Murphy v Victoria

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT

S CI 2014 01911

ANTHONY MURPHY

Plaintiff

STATE OF VICTORIA

LINKING MELBOURNE AUTHORITY

First Defendant

Second Defendant

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JUDGE:	CROFT J
WHERE HELD:	Melbourne
DATE OF HEARING:	1 August 2014
DATE OF JUDGMENT:	8 August 2014
CASE MAY BE CITED AS:	Murphy v State of Victoria & Anor
MEDIUM NEUTRAL CITATION:	[2014] VSC 363

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PRACTICE AND PROCEDURE – Pleadings – Strike out of the whole or specified parts of pleadings – Separate questions – Supreme Court (General Civil Procedure) Rules 2005, Rules 23.02, 47.04 – Civil Procedure Act 2010, Section 7.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr R. Merkel QC with Ms M. Richards SC and Ms C. Van Proctor	Fitzroy Legal Service Inc
For the First Defendant	Mr S. McLeish SC, Solicitor-General with Ms K. Foley	Victorian Government Solicitor
For the Second Defendant	Mr A.J. Myers QC with Mr R.A. Heath	Clayton-Utz

HIS HONOUR:

Applications

In substance, there are two applications before the Court at this stage of the proceedings.

The first is an application by the plaintiff to strike out the whole or specified parts of the amended defence filed 17 July 2014 by the first defendant, the State of Victoria (“the State”), and to strike out specified parts of the amended defence filed 17 July 2014 by the second defendant, Linking Melbourne Authority (“the Authority”).[1] The plaintiff’s application seeks orders that:[2]

1.Pursuant to rule 23.02 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic):
(a)the first defendant’s amended defence filed 17 July 2014 be struck out, or alternatively paragraphs 3E, 19, 21, 22, 24, 25, 26, 28, 32, 33, 34 and 35 of that defence be struck out; and
(b)paragraphs 24, 28 and 35 of the second defendant’s amended defence filed 17 July 2014 be struck out.

[1]Summons filed by the plaintiff (18 July 2014).

[2]Summons filed by the plaintiff (18 July 2014) as amended, by leave, at the hearing on 1 August 2014 by the substitution of paragraph 24 for paragraph 22 in paragraph 1(b) of the orders sought.

The second is comprised of applications by both the State and the Authority for the trial of separate questions in advance of any trial of the proceeding.[3] These applications were, in the course of the hearing, amended by leave, to accommodate amendments made to the Further Amended Statement of Claim, filed 11 July 2014 (“the FASOC”). The separate questions are sought in the same terms in the now amended summonses filed by the State and the Authority:[4]

2.Pursuant to r 47.04 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic), the following questions in the proceeding be tried before the trial of all other questions in the proceeding (having regard to (i) such relevant and admissible evidence as may be adduced and (ii) any facts on which the parties agree and specify accordingly):
(a)Assuming that the First Defendant made each of the representations (the Representations) alleged in paragraphs 21, 25, 29 and 33 of the further amended statement of claim dated ~~11 April~~ 11 July 2014 (the FASOC) (which is not admitted for the purpose of the trial of these preliminary questions), was that conduct engaged in as part of the carrying on of a business by it (as alleged in paragraph 19 of the FASOC), for the purposes of s 16 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) (the Fair Trading Act)?
(b)Assuming that the First Defendant made each of the Representations (which is not admitted for the purpose of the trial of these preliminary questions), was that conduct in trade or commerce for the purposes of s 18 of the Australian Consumer Law, applying as a law of Victoria pursuant to s 8 of the Fair Trading Act (the ACL)?
(c)Assuming that the First Defendant made each of the Representations in contravention of s 18 of the ACL (as alleged in paragraph 37 of the FASOC) (which is not admitted for the purpose of the trial of these preliminary questions), should a final injunction in the form of that sought in paragraph B(b) and B(c) of the Prayer for Relief in the FASOC be given?

[3]Summons filed by the State (14 May 2014 and as amended on 1 August 2014) and summons filed by the Authority (14 May 2014 and as amended on 1 August 2014).

[4]Summons filed by the State (14 May 2014 and as amended on 1 August 2014), paragraph 2.

There are also related applications by the State and the Authority for costs thrown away as a result of the filing of the FASOC. The filing of this amended pleading resulted in the filing, on 17 July 2014, of a Defence to Further Amended Statement of Claim by the State and the filing, on 17 July 2014, of an Amended Defence by the Authority. For convenience, I will refer to these latter proceedings, simply as the defence or defences of the relevant party.

Strike out application

The plaintiff, in its submissions, refers to the essential principles in relation to pleadings in civil proceedings, the approach it has adopted to pleading its claims and the particular issues which it says relate to the operation of s 16 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) (“the ACL Victoria”) which the plaintiff contends binds the defendants “so far as the Crown carries on a business, either directly or by an authority of the jurisdiction concerned”.[5] These more general contentions are addressed in the reasons which follow in relation to the particular issues raised with respect to the defences of the State and the Authority.
[5]See Plaintiff’s Outline of Submissions (18 July 2014), [1] to [12].

Both the plaintiff and Authority, particularly, provided material in their submissions with respect to pleadings principles and strike out principles, respectively, which are helpful to set out for the purpose of providing bases for better understanding the reasons which follow.

In relation to pleadings principles, the plaintiff submitted:[6]
[6]See Plaintiff’s Outline of Submissions (18 July 2014), [3].

3.The essential principles in relation to civil proceedings may be summarised as follows:[7]
[7]Wheelahan v City of Casey [2013] VSC 316, [25]; Clarke v Great Southern Finance Pty Ltd (2010) 243 FLR 451, [5]-[10]; Gunns Ltd v Marr [2005] VSC 251, [14]-[18].
(a)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;
(b)the cardinal rule is that a pleading must state all the material facts, being those facts relied on to establish the essential elements of a cause of action or defence;
(c)as a corollary, the pleading must be presented in an intelligible form – it must not be vague or ambiguous or inconsistent; a pleading is “embarrassing” when it places the opposite party in the position of not knowing what is alleged;
(d)the fact that a proceeding arises from a complex factual matrix does not detract from the pleading requirements; to the contrary, the requirements become more poignant;
(e)pleadings, when well drawn, serve the overarching purpose of the Civil Procedure Act 2010 (Vic);
(f)it is not sufficient to simply plead a conclusion from unstated facts; a pleading that does so is embarrassing;
(g)every pleading must contain in a summary form a statement of all material facts upon which the party relies, but not the evidence by which the facts are to be proved (r 13.02(1)(a));
(h)particulars are not intended to fill gaps in a deficient pleading;
(i)the purpose of particulars is to fill in the picture of the cause of action or defence with information sufficiently detailed to put the other party on guard as to the case that must be met.

In relation to strike out principles, the Authority submits:[8]
[8]Outline of Second Defendant’s Submissions (21 July 2014), [4] and [5].

4.The LMA refers to r 23.02 of the Supreme Court (General Civil Procedure) Rules 2005 (Vic) (“Rules”). That rule is concerned only with the sufficiency of the pleading of the opposite party as distinct from the validity of that party’s claim. Its only purpose is to secure compliance with the rules of pleading.[9] Those rules are based, in the main, on the following principles:
[9]Meckiff v Simpson [1968] VR 62 at 70 per Winneke CJ, Adam and Gowans JJ.
(a)It is trite that the fundamental object of pleadings is to apprise the opposite party of the nature of the case he has to meet.[10] That is a basic requirement of procedural fairness.[11]
(b)Ancillary objects of particulars are to save expense in preparing to meet a case that may never be put, and to make the party’s case plain so that each side may know the issues of fact to be investigated at the hearing.[12]

5.Byrne J in Opat Decorating Service (Vic) Pty Ltd v Jennings Group Ltd (unreported, Supreme Court of Victoria, 16 September 1994) stated the principles which apply to the exercise of the power under r 23.02 as follows:
I am permitted to look at the terms of the pleading only. This includes requests for particulars and the particulars provided by the plaintiff in response to those requests. The power is, of course, subject to my overriding discretion to refuse to strike out an offending part, a discretion which has as its starting point the requirement that pleadings and particulars be sufficient to enable the defendants to know what it is they have to meet and the trial judge to conduct a trial which is fair to all parties. Insofar as it is contended that a particular paragraph or paragraphs does not disclose a cause of action I am not determining a demurrer. A plaintiff will be stopped from putting a claim forward only where, assuming the facts pleaded have been established, the claim is so manifestly hopeless that a trial would be a futility. In case of doubt I should refuse to exercise the power.

[10]Goldsmith v Sandilands (2002) 190 ALR 370 at 371 per Gleeson CJ.

[11]Banque Comerciale SA v Akil Holdings Ltd (1990) 169 CLR 279 at 286 per Mason CJ and Gaudron J.

[12]Bailey v Federal Commissioner of Taxation (1977) 136 CLR 214 at 219.

The adequacy of the pleadings and defences are assessed in light of these principles in the context of the strike out application made by the plaintiff.

