Niche Logistics Pty Ltd (ACN 112 953 833) v Bluestar Global Logistics (Aust) Pty Ltd (ACN 130 179 300)
[2018] VCC 491
•23 April 2018
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-16-04578
| NICHE LOGISTICS PTY LTD (ACN 112 953 833) | Plaintiff |
| v | |
| BLUESTAR GLOBAL LOGISTICS (AUST) PTY LTD (ACN 130 179 300) | Defendant |
---
JUDGE: | HIS HONOUR JUDGE MACNAMARA | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 2, 3, 4, 5, 6 October, 17 November 2017, 14 March 2018 | |
DATE OF JUDGMENT: | 23 April 2018 | |
CASE MAY BE CITED AS: | Niche Logistics Pty Ltd (ACN 112 953 833) v Bluestar Global Logistics (Aust) Pty Ltd (ACN 130 179 300) | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 491 | |
REASONS FOR JUDGMENT
---
Subject: Misleading or Deceptive Conduct
Catchwords: Alleged misleading or deceptive conduct as to defendant’s intentions relative to sub-leasing arrangement; representation as to defendant’s present intention a representation as to present existing facts; liability as to representations as to future matters; plaintiff’s case made out.
Legislation Cited: Ss 4, 18 and 236 Australian Consumer Law; Trade Practices Act 1974; Trade Practices Revision Act 1986; Western Australian Property Law Act 1969; Supreme Court Act 1986
Cases Cited:Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217; Bill Acceptance Corporation Ltd v GWA Ltd (1983) 50 ALR 242; LE Stack v Coast Securities No 9 Pty Ltd (1983) 46 ALR 451; Lyndel Nominees Pty Ltd v Mobil Oil Australia Ltd (1997) 37 IPR 599; Cummings v Lewis (1992) 113 ALR 285; Sykes v Reserve Bank of Australia (1998) 88 FCR 511; Saleh v Romanous [2010] NSWCA 274; Ashton v Pratt [2015] NSWCA 12; Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825; ACN 074 971 109 Pty Ltd v The National Mutual Life Association of Australasia Ltd (2008) 21 VR 351; LCY Pty Ltd v Ma [2017] VSC 383; Amalgamated Investment & Property Co Ltd (in liq) v Texas Commerce International Bank Ltd [1982] QB 84; Giller v Procopects (2008) 24 VR 1; South Carolina Insurance Co v Assuranti Maatschappij“De Zeven Provincien” NV [1987] AC 24; Australian Broadcasting Corporation v Lenah Game Meats (2001) 208 CLR 199; Accurate Financial Consultants Pty Ltd v Koco Black Pty Ltd (2008) 66 ACSR 325
Judgment: 1. Adjourned to a date to be fixed to hear submissions as to damages under the Australian Consumer Law
2. Costs reserved
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S. Hay | Lander & Rogers |
| For the Defendant | Mr S. Hopper | Evans Ellis Lawyers |
HIS HONOUR:
BACKGROUND
1 The plaintiff, Niche Logistics Pty Ltd (“Niche”) and the defendant, Bluestar Global Logistics (Aust) Pty Ltd (“Bluestar”), are transport companies operating around Australia. Amongst the centres which they serviced was Perth. In early 2012, Niche considered establishing its own depot in Perth. Until then it had been servicing Perth through an agent. Niche would deliver freight to the agent’s Perth depot and the agent would provide the storage and delivery facilities from there for a per-pallet delivery fee (Transcript (“T”) 62, Lines (“L”) 18-31).
2 The Melbourne depots of both Bluestar and Niche are in Campbellfield (T61, L23-4). Mr Dickson, who is the managing director of Niche, met Mr Panagiotou of Bluestar at a Christmas function held by the rail operator, Pacific National (Ibid, L15-22). These gentlemen had intermittent discussions over the years to see if, in the words of Mr Dickson, “there were any possible synergies we could achieve both here and in Melbourne and in Perth” (T62, L3-5).
3 Niche did not initially find a suitable depot in Perth. It “found the market was reasonably tight over there” (T63, L11). It did eventually find a depot for at least temporary occupation at a location referred to as Fargo Way Welshpool (Ibid, L13).
4 Mr Dickson explained that his company transported 48 foot containers, which were longer than the traditional shipping containers which were 40 feet long:
“So we needed to have a site where you could get a truck in and out with those containers and being able to unload and that is probably the biggest criteria, there are places where you can't actually get a truck that side (scil size) in.” (T63, L31-T64, L4).
5 Ideally a canopy or outside cover at the depot would be “nice”, but not essential (T64, L10-14). According to Mr Dickson, he asked Mr Panagiotou whether Niche could operate out of Bluestar’s Perth depot (T64, L17-19). Bluestar had what Mr Dickson understood to be an eighteen-month lease on an existing depot in Perth, but Mr Panagiotou, according to Mr Dickson:
“… was interested in talking further about what we might do in the future. As a result the depot we ended up buying we specifically took the 12 months lease to try to align ourselves with the expiration of their new lease.” (T64, L28-T65, L1).
6 The Fargo Way depot was 10 or 15 kilometres from Perth, or a twenty-minute drive but, more significantly, a ten-minute drive from the rail freight terminal (T65, L6-10).
7 On 9 January 2012, Mr Dickson sent an email to Mr Panagiotou, principally proposing a possible arrangement whereby Bluestar might transport freight on Niche’s behalf from Melbourne to Sydney, Adelaide or Brisbane. He enquired about Bluestar’s rates and concluded the email, “I am back in Melbourne tomorrow and would love to catch up to discuss this as well as the Perth options” (Court Book (“CB”) 45). Later in the month, 25 January 2012, Mr Dickson sent another email to Mr Panagiotou which concluded:
“Also, I’m heading to Perth mid-Feb to start looking for depots of our own. Do you have time to catch up before then to discuss your thoughts on shared operation of some description?” (CB 44)
8 The process continued. On 2 May 2012, Mr Dickson emailed Mr Panagiotou:
“My guy in Perth is going to drive past the depot he had seen before at some time today and get the agent’s phone number again. Once he gives me a call I will let you know.” (CB 57)
9 Mr Dickson sent a follow-up email the following day saying:
“The depot we had been looking at in Perth is gone now apparently. My guy drove past it and said the for lease sign was gone and there were people in there working (it was empty before).” (CB 56)
10 The email continued:
“Sorry mate. If you do come across something larger than you need please let me know as I would happily look at sharing a depot in one way or another. I can fly to Perth for a couple of days if necessary to look at anything that might be suitable.” (Ibid)
11 By August, matters seemed to be becoming more serious. Mr Dickson sent an email to Mr Panagiotou considering a scenario where:
“Niche finds a facility that is large enough to cater for the volumes of both companies. Niche essentially acts as the ‘senior partner’ in the relationship, in so far as it leases the premises, hires staff and runs the operation.
Niche charges Bluestar per pallet for the unloading of containers and delivery of freight.
Bluestar maintains a level of control via its’ (sic) own staff (Jamie and possibly others), depot signage and trucks with signage.” (CB 59)
12 Earlier in the email, Mr Dickson had told Mr Panagiotou “we have advised Goldstar [presumably another transport operator] that we are now looking for our own depot and there is no turning back for us!” (Ibid). Niche wanted to inspect accounting records relative to Bluestar’s Perth operation with a view, it would seem to its acting as “senior partner” in the scenario as described. It entered into a Deed of Confidentiality prepared by Bluestar, dated 10 August 2012 (CB 61-67).
