).
[27]Ibid 580-1 (Mason CJ, Dawson, Toohey and Gaudron JJ), 595-6 (Brennan J).
So too, Timor Leste argues that it, as a sovereign state, was the subject of a fraud perpetrated by Mr Jacobs (among others), and submits that it has a real interest in securing public vindication in respect of Mr Jacobs’s allegedly fraudulent conduct. Lighthouse submits that Ainsworth is authority for the proposition that declaratory relief is available in respect of a reputational matter alone.
Timor Leste also relied upon Telstra Corporation Limited v Singtel Optus Pty Ltd (No 2) (‘Telstra Corporation’).[28] In that case, Elliott J considered the appropriateness of declaratory relief in circumstances where Singtel Optus (‘Optus’) misleadingly compared its mobile phone coverage with that of Telstra Corporation (‘Telstra’) and injunctive relief had been granted. Ultimately, his Honour made declarations that identified the contravening conduct; publicised the type of advertising that constituted the contravention; and informed consumers in respect of long-term mobile phone contracts and mobile coverage.[29]
[28][2014] VSC 108.
[29]Ibid [36].
Neither Ainsworth nor Telstra Corporation are of any real assistance to Timor Leste.
In Ainsworth, Mr Ainsworth sought relief in the context of reputational damage arising from acts or omissions of the CJC, including the publication of the report. In that proceeding, Mr Ainsworth’s reputation was the main interest he sought to vindicate. For reasons peculiar to that case, mandamus and certiorari were not available. Accordingly, there was no other remedy available by which Mr Ainsworth could achieve vindication of his reputational interest in circumstances where it had been unfairly damaged by the CJC. In that context, and given that the report by the CJC adverse to Mr Ainsworth had been widely publicised, the declaratory relief sought had practical consequence for the vindication of Mr Ainsworth’s reputation. There was no other means by which the breach of procedural fairness and the damage to Mr Ainsworth’s reputation that flowed from it could be remedied; no other relief was available.
Nor is Telstra Corporation of any substantial assistance. That case did not involve a declaration made purely to vindicate a reputational interest. In contrast to Ainsworth, the declarations sought in that case were made in the context of the publication at large of a comparative advertisement by Optus which misrepresented Telstra’s geographic coverage. Given the dissemination of this misinformation to the public, there was a public interest in members of the relevant consumer class being properly informed as to the geographic coverage of both Telstra and Optus; it was in that context that his Honour considered that the making of appropriate declarations would assist in achieving that outcome.[30]
[30]Ibid [37].
By contrast, Lifeplan bears far closer similarity to the present case. The Full Court of the Federal Court in Lifeplan, rejecting the appeal against the trial judge’s refusal to grant declaratory relief, noted that the declarations sought would do no more than state the findings made against the respondent in a private law claim, and as such would have no practical effect in circumstances where the contravening conduct had ceased and the parties had no ongoing relationship.[31]
[31]Lifeplan (n 22) [3] (Allsop CJ, Middleton and Davies JJ).
Notwithstanding that those observations were made following the conclusion of trial and not, as is the case here, upon the hearing of an interlocutory application for summary judgment, they are apposite to the present case. The relief sought by Timor Leste in the proceeding in respect of the pre contractual contraventions of the TPA includes an order avoiding the fuel supply agreement as a consequence of Lighthouse’s conduct, which conduct includes conduct engaged in on its behalf by Mr Jacobs. Any question of utility of the declaration sought against Mr Jacobs in respect of a vindication of Timor Leste’s reputational interest must be assessed in the context of the likelihood that if such contraventions are established they will be the subject of findings and may well lead to the substantive private remedy of avoidance of the fuel supply agreement. Further, and whilst it may be doubtful as to whether there is any requirement for additional declaratory relief against Lighthouse in light of the avoidance relief sought in respect of the fuel supply agreement,[32] that declaratory relief remains available.