The State’s Defence

The plaintiff submits that the State’s defence is deficient in the following respects, in that it is said that:[13]

(1)the State is required to, and has not, set out all the activities carried out by it in relation to “the Project” (as defined in paragraph 4 of the FASOC);[14]
(2)the State is required to, and has not, set out all of the conduct by which it made the representations alleged by the plaintiff;[15]
(3)the State’s pleadings as to reasonable grounds in respect of the representations concerning future matters – the “BCR Representation”, the “Net Benefit representation” and the “Traffic Volume representation” – are deficient;[16]
(4)the State’s defence does not properly respond to the plaintiff’s allegation that the representations alleged were made in trade or commerce;[17] and
(5)the State’s defence does not respond properly to the alleged misleading nature of the “Standard Methodology representation”.

[13]See First Defendant’s Submissions (21 July 2014), [3].

[14]See Plaintiff’s Outline of Submissions (18 July 2014), [9] to [15].

[15]See Plaintiff’s Outline of Submissions (18 July 2014), [16] to [19].

[16]See Plaintiff’s Outline of Submissions (18 July 2014), [20] to [26].

[17]See Plaintiff’s Outline of Submissions (18 July 2014), [27] to [29].

As indicated in the reasons which follow, I do not accept that the plaintiff has established any deficiency in the State’s defence. I turn now to particular issues with respect to the pleadings which lead me to this view.

Carrying on business

Paragraph 19 of the FASOC alleges that “The State and/or the Authority are, and have at all material times been, carrying on a business in relation to the Project”. The particulars to this allegation are as follows:

Save to refer to the activities of the State and/or the Authority alleged in paragraphs 4 to 18 above, and to say that the business carried on by the State and/or the Authority includes designing, funding, developing and procuring the Project and to take such other steps as are necessary to enable its construction and operation as a PPP between the State and/or the Authority and the successful tenderer or tenderers, the Plaintiff is unable to provide further particulars until after discovery.

The final reservation or notice, asserted or provided, in the particulars with respect to the possible fruits of further discovery is, of course, not unusual in pleadings, but its utility and the extent to which it might provide a basis for further amendment of the pleadings will depend upon the particular circumstances of each case. Speaking generally, with respect to the present proceeding, it is observed that the effective incorporation in these particulars of paragraphs 4 to 18, the preceding paragraphs, in the FASOC means that quite detailed particulars are in fact provided by the plaintiff to the assertion pleaded in paragraph 19.

Paragraph 20 of the FASOC pleads, in substance, that the effect of the preceding allegations is that the State and the Authority are carrying on business in relation to the Project with the result that s 16 of the ACL Victoria applies to both the State and the Authority in relation to their carrying on of business in relation to the Project. The Project is previously defined in the FASOC as the East West Link Stage One.[18]
[18]FASOC, [4].

The State in its defence denies both paragraphs 19 and 20 of the FASOC but, in this context, does specifically plead to paragraph 19 of the FASOC, as follows:

19. As to paragraph 19:
(a)to the extent that it is alleged that, in engaging in the conduct pleaded at paragraphs 4–18 of the statement of claim (“the alleged conduct”), the State has carried on a business:
(i)it refers to paragraph 2(c) above and paragraph 19 of the defence of the LMA [i.e. the Authority] as to the alleged conduct of the State (through the LMA);
(ii)it refers to paragraphs 3A-18 above and 21, 25, 29 and 33 below and otherwise denies paragraph 19, as to the alleged conduct of the State (otherwise than through the LMA);

(b)it otherwise denies paragraph 19.

The pleadings to which paragraph 19 of the defence refers, the variously identified preceding and subsequent paragraphs of that pleading, provide details of the steps taken to develop and assess the Project.

The plaintiff criticises the State’s defence in this respect on the basis that it does not endeavour to set out the activities carried on by the State in relation to the Project that might be regarded as carrying on or not carrying on a business on the part of the State. By way of example, it is said that the matters set out in the Preliminary Points section of the State’s defence concern the business case and various statutory steps. In relation to the subsequent paragraphs to which reference is made in paragraph 19 of the State’s defence, paragraphs 21, 25, 29 and 33, the plaintiff says that they do little more than refer to publishing certain documents. Moreover, the plaintiff says that paragraph 19(a) of the State’s defence now acknowledges that the activities undertaken by the Authority in relation to the Project are the conduct of the State. The further point is made that it is not alleged, however, that these were the only activities undertaken by the State in relation to the Project, suggesting that it is highly improbable that this is the case. Moreover, it is said that the State’s pleading may be contrasted with that of the Authority, which sets out in detail the relevant activities which it has conducted on its own behalf. This latter submission does, however, in my view, do nothing but detract from the plaintiff’s position. The plaintiff, having contended that the effect of the State’s pleading was to acknowledge that activities undertaken by Authority in relation to the Project are conduct of the State, simply confirms or accepts that the more detailed pleadings, as the plaintiff puts it, by the Authority in relation to issues raised in paragraph 19 of the FASOC are properly treated as matters going to the issue whether or not the State is carrying on business for the purpose of the ACL Victoria.

The State submits that the defence adequately responds to the allegation in paragraph 19 of the FASOC for two reasons.

The first reason advanced is that s 16 of the ACL Victoria applies to the State only “so far as” the State carries on a business. The relevant question is, it is submitted, whether, in making the representations alleged in the manner particularised, the State was carrying on a business.[19] The State contends that the proceeding does not involve any broader question whether the activities of the State in any way connected to the Project, now or in the future, may constitute a business. In my view, this follows from basic pleadings principles. It is the plaintiff’s case to plead and to particularise. In the latter respect, I have noted the reservation or notice contained in the particulars to paragraph 19 of the FASOC, but the common formulation of such a reservation or notice in particulars cannot be accepted as enabling a plaintiff to vary the case pleaded as a result of further information it may obtain through discovery or otherwise without formal amendment of pleadings in the usual way. It is simply basic procedural fairness that in litigation conducted on the basis of pleadings parties are entitled to rely upon pleadings so that, in the case of defendants, they know the case and the evidence they must meet in response. Moreover, the point was raised by the defendants during the hearing of these applications that it is to be kept in mind that the plaintiff has not made an application for preliminary discovery in this proceeding. In this context, I agree that it is a fair observation that a good deal of the arguments raised in support of the plaintiff’s position with respect to these applications are matters directed something in the nature of a preliminary discovery application, rather than an application with respect to the state of pleadings.
[19]See, for example, JS McMillan Pty Ltd v The Commonwealth (1997) 77 FCR 337 and 356.

Returning to the State’s defence, the State denies, in paragraphs 3E and 19, that, in making the representations alleged in the manner particularised, the State was carrying on a business. The State does so by reference to the detailed facts alleged in the State’s defence in paragraphs 3A to 3D in relation to the context in which the pleaded and particularised representations were made. Consistently with the plaintiff’s contention to which reference has already been made, the State makes it clear in its defence, at paragraphs 2(c) and 19, that the conduct of the Authority pleaded in its defence is also conduct of the State. On this basis, the State contends that the conduct of the Authority pleaded in its defence also provides the context in which the pleaded and particularised representations were made by the State. In my view, this is clear from the pleadings of both defendants and, as indicated previously, is a matter which does not assist the plaintiff’s position.

In concluding its submissions with respect to the first of its reasons in response to these allegations, the State says that as far as it is aware, there is no further conduct of the State beyond that identified in its defence and the Authority’s defence which bears upon the question whether, in making the representations alleged in the manner particularised, the State was carrying on a business. This is, as the State observes, in contrast to the submissions by plaintiff that it is highly improbable that the matters pleaded by the State and the Authority with respect to the plaintiff’s allegations in paragraph 19 of the FASOC were the only activities undertaken by the State in relation to the Project.[20] In my view, this is mere speculation on the part of the plaintiff. The State has provided a responsive and detailed pleading, particularly having regard to the matters also raised in the Authority’s pleading by which, for the preceding reasons, the State is also bound, and bearing in mind that this is not an application by the plaintiff for preliminary discovery.
[20]See Plaintiff’s Outline of Submissions (18 July 2014), [14]; submissions which were, in my view, taken no further by the plaintiff’s oral submissions with respect to NT Power Generation Pty Ltd v Power and Water Authority (2004) 219 CLR 90.

The second reason advanced by the State with respect to the allegation contained in paragraph 19 of the FASOC is that even if some broader question were involved, the plaintiff bears the onus of establishing the allegations made in this pleading. Thus, the plaintiff bears the onus of establishing that the State is, and at all material times has been, carrying on a business in relation to the Project. The State has denied that allegation and has identified the positive facts upon which it will rely to contest the allegation. In my view, this is clearly the position and I also accept the submission by the State that it has “identified exhaustively the positive facts” in this respect, having regard to the contents of its defence and also that of the Authority, to which reference has been made. Clearly, it was a matter for the plaintiff to plead any further facts, if any, if he wished to support the allegation.

The State also contends that this position is, in effect, accepted by the plaintiff in his own submissions where it is said that:[21]
[21]See Plaintiff’s Outline of Submissions (18 July 2014), [12].

12.A proper response to the plaintiff’s pleading required the defendants to set out the activities carried out by them in relation to the Project and upon which they rely to contend that those activities do not constitute carrying on a business.