13 In September 2012, the Perron Group, was facing a vacancy in its property at 6 Miles Road, Kewdale, and engaged Mr Craig Rowe, then an agent dealing in commercial property at Knight Frank in Perth to advertise it for lease (CB 171-172). Mr Rowe reported to the asset manager at the Perron Group, Mr Alwin Bax, that he had showed this property, which was suitable for use as a transport deport, to representatives of Bluestar on 21 September. He told Mr Bax, “Bluestar liked the building this morning. If anything, it’s more than enough for them.” (CB 171) Negotiations between Bluestar and the Perron Group commenced (CB 164-174). Meanwhile, Niche entered into a sublease of the property at 10 Fargo Way, Welshpool, pursuant to a written sublease dated 18 September 2012, which gave Niche occupancy of those premises from 1 October 2012 until 30 September 2013. The lease provided Niche the option of a further term from 1 October 2013 to 27 February 2014 (CB 75-88, 90-101).
14 In February 2013, Mr Jamie Kane and Mr Michael Panagiotou, Bluestar’s Western Australian state manager and national operations manager respectively, were inspecting prospective depot sites on 11 February 2013. Mr Panagiotou was flying to Perth from Melbourne on 11 February. At this stage, it appears the property to be inspected was at 505 Abernethy Road, Kewdale (CB 126-127). On 14 February 2013, Mr Rowe reported to Mr Bax that he:
“… took Bluestar through Miles Rd again. Their national manager [Mr Panagiotou] was over and so did the rounds with them. Of the 4 properties we looked at today, it appears Miles Rd is the most suitable.” (CB 165)
15 The previous day, Mr Panagiotou had faxed Mr Dickson of Niche that he was “visiting a couple of sites tomorrow [in Perth] (your [sic] welcome to join us).” (CB 138) Mr Dickson, apparently as part of his investigations as to whether Niche might take over responsibility for Bluestar’s operations in Perth, arranged to fly to Perth. He stated, “I can happily tag along with you.” (CB 138) Seemingly as a result of that inspection, Mr Dickson of Niche entered into email communication with Mr Rowe, seeking details of the Miles Road property. By email of 20 February 2013, he thanked Mr Rowe for his “time showing us around the depots last week. Could you please send me further plans/information you have on the Miles Rd site.” (CB 143) Mr Rowe forwarded detailed information on outgoings. (CB 141-142)
According to Mr Dickson:
“During that inspection we both talked about it was probably the first depot that we had seen we thought we could operate out of together at, you know, a large area of land, a large can step, a fairly large office and warehouse. Bluestar needed more office space than we did. Full drive around facility which means you can drive the truck right around, you don't need to drive in and back out, or vice versa. And yeah, we basically said that was a site that would be of interest and I think we decided to go away and have a bit more of a think about it and reconvene in a couple of days.” (T72, L11-22)
16 Following this inspection, Messrs Dickson and Panagiotou met at Bluestar’s premises in Somerton, Victoria. According to Mr Dickson:
“We talked about that depot and the general state of the market in WA, what other places were available and at the end of the meeting we both concurred that was a site that would be possibly suitable for us to operate out of under a joint operation of some description. We didn't really get into the detail of how that would work, it was more just around whether the site would be feasible or not.” (T72, L30-T73, L6)
17 The meeting occurred, it would seem, on 19 February 2013. (T226, L14-20) Mr Panagiotou gave a somewhat different emphasis to the discussion. According to him, what was discussed was the process of a transition whereby Bluestar would cease to have fixed-cost commitments in Perth and would be represented in Perth by Niche on a fee-for-service basis (T226, L22-T227, L3)
18 On 3 March, Mr Dickson sent Mr Panagiotou a document styled “Options Paper”. His covering email said “See attached summary of potential scenarios and potential savings”. (CB 146-161) This paper summarised the status quo arrangements in Perth for each of Bluestar and Niche as at March 2013, and described three “potential implication scenarios”. The first of those scenarios entailed:
“Bluestar effectively become (sic) a client of Niche. Key changes required would include:
·Bluestar staff become Niche staff (vehicles may also transfer)
·Plan to maintain Bluestar identity, including signage and presentation to clients
·Country deliveries to continue to be charged individually.” (CB 157)
19 Scenario two entailed:
“An open book partnership, managed and controlled by both Niche and Bluestar. Potential structure would include:
·Establishment of a stand alone WA company to manage the entire process
·Niche and Bluestar act as 50/50 shareholders
·Current Niche and Bluestar WA staff rolled into new entity
·New entry to invoice Niche and Bluestar based on formula to be determined.” (CB 158)
20 The third scenario entailed:
“Share facility, with each party continuing to be responsible for own staff and deliveries. Some sharing of vehicles for deliveries would achieve cost savings. General structure would include:
·Staff remain employees of current companies
·Each party has a dedicated section of the facility (warehouse and office)
·Some sharing of common areas to maximise work flow.” (CB 159)
21 Mr Dickson and Mr Panagiotou met in Victoria to discuss the Options Paper on the following day, 5 March 2013. Mr Dickson had emailed Mr Panagiotou on 3 March stating inter alia “I think we should pursue the Miles Rd depot as a matter of urgency if you are keen to proceed”. (CB 162-3)
22 Following further discussions, Mr Rowe of Knight Frank, the leasing agent, reported to Mr Bax of the proposed lessor of the Miles Road property, Perron Group:
“Further to previous email … this party are interested [sic] in making an offer to lease but Niche Logistics will be making the offer exclusively and not Bluestar.
Initially is was proposed that Bluestar or Bluestar/Niche combined would consider the facility …” (CB 164)
23 On 19 March, Mr Dickson emailed Mr Rowe “As discussed yesterday, I have attached an offer to lease for 6 Miles Rd, Kewdale WA for your consideration”. (CB 175) Mr Rowe had previously quoted rental of $650,000 per annum plus GST and outgoings. (CB 177)
24 On 21 March, Mr Dickson sent an email to Mr Panagiotou in which he stated:
“Just wanted to confirm that my conversation with Craig [Rowe] is similar to what he is telling you. We are proposing to commence the lease at Miles Rd on 1 August and Craig has told me that he can get you an extra 1 or 2 months at Fargo Way without a problem to allow us time to transition you over.” (CB 207)
25 On 27 March, Mr Panagiotou emailed Mr Dickson stating “I will let Craig know that we will extend our lease till end of August.” (CB 208)
26 Earlier that day, Mr Dickson had sent an email to Mr Panagiotou which is of major significance in the proceeding and I quote it in full:
“I’ve been waiting for a response from the owners of Miles rd (sic). Craig just emailed me back today saying they wanted a 5 year lease not 3. Other than that there seems to be general agreement on the terms of the lease.
I would prefer 3 years but am reasonably comfortable with 5 years. I wanted to get your thoughts first but only got his email at midnight here and didn’t get a chance to send to you.
I would suggest you ask to extend for 2 months and we will transition you over to miles rd (sic) from 1 August.