[32]No doubt in such event, it will be contended that the substantive relief is sufficient and that no declaration is necessary as was the position in the relevantly analogous case of Lifeplan.
The utility of the claim for personal declaratory relief against Mr Jacobs falls for consideration in this context. In such circumstances it is difficult to see how a declaration against Mr Jacobs could secure any benefit to Timor Leste or produce any foreseeable consequences, other than those which remain available to it vis-à-vis Lighthouse.
Whilst Timor Leste submits, and with force, that the Court’s power to summarily determine matters that are properly the subject of discretionary assessment at the end of trial should rarely be exercised, in my opinion exercise of that power is appropriate in the present case. Beyond submitting that Timor Leste wished to pursue a claim for declaratory relief against Mr Jacobs and that it was entitled to have the appropriateness of such relief assessed after trial, Timor Leste did not identify any specific reason why, beyond the general assertion of reputational vindication, such a declaration was of utility in circumstances. There is no reason to believe that the question of whether there is any foreseeable consequence and hence utility in the declaration will be any different at trial.
My assessment of the utility of the personal declaratory relief against Mr Jacobs in any event proceeds upon the basis that each of the allegations of material fact made against him in the proceeding by Timor Leste (that is, the pre-contractual contravening conduct, the pre-contractual unconscionable conduct, and the post-contractual unconscionable conduct) will be established at trial. Assuming such allegations are established, findings to that effect will be made and both Mr Jacobs and Lighthouse will be found to have engaged in misleading and deceptive conduct and/or unconscionable conduct contrary to the TPA or the FTA.
Even allowing for that conclusion, I am unable to see what foreseeable consequence there is to the parties that would arise from the making of a declaration against Mr Jacobs. This is all the more so in circumstances where no other relief is sought against Mr Jacobs and where precisely the same form of relief, yet with more substantial effect, is sought against Lighthouse.
Whilst it is true that Lighthouse was not able to point to a case where a claim for declaratory relief had been dismissed on a summary basis, neither was Timor Leste able to point to any case where declaratory relief alone was sought,[33] absent an accompanying claim for a form of more substantial relief such as damages or orders avoiding a contract. Of course, it is common for parties to make claims against individuals on the basis that they were involved in contraventions by another corporate entity or are otherwise liable as a primary contravenor. However, invariably any claim for declaratory relief to that effect in a private law context is accompanied by claims for substantial relief, whether in the form of injunctions, damages or the like. The unorthodoxy of the present case is that only declaratory relief is sought in a private law context against the individual and where the same relief, as well as more substantive practical relief, is sought against the contravening contracting party.
[33]In the context of what is essentially a private law claim.
The power to order summary dismissal is to be exercised in a manner consistent with the overarching purpose in s 7 of the CPA, which is to facilitate the just, efficient, timely and cost-effective resolution of the issues in dispute. I do not consider that the persistence of the claim against Mr Jacobs is consistent with the overarching purpose. Dismissal will remove Mr Jacobs as a party to the proceeding and refine to some extent the matters to be determined at trial. I do not consider that there is a real prospect that Timor Leste will be able to establish at trial that there is any utility in the grant of a declaration against Mr Jacobs alone.
Accordingly, in my opinion the counterclaim against Mr Jacobs should be summarily dismissed.
Strike out of the pleaded allegations with respect to the post-contractual conduct
As mentioned above, prior to the amendment, in the counterclaim Timor Leste pleaded a series of post-contractual misrepresentations made by Messrs Jacobs, Magee and Podaridis, both on their own behalf and on behalf of Lighthouse. Prior to amendment, the counterclaim then pleaded a series of correlative allegations as to the true state of affairs in respect of the post-contractual misrepresentations, which were said to be in contravention of s 51AC(1) of the TPA; that is, they are coextensive with the alleged post-contractual unconscionable conduct.