Clearly, for the reasons indicated, and as the State contends, this is an uncontroversial proposition. Moreover, the State contends, with respect to the plaintiff’s submission set out above, that:[22]
9.So much is accepted by POS[23] [12]. It does not contend that a proper response to the plaintiff’s pleading requires the defendants to set out all the activities carried out by them in relation to “the Project” that might or might not be regarded as carrying on a business (though that is apparently required by POS [14]). POS [12] contends only that the response must set out the activities carried out by the defendants “upon which they rely to contend that those activities do not constitute carrying on a business”. The State has done so.

Again, I emphasise that for the preceding reasons I am of the opinion that the position as contended for by the State is entirely correct.
The BCR Representation and the Net Benefit representation

[22]First Defendant’s Submissions (21 July 2014), [9].

[23]A reference to Plaintiff’s Outline of Submissions (18 July 2014).

The plaintiff submits that the BCR Representation is clearly expressed in paragraph 21 of the FASOC to be a representation that the Project will produce a BCR of 1.4. Moreover, it is submitted that the Net Benefit representation is clearly expressed in paragraph 25 of the FASOC to be a representation that the Project will have a net economic benefit (in present value terms as at 2013) of $1.476 billion. It is pleaded, in paragraph 22 of the FASOC, that the BCR Representation was made, and is continuing to be made, in trade or commerce.

It is contended by the plaintiff that the particulars to paragraph 21 of the FASOC make it clear that an occasion on which the representations were made was in the Business Case – which is a reference to the publication by the State and/or the Authority of a short form business case for the Project in or about July 2013.[24] These particulars conclude with the words “… The Plaintiff is unable to provide further particulars until after discovery”. The plaintiff submits, with respect to this reservation or notice in the particulars, that it is to be read as a reference to further particulars in respect of other occasions on which the representation was made. Moreover, the plaintiff submits that “On no reasonable reading of the pleadings can it be suggested that the plaintiff’s case is that the representations are only made in the Business Case. Yet, that is the response to the pleading by the State”.[25]
[24]See paragraph 6(a) of the FASOC.
[25]See Plaintiff’s Outline of Submissions, [17].

The latter submission by the plaintiff is addressed more fully in a subsequent submission:[26]

19.The State also, in paragraphs 21 and 25 of its amended defence, confines the making of the representations to the publication of the Executive Summary from the Short Form Business Case, including by the LMA. The State also does not plead that these publications of the Executive Summary were the only times the representations were made by it and, unlike the LMA, has given no indication to that effect. Paragraphs 21 and 25 of the State’s amended defence are therefore not responsive to the ASoC, and should be struck out.

[26]See Plaintiff’s Outline of Submissions, [19].

In my opinion, the plaintiff’s submissions in this respect are entirely misconceived. As indicated previously, this is the plaintiff’s case to plead, this is not an application for preliminary discovery, and the plaintiff has clearly pleaded these representations by reference to the Business Case and has not chosen to identify any other matters upon which it relies. This is a critical aspect of these proceedings and one which I now turn to in more detail.

The plaintiff’s case relies upon the application of s 18 of Schedule 2 of the Australian Consumer Law (“the ACL”), which relevantly provides as follows:

18 Misleading or deceptive conduct
(1) A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

The prohibition in s 18 of the ACL is directed to misleading or deceptive conduct. It is a defendant’s conduct, whether by making specific statements to identified persons in a particular context, or by remaining silent in specific circumstances, that a plaintiff must allege in order to found an allegation under s 18. The particular conduct relied upon must be pleaded clearly to satisfy the requirement of informing a defendant of the case it has to meet. I accept the State’s submissions in this respect which are, in my view, clearly confirmed by the following statement in the joint judgment of French CJ and Kiefel J in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd:[27]
Its pleading, however, requires consideration of the words of the relevant statute and their judicial exposition since the cause of action first entered Australian law in 1974. It requires a clear identification of the conduct said to be misleading or deceptive. Where silence or non-disclosure is relied upon, the pleading should identify whether it is alleged of itself to be, in the circumstances of the case, misleading or deceptive conduct or whether it is an element of conduct, including other acts or omissions, said to be misleading or deceptive.
[Emphasis added by the State.]

The reference to identification of the conduct is clearly a reference to identification of the conduct by the plaintiff.

[27](2010) 241 CLR 357, at [5].

It follows, in my view, as submitted by the State, that as indicated in the last sentence of the passage of the joint judgment of French CJ and Kiefel J which is set out above, the reference to “conduct” is to the acts or omissions of the defendant upon which the plaintiff relies and not to the meaning, that is the representations, which the plaintiff seeks to persuade the Court that the conduct conveyed. This is, in my view, consistent with the inclusive definition of “engaging in conduct” which appears in s 2(2)(a) of the ACL and is also consistent with s 232(1) of that legislation. Clearly, it is only “conduct” which the plaintiff in proceedings under this legislative regime can seek to restrain. It is clear, in my view, as submitted by the State, that if the plaintiff does not allege particular conduct, then there is no basis for a trial and nothing to enjoin in respect of that conduct.

The requirement that conduct relied upon for the purpose of the statutory equivalent, the predecessor of s 18 of the ACL, be pleaded, and pleaded carefully and precisely, was emphasised by Merkel J (as he then was) in Johnson Tiles Pty Ltd v Esso Australia Ltd.[28] In that case, it was pleaded that the defendants, by their conduct, had induced certain assumptions, but the conduct was stated only in particulars which stated that they may be supplemented after discovery. Merkel J said:[29]

As has been pointed out on a number of occasions, the central allegation in any claim based upon s 52 of the Trade Practices Act 1974 (Cth) must carefully and precisely identify the conduct of the respondent which is alleged to have been misleading and deceptive in contravention of s 52. In my view the pleading in its present form fails to do so. An initial problem is that … the conduct which is the central allegation is pleaded by way of particulars. Plainly, the conduct complained of is a material fact and must be pleaded as such.

Clearly, the vice identified was, the State contends, the failure to articulate exhaustively the acts or omissions upon which the plaintiff relied. With respect to the many judicial pronouncements, those to which reference has been made and more generally, it almost goes without saying that where a serious allegation is made in a proceeding, such as misleading or deceptive conduct by a party, it is incumbent upon the party making the allegation to carefully and precisely identify the conduct alleged, both as a matter of procedural fairness to the party against whom the allegation is made and, of course, to provide any basis for the court to determine the issue raised.

[28][1999] FCA 167.

[29][1999] FCA 167 at [18].

Applying these requirements in the circumstances of this proceeding, the State makes detailed submissions with respect to the state of the plaintiff’s pleadings and the adequacy of its pleading responses by way of defence. For present purposes, it is helpful, in my view, to set out the submissions in full:[30]
[30]See First Defendant’s Submissions (21 July 2014), [14] to [19].

14.The only conduct relied upon by the plaintiff in the FASOC is publication of certain documents, described as the “Business Case” (FASOC [6]), the “CIS” (FASOC [14]) and the “Transport Summary Report” (FASOC [15]). In fact, as previously explained, the document described in the FASOC as the “Business Case” is only the Executive Summary from the Short Form Business Case prepared by the State for submission to Infrastructure Australia.[31] To avoid confusion, it will be referred to below as “the Executive Summary”.
[31]See the State’s defence at [3C(f)], [3C(g)], [6].
15.The particulars to FASOC [21], [25], [29] and [33] particularise publication of the Executive Summary, the CIS and the Transport Summary Report as the conduct by which the State and the LMA made the representations alleged, but foreshadow further particularisation after discovery. For the reasons above, this is unsatisfactory. A plaintiff cannot, by alleging that publication of one document conveyed a representation in one context or to certain people, reserve to itself the ability to pursue a case based on the making of that representation in other contexts to other people by the publication of other documents or, indeed, by other conduct altogether. Still less can a plaintiff, by a general pleading that misleading or deceptive representations have been made, compel a defendant to supply facts and circumstances so that the plaintiff can then decide whether to mount a case based on the conduct constituted by such facts and circumstances.
16.In any event, contrary to POS [17], unless and until the plaintiff identifies further conduct on which he relies, the plaintiff’s case is, and is only, concerned with the pleaded and particularised conduct, namely publication of the Executive Summary, the CIS and the Transport Summary.
17.The State’s defence identifies exhaustively the publications by the State of these documents to third parties:
(a)in relation to the Executive Summary see [3C(g)], [3C(h)], [3C(i)], and see [21], [25] and [33];
(b)in relation to the CIS see [3D(k)], [3D(l)], and see [29]; and
(c)in relation to the Transport Summary Report see [3D(n)], and see [29].

18.The LMA’s defence adopts the same approach to publications of these documents by the LMA, setting out in detail all publications by the LMA of these documents to third parties: see [21A], [25A], [29A], [33A]. To avoid duplication, the State has not replicated these pleadings in the State’s defence but it is clear from the State’s defence at [2(c)], [19(a)(i)], [21(b)(iA)], [25(b)(iA)], [29(b)(iiA)] and [33(b)(iA)] that the State accepts that publications by the LMA are publications by the State.
19.Contrary to the implication of POS [17] and [19], the State is not required in its defence to plead the plaintiff’s case for him, by identifying other conduct by which the State considers it may have made the representations alleged. That is a matter for the plaintiff. Were it otherwise, the State would be required not only to identify other documents or oral statements which it considers may be argued by the plaintiff to convey the alleged representations, but even occasions on which other parties made statements in circumstances where the State’s silence in response conveyed the representations. For the plaintiff to seek to require the State to do so is the antithesis of the clear identification of conduct by the plaintiff’s pleading of which French CJ and Kiefel J spoke in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd.