Let me know if you are happy with all that and I will respond to Craig and let him know we agree to the 5 year term. If you any (sic) to discuss on the phone first I can give you a call anytime today.” (CB 208-209)
27 Immediately before the email in which Mr Dickson stated that Bluestar would extend its lease until the end of August, Mr Panagiotou sent an email to Mr Dickson “This is okay with me”. (CB 237)
28 The offer letter which Mr Rowe prepared for Mr Dickson’s signature on behalf of Niche included the following paragraph:
“The lessee advises that they may sub-lease a portion of the warehouse to Bluestar Logistics. The lessee advises that this lease is not subject to any sub-lease being agreed with Bluestar Logistics and in any event, the sub-lease shall be approved in writing by the lessor. Any legal costs incurred by the lessor to review any proposed sub-lease shall be paid by Niche Logistics.” (CB 202)
29 Mr Dickson had preferred a three year term but Mr Rowe advised him by email dated 26 March that “unfortunately with the tightness of the leasing market in Perth, and in particular Kewdale/Welshpool, most buildings are commanding 5 year lease terms.” (CB 211)
30 Mr Rowe had sent an email to Mr Dickson at 6.02pm on 27 March 2013 stating:
“I just spoke with michael at Bluestar and they are happy to commit to miles rd with you for 5 years. Michael will be speaking with you shortly to confirm this. (sic)” (CB 224)
31 Negotiation for the lease by Niche proceeded in the course of April 2013.
32 On 9 April, Mr Dickson emailed Mr Panagiotou stating that the terms of the lease had finally been agreed following wrangling over the start date. “Paperwork” would be officially signed “next week but the basics are that we can move in from 1 July and it is for a 5 year term.” (CB 291-2)
33 Mr Panagiotou’s response later the same day was: “We can organise a time next week to fianalize [sic]”. (CB 291)
34 Mr Rowe sent Mr Dickson an amended offer of lease incorporating “the changes as agreed” on 12 April 213. (CB 294) The signed offer was emailed by Mr Dickson to Mr Rowe on 15 April. (CB 293) This document, dated 12 April 2013, included the paragraph already quoted relative to a possible sub-lease to Bluestar. (CB 296-8)
35 The lease itself was negotiated in the period 3 May 2013 to 1 July 2013. It seems that Mr Dickson and Mr Panagiotou met on 13 May to discuss the progress of the lease for Miles Road. (CB 489-90)
36 On 23 May, Mr Dickson emailed Mr Panagiotou advising him that he (Mr Dickson) was still “chasing Craig [Rowe] with a view to finalising the lease”. (CB 569-70)
37 On 29 May 2013, Mr Dickson emailed Mr Panagiotou the latest draft of the lease. He said: “the main issue seems to be in regard to the wording of clause 18” (CB 705) which deals with limitation of lessor’s liability. (CB 741-2)
38 Mr Dickson said he had spoken to Mr LeGuier, Niche’s Western Australian manager, who had asked him “to make a slight change which would mean the total areas would be about 52% BSL and 48% Niche, whereas I was expecting it to be closer to 55%/45%”. He concluded, “the numbers are close enough in our opinion to just leave it as a 50/50 split for payment purposes.” (CB 705)
39 Mr Dickson sent an executed part of the lease to the landlord’s solicitors under cover of email dated 1 July 2013. (CB 880-946) There was, it seems, a problem as to Niche’s execution but the landlord’s solicitors agreed to Niche taking possession on 3 July subject to certain undertakings. (CB 1011-12)
40 Mr Jamie Kane of Bluestar emailed Mr Dickson on 2 July stating: “I was just wondering when we can expect to have access to Miles Rd?” (CB 1014)
41 On 11 July, Mr Dickson of Niche exchanged emailed with Mr Kane of Bluestar as to the size of Bluestar’s sign which was to be put “on the awning”. Mr Kane suggested a 6 metre sign. (CB 1015-16) There had been a previous exchange of emails as to signs to be placed behind reception. (CB 1017-19)
42 Niche then began rendering monthly rental statements for 50 per cent of the rent on the Miles Road premises which Bluestar paid. An example of such an invoice is to be found at Court Book 1044, claiming rental in the sum of $27,083.34 plus GST of $2,708.33, totalling $29,791.67. It is common ground that these invoices were paid by Bluestar.
43 When the three month rent free period for Miles Road was about to expire, Mr Dickson emailed Mr Panagiotou on 14 October 2013 foreshadowing a claim for “some outgoings already that we have been paying” and enquiring:
“Are you available either Friday this week or Monday next week to catch up to a) get an agreement about the lease in writing and b) discuss the process for getting invoices to you for payment (mainly who do you want me to send the invoices to).” (CB 1026-27)
44 It appears a meeting was scheduled between Mr Panagiotou and Mr Dickson on 18 October. (CB 1028)
45 Mr Dickson sent an invoice for outgoings incurred by Niche on the Miles Road property to Mr Panagiotou under cover of an email dated 30 October 2013. (CB 1031-32)
46 Approximately 12 months went by. Mr LeGuier of Niche sent an email to Mr Panagiotou on the subject of “rate percentage discussion”. He said:
“We are currently charging Bluestar 50% of all cost and being as we were looking at the option of possibly taking over the distribution of your WA freight we had left it as is, however we need to revisit it as you are actually occupying 59% of the site so the rate should be charged accordingly.” (CB 1107)
47 Mr Panagiotou responded in an email the same day addressed both to Mr LeGuier and Mr Dickson. To Mr LeGuier, he said that he was in Sydney “this week, will be back next week”. To Mr Dickson, he said “Are you guys still interested in doing our work out of WA, as good timing to start would be in Jan/Feb”. (CB 1107) Mr Dickson responded that he was:
“working on a couple of projects with Rex [Comb] at the moment which is likely to eat up quite a bit of my time over the next few months. Plus our manager in Perth, Wayne, is off to hospital this week for major surgery is not likely to be back before Xmas.” (CB 1109)
48 Mr Panagiotou responded:
“Sounds like a lot on your plate at the moment.
We will wait to when it’s a suitable time and we can catch up for a coffee sometime.” (CB1109)
49 Mr Dickson had said “The most realistic implementation timetable for us would then be somewhere around March-April, assuming the numbers still stacked up”. (Ibid)
50 In March 2014, Mr Wayne Thompson had taken over as Bluestar’s chief operating officer with responsibility for matters such as the Perth depot then devolved upon him rather than where they had previously lain with Mr Panagiotou. (T295, L27 – T296, L6) He had found that Bluestar’s Perth operation was “running at a loss”. (T296, L7-8)
51 In what appears to be a computerised or email exchange between Mr Thompson and Mr Dickson and Mr Panagiotou, a meeting at Bluestar’s premises in Victoria on 13 April 2015 from 3.30 to 4.30pm was appointed. (CB 1118)
52 On 8 April, Mr Panagiotou had emailed Mr Dickson “Can you let me know if you have made a decision to look at the opportunity to be our agent in WA?” (CB 1116)
53 Mr Dickson replied on the same day:
“We have had a good look at it and it is probably not our preferred option right now, but we dont (sic) discount it totally as an option. Can we catch up early next week to talk through some possible scenarios? I have a bit of free time both Monday and Tuesday at this stage.” (CB 1116)
54 In early October, Mr Dickson and Mr Panagiotou were looking to arrange a meeting. In an email of 1 October 215 to Mr Panagiotou, Mr Dickson said:
“As I mentioned on the phone we are keen to discuss a collaboration on the Pacific National side as well as a general discussion around where we are both heading with WA. Rex [Comb] wants to come along with me, so not sure if Wayne [Thompson] wants to be involved as well from your side?” (CB 1121)
55 The meeting seems to have been appointed at 10.00am at Bluestar’s Somerton premises. (CB 1122)
56 On 13 October, Mr Dickson sent an email to Mr Panagiotou and others on the heading “Niche – Bluestar potential”. He referred to:
“definite opportunities linehaul, delivery and the Sydney to Perth market that we should all consider. I will have a document I can circulate later this week with some more details around the possibilities and some indicative numbers in terms of potential benefits.” (CB 1124)
57 A further 12 months seems to have gone by, until Mr Dickson, Mr Panagiotou and Mr Bott attended a meeting at Bluestar in Victoria. Mr Bott provided a summary of the matters discussed. (CB 1126-7)
58 Following the Christmas/New Year break, Mr Panagiotou sent an email to Mr Dickson stating that he just wanted to “organize a suitable time with you to discuss WA future”. (CB 1128-9)
59 Following an exchange of emails, the meeting was arranged. It took place on 18 February 2016 and was attended by Mr Dickson, Mr Panagiotou and Mr Bott. (CB 1128-9)
60 On 22 April 2016, Mr Panagiotou rang Mr Dickson and informed him that Bluestar intended to vacate the Miles Road premises by July 2016. (T94, L1-5)