In the amended defence and amended counterclaim of 30 June 2021, the prayers for relief were amended to clarify that the declaratory relief was no longer sought against Lighthouse in relation to the post-contractual misrepresentations, and nor was any personal declaratory relief sought against Messrs Jacobs, Magee and Podaridis in respect of the post-contractual misrepresentations. The conclusion that the post-contractual misrepresentations constituted unconscionable conduct was dropped but the very substantial number of paragraphs alleging the matters giving rise to the many post-contractual misrepresentations and their falsity was remained.
In its written submissions in response to the strike out summons, Timor Leste clarified that the allegations with respect to the post-contractual misrepresentations were not relied upon for the purpose of founding a separate cause of action for contravention of the TPA (or its state equivalent, the FTA) or any form of declaratory relief. Rather, the allegations were relevant only for the purposes of s 87(1D) of the TPA; that is, as discussed above, for the purposes of determining whether an order is to be made as a result of the pre-contractual contravening conduct and not to establish that a contravention had occurred.
Section 87(1D) of the TPA reads:
(1D) [Conduct since contravention may be considered]
For the purpose of determining whether to make an order under this section in relation to a contravention of Part IVA, the Court may have regard to the conduct of parties to the proceeding since the contravention occurred.
Timor Leste submits that the post-contractual misrepresentations are relevant for the purpose of determining whether the Court should make an order under s 87(1) (now s 87(1A)) of the TPA in relation to a contravention of s 51AC arising from the pre-contractual misrepresentations that are alleged to constitute unconscionable conduct.
Lighthouse submits that, following Timor Leste’s clarification of its position in its amended defence and counterclaim and subsequent submissions, it is clear that the pleaded post-contractual misrepresentations are not relied upon for the purposes of founding a cause of action. It submits that the pleadings in that respect are not pleadings of material facts and should be struck out.
It is not in dispute that s 87(1A)[34] of the TPA confers a wide power on the Court to make remedial orders in appropriate cases relating to conduct covered by Part IVA (the unconscionable conduct provisions, including s 51(AC)) and Part V (the misleading and deceptive conduct provisions, including s 52 of the TPA.
[34]And s 87(1).
The wide power conferred by s 87(1A) of the TPA is not fettered by principles controlling the discretion to grant the equitable remedies or rescission. Nevertheless, it is permissible for the Court to obtain guidance, where appropriate, from those principles.[35]
[35]See for example, Benlist Pty Ltd v Olivetti Australia Pty Ltd (1990) ATPR 41-043.
In that context, one can apprehend that it could be possible for the post-contractual conduct generally to be of relevance in determining whether to grant such a remedy. At law, a party’s entitlement to rescind may be affected by an affirmation of a relevant contract. As such, plainly evidence of post-contractual conduct amounting to an affirmation could be relevant to the grant of the avoidance relief under s 87, such relief being analogous to rescission. Moreover, post-contravention conduct may also impact on other remedies, such as the availability of forms of injunctive relief.
The suite of conduct which can amount to unconscionable conduct is vast. So too is the suite of measures which arise to remedy such conduct. Available remedies include orders in relation to private contracts between parties, in addition to declarations and injunctions. For example, contravention of the unconscionable conduct provisions in the ACL has often arisen in the context of a system or pattern of behaviour. In appropriate instances, particularly where the conduct has been visited upon a wide group,[36] injunctive relief may extend to the requirement to institute a compliance program.[37] In such instances, it is easy to see how conduct which has occurred since the relevant contravention may be relevant to the appropriateness of the relief sought by or on behalf of the applicant.
[36]See the ACCC cases; eg ACCC v Ford Motor Company of Australia Ltd (2018) 360 ALR 124.
[37]ACCC v Real Estate Institute (WA) Inc (1999) 161 ALR 79; ACCC v Z-Tek Computer Pty Ltd (1997) 78 FCR 197.
Section 87(1D) of the TPA, together with sub-ss 87(1A) - (1E), were inserted by s 55(a) of the Trade Practices Revision Act 1986 (Cth). Section 87(1D) (which commenced 13 May 1986) originally read:
For the purpose of determining whether to make an order under this section in relation to a contravention of section 52A [unconscionable conduct], the Court may have regard to the conduct of parties to the proceeding since the contravention occurred.