In my opinion, these submissions by the State should be accepted on the basis of the reasoning and the material relied upon as being a proper application, in the context of the pleadings in this proceeding, of the requirements with respect to a pleading of misleading or deceptive conduct, to which reference has been made.
Reasonable grounds

The plaintiff criticises the pleadings by both the State and the Authority, contending that they merely assert that the defendants had reasonable grounds for making the key BCR and Net Benefit representations. The plaintiff submits that neither of the defendants pleads the material facts upon which that conclusion is based, with the result that the pleading is embarrassing.

More particularly, the plaintiff says that the Authority’s defence relies, at paragraphs 24(c)(i) and 28(c)(ii), on an allegation that the State had reasonable grounds for making the representations. The Authority then states in the particulars that further grounds may be provided after the extant public interest immunity claims have been fully determined. In relation to the State’s defence, at paragraphs 24 and 28, the plaintiff says that it does not set out any grounds upon which the State relied in making the two representations. The plaintiff contends that it merely details steps taken, which cannot, as a matter of law, constitute grounds for making the specific representations alleged. Rather, it is said, they go to the different question, which is whether it was reasonable for the State to engage the relevant experts for the purposes of the analysis, a matter which the plaintiff says is not in issue. It is noted by the plaintiff that the State seeks to make the same reservation in respect of public interest immunity as does the Authority.

In relation to the public interest immunity reservation, the plaintiff submits that this is not responsive, is embarrassing and ought not to be permitted. Continuing, the plaintiff says:[32]
[32]See Plaintiff’s Outline of Submissions [23].

23.Put shortly, public interest immunity is not a defence to an allegation of misleading conduct in contravention of the ACL. The State can elect either to plead its grounds for making the BCR and Net Benefit representations, or to remain mute on those issues due to its claimed public interest immunity. In this case it has attempted to do both, without electing between its positive defence and its claim of public interest immunity.

Further, the plaintiff contends:[33]
24.If the State wishes to plead a positive defence, it may not do so while reserving to itself the possibility of providing further grounds or particulars if its public interest immunity claim is defeated. Pleading a positive defence waives any privilege in relation to the matters pleaded.[34] If the State wishes to claim public interest immunity now, it is not appropriate for it to also plead a positive defence. At most, it may be open for the State to seek to amend its defence at a later date, when that application will be dealt with on its merits.[35]

[33]See Plaintiff’s Outline of Submissions [24].

[34]Australian Securities and Investments Commission v Mining Projects Group Ltd (2007) 164 FCR 32, [24].

[35]cf CC Containers Pty Ltd v Lee (No 2) [2012] VSC 149, [19]-[20] and Re Australian Property Custodian Holdings Ltd (No 2) (2012) 93 ACSR 130, [115].

The plaintiff’s submissions conclude on this aspect of the pleadings:[36]

25.In their present form, the defences raise few if any issues of fact in relation to the reasonable grounds issue, and insufficient issues of fact to justify the issue not being determined together with the carrying on business and the trade or commerce issues. The defendants appear to want to “have their cake and eat it too” on the separate questions they seek to have determined. This is plainly unsatisfactory.
26.The proper course is for paragraphs 24 and 28 of both defences to be struck out, and for the State and the LMA to replead in a manner that elects between pleading a positive defence and relying on their claim of public interest immunity.

[36]See Plaintiff’s Outline of Submissions [25] and [26].

In my opinion, the plaintiff has failed to establish any basis for striking out pleadings with respect to the defensive pleadings with respect to reasonable grounds, for the reasons to which I now turn.

The plaintiff’s contentions with respect to the adequacy of the pleadings with respect to the representations as to future matters – the BCR Representation, the Net Benefit representation and the Traffic Volume representations – are misconceived. The effect of the provisions of s 4(2) of the ACL is to cast an onus on the State to adduce, merely, some evidence to negate the presumption of an absence of reasonable grounds. This is clear from the authorities.[37] Nevertheless, the effect of these provisions is not to affect the ultimate onus, which the plaintiff bears, of demonstrating that the State lacked reasonable grounds for those representations.
[37]See, for example, See, eg, Sykes v Reserve Bank of Australia (1998) 88 FCR 511 at 513; North East Equity Pty Ltd v Proud Nominees Pty Ltd (2010) 269 ALR 262 (FCAFC); Auswest Timbers Pty Ltd v The Secretary to the Department of Sustainability and Environment (2010) 241 FLR 360 (VSC) at [46]–[47].

It is not the case, as the plaintiff asserts, that the State’s defence merely contains an assertion that the State had reasonable grounds for making the representations as to future matters. In respect of each of these representations, the State has identified in its defence the reasonable grounds upon which it relies; grounds which are both pleaded and particularised in some detail.[38] A similar approach has been adopted by the Authority in its defence.[39] Moreover, the suggestion by the plaintiff that it was not reasonable for the State to rely upon relevant expert advisers as constituting reasonable grounds is not supported by any authority cited on the part of the plaintiff but is, rather, supported in terms of a contra proposition in favour of the State’s position in authorities to which it made reference.[40]
[38]See the Defence to Further Amended Statement of Claim of the First Defendant, paragraphs 24, 28 and 30.
[39]Amended Defence of the Second Defendant, paragraphs 24, 28, 30 and the Schedule which identifies and/or describes in considerable detail the reasonable grounds supporting the Traffic Volume representation.
[40]First Defendant’s Submissions (21 July 2014), [22], referring to, e.g. Lake Koala Pty Ltd v Walker [1991] 2 Qd R 49 at 58; Bowler v Hilda Pty Ltd (1998) 80 FCR 191 (FC) at 218.

Finally, and in terms of substance and procedural fairness, most importantly, there is, in my view, no difficulty presented by the identification of the grounds upon which the State relies in allegations and the detailed facts or evidence upon which it relies to establish those grounds in particulars in support of its reasonable grounds defence. In my view, the plaintiff is clearly put on notice of the State’s case in this respect. Moreover, the course adopted by the State with respect to its defensive pleadings with respect to reasonable grounds is supported by the recent judgment of the Full Court of the Federal Court of Australia in SPR Licensing Pty Ltd v NIS QLD Pty Ltd.[41]
[41][2014] FCAFC 50, at [77].

Finally, in the context of the reasonable grounds defensive pleadings, I come to the plaintiff’s contentions with respect to proper defensive pleading with respect to the State’s public interest immunity claim. At the hearing of the applications, the point was made by the plaintiff in response to the proposition that a public interest immunity claim was not waivable that, nevertheless, the State could choose to act in ways in which, broadly speaking, the claim would not arise or would not be maintainable. While that may be so, there is, nevertheless, no reason why the State is not, in the present circumstances, entitled to press such a claim and also entitled to plead to a case against it in such a way as that claim is preserved until that claim is determined if, indeed, such determination proves necessary in these proceedings. For these reasons and on the basis of the matters contended in the material relied upon in the State’s submissions, which it is now helpful to set out, I reject the plaintiff’s contentions in this respect:[42]
[42]First Defendant’s Submissions (21 July 2014), [24] to [28].

24.Nor is there any deficiency with the reservation of the State’s position pending final disposition of its public interest immunity claim. The purpose of that reservation was made clear in correspondence to the plaintiff which accompanied the State’s defence to amended statement of claim dated 8 July 2014:
[A]s you know, documents including the Short Form Business Case and the detailed business case are the subject of public interest immunity claims by the First Defendant. The First Defendant has set out the grounds upon which it relies in paragraphs 24 and 28 of the Defence consistently with those claims. Accordingly, certain matters upon which it might otherwise rely are not able to be set out, as they would disclose the content of the documents over which public interest immunity is claimed. If those claims are finally determined adversely to the First Defendant (including after any appeals), the First Defendant may seek to expand those grounds by way of further pleadings or particulars, so as to rely upon matters upon which it is presently unable to rely.
25.There is no impropriety in this course. If the State’s public interest immunity claim is upheld, the particulars will not be expanded on the strength of the contents of documents presently unable to be disclosed, as they will remain unable to be disclosed. It is only if the State’s public interest immunity claim ultimately fails that there may be matters upon which the State then seeks to rely, upon which it at present cannot. It was entirely proper for the State to bring this possibility to the attention of the plaintiff.
26.Contrary to POS [23], the State’s position does not involve seeking to rely on public interest immunity as a defence to the plaintiff’s claims. The State has identified its defence. It has simply given notice that, if its public interest immunity claim is defeated, there may be further matters upon which it wishes to rely by way of that defence.
27.The position adopted by the State can only be to the benefit of the plaintiff. If the State’s public interest immunity claim is successful, the State is more confined in its ability to defend the representations as having reasonable grounds. This affords no basis for striking out the pleading as the plaintiff seeks.
28.So far as POS [23]–[24] refer to a requirement for the State to “elect” between its public interest immunity claim and its pleading, and a “waiver” of the public interest immunity claim, those submissions are misconceived. Public interest immunity cannot be waived.[43] The State is obliged to claim it. Without derogating from that claim, the State has pleaded and particularised its position to the fullest extent it considers possible.