61 According to Mr Dickson, Mr Panagiotou said that Bluestar required more space, referring to “a couple of large customers who wanted Bluestar to do their warehousing in WA for them” but that the Miles Road premises were not satisfactory and “that the customers were essentially threatening to … pull all of their work off Bluestar if they didn’t take on the WA warehousing component and as such he had no choice but to move to another facility.” (Ibid, L6-16)
62 According to Mr Dickson, Mr Panagiotou assured him that Bluestar would not “leave us in the lurch” and would try to assist Niche. (Ibid, L20-22)
63 Mr Dickson said “I remember thinking
“I remember thinking afterwards that after the phone conversation, that I had the impression he was essentially trying to say well, it's Niche's problem now but we will do what we can to help you, but it is your problem, what happens with the rest of the lease.” (Ibid, L24-30)
64 Mr Panagiotou “also talked about the current facility [not being] suitable for those customers, they weren’t happy, it was too old and dirty I guess, for want of a better description”. (T95, L11-13)
65 Mr Dickson sent an email to Mr Panagiotou on 26 April 2016 stating that he had “spent a lot of time over the weekend thinking about options for the current lease in WA, and also our mutual obligations in regard to that lease”. (CB 1130) He said:
Niche cannot carry the financial burden of the entire lease for Miles Rd for the next 2 years. The lease at Miles Rd was only taken on the basis of a 50/50 split of the lease between Niche and Bluestar for a 5 year term.” (Ibid)
66 He said it was an error on his behalf to have failed to have a “written sub-lease documented in the time since the lease was signed”. (CB 1131) Nevertheless, he said everybody was:
“aware that a clear and deliberate agreement was made between Niche and Bluestar to take on a joint lease for a period of 5 years. The lease for Miles Rd would never have been signed without the verbal [scil oral] and written (email) commitment from Bluestar to all the terms and conditions, specifically including the length of the lease.” (Ibid)
67 He said that in his view the “correct expectation is that Bluestar is responsible for ensuring their 50% share is paid for the remaining duration of the lease”. (Ibid) He suggested a meeting. (Ibid)
68 The meeting took place by way of a phone hook-up. The call was said to be between “Rex [Comb], Jimmy [Dickson], Wayne [Thompson] and Michael [Panagiotou]”. According to Mr Dickson’s account “Rex noted that in our opinion Bluestar and Niche have a clear contract that still has approx. 2 years to run”. He again asked if anybody truly disputed this.
69 According to Mr Dickson’s written summary “Wayne and Michael did not (could not?) refute this”.
70 According to Mr Dickson’s viva voce evidence.
“Michael said words to the effect that he understood my point but he was between a rock and a hard place and there was nothing else he could do. He said it wouldn't have mattered if we had a sublease signed because that wasn't the issue, the issue was purely financial, they had to do this or they were going to lose their business. They would lose two major customers if they walked away, that would ruin their whole business, and then he went on to claim they were under extreme financial pressure. They had been selling some of their trucks to pay bills. He talked about the fact that even at this new facility they were going to have to get a new IT system warehousing system, and that they didn't know how they were going to pay for that. The banks wouldn't lend them any more money and yeah, his summary I guess was he understood and agreed with everything I said, but he had no option but to do what he was doing.” (T97, L21 – T98, L7)
71 I asked him if, on his account, Mr Panagiotou was saying in effect “it doesn’t matter what the deal was, it doesn’t matter whether it was in writing or not, we can’t go on with this, we have to leave?” Mr Dickson said “Correct”. (T98, L8-12)
72 These elaborations do not appear in the written summary.
73 Mr Thompson said that he and Mr Panagiotou were not forthcoming in taking up Mr Comb’s challenge to deny that there had been an enforceable agreement obliging Bluestar to stay as sub-tenant for five years. Mr Thompson said “I felt the email on the 22nd was a fairly well crafted email so I understood that this obviously was going down a legal course.” (T304, L222-25)
74 He and Mr Panagiotou decided to say as little as possible to avoid being verballed. (Ibid, L29)
75 Mr Panagiotou denied a number of the things that were attributed to him in his telephone conversation with Mr Dickson on 22 April. He denied saying that Bluestar was under extreme financial pressure based on its obligation to obtain a new IT system. He denied that Bluestar was obliged to sell trucks to pay its bills and denied that it had exhausted its lines of credit with the banks. (T283-4)
76 Following the telephone hook-up meeting, Mr Thompson sent an email dated 5 May to Mr Dickson stating:
“As per our previous discussions and the advice that we provided to Jim earlier this year, Bluestar Global Logistics will be exiting the current premises at 6 Miles Road, Kewdale on the 1st July 2016. Bluestar Global Logistics has previously advised Niche over a period of 2 years that;
1. We have been considering for some time to not maintain a physical presence in Perth
2. That the facilities were not suitable for our needs if we remained in Perth
3. That we have had several concerns regarding the condition and maintenance of the site
4. And more recently that our current and potential new clients did not consider the current site to be ‘Fit for Purpose’ and was not acceptable for their business
For Bluestar Global Logistics to remain viable within Western Australia and to ensure that we secure the long term partnerships with a number of clients which will have a direct influence on our business nationally, we have had to seek another facility that meets the requirements of our customers’ expectations and the needs of Bluestar Global Logistics. We will begin to relocate our operations through June 2016 and therefore our last day of occupancy will be Sunday 3rd July 2016.” (CB 1139)
77 Mr Dickson sent an email dated 13 May 2016 to Mr Panagiotou and Mr Thompson making denials about “ongoing issues with leaks in the roof”, saying that Mr LeGuier felt that “by and large the real estate agent managing the property had responded to all concerns”. As to complaints about the suitability of the site and dustiness, according to Mr Dickson:
“The landlord said he was unaware of any significant issue that had not been resolved but if some still existed he would obviously take steps to fix them as necessary”. (CB 1141)
78 Mr Dickson gave Bluestar to understand that Niche would continue to invoice Bluestar for 50 per cent of the rent and outgoings rather than the 59 per cent which represented Bluestar’s actual occupancy. (CB 1141-42)
79 Bluestar vacated the premises in accordance with Mr Thompson’s advice by an email dated 30 August 2016 addressed to Messrs Thompson and Panagiotou. Mr Dickson forwarded the original “discussion paper”, that is the one headed “Options Paper”, together with:
“multiple other emails that detail the progress from this point through to the decision to jointly lease a facility. Most are largely self explanatory but I will add some context where it helps”. (CB 1152-3, 1154-68)
80 From June to November 2015, Niche sought to sub-lease the part of the Miles Road premises formerly occupied by Bluestar and entered into a sub-lease arrangement with Sands Fridge Lines Pty Ltd for the occupancy of 62.5 per cent of the premises by Sands, receiving payments accordingly. (CB 1407)
This proceeding
81 Solicitors acting for Niche filed a writ commencing this proceeding on 13 October 2016. By its original Statement of Claim, Niche alleged that it and Bluestar agreed that Niche would enter into a lease of the property at 6 Miles Road, Kewdale in Western Australia, and grant Bluestar a sub-lease of 50 per cent of the premises for a period of five years, commencing 1 July 2013, with Bluestar paying 50 per cent of all rent and outgoings incurred by Niche. Further, according to Niche, Bluestar represented to it that Bluestar would occupy 50 per cent of the premises for the whole term of the lease and pay Niche 50 per cent of all rent and outgoings incurred by Niche under the lease for the whole of the term of the lease, and, in reliance upon that representation, Niche executed the lease of the premises “and became bound by its terms”. Bluestar and Niche occupied approximately 50 per cent of the Miles Road premises between July 2013 and June 2016, but, as from 1 July 2016, Bluestar vacated the premises “and has thereafter refused to pay the invoices rendered by Niche Logistics for sums due under the sub-lease agreement.” The representations were said to have been made in trade and commerce and were misleading or deceptive because Bluestar did not occupy 50 per cent of the premises for the whole lease term or pay 50 per cent of rent and outgoings incurred by Niche for the whole of the term of the lease. Accordingly, it was said that Bluestar engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, thereby contravening s18 of the Australian Consumer Law.