Section 87(1D) was amended by s 19 and Schedule 1 of the Trade Practices Legislation Amendment Act 1992 (Cth) (which commenced 21 January 1993) to read:
For the purpose of determining whether to make an order under this section in relation to a contravention of Part 4A, the Court may have regard to the conduct of parties to the proceeding since the contravention occurred.
The Explanatory Memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth) noted that s 137D of the ACL, which is expressed in similar terms, would allow the Court to take into account, for example, that a party has been refunded money after the contravention.[38]
[38]Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth), 386.
Timor Leste relies upon Gregg v Tasmanian Trustees Ltd (‘Gregg’).[39]
[39](1997) 73 FCR 91.
In Gregg, the applicant and her husband granted a first mortgage over their matrimonial home in favour of the respondent finance company (‘the mortgage’), securing repayment of a principal sum of $261,000 lent by the respondent to T Pty Ltd (‘T’). T was a company of which the applicant’s husband was the financial director and one of three shareholders.
In or about May 1993, T’s three directors approached the respondent with a view to refinancing T’s debt then due to the Commonwealth Bank. The security provided against the refinance of T’s debt included the mortgage. In the middle of 1994 the applicant engaged a solicitor to act for her in relation to Family Court proceedings, at which time she became aware of the true nature and extent of her liability under the mortgage.
The applicant’s case was that she was induced into executing the mortgage in reliance on misleading and deceptive representations made by her husband on behalf of or as agent for the respondent finance company. The alleged representation related to T and to the terms and effect of the mortgage.
The trial judge found that the representations by the husband as to the nature of the liability to be secured by the mortgage were significantly different and greater than that which he had represented to the applicant and constituted misleading and deceptive conduct.[40]
[40]Ibid, 104.
The trial judge rejected the assertion that the husband’s representations had been made by him as agent for the respondent. However, he found that the respondent’s solicitor and employee branch manager had effected misleading and deceptive conduct on its behalf as to the nature of the liability to be secured by the mortgage, and that this was misleading and had induced the applicant to execute the mortgage.
The gist of the respondent’s misleading and deceptive conduct was that the mortgage in fact imposed more onerous obligations on the applicant and greater risks to her property than has been originally represented to her. Further, the trial judge found that the applicant was under a special disadvantage vis-à vis the respondent arising from, among other things, the matrimonial relationship between her and her husband; her lack of financial expertise, her serious physical disability, her position of vulnerability in respect of any request by her husband to mortgage her interest in the matrimonial home for a business venture proposed by him; and the fact that she had executed the mortgage in reliance upon the statements made by her husband without her having been given an explanation or understanding of its terms.[41] The trial judge also found that the transaction was highly improvident from the applicant’s point of view, in that she had undertaken a direct and personal liability in respect of the principal sum of $261,000, which sum had been lent to a company in which she had no interest, and further, that part of the sum had been applied to the direct benefit of another director of the company with whom the applicant had no relationship of any kind.[42]
[41]Ibid, 119.
[42]Ibid, 119-20.
The trial judge further held that the respondent, acting through its employee branch manager and solicitor, had been on notice of facts or circumstances that ought to have put it on enquiry as to the applicant’s special disadvantage, and that in those circumstances the respondent had unconscientiously taken advantage of the applicant’s special disadvantage.[43]
[43]Ibid, 120-1.
Accordingly, the trial judge held that the respondent’s conduct in procuring and accepting the applicant’s assent to an execution of the mortgage was conduct in trade or commerce that was unconscionable both in contravention of s 51AA and in equity.[44]
[44]Ibid, 122.