Trade or commerce

[43]See, eg, Air Canada v Secretary of State for Trade (No 2) [1983] 2 AC 394 at 436; ASIC v Zarro (No 2) (1992) 34 FCR 427 at 432–3; R v Lipton (2011) 82 NSWLR 123 (CA) at [85].

The plaintiff contends that the pleading problems previously identified become more particularly acute in relation to the question whether each publication of the representation was made in trade and commerce. The plaintiff says that each representation needs to be looked at in its context in order to answer that question. The failure by the State, it is submitted, to plead all of the occasions on which the two representations were made means that question cannot be answered in relation to the representations made by the State. It is said that there is also an additional difficulty with the State’s defence on this question as it “impermissibly conflates the carrying on business issue with the discrete trade and commerce issue”.[44] The plaintiff submits that the ACL requires two separate questions to be asked, namely whether, at the time the relevant representation was made, the State and, or alternatively, the Authority were carrying on business and, secondly, whether the relevant representation was made in trade or commerce. On these bases, the plaintiff submits that paragraphs 22, 26, 32 and 34 of the State’s defence should be struck out.
[44]See Plaintiff’s Outline of Submissions [28], referring to paragraph 3E of the State’s defence.

There is, however, in my view, no substance in the plaintiff’s complaint concerning the State’s defence with respect to trade or commerce. As indicated in the preceding reasons, all of the conduct put in issue by the plaintiff in the FASOC has been identified and all of the facts relevant to identifying whether the conduct was in trade or commerce have also been identified. In this context, the State contends that: “At the least, all of the facts upon which the State wishes to rely to contend that the conduct was not in trade or commerce have been identified in the State’s defence”.[45] On this basis, it follows for the reasons indicated previously with respect to the importance and role of pleadings, that, at the very least, this defensive pleading properly places the plaintiff in a position where it is aware of the factual matters upon which the State wishes to rely in defence on this issue and, subject to any formal amendment of pleadings in the future, the matters upon which the State is limited to being able to rely upon in its defence.
[45]First Defendant’s Submissions (21 July 2014), [29].

Moreover, I do not accept that the plaintiff’s contention that there can be any objection to the State’s denial that the conduct was in trade or commerce being combined in the State’s defence, in paragraph 3E, with a denial that the conduct was in the course of carrying on a business. As the State submits, they are obviously related inquiries. Furthermore, the State says that there are common facts upon which the State will rely to support both denials. In my view, it is correct to say, as the State contends, that the fact that the ACL “requires two separate questions to be asked” does not prohibit the State from answering those questions by reference to common facts, and saying so in its defence. The only objection to this course would be if the combination of pleadings of this nature produced some confusion or ambiguity which did not convey to the other party or parties the nature and basis of the defence sought to be relied upon. That is not the position with respect to the State’s defensive pleadings.

The Standard Methodology representation

The plaintiff submits that both defences to this representation suffer from the same defects as the plaintiff contended existed with respect to the BCR and Net Benefit representations.[46] These issues have already been addressed with respect to those representations and, consequently, for the preceding reasons with respect to those alleged defects, the plaintiff’s objections on similar bases to the pleadings with respect to the Standard Methodology representation are rejected.
[46]Plaintiff’s Outline of Submissions (18 July 2014), [30] and [31].

An additional matter raised by way of objection in the present context is to paragraph 35 of the State’s defence on the basis that the pleading is unsatisfactory as the substance of the pleading is that the plaintiff’s allegation that the Standard Methodology representation was misleading is met with a bare denial. The same complaint is made with respect to paragraph 35 of the Authority’s defence. The plaintiff says that the pleadings are objectionable as neither defence pleads the basis for the making of the Standard Methodology representation while, inconsistently, reserving the possibility of providing further grounds and particulars once the public interest immunity claims have been determined. In my view, there is no substance in these objections, for the reasons advanced in the State’s submissions:[47]

33.Also contrary to POS [32], the State’s defence at [36] is not a “bare” denial. It is responsive to the allegation “[b]y reason of the matters set out in paragraphs 33 to 35” of the FASOC. Accordingly, it should be understood against the background of the State’s response to those paragraphs of the FASOC. They include, in particular, the State’s defence at [33(a)]. The plaintiff’s case on this allegation focuses on the inclusion within the methodology of “wider economic benefits” (see FASOC [35] and the particulars thereto). As the State’s defence at [33(a)] makes clear, the State denies that the representation alleged by the plaintiff was made because, significantly, it was made clear that wider economic benefits were included. That is the pleaded basis for the State’s defence concerning this alleged representation.
34.Of course, the State will be confined to its pleading. Accordingly, it will not be entitled to advance further positive material supporting the making of the representation if that will take the plaintiff by surprise, having regard to its defence and any particulars provided following determination of the public interest immunity claim as foreshadowed in the particulars to the State’s defence at [35].
[47]First Defendant’s Submissions (21 July 2014), [33] and [34].

The Authority’s defence

The plaintiff’s strike out application is much more limited in relation to the Authority’s defence than in relation to the State’s defence; only seeking to strike out paragraphs 24, 28 and 35 of the Authority’s defence.

Paragraph 24 of the Authority’s defence is responsive to the plaintiff’s pleading, in paragraph 24 of the FASOC, that the Authority did not have reasonable grounds for making the BCR Representation which, the plaintiff alleges, is to be taken to be misleading by virtue of s 5(1) of the ACL. As the Authority, in its defence, relies in paragraphs 24(c)(i) and 28(c)(ii) on an allegation that the State had reasonable grounds for making the representations, it follows that, for the same reasons that I have indicated previously, the plaintiff’s objections with respect to the reasonable grounds defensive pleading raised by the State are also applicable to the corresponding Authority pleadings. Paragraph 28 of the FASOC alleges that the State and/or the Authority did not have reasonable grounds for making the Net Benefit representation, which is taken to be misleading by virtue of s 4(1) of the ACL. It follows, for the preceding reasons, that the plaintiff’s objections with respect to the Authority’s defensive pleading must fail.

In terms of the pleading of reasonable grounds in the context of s 4 of the ACL, the Authority makes detailed submissions which it is, in my view, helpful to set out in their entirety. In my view, for the reasons indicated and on the basis of the material relied upon, these submissions correctly state the position with respect to pleading reasonable grounds in the context of the statutory provisions. Apart from being helpful in this respect, they are also of assistance in the context of these proceedings in emphasising, and quite correctly, that the parties are all bound by their present pleadings. For the reasons set out below with respect to the issue of separate questions, this is an important consideration. On this basis, I set out the Authority’s submissions on pleading reasonable grounds for the purposes of s 4 of the ACL:[48]
[48]Outline of Second Defendant’s Submissions (21 July 2014), [7] to [12].

7.The “reasonable grounds” pleas in [24] and [28] of the State’s amended defence are adequate. According to the Sykes approach, if there was a representation as to a future matter, s 51A of the TPA required (and s 4 of the ACL requires) the representor to show: (1) some facts or circumstances; (2) existing at the time of the representation; (3) on which the representor in fact relied; (4) which are objectively reasonable; and (5) which support the representation made. This approach is well established.[49]
8.The LMA has adopted the State’s “reasonable grounds” as at the time of each relevant representation. In the premises, it is appropriate to examine the relevant contents of the State’s pleading. In [24] of the State’s amended defence, by reason of three matters, the State alleges that it had reasonable grounds for the BCR representation. Those three matters are as follows: (1) a cost benefit analysis demonstrated the relevant cost benefit ratio; (2) that analysis was undertaken by experts upon whom the State was entitled to rely, and (3) that analysis was subject to a pre-existing process mandated by the State for the development of robust analyses.[50] The State relies on the same matters to establish reasonable grounds for the Net Benefit representation.
9.The matters pleaded and particularised in [24] and [28] of the State’s amended defence address each matter the subject of the Sykes approach. Under that approach, the State must show “some facts or circumstances” supporting each representation with respect to any future matter (underlining added). There is no requirement to list every fact or circumstance on which the State could rely (including those facts and circumstances recorded in documents the subject of the PII claims).
10.Conformably with the rules of pleading, the State and the LMA cannot rely on any grounds beyond the pleaded grounds. If the State pleads only some of the facts and circumstances on which it could rely, that is a matter for it. If the State does not or cannot rely on the contents of the cost benefit analysis, that may have a bearing on its ability to establish the reasonableness of the grounds for the two relevant representations (see point 4 in [7] above). Again, that is a matter for trial (or, possibly, some other application by the State and the LMA on analogous grounds to those considered in the Sands case discussed below at [15]).
11.At this stage, in respect of the “reasonable grounds” pleas in [24] and [28] of the State’s amended defence, the State has satisfied the rules of pleading. The plaintiff has been put on notice of the grounds on which the defendants rely. Assuming the facts pleaded have been established, the claim is not “so manifestly hopeless that a trial would be a futility”.[51]
12.Absent an amendment pursuant to the Rules, the defendants cannot rely on further grounds for the relevant representations. If the Court rejects the PII claims, there is nothing in r 36 of the Rules preventing the defendants from seeking to amend their respective pleadings to rely on additional grounds recorded in the documents the subject of those claims. As noted in subparagraph 3(f) above, the plaintiff effectively concedes this point.