82 Alternatively, it was said that these were representations with respect to future matters as to which Bluestar had no reasonable grounds for making the representation and thereby engaged in misleading or deceptive conduct contrary to s18. It was said that if the representations had not been made, Bluestar would not have vacated its former premises and would not have incurred the liabilities for rent and outgoings under the lease of the Miles Road property. Rather, it would have obtained alternative premises between 3,000 and 4,000 square metres, which was said to be appropriate alternative premises. As a result, Niche had incurred loss and damages.
83 Further, according to Niche, Bluestar, in making the sub-lease agreement, making representations and encouraging Niche to enter into the lease, led to Niche and Global agreeing to assumed facts that Bluestar had agreed to share the occupation of the premises, meeting 50 per cent of the rent and outgoings for the whole term of the lease, and that Bluestar had agreed to be bound by the terms of the sub-lease agreement. According to Niche, by its conduct, Bluestar induced Niche to assume the truth of those “assumed facts”, in reliance upon which Niche vacated its former premises, executed the lease, incurred the liabilities and did not take steps to secure a lease of alternative smaller premises. It was said Niche did all this, as Bluestar intended it to do, which it would not have done but for these inducements. Niche, it was said, had suffered loss and damage as a result, so that it “would be unfair and/or unjust for Bluestar … to resile from the Assumption.” It was said further that, by reason of these matters, Bluestar was estopped from denying the assumption “with the result that Bluestar … is liable to contribute 50 per cent of the rent and outgoings payable by Niche Logistics under the lease for the whole of its terms by operation of the doctrine expressed in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387”. Therefore, Niche was entitled to equitable compensation.
84 Niche sought damages under s236 of the Australian Consumer Law: “a declaration that Bluestar … is estopped from denying the Assumption”, and that it was “liable to contribute 50 per cent of the rent and outgoings payable by Niche … under the lease for the whole of its term”, equitable compensation, interest and costs.
85 Following discussions during final submissions, Niche was granted leave to amend its Statement of Claim, principally to rework its claim based on misleading or deceptive conduct. Aside from certain minor changes and links to amended additional particulars of loss and damage, and certain expert reports, the significant amendment was to add what was described as an “alternative misrepresentation case”. By this additional cause of action, Niche alleged that “at about the time of their entry into the sub-lease agreement”, Bluestar represented to Niche that if Niche entered into the lease, Bluestar “presently and unconditionally intended to” —
(a)occupy 50 per cent of the premises for the whole of the term of the lease;
(b)pay to Niche 50 per cent of all rent and outgoings incurred by Niche under the lease for the whole term of the lease; and
(c)enter into a sub-lease with Niche for a period equivalent to the term of the lease.
86 This was said to be a “present intention representation”. This representation was said not to have been withdrawn or modified until Niche entered into the lease and undertook the obligation, and was therefore a continuing representation in reliance upon which Niche entered into the five-year lease for the Miles Street premises. That representation was said to have been made in trade and commerce and to be misleading or deceptive in that, at the time the parties entered into the sub-lease agreement up until the time Niche entered into the lease, Bluestar did not then presently and unconditionally intend to occupy 50 per cent of the premises for the whole of the term, paying Niche 50 per cent of all rent and outgoings incurred, or enter into a sub-lease with Niche for a period equivalent to the term of the lease. These matters were said to have constituted breaches of s18 of the Australian Consumer Law, leading Niche to suffer loss and damage because, absent those matters, it would not have vacated its former premises, would not have executed the lease, would not have incurred liability under it and would have obtained appropriate alternative premises.
87 In its defence, Bluestar referred to the three options contained in the Options Paper under discussion in February 2013, stating that the option providing for sharing by the parties of a depot in Perth “was never expanded upon in respect of the leasing of the premises and obligations of the parties”. It said that Niche entered into the lease of the premises “of their own accord and without any agreement as to the particulars of the sub-lease with [Bluestar] (either in writing or otherwise)” and Bluestar “did not agree or commit to a period of time or length of occupation of the premises”. Accordingly, its occupancy was a tenancy at will. No agreement was ever reached as to the adoption of any of the options in the Options Paper. Accordingly, Bluestar’s occupancy of the Miles Road premises “was subject to a formal agreement … which did not occur” and “consequently [Bluestar] was occupying the Premises at all times pursuant to a tenancy at will”.
88 Further, Bluestar referred to s33 of the Western Australian Property Law Act 1969, which “renders leases of land void for the purpose of creating a legal estate unless made by deed”. As to the representations alleged, it said that they were not made by Bluestar in the terms pleaded “or at all”. Bluestar admitted that it refused to pay invoices rendered to it after it vacated the Miles Road premises and said it was entitled to do so following the termination of the tenancy at will.
89 As a result, of the leave granted during final addresses for the plaintiff to reformulate its case under the Australian Consumer Law, the defendant sought and obtained leave to reopen its case and call further evidence. Brief evidence was heard from Mr Eideh, who is the chief executive and majority shareholder of the defendant, Bluestar, and the defendant’s chief operating officer, Mr W K Thompson.
90 As majority shareholder, Mr Eideh had the final say on all matters. (2ndT111, L7-14, 18-23) Mr Eideh seems not to have been involved in the negotiations with the plaintiff at all. He had never seen the Miles Road premises and could not remember their exact address. (2ndT116, L11-15) As Mr Eideh saw it, Bluestar’s move to the Miles Road premises, sharing with Niche, was undertaken on “a handshake deal to go in on the basis that they’re going to subcontract our work.” (2ndT117, L9-11) Mr Eideh was seeking an arrangement, at least initially, whereby under a sub-contracting arrangement, Niche would provide the services which Bluestar required, in servicing national clients, to provide in Perth, and to relieve Bluestar of the burden of providing premises and personnel and an administrative structure. (2ndT115, L18-T116, L10) Again, as Mr Eideh saw it, Bluestar at no stage was committed to remain sharing the premises at Miles Road with Niche for the full term of the lease which Niche had entered into. (2ndT118, L6-10)
91 Relocation costs had been incurred in the order of $100,000 in Bluestar’s move to the Miles Road premises. A relocation from those premises necessarily incurred costs of at least that much, and perhaps more. (2ndT113, L9-14) Mr Eideh saw Bluestar as having a number of options when negotiations for a sub-contracting arrangement with Niche broke down. They could have negotiated with another potential sub-contractor, Bluestar could have remained at the Miles Road premises for the entire five-year term to which Niche had committed itself, or moved to another site. (2ndT111, L27-T112, L19)
92 Mr Thompson’s supplementary evidence was that the catalyst leading to Bluestar’s move out of the Miles Road premises was its acquisition as a national client of Baby Bunting which, it will be recalled, apparently regarded the Miles Road premises as an unsatisfactory depot for its logistics in Western Australia. Baby Bunting had not been a customer of Bluestar when it commenced the premises-sharing arrangement with Niche. (2ndT121, L8-16) Mr Thompson gave similar evidence as to the variety of options which presented themselves to Bluestar at that time. (2ndT121, L17-2ndT122, L17) Mr Thompson said that he would not feel that Bluestar was under an obligation to remain for the balance of the lease term on the Miles Road premises. (2ndT124, L11-13)
Plaintiff’s contentions as to misleading or deceptive conduct
93 Mr Hay, on behalf of the plaintiff, said that his client’s claim —
“… has not been pleaded in a way such as to require us even though we could, … establish a contract, but we don’t need to establish a contract. What we need to establish is representation … the relevant operative part of the pleading so far as the misrepresentation case is concerned appears at paragraph 4.” (2ndT357, L28-T358, L7)
He said his client’s case “relies on the same matters that would also establish a contract, but it is the representations that are relevant”. (2ndT358, L15-17) I take these statements to mean that the plaintiff makes no claim in contract, so I put that to one side.