In addition, in 1995 after the execution of the mortgage, the finance company had released the security provided by the other two directors, such that the applicant’s home, together with one other asset of another directors, as the sole security for the loan. The trial judge found that the applicant had been prejudiced by the release of the other securities, as she had lost significant rights of contribution from co-borrowers or co-sureties, and that generally the release of the other securities was prejudicial to her and had been carried out without reference to her or her solicitor. At or about that time, the applicant’s husband was bankrupt and had separated from the applicant, who was becoming increasingly disabled by her multiple sclerosis. At that time and notwithstanding its differential treatment of the security provided by the two other directors, the finance company indicated to the applicant that it was holding her and her home liable under the mortgage.
In that context, the trial judge also held that the respondent’s conduct in 1995, after the mortgage was executed, in seeking to retain the benefit of the applicant’s assent to an execution of the mortgage was conduct in trade or commerce that was unconscionable in contravention of s 51AA and in equity.[45]
[45]Ibid, 122.
Thus the unconscionable conduct occurred prior to the grant of the mortgage, and after.
Having determined that the conduct which preceded the execution of the mortgage was both misleading and deceptive and unconscionable in contravention of the TPA; and further that the conduct of the finance company after execution of the mortgage was unconscionable in contravention of the TPA; the trial judge then turned to the question of the relief to be granted under s 87(1A) of the TPA.
In response to the applicant’s claim for avoidance of the mortgage ab initio, the finance company had submitted that if the mortgage was unconscionable or the applicant was misled, it would nonetheless be just and equitable for the applicant to be bound at least to the terms of transaction which she believed she had entered. The trial judge noted that there may have been force in that contention, had the finance company made an open offer to the applicant in those terms rather than seeking to retain the benefit of the unconscionable transaction..[46]
[46]Ibid, 124.
In that context, the trial judge noted that the respondent sought to retain the benefit of its unconscionable and misleading conduct in relation to the obtaining of the mortgage, and as such had no equity or other relevant factor in its favour to have the mortgage read down..[47]
[47]Ibid, 124.
In support of that reasoning, the trial judge made brief reference to s 87(1D), noting that ‘it is to be noted that under s 87(1D) it is appropriate to have regard to the conduct of the parties to the proceeding since the contravention of s 51AA occurred.’[48]
[48]Ibid, 125.
In that context, the conduct of the respondent in relation to the applicant since at least mid-1995 afforded it little assistance in securing the exercise of the Court’s discretion in its favour in respect of the orders that were to be made in favour of the applicant under s 87(1A), s 80 or in equity. Accordingly, the trial judge made orders that the mortgage be set aside effectively ab initio.
Thus, it would appear that in Gregg the conduct which had occurred after execution of the mortgage was, at least in part, considered by the Court to constitute a separate species of unconscionable conduct in contravention of the TPA. Further, that conduct was in any event relied upon by the Court in its reasons for rejecting the respondent claim for a lesser form of relief.
Thus the 1995 conduct was both an instance of contravening conduct, and relevant evidence in rebuttal to the respondent wrongdoer’s claim that the applicant should be confined to a lesser form of relief.
A close consideration of Gregg shows it to be a very different case to the present. First, here, unlike Gregg, Timor Leste eschews any contravention constituted by post-contractual conduct; secondly, Timor Leste is not relying upon the post-contractual conduct as an answer to any submission by Lighthouse that Timor Leste is not otherwise entitled to the primary avoidance relief that it seeks.
Gregg does not assist Timor Leste. It remains the case that the conduct referred to in s 87(1D) of the Act cannot constitute an element of any cause of action and, as matters presently stand, is irrelevant and embarrassing in that it constitutes an impediment to the just and efficient disposition of the proceeding.
In the present case, a claim for the avoidance of a commercial contract grounded on an alleged series of discrete pre-contractual misrepresentations, it is more difficult to envisage how post-contractual conduct (save to the extent to which such conduct may disentitle the injured party from orders in the nature of rescission or avoidance of the contract) could be material.
Certainly, in the present case it is not clear how the making of some 50 or so further post-contractual representations said to have been false could be relevant to the Court’s discretion to grant the avoidance relief to Timor Leste where that relief is grounded on the pre-contractual contravening conduct.