[49]See Auswest Timbers Pty Ltd v The Secretary to the Department of Sustainability and Environment [2010] VSC 389 at [47]-[48] per Croft J and Doppstadt Aust Pty Ltd v Lovick & Son Developments Pty Ltd [2014] NSWCA 158 at [189] per Gleeson JA.

[50]As to the second matter, see authorities such as Lake Koala Pty Ltd v Walker [1991] 2 Qd R 49 at 58 and Bowler v Hilda Pty Ltd (1998) 80 FCR 191 at 218.

[51]See the decision of Byrne J identified in [5] above.

Paragraph 35 of the Authority’s defence responds to the plaintiff’s allegation that the final cost benefit analysis for the Project was not carried out in accordance with standard methodology. In my opinion, this objection on the part of the plaintiff must be rejected for the same reasons as indicated previously with respect to the corresponding pleas in the State’s defence.

Finally, the Authority submits that it has properly pleaded to paragraphs 24, 28 and 35 of the FASOC without revealing the information the subject of the public interest immunity claims. The Authority submits:[52]

13.By making the PII claims, the State and the LMA want to prevent the disclosure of certain documents relating to matters of state. Each one claims that the disclosure of such documents would be injurious to the public interest. Accordingly, in pleading to the relevant allegations in the FASOC, each defendant has not pleaded material facts evidenced by the documents the subject of the PII claims.
14.As noted above, public interest immunity is not a form of privilege. Unlike the privilege against self-incrimination and the privilege against exposure to penalties, a party cannot waive public interest immunity.[53] However, the disclosure of confidential information may bear on the balancing exercise for which s 130 of the Evidence Act 2008 (Vic) calls. Accordingly, at this stage, the defendants cannot run complete defences on the question of reasonable grounds for the relevant representations.
15.In these circumstances, the question is whether the defendants can plead to [24], [28] and [35] of the FASOC without revealing the information the subject of the PII claims. A like question arose for consideration in Sands v The State of South Australia (No 2) [2010] SASC 340. In that (defamation) case, the plaintiff sought to amend his statement of claim by the inclusion of two further imputations and a claim of misfeasance in public office. The defendant sought a permanent stay of the proceeding by reason of public interest immunity preventing it from pleading and proving its full defence. Anderson J found that the defendant was capable of filing a defence that: (1) complied with the rules of pleading; and (2) avoided disclosing the sensitive information, in respect of the imputations and the claim of misfeasance, and that the defendant was capable of proving its defence on the further imputations. However, his Honour held that the defendant would not be capable of proving its defence on the misfeasance claim by reason of public interest immunity. Absent the abandonment of the misfeasance claim by the plaintiff, Anderson J indicated the appropriateness of granting a stay.[54]

16.This case is analogous to Sands v The State of South Australia (No 2). In responding to the allegations in [24] and [28] of the FASOC, as explained in section D above, the State has complied with the rules of pleading. Further, in [24] and [28] of the State’s amended defence, the State has avoided the disclosure of the sensitive information the subject of the PII claims.
17.If the Court upholds the PII claims, the defendants could not rely on any grounds in addition to those pleaded in [24] and [28] of the State’s amended defence. If the Court rejects the PII claims, subject to the demands of r 36 of the Rules, there is no reason why the defendants should be prevented from pleading additional grounds.
[52]Outline of Second Defendant’s Submissions (21 July 2014), [13] to [17].
[53]See ASIC v Zarro (No 2) (1992) 34 FCR 427 and DPP Reference under s 639A of Criminal Code; R Y & Ors (1998) 100 A Crim R 166 at 174.
[54]Sands v The State of South Australia (No 2) [2010] SASC 340 at [120]-[126].

In the absence of any cogent arguments to the contrary, based on principle or authority, I accept the submissions by the Authority, and as applicable to both the pleadings of the State and the Authority, the reasons set out and on the basis of the material relied upon.
Costs thrown away

As indicated previously, the State and the Authority seek to recover costs thrown away by reason of the plaintiff’s filing of the FASOC. There was argument at the hearing of the applications as to whether or not the amendments contained in the FASOC were the result of information later obtained by the plaintiff as a result of contents of affidavit material provided by the defendants after the initial statement of claim was filed. On this basis, the plaintiff says he should not be penalised in costs. The defendants, on the other hand, assert that this is not the position and that the amendments are simply the result of the plaintiff’s decision to revise its pleadings in any event. The plaintiff also says that the defendants are precluded from recovering costs thrown away as they have, themselves, made further amendments to their defences, amendments which did not flow from the amendments made to the statement of claim.

As will be seen from the reasons which follow, I intend to hear, as soon as possible, the separate questions the subject of applications by the defendants and, accordingly, I think it is more appropriate to deal with this costs issue as soon as those questions have been determined.

Separate questions

The State and the Authority apply for the determination of separate questions as set out in their summonses of 14 May, as amended on 1 August 2014, to which reference has been made. The relevant parts of those summonses setting out the separate questions proposed are set out above.[55]
[55]See above, paragraph [3].

It is perfectly true, as the plaintiff submits, that the authorities with respect to the ordering of a separate trial of separate questions caution courts against doing so for a variety of reasons:[56]
[56]Plaintiff’s Outline of Submissions (11 April 2014), [5] to [10].

5.A separate trial should be ordered under r 47.04 only with great caution and only in a clear case.
Wells Fargo Bank Northwest National Association v Victoria Aircraft Leasing Ltd (No. 2) [2004] VSC 341, [181] ff
6.This is because “the attraction of trials of issues rather than of cases in their totality, are often more chimerical than real”, so that separate trials should “only be embarked upon when their utility, economy and fairness to the parties are beyond question.” The advantages of trying separate questions for one party may unfairly disadvantage another party, including because the questions will be determined without the benefit of all the evidence relevant to the proceeding.
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514, 533-4 (Mason CJ,
Dawson, Gaudron and McHugh JJ)
Tepko Pty Ltd v Water Board (2001) 206 CLR 1, [52] (Gaudron J), [168]-[170]
(Kirby and Callinan JJ)
Hyder Consulting (Vic) Pty Ltd v CGU Insurance Ltd [2001] VSC 449, [25]
7.There should be no trial of a separate question on the basis of assumed facts; only where facts are agreed or can readily be determined judicially. Otherwise the parties remain free to dispute the relevant facts at any later trial.
Jacobson v Ross [1995] 1 VR 337, 341-2 (Brooking J)
8.It will as a general rule only be appropriate to order that a preliminary issue be isolated for determination where the determination of the issue in favour of the plaintiff or the defendant will put an end to the action, or where there is a clear line of demarcation between issues and the determination of one issue in isolation from the other issues in the case is likely to save inconvenience and expense.
Dunstan v. Simmie & Co. Pty Ltd [1978] VR 669, 671
9.Factors that tell against the making of an order under r 47.04 include that the separate determination of the question may:
(a)give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of trial;
(b)result in significant overlap between the evidence adduced on the hearing of the separate question and at trial - possibly involving the calling of the same witnesses at both stages of the hearing of the proceeding; or
(c)prolong rather than shorten the litigation.

Reading Australia Pty Ltd v Australian Mutual Provident Society [1999] FCA 718,
[8], cited in Village Building Company Limited v Canberra International Airport Pty Limited [2003] FCA 1195, [8].
10.The issue, ultimately, is whether it is just and convenient for the order to be made, having particular regard to efficient case management. This is a determination to be made in the particular circumstances of each case.
Village Building at [9]

As indicated, however, in the plaintiff’s submissions, the judgment of the Federal Court in Village Building Company Limited v Canberra International Airport Pty Ltd[57] does reaffirm that the issue is, ultimately, whether it is just and convenient for an order for separate trial of separate questions to be made and that this a determination to be made in the particular circumstances of each case.

[57][2003] FCA 1195.

On this basis, I turn to the summary of the relevant principles which appears in the judgment of Branson J in Reading Australia Pty Ltd v AMP Society.[58] As submitted by the Authority, these principles include the following:[59]

(a)The judicial determination of a preliminary question must involve a conclusive or final decision based on concrete and established or agreed facts for the purpose of quelling a controversy between the parties.[60]
(b)Where the preliminary question is one of mixed fact and law, it is necessary that the question can be precisely formulated and that all of the facts that are on any fairly arguable view relevant to the determination of the question are ascertainable either as facts assumed to be correct for the purposes of the preliminary determination, or as agreed facts or as facts to be judicially determined.[61]
(c)The issues to be separately determined must be “ripe” for determination. An issue that is ripe for determination includes one that is central to the dispute, the resolution of which will obviate the necessity for further litigation. An issue is also ripe where its determination will “substantially narrow the field of controversy”, lead to “a strong prospect that the parties will agree upon a result” or obviate “an unnecessary and expensive hearing of other questions”.[62]
(d)Factors tending to support the making of a severance order include that the separate determination may contribute to the saving of time and cost by substantially narrowing the issues for trial, or even lead to disposal of the action.
(e)Factors telling against the making of a severance order include that the separate determination may: (1) prolong rather than shorten the litigation; (2) result in significant overlap between the evidence adduced on the hearing of the separate question and at trial (possibly involving the calling of the same witnesses at both stages of the hearing of the proceeding); and (3) give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of trial.
(f)Ultimately the issue for the Court to determine is whether it is “just and convenient” for the severance order to be made.[63]

[58](1999) 217 ALR 495, at [8]; and see also Village Building Company Limited v Canberra International Airport Pty Ltd [2003] FCA 1195.