94 According to Mr Hay, “the story [plaintiff’s witness] Mr Dickson has told is inherently consistent.” (2ndT358, L22-23) He urged me to accept his evidence. He submitted that Mr Dickson’s account should be accepted in preference to the account given by Mr Panagiotou. Mr Hay said it was inherently unlikely that Bluestar would “move in willingly on a periodic basis or a tenancy at will basis when they could be removed at any time under that arrangement”. (2ndT363, L14‑16) He said that in the correspondence at the time of Bluestar’s vacating the premises, it did not assert there, or in the telephone conversation on 29 April 2016, that Bluestar was in occupancy only as a periodic tenant or a tenant at will. (2ndT364, L27-T365, L2)
95 Mr Hay said that, insofar as Mr Panagiotou suggested that there had been a final commitment by the parties to Option 1, as described in the Options Paper, this evidence should not be accepted because it was inconsistent with the evidence of other witnesses. (2ndT366, L13-20) According to Mr Hay, “given…the cogency of Mr Dickson’s evidence…if the court finds that the representations [as alleged by him] were made, it should have no difficulty in finding they were relied upon in order to execute the lease.” (2ndT368, L19-20, L29-T369, L1) Insofar as Niche failed to make its offer to lease the premises conditional upon the support and involvement of Bluestar, Mr Hay conceded that this was the result of a failure on Niche’s part properly to document matters and thereby protect its own interests. (2ndT370)
96 I raised with counsel the possibility that the plaintiff’s entire case as to misleading or deceptive conduct necessarily referred to future matters rather than alleged present existing facts, and that if there were reasonable grounds for the making of any representations as to the future when they were made, the fact that subsequent events, or even a change of heart on the part of the representor supervened later, would not in itself render the conduct or representations misleading or deceptive, and therefore actionable under the Australian Consumer Law. It was in response to those comments that counsel for the plaintiff sought and obtained, over the opposition of Mr Hopper on behalf of the defendant, leave to further amend the plaintiff’s claim so as to allege misleading or deceptive conduct as to a present existing fact, namely the intention of Bluestar at the time that it was negotiating prior to Niche’s entry into the lease of the Miles Road property. The amendments were to the effect summarised above.
97 Mr Hay referred to the judgment of Ormiston J, as he then was, in Futuretronics International Pty Ltd v Gadzhis [1992] 2 VR 217, 239, where his Honour said:
“It would seem on the authorities that, at the least, a contractual promise would amount to an implied representation that the promisor then had an intention to carry out that promise. If it can be shown that he had no such intention he would be guilty of misleading or deceptive conduct.”
98 Following the receipt of supplementary evidence on behalf of the defendant, Mr Hay contended that the cause of action asserted, based upon an alleged misrepresentation of a present existing fact, namely, Bluestar’s intention at the relevant time, had been made out. He said that Mr Eideh, who was Bluestar’s controlling mind, said that “Bluestar, never intended unconditionally to be there for the full term of the lease”. (2ndT180, L21-23) Implicitly, Mr Hay was asserting that Bluestar’s conduct was entirely inconsistent with that state of mind held by its controller and was therefore misleading or deceptive.
99 Insofar as Niche’s claim as to misleading or deceptive conduct was based on representations as to future matters, Mr Hay submitted that s4(4) of the Australian Consumer Law significantly varied the effect of this cause of action from the one created by the now repealed s51A of the Trade Practices Act 1974. (2ndT159, L10-22) Mr Hay said that he was unaware of any judicial authority as to the meaning of sub-s(4). The existence of reasonable grounds for the making of the representations as to future matters was relevant as to whether the representation was misleading or deceptive, but not conclusive. (2ndT160-1) According to Mr Hay, to make that determination, “One would take into account both what was known at the time and what occurred in fact and weigh both of those things up and say in all the circumstances, is it misleading? So that is to say you can take into account what has occurred, in my respectful submission.” (2ndT161, L25-29) Even if reasonable grounds existed for what was being represented in the future, the question remains, “is that conduct misleading even though there were reasonable grounds?” (2ndT162, L4-6) The change in the law worked by s4(4) of the Australian Consumer Law had been “beneficial for the plaintiff’s case”, according to Mr Hay. (2ndT163, L7) Mr Hay said that Bluestar’s action in going into possession as it did was supportive of the plaintiff’s account of events. He continued, “There was a rent-free period. I think it was about six months or so. And it wasn’t until that period had expired that Niche started to issue invoices to Bluestar who then starting (sic) paying.” (2ndT163, L19-22) He continued, “that very aspect alone is completely inconsistent … with a month-to-month tenancy and is completely consistent with the sub-lease agreement which, as your Honour knows, hinges on the principal lease.” (Ibid L24-28)
Defendant’s contentions as to misleading or deceptive conduct
100 In his closing submissions, Mr Hopper submitted that there was “no agreement for a five year sub-lease”. As the passages from Mr Hay’s closing address, commenced after Mr Hopper, indicate, the plaintiff either did not mount a contractual claim or if, as I am inclined to think, its true construction of the Statement of Claim included such, abandoned it. Nevertheless, the matters urged by Mr Hopper as to what he perceived as an allegation of contract by the plaintiff are nevertheless material on the question as to whether Bluestar, in fact, engaged in the misleading or deceptive conduct alleged against it by Niche.
101 According to Mr Hopper, the key emails were to be found at CB 266-265 [presumably rendered this way because emails when printed appear in the reverse order to their transmission], together with CB 237 and 208. Upon analysis, he said these email exchanges demonstrate:
“Athe discussion of the five year term is referrable to Mr Dickson and Niche;
Bthe discussion of the start date is referrable to Bluestar; and
Cconsequently, when the email calls for a response, it calls for a response on the start date, rather than the five year term.”
He said further that it was evident to Mr Dickson that Mr Panagiotou was concerned with the start and not the end date “of Bluestar’s sub-lease”. He said a consideration of Mr Dickson’s email at CB 225 showed that:
“(i)he was aware that Bluestar’s primary concern was that it was not left `homeless’ if it did not extend its then current lease;
(ii)the five year term in that email is referrable to Niche, not to Bluestar;
(iii)the only conditions that he [viz Mr Dickson] places on the five year term are by reference to rent, not by reference to Bluestar; and
(iv)Mr Dickson instructs Mr Rowe to put his acceptance of the five year term to the landlord without qualifying it by reference to Bluestar.”
102 According to Mr Hopper, Niche was aware that Bluestar “was looking to exit Perth and move from a fixed cost to a variable cost model. That would necessarily involve using an agent or sub-contractor in Perth”. He noted that discussions along these lines had been “on foot since 2012”. He referred to CB 58-59 and 146-147. He noted that Mr Dickson prepared Option 1 of the provision paper “to pitch for that very work. Committing Bluestar to a five year sub-lease was not consistent with a move from a fixed cost to a variable cost model;”
103 Mr Hopper conceded that an email from Mr Rowe on 27 March 2013 at CB 270‑271 recorded reference to Bluestar taking a five year lease. He said, however, that Mr Dickson placed no reliance on this. He referred to T86, L7‑10. He noted that Mr Rowe had only a very limited memory of these matters. He referred to paragraphs 16 and 34 of Mr Rowe’s statement (Exhibit A; T206, L11-13) and that he, Mr Rowe, was not aware of the arrangements between Niche and Bluestar. He referred to paragraph 34 of Mr Rowe’s statement and T208, L23. Therefore, said Mr Hopper, “He [viz Mr Rowe] could easily have been mistaken at the time and the Court should make no conclusions based on that email.”