Certainly, there is no plea in the counterclaim which elucidates how Timor Leste’s claim for the avoidance relief is assisted, informed or otherwise affected by the vast amount of post-contractual representations alleged.
Further, if the pleading is allowed to stand it will not only require Lighthouse to plead to each of the additional 50 allegations, but it will ultimately require the Court to determine the falsity of the post-contractual misrepresentations as part of some as-yet unclear process designed to inform the Court’s discretion to grant Timor Leste the avoidance relief; which relief is grounded on the pre-contractual contravening conduct.
Accordingly, in the present circumstances the material facts alleged in relation to the post-contractual representations in the counterclaim are not material facts which establish any cause of action; nor does the pleading make clear how they could be relevant to the question of relief. In that context, they are irrelevant and have the potential to delay the fair trial of the proceeding.[49]
[49]Timor Leste have started a hare which, as matters presently stand Lighthouse, have to chase down, to cite the metaphor used by Gleeson CJ in Sandilands (n 16) 371, [1].
Maintenance of the relevant paragraphs is not, in my view, consistent with the overarching purposes set out in the CPA. Accordingly, those paragraphs in the counterclaim should be struck out.
Timor Leste submitted that if I was disposed to strike out the paragraphs of the amended counterclaim relating to the post-contractual conduct, then it should be given leave to file and serve an amended pleading. I do not propose to grant such leave as part of the disposition of this application.
The fact that I have struck out the paragraphs in the present pleading does not in and of itself operate as a bar to any further pleading in respect of such matters. As matters presently stand I have some difficulty in seeing how such matters are appropriate to be included in a pleading and I have a concern that there is potential for such allegations to impede the efficient, timely, cost-efficient resolution of the dispute between the parties. That said, Lighthouse’s reply to the amended counterclaim having yet to be filed, it is conceivable that reference to the post-contravention conduct by Timor Leste in some other pleading such as a rejoinder may be appropriate depending on the content of the reply. Ultimately, any application for leave to file any pleading by Timor Leste, if Timor Leste chooses to make such an application, will be considered if and when such application is made and in light of the content of such proposed pleading.
The claim in relation to the post-contractual conduct is time barred
As noted above, in its original defence and counterclaim Timor Leste invoked s 87 of the TPA in support of its claim for the avoidance relief. In response to Lighthouse’s criticism that s 87(1) was not available to Timor Leste in circumstances where Timor Leste did not otherwise seek relief under Part VI, Timor Leste amended its counterclaim so as to plead that the entitlement to such relief arose not under s 87(1) but under s 87(1A).
However, an application under s 87(1A), unlike s 87(1), is subject to a specific time-bar. Section 87(1CA) reads:
An application under sub-s (1A) may be made at any time within six years after the day on which the cause of action that relates to the conduct accrued.
Accordingly, Lighthouse submitted at the first day of the hearing of the application that insofar as the counterclaim relates to the post-contractual conduct,[50] the counterclaim ought be summarily dismissed because it is brought outside the time period referred to in s 87(1CA).
[50]It did not press the position at the hearing in respect of the pre -contractual conduct claims but advised that it would do so in respect of that conduct at trial.
Lighthouse submits that the cause of action could not have accrued after 22 October 2010, that being the date on which the fuel supply agreement had been entered into. Accordingly, Lighthouse submitted that following the amendment the counterclaim has not been issued within six years after the day on which the cause of action accrued.
In response, Timor Leste relied upon, among other things, s 30 of the Limitation of Actions Act 1958 (Vic) (‘the LAA’). Section 30 provides:
30 Provisions as to set off or counterclaim
For the purposes of this Act, any claim by way of set off or counterclaim shall be deemed to be a separate action and to have been commenced on the same date as the action in which the set off or counterclaim is pleaded.