[59]Outline of Second Defendant’s Submissions (19 May 2014), [4].

[60]Bass v Perpetual Trustee (1999) 198 CLR 334 at [45].

[61]Jacobson, supra. At 341, referring to Nissan v Attorney-General [1970] AC 179 at 242-243 per Lord Pearson; and Bass v Perpetual Trustee (1999) 198 CLR 334 at [53]; as to the use of assumed facts, see also DPP (Cth) v JM (2013) 298 ALR 615 at [8], [24] and [31]-[43].

[62]CBS Productions Pty Ltd v O’Neill [1985] 1 NSWLR 601 at 606; AWB Ltd v Cole (No 2) (2006) 233 ALR 453 at [31]; and Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 141.

[63]Arnold v Attorney-General for the State of Victoria [1995] FCA 727.

Additionally, having regard to the plaintiff’s submissions with respect to the state of the authorities, it is helpful to make reference to some of the authorities to which reference is made for the purpose of putting the propositions advanced in context. It is particularly important to clarify that they are not authorities for the proposition that the factual basis for the determination of separate questions may not be provided by the pleadings themselves, without the need for any other material. Thus in Dunstan v Simmie, the Full Court (Young CJ, McInerney and Jenkinson JJ) said:[64]
[64][1978] VR 669 at 671.

Some of the early English cases dealing with the occasions when the power in O 36, r 8 might be exercised may have expressed somewhat too restrictive a view: see Emma Silver Mining Co v Grant (1879) 11 Ch D 918; Piercy v Young (1880) 15 Ch D 475; and Smith & Co v Hargrove & Co (1885) 16 QBD 183. Nevertheless it remains true that it is a power to be exercised with great caution. It is not desirable to circumscribe the exercise of the discretion to make an order under the power and it is perhaps particularly desirable that the power should be invoked in building cases so long as there are appropriate issues to be isolated. Nevertheless, although every case must depend upon its own facts, it will as a general rule only be appropriate to order that a preliminary issue be isolated for determination before trial where the determination of the issue in favour of the plaintiff or the defendant will put an end to the action or where there is a clear line of demarcation between issues and the determination of one issue in isolation from the other issues in the case is likely to save inconvenience and expense: cf Polskie v Electric Furnace Co Ltd, [1956] 1 WLR 562, especially at p 569; [1956] 2 All ER 306 at p 311. Subject to these considerations we would agree with what Hudson, J said in George Wimpey & Co Ltd v Territory Enterprises Pty Ltd, supra at p 316, that there is no reason to differentiate between an application by a plaintiff and one by a defendant.
The question or issue to be isolated must, of course, appear clearly from the pleadings and this means that, before an order is made, the parties must take especial care to ensure that all aspects of the matter are raised.

Similarly, in Jacobson v Ross, Brooking J said:[65]
[65][1995] 1 VR 337 (Appeal Division) at 340-1.
Rule 47.04 provides for the separate trial of a question which may be one of law, of law and fact or of fact. Where the question is one of law or one of law and fact, regard must always be had by the judge making an order for preliminary trial to the question what facts if any are or may be necessary for the trial of the preliminary issue and to the question whether those facts (once identified) are to be merely assumed for the purposes of the trial of the preliminary issue or on the other hand are to be admitted or proved, and in particular whether they are to be the subject of mutual admissions by the parties.
It may be that a question of law can be determined in a preliminary way without regard to the facts. So if a judge is satisfied that the question whether “person” in a particular section of a given Act includes “corporation” is a “question in a proceeding” to be “tried” within the meaning of r 4.07 as those expressions are explained in Bhagat’s case at 208-9, he may see fit to order the preliminary determination of that question without stating any factual basis on which it is to be determined. He will do this on the footing that the abstract question can be answered without regard to the facts of the particular case. But where the preliminary question cannot be properly answered without reference to the facts of the case (and this will be so with any question of mixed law and fact), the order for the preliminary trial of the question should show how the relevant facts are to be identified for the purposes of that preliminary trial and whether the relevant facts are merely to be taken as assumed for the purposes of the determination of the preliminary question or on the other hand are either to be mutually admitted or proved. Where the preliminary issue to be determined is one of law or of mixed law and fact and there are relevant facts which are in dispute, the court may in its discretion make an order for the trial of the preliminary issue on the footing that relevant disputed questions of fact will be resolved by the court in the course of determining the preliminary issue, as was done in George Wimpey & Co Ltd v Territory Enterprises Pty Ltd [1966] VR 312 (evidence of surrounding circumstances as bearing on construction of contract).
The decision just cited shows that an order for the trial of a preliminary issue may be made notwithstanding the opposition of a party and that in an appropriate case it may be enough for the order to use some such words as “having regard to such relevant and admissible evidence as may be adduced” by way of providing for the identification and determination of relevant questions of fact. Indeed, in an appropriate case the court may order the trial of a preliminary issue of its own motion and notwithstanding that no party desires it: r 1.14(2).
The need for precision in the statement both of the question to be decided and of the facts on which it is to be decided was emphasised by Lord Pearson in Nissan v Attorney-General [1970] AC 179 at 242-3.
Care must be taken to ensure that, in one way or another, all the facts that are on any fairly arguable view relevant to the determination of the question are ascertainable as a result of the order for the preliminary determination, as facts assumed to be correct for the purposes of the preliminary determination, or as facts which both sides accept as correct, or as facts which are to be judicially determined. Failure to do this, and in particular failure to perceive that the facts alleged in a pleading are some only of the facts relevant to the determination of the preliminary question, may make the order for preliminary determination unfruitful. So in Attia v British Gas Plc [1988] QB 304 the Court of Appeal set aside the order of the primary judge answering the preliminary question in the negative, not because the question should have been answered in the affirmative, but because it should not have been answered at all, since the facts pleaded by the plaintiff were insufficient for that purpose.

And in DPP (Cth) v JM[66] the High Court made reference to the approach advocated by the defendants in the present proceedings – namely something in the nature of a demurrer proceeding based on pleaded facts. The High Court, in the context of discussion of the provisions of the Criminal Procedure Act 2009 (Vic), made the following statement, of more general application in the present context:[67]
[32] Further, to read s 302 of the CP Act as permitting reservation of questions arising before trial, by reference to the facts which the prosecution asserts it will prove at trial, does not differ in principle or effect from the demurrer procedure which has been used by this court throughout its history.[68] In cases in which a pleading “is drawn so as to allege with distinctness and clearness the constituent facts of the cause of action or defence set up”,[69] demurrer to the pleading determines whether those facts are legally sufficient to establish the claim made or defence set up. As may be seen most clearly when a party both pleads and demurs, the issue presented by the demurrer may be contingent upon proof of disputed facts. But it has never been suggested that there is any constitutional impediment to a court exercising the judicial power of the Commonwealth deciding whether facts asserted by one party would, if proved, establish a claim made, or defence advanced, by that party.

[66](2013) CLR 135

[67](2013) CLR 135 at 154, [32].

[68]See, for example, Bond v The Commonwealth (1903) 1 CLR 13.

[69]South Australia v The Commonwealth (1962) 108 CLR 130 at 142. See also Wurridjal v The Commonwealth (2009) 237 CLR 309 at 368–369 [119]–[121].

The defendants submit that it is just and convenient for this matter to proceed now by way of the separate questions proposed for the following reasons:[70]
[70]Outline of Second Defendant’s Submissions (19 May 2014), [5].

(a)Like the preliminary questions in Village Building Company Limited v Canberra International Airport Pty Limited & Ors [2003] FCA 1195, the proposed questions focus on particular requirements of the relevant consumer protection legislation.
(b)The first question is whether, assuming without accepting that the LMA made each representation, it was carrying on a business for the purposes of the ACL (see [19] and [20] of the SOC). If the answer is “no”, the plaintiff’s action against the LMA must fail.
(c)The second question is whether, assuming without accepting that the LMA made each representation, it engaged in that conduct in trade or commerce for the purposes of the ACL (see [22], [26], [32] and [34] of the SOC). Similarly, if the answer is “no”, the plaintiff’s action against the LMA must fail.
(d)Accordingly, the questions are “ripe” for determination in the sense described above.
(e)Further, the matters particularised to demonstrate the misleading or deceptive character of each representation are unlikely to have any significant bearing upon either one of those question (sic).
(f)The factual issues on the misleading or deceptive question (including the presence of reasonable grounds for alleged representations in respect of future matters) are likely to be complex and time consuming.[71]
(g)In the circumstances, the preliminary determination of the proposed questions would achieve or promote the overarching purpose described in s 7 of the Civil Procedure Act 2010 (Vic) (CPA).

[71]See Mr Fraser’s affidavit at [7]-[19] [a reference to the affidavit of Kym Andrew Fraser (sworn 14 May 2014)].