104 Mr Hopper said that no binding agreement was made to follow either Option 1 or Option 3. He noted that Option 1 was still being discussed in 2014 and 2015, and he referred to CB 1107-6, 1116, 1113 and 1127. Mr Hopper said Mr Panagiotou’s evidence should be read as meaning that there had been an agreement on Option 1 in principle, but not one which was legally enforceable. In any event, said Mr Hopper, the Court ought not be satisfied that Niche relied on an agreement, even if one were found to exist. He said the letter of offer in its various forms referred only to the possibility of a sub-lease. (CB 297) That portion was left unchanged until the final version of the letter of offer to be found at CB 342. He noted that the lease made no reference to a sub-lease to Bluestar and, in any event, it contained a standard prohibition on sub-leasing, subject to an unfettered consent of the landlord. He referred to CB 402, and the final version at CB 988.
105 This situation remained, despite detailed reviews of the lease drafts by Mr Dickson and Niche’s legal advisers. He referred to CB 426, 487, 491, 495, 500-501, 561, 640 and 705. Evidence of any oral consent from the landlord, according to Mr Hopper, was “not to the point”. The situation of any sub-lease was left uncertain. Had Niche relied on Bluestar’s involvement for the full term, “it would have insisted on this being recorded in the lease documents so that the landlord could not cause problems at a later stage. The absence of that reference is consistent with the defendant’s case that negotiations were not concluded either way.”
106 Further, according to Mr Hopper, the structure of the leasing arrangements, as alleged by Niche, did not make sense. He said there was —
“… no obvious reason why Niche would have taken the risk of the full head lease term with Bluestar as a sub-tenant. Mr Dickson had no real explanation for it. Mr Rowe gives evidence that he was surprised by that structure (see Rowe’s statement at paragraph 34). The plaintiff’s particulars suggest that any other arrangement was ‘too complex’ … it is not clear why any other arrangement was too complex on the plaintiff’s case. The simplest explanation is that Niche wanted to make it easier to take over Bluestar’s operations and occupy the whole site.”
According to Mr Hopper, this was consistent with the tightness of the Perth market for such properties (he referred to CB 272), the rapid expansion of Niche (he referred to CB 189 and 195) and that Niche had proposed Option 1 and was tendering for Bluestar’s work. (CB 59) He noted that those negotiations were continuing. Mr Hopper said the first assertion by Niche that a five year sub-lease had been agreed upon was to be found at CB 1130, dated 26 April 2016, after Bluestar had stated its intention of vacating. (CB 1131)
Misleading or deceptive conduct – legal considerations
107 The provisions in the Australian Consumer Law derive from what were ss51A and 52 of the Trade Practices Act 1974, now repealed. At its initial enactment, the Trade Practices Act, as to misleading or deceptive conduct, contained only s52. The Australian Consumer Law provides that where a claimant has suffered loss and damage because of conduct by another in contravention inter alia of Chapter 2, including s18, “the claimant may recover the amount of the loss or damage by action against that person, or against any person involved in the contravention.”
108 Section 18 of the Australian Consumer Law (which is Schedule 2 to the Competition and Consumer Act 2010 of the Commonwealth of Australia) 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.
(2) Nothing in Part 3-1 (which is about unfair practices) limits by implication subsection (1).”
This section must be read with s4 of the law, which deals specifically with misleading or deceptive representations with respect to future matters in the following terms:
“Section 4 - Misleading representations with respect to future matters
(1)If:
(a) a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act); and
(b) the person does not have reasonable grounds for making the representation;
the representation is taken, for the purposes of this Schedule, to be misleading.
(2)For the purposes of applying subsection (1) in relation to a proceeding concerning a representation made with respect to a future matter by:
(a) a party to the proceeding; or
(b) any other person;
the party or other person is taken not to have had reasonable grounds for making the representation, unless evidence is adduced to the contrary.
(3)To avoid doubt, subsection (2) does not:
(a) have the effect that, merely because such evidence to the contrary is adduced, the person who made the representation is taken to have had reasonable grounds for making the representation; or
(b) have the effect of placing on any person an onus of proving that the person who made the representation had reasonable grounds for making the representation.
(4)Subsection (1) does not limit by implication the meaning of a reference in this Schedule to:
(a) a misleading representation; or
(b) a representation that is misleading in a material particular; or
(c) conduct that is misleading or is likely or liable to mislead; and, in particular, does not imply that a representation that a person makes with respect to any future matter is not misleading merely because the person has reasonable grounds for making the representation.”
109 In 1983, Lockhart J of the Federal Court of Australia heard a claim by Bill Acceptance Corporation Ltd v GWA Ltd (1983) 50 ALR 242 for damages under s82 of the 1974 Act (the equivalent of s236 of the law). This part of the plaintiff’s claim was based on an allegation that the defendant had breached s52 of the Act by representing that it did pay a procuration fee to the plaintiff if the plaintiff was able to facilitate the disposal of certain shares held by the defendant. Bill Acceptance Corporation said it had in fact facilitated the disposal of the shares, but GWA Ltd had refused to pay Bill Acceptance Corporation Ltd. His Honour ordered that the Statement of Claim be struck out:
“The mere fact that representations as to future conduct or events did not come to pass does not make them misleading or deceptive, notwithstanding that the applicant has relied on them and has altered his position on the faith of them. Although reference may be made to later events, whether statements or representations of this type are misleading or deceptive must be determined as at the time they were made.” (1983) 50 ALR 242, 250
110 The reference by his Honour to the formulation by Fitzgerald J in Stack’s case is to a judgment of Fitzgerald J in LE Stack v Coast Securities No 9 Pty Ltd (1983) 46 ALR 451, 456, where his Honour said:
“It would be appropriate at this interlocutory stage, and not inconsistent with any submission made before me on behalf of either applicants or respondent, for me to act upon a view which has been consistently adopted by a number of judges of this court that, irrespective of whether representations as to future events or conduct constitute promises or predictions, they involve contraventions of the presently relevant provisions of the Act only if it is established that the belief of the respondent was at the time different from what was stated, or that the respondent did not believe what was stated, or was recklessly indifferent as to what was stated. Accordingly, an issue as to the respondent's state of mind at the relevant time is, in fact, central to these proceedings as it was to the proceedings …”
111 It will be seen that the statement of principle by Fitzgerald J, approved by Lockhart J in the Bill Acceptance case, is to the same effect as the passage quoted by Mr Hay and relied upon by him from the judgment of Ormiston J in the Futuretronics case. The result was that under the Trade Practices Act in its original form, no misleading or deceptive conduct as to representations relative to future matters could be established unless it was proven that what was said entailed a misstatement of the representor’s state of mind. Following these decisions of the Federal Court, the Commonwealth Parliament enacted what became s51A of the Trade Practices Act. That section, which was included under the heading “Interpretation”, inserted by the Trade Practices Revision Act 1986, was in generally the same terms as s4 of the Australian Consumer Law, save that it did not include sub-s(4).
112 Following this enactment, a considerable jurisprudence developed as to what, in the form of representations as to the future, constituted misleading or deceptive conduct for the purposes of the Trade Practices Act. Sub-s(2) of s51A was significant as to its effect on evidentiary burdens. In Lyndel Nominees Pty Ltd v Mobil Oil Australia Ltd (1997) 37 IPR 599, a Mobil executive made a speech at a conference, stating that franchisees who reached a certain performance level would have their franchises automatically extended. Franchisees who did not obtain automatic extensions took legal proceedings alleging that the statement was misleading or deceptive. The proceeding failed, with the Court finding that there were reasonable grounds for the making of the statement at the time when it was made, though circumstances and policies had changed thereafter.