In circumstances where Lighthouse did not commence the proceeding until 21 October 2016, Timor Leste contends that the counterclaim is deemed by force of s 30 of the Limitations of Actions Act to have commenced, for limitation purposes, as at the date of the commencement of the primary proceeding. Such submission requires consideration of the interrelationship between the provision in the TPA (that is, s 87(1CA)), a Commonwealth act, and the provision in the LAA (that is, s 30), a Victorian state act. It also involves ascertaining the proper date upon which the cause of action accrued.
After the hearing on 15 July 2021, the parties filed further submissions on, among other things, the time at which the relevant cause of action accrued and the interaction between s 30 of the Limitation of Actions Act 1958 (Vic) and s 87(1CA) of the TPA of s 79 of the Judiciary Act 1903 (Cth). The issues which are raised in that context are of some complexity.
It is not necessary in the context of this application to determine those matters.
First, I have determined that it is appropriate to strike out the paragraphs of the counterclaim which relate to the post-contractual representations. As a consequence, there is limited or no utility in considering the further question as to whether summary dismissal should apply in relation to such conduct because it is time-barred; those matters have been struck out.
Secondly, Timor Leste has confirmed that it does not rely upon the post-contractual misrepresentations for the purposes of establishing an independent cause of action that relates to such conduct. There is no cause of action alleged in relation to the post-contractual representations. Instead, as noted above, Timor Leste relies upon the post-contractual representations solely for the purposes of s 87(1D) of the TPA.
In those circumstances, the post-contractual conduct gives rise to no cause of action in respect of which s 87(1A) can operate. Section 87(1CA) requires a relevant application to be commenced within six years of the date on which the cause of action which relates to the conduct occurred. This reference to ‘the conduct’ in s 87(1CA) plainly relates to the conduct relied upon to found the cause of action which enlivens the entitlement to relief under s 87(1A). In the present case, that conduct is not the post-contractual conduct. Accordingly, s 87(1CA) can have no application to the post-contractual conduct.
The weighty issues in respect of the time bar will be determined at trial in the context of the availability of avoidance relief under the TPA and in respect of the pre-contract contravening conduct.
Accordingly, Lighthouse’s application for summary dismissal in respect of the post-contractual conduct is dismissed.
Conclusion
In light of the above matters, the counterclaim against Mr Jacobs will be dismissed; the paragraphs of the counterclaim relating to the post-contractual conduct will be struck out,[51] and the summons will otherwise be dismissed.
[51]The relief as sought in the original summons was to some extent overtaken by later events, and in any event the amended counterclaim is of some complexity having regard to cross-referencing and overlap between the allegations that relate to pre-contractual conduct and post-contractual conduct, and those affecting Mr Jacobs. I will give the parties the opportunity to review the amended defence and the amended counterclaim in the context of my determination that the post-contractual misrepresentation allegations should be struck out. On my reading, the following paragraphs relate to the post contractual conduct allegations – 406-647; 732(b), 738, 739,740, 741(b), 742, 743(b), 744(b), 744D, 744E(b), 744G(b), 744K(b), 744M(b), and 744P(b).
I will hear counsel as to the appropriate form of orders and as to costs.
SCHEDULE OF PARTIES
| S CI 2016 04287 | |
| BETWEEN: | |
| LIGHTHOUSE CORPORATION LIMITED (IBC 051 557) | First Plaintiff / First Defendant by Counterclaim |
| LIGHTHOUSE CORPORATION PTY LTD (ABN 25 343 263 433) | Second Plaintiff / Second Defendant by Counterclaim |
| - and - | |
| REPUBLICA DEMOCRATICA DE TIMOR LESTE | First Defendant / First Plaintiff by Counterclaim |
| ESTADO DA ELECTRICIDADE AGUA E URBANIZACO | Second Defendant / Second Plaintiff by Counterclaim |
- and - | |
| ALBERT JACOBS | Third Defendant by Counterclaim |
| SEAN MAGEE | Fourth Defendant by Counterclaim |
| JAMES PODARIDIS | Fifth Defendant by Counterclaim |
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