In my view, it is correct, as the defendants submit, that the circumstances of this case are relevantly very similar to those in Village Building Company Limited v Canberra International Airport Pty Ltd,[72] where a severance application was made to Finn J. In that case, the determination of the preliminary questions was approached by Finn J on the basis that “The impugned conduct [namely, the pleaded representations] can be established to have occurred”.[73] In other words, as submitted by the defendants, conformably with the way in which each question was framed, Finn J assumed that the applicant could establish the alleged conduct.
[72][2003] FCA 1195.
[73]Village Building Company Limited v Canberra International Airport Pty Ltd (No 2) (2004) 134 FCR 422, at [40].

The defendants submit that a similar approach is justified in this case, for the following reasons:[74]

(a)The relevant conduct in issue in this case is four representations, each of which has been identified with precision. Each representation stems from the publication of a document or documents. The LMA does not dispute the publication of those documents.[75]
(b)However, it appears the plaintiff also reserves the right to rely on other conduct to support each representation as alleged.[76]
(c)This apparent reservation is not inimical to the making of the 2^nd proposed order. That order, if made, will ensure that all facts relevant to the determination of the questions are ascertainable as facts assumed to be correct (for the purposes of the exercise), or as agreed facts, or as facts which are to be judicially determined. The 3^rd proposed order and discovery will ensure that all relevant facts are ascertainable.
(d)The point of this procedure is to fully expose the factual universe going to the questions (at least the first and second questions posed). All of the facts relevant to whether the LMA was carrying on a business, or acting in trade or commerce, will be able to be found, based on the documents and (if the plaintiff thinks it necessary) other evidence.

[74]Outline of Second Defendant’s Submissions (19 May 2014), [8].

[75]See the corresponding paragraphs in LMA’s proposed defence, being ex. “KAF-1” to Mr Fraser’s affidavit.

[76]See the particulars under [21], [25] and [27] of the SOC.

The defendants submit that, in any event, the reservation sought to be made by the plaintiff is inappropriate. It is, in my view, incompatible with the facilitation of the just, efficient, timely and cost-effective resolution of the real issues in dispute as required by s 7 of the Civil Procedure Act 2010. Moreover, under s 19 of that Act, for the purpose of avoiding undue delay and expense, the plaintiff “must not take any step in connection with any claim or response to any claim in a civil proceeding unless the person reasonably believes that the step is necessary to facilitate the resolution or determination of the proceeding”. Additionally, the overarching obligation to ensure costs are reasonable and proportionate as provided for in that Act is also a significant and important consideration in favour of the applications for determination of the proposed separate questions.[77]
[77]See also, generally as to the nature and effect of the Civil Procedure Act, Kuek v Dev Flan Pty Ltd [2012] VSC 571 at [78].

For the reasons indicated previously, it is not open to the plaintiff to seek to avoid stating exhaustively the conduct upon which he relies, particularly in respect of the issues the subject of the first and second questions. In the first instance, the plaintiff must identify with the requisite degree of precision the conduct on which he relies. Given the objects of the Civil Procedure Act, and given the overarching obligations imposed by that Act, the plaintiff cannot maintain the reservation in the hope that further documents might emerge from the discovery process and, or alternatively, to resist the use of the preliminary trial procedure having regard to the likely savings in time and cost which would flow from its adoption, matters to which I now turn.

The advantages in terms of costs and expedition are the subject of submissions by the State, submissions which are adopted by both defendants:[78]
[78]First Defendant’s Submissions (10 July 2014), [18] to [24].

18.In addition to the reasons given in the submissions of the LMA in favour of stating the separate questions, the State adds the following matters. Each tends strongly in favour of the statement of separate questions.
19.First, the proposed separate questions deal with discrete issues, which would be necessary for determination in any event. None of the matters relevant to whether the alleged representations were misleading would bear upon the separate questions. So, for example, none of the expert accounting and traffic modelling evidence which would inevitably be required to determine whether the representations were misleading will be required to determine whether the State was engaging in the conduct of a business, or in trade or commerce.
20.Secondly, compared to determination of whether the alleged representations were misleading – which will be complex, costly and time-consuming[79] – determination of whether publication of the documents upon which the plaintiff relies involved the conduct of a business, or trade or commerce, is likely to be considerably simpler, cheaper and quicker. That is most significant where the pendency of the proceeding affects the current tender process for this major State infrastructure project.[80]
21.Thirdly, given the allegations in the ASOC and the defences, it should be clear that the contention that the conduct on which the plaintiff relies involved the conduct of a business and trade or commerce by the State is speculative at best. So too, no connection is alleged between the impugned conduct and the relief sought at [B(b)] of the prayer for relief, nor any particular facts about the plaintiff so as to justify such relief at his suit.[81] It is exceedingly unlikely that the Court would conclude that relief in that form should be granted in the circumstances.
22.Fourthly, through the detailed allegations in the defences, the process of agreeing facts and documents, and (if necessary) judicial determination, the factual basis for the first and second questions will be fully identified. The area of contest about those facts, if any, is likely to be small. They are likely to turn mostly, if not entirely, on competing submissions about the correct legal characterisation of uncontroversial facts. That may be contrasted with whether the alleged representations were misleading, which will clearly involve significant factual controversy, requiring expert evidence.
23.Fifthly, the third question is suitable for determination on the assumed basis that the plaintiff is otherwise successful. It is akin to a demurrer, upon which it is assumed that the allegations in the ASOC are otherwise established.[82] Again, it is question involving purely legal submissions. If disposed of adversely the plaintiff, the critical aspect of the relief he seeks – directed to forestalling the progress of the project by the entry into contracts – could not obtained by him.
24.Sixthly, a particular reason to favour statement of separate questions concerns the public interest immunity claim which has been made by the State in respect of, in particular, the Short Form Business Case (other than the Executive Summary) and the detailed business case. The contents of those documents, as opposed to the fact that they were produced and the circumstances in which that occurred, is not relevant to the issues the subject of the proposed separate questions. The separate questions can thus be determined irrespective of the outcome of the public interest immunity claim. The determination of that claim may well involve cost and delay consequent upon invocation of the appellate process.

[79]Affidavit of Alison Patricia Kate O’Brien’s sworn 14 May 2014 at [11]-[13]; affidavit of Kym Andrew Fraser filed 14 May 2014 at [7]-[19].

[80]See the affidavit Kym Andrew Fraser filed 14 May 2014 at [20].

[81]See Australian Consumer Law, s 232; Australian Consumer Law and Fair Trading Act 2012 (Vic), ss 201, 202.

[82]As is clear from Director of Public Prosecutions (Cth) v JM (2013) 87 ALJR 836; 298 ALR 615, see esp at [8], [24], [31]-[43], there is no difficulty stating such a question.

In my opinion, there is much force in these submissions, particularly as the parties indicated at the hearing of these applications that the separate questions hearing would last one or perhaps two days and could be prepared for and argued with approximately two weeks’ notice. These questions would, if answered as the defendants would have them answered, dispose of the proceeding. If they were answered otherwise, then the matter would proceed promptly to full trial, but with the advantage of the matters the subject of the separate questions having been canvassed and, in my view, with likely utility in terms of economy of time and cost in the event that the matter did proceed to full trial.[83] The other advantage is that it would not, in my view, be necessary to deal with the public interest immunity claim prior to determination of the separate questions. The plaintiff does, however, not accept this position, but this follows, in my view, from his failure to accept the current state of the pleadings and that the pleadings in their current state provide a proper factual basis for determination of the preliminary questions on the approach applied by Finn J in the Village Building Company case and other cases to which reference has been made, namely, that the impugned conduct as pleaded can be established to have occurred. For the preceding reasons, this approach is not, in my opinion, properly criticised on the basis that it is some hypothetical determination of matters on the basis of assumed facts, but is rather a determination on the basis of the bases as pleaded by the parties. This approach also, in my view, disposes of the objection raised by the plaintiff that the determination of the preliminary questions would not be possible because the parties would not be able to agree the factual basis upon which that determination would take place. Quite apart from issues with respect to the obligations of parties under the Civil Procedure Act to facilitate civil proceedings – with particular reference to s 7 – the approach of Finn J and of the judges in the other authorities to which reference has been made does avoid these difficulties because in the absence of agreed facts the pleadings themselves provide the factual background, which is quite sufficient in the present circumstances for the determination of the preliminary questions.
[83]See above, [54] and the authorities discussed; and see also Wells Fargo Bank Northwest National Association v Victoria Aircraft Leasing (No 2) [2004] VSC 341 at [182]-[191] (Dodds-Streeton J).

Conclusions and Orders

For the preceding reasons, the plaintiff’s summons, as amended, will be dismissed and orders sought in the defendants’ summonses, as amended, with respect to the determination of separate questions will be made. Moreover, it follows from the preceding reasons that any application for production of documents and with respect to public interest immunity will only be heard, if necessary, after determination of the separate questions. On this basis, the parties are to bring in draft orders to give effect to these reasons.

As indicated, the question whether the plaintiff should be ordered to pay costs thrown away by the defendants with respect to the filing of the FASOC is reserved. The question of costs is otherwise reserved.

[2014] VSC 363

8 August 2014