113 In light of the amendment to the law of misleading or deceptive conduct resulting from the insertion of sub-s(4) in the present Australian Consumer Law, a similar result would not appear to follow under the present statutory provisions in the Australian Consumer Law. This potentially crucial change in the law on this subject was considered by Graham S Clarke QC in an article entitled “Misleading or Deceptive Conduct Cases in the Supreme Court of Victoria” (2015) 89 ALJ 397, 404. Mr Clarke’s analysis on this point is relatively elaborate. To avoid inaccuracy or any failure to do justice to his argument, I have abstained from any attempt to summarise it and set it out in full:
“Section 4(1) and (2) of the Australian Consumer Law in substance re-enacted s 51A(1) and (2) of the earlier TPA. The new s 4(3) goes on, unnecessarily but perhaps helpfully, to provide in effect that where the defendant goes into evidence as to what its reasonable grounds were, then that does not mean that the defendant wins, or that the plaintiff is excused from proving its case. Section 4(4) also goes on to provide that s 4(1), in deeming a representation as to future matters to be misleading if the defendant does not have reasonable grounds therefor, "does not imply that a representation that a person makes with respect to any future matter is not misleading merely because the person has reasonable grounds for making the representation" (emphases added). What s 4(4) seems to say then is that a future matters representation may be misleading, even if the maker had reasonable grounds for making it. [40] If so, then that sits oddly with s 4(1). If there are reasonable grounds then the deeming effect of s 4(1) will not apply and, I suggest, the future matters representation will not be misleading. If a future matters representation made on reasonable grounds can be misleading notwithstanding the existence of such grounds, it is difficult to identify from s 4(1) in what circumstances that could be so, or why.
The answer to all this perhaps emerges from the Explanatory Memorandum:
In certain cases, Section 51A of the Act was interpreted in such a way to, by implication, provide that proving reasonable grounds is a substantive defence to an allegation of misleading conduct [citing Quinlivan v Australian Competition and Consumer Commission]. To reverse the effect of such decisions, section 4 of the ACL states explicitly that it does not imply that a representation as to a future matter is not misleading merely because the person had reasonable grounds for making the representation.
Quinlivan v ACCCconcerned an enforcement proceeding against a director of a company where accessorial liability under ss 75B(1) and 80(1) of the TPA was established at trial in relation to a future matters misrepresentation by the company. The Full Court of the Federal Court over-turned the decision of the trial judge and held that there was insufficient evidence that the director knew that the third party-sourced figures used were other than a reasonable basis for the representation as to future property growth rates. There were three strands to the court's reasoning. First, the s 51A deeming provisions did not mean that actual knowledge of the essential elements of the contravention by the company was not necessary for the purposes of ss 75B(1) and 80(1). Secondly, the s 51A(2) "reversal of onus" did not apply in respect of accessorial liability. Thirdly, it was implicit in s 51A(1) that where a corporation did have reasonable grounds for making a future matters representation, then there will have been no misleading or deceptive conduct by it. Hence, if the company was not liable, then there was no contravening conduct in respect of which a director could have been an accessory.
We know clearly enough from s 4(3) that under ss 4(1) and 4(2), there is no reversal of the legal onus of proof onto the defendant. Consistently with that, the legislature seems to have intended by s 4(4) to provide that if the defendant did not know that the future matters representation lacked a reasonable basis, or believed that the representation was reasonably based, and hence had "reasonable grounds for making the representation", then that does not mean that the plaintiff would fail in establishing that the defendant had engaged in misleading or deceptive conduct where the plaintiff proves that, objectively considered, the representation did lack reasonable grounds. Such an understanding of s 4(4) is consistent with the apparent legislative intent to reverse Quinlivan. If the future matters representation lacked reasonable grounds, but the defendant did not know that, or that the grounds for the representation were not reasonable ones, then s 4(1) still operates to deem the representation to be misleading. The deeming effect of s 4(1) concerns the reasonableness of the grounds for the representation, objectively ascertained, not whether the defendant knew or believed that the grounds were reasonable. I suggest that the legislature by s 4(1) did not intend, because of s 4(4), to introduce a new species of deemed misleading future matters representations where the representations were based on reasonable grounds, but on some basis other than where there were no reasonable grounds.”
114 Mr Hay submitted that following the enactment of s4(4) of the Australian Consumer Law, it was insufficient for a defendant to escape liability merely to show that he had reasonable grounds for the relevant representation as to future matters. Once the establishment of reasonable grounds was removed as an absolute defence, it was a matter of considering upon the whole of the evidence and circumstances whether the relevant representation was misleading or deceptive. As a piece of textual interpretation, this seems a satisfactory outcome. However, when one comes to attempt to apply this interpretation in practice, it will be seen to be problematic.
115 In the case of representations as to present existing fact, to test whether they are misleading or deceptive, one simply compares what is represented as to present fact against the reality. It is any discrepancy between the two things that can establish a misleading or deceptive character. Where one is dealing with future matters, the same simple analysis cannot be applied. A simple test would be to compare the prediction of the future with what in fact thereafter occurred. The result of such a test, however, would be to render mere statements and representations not intended by either representor or representee as having contractual force to be as effectual as contractual warranties. This would be a most fundamental change to the law of obligations in Australia. It is difficult to see that the addition of s4(4) to the Australian Consumer Law, which seems to have been described in the explanatory memorandum as merely a piece of tidying up in the drafting, was intended to have such tectonic consequences. Mr Hay disclaimed any support for such a wide interpretation. If one is not to regard a representation as to the future as misleading or deceptive simply because it does not eventuate in fact, by what criterion can one determine whether it is “misleading or deceptive” or not? As Lockhart J said in the Bill Acceptance Corporation, any alleged misleading or deceptive conduct in such a situation would retain the same character throughout. The only variable would be its non-fulfilment in fact. Where the representation is as to the representor’s future conduct, that representation will be misleading or deceptive as to present existing facts if the representor does not at the time intend to do what he represents he will do in the future. Section 4 of the Australian Consumer Law does not have to be resorted to at all to resolve the character of such a representation. The representation is as to a present, not a future matter. It only becomes relevant where this analysis cannot be applied.
116 If we attempt to adopt the analysis advocated by Mr Clarke QC so that sub-s(4) would operate to render what under s51A would not have been regarded as misleading or deceptive only:
“If the future matters representation lacked reasonable grounds, but the defendant did not know that, or that the grounds for the representation were not reasonable ones …” (2015) 89 ALJ 397, 404
the outcome seems problematic.
117 Despite Mr Clarke’s analysis, it is difficult to find a foothold in the text of s4(4) which would give it this more limited operation. The unhappy result seems to be that one is left to consider whether representations as to the future are misleading without any clear principle that the existence of reasonable grounds for their making excludes that possibility and without any clear judicially approved test which could guide the analysis.
118 One further issue might be thought to be related to Mr Clarke’s analysis upon the point just mentioned. Mr Hopper, on behalf of the defendant, referred to Cummings v Lewis (1992) 113 ALR 285, 291-2 in support of the proposition that reasonable grounds for a representation as to future matters may be relied upon even if these were not present to the mind of the representor when he made the representation. This seems an attractive analysis and in conformity with the general rule in the exercise of contractual powers that the analysis must be conducted objectively so that a party exercising a power, for instance to terminate a contract, is at liberty to rely on matters not in his contemplation at the time that he acted or even known to him at the time. However, as Mr Andrew Eastwood has pointed out in his article “Future representations and the grounds that may be relied on to establish reasonableness” (2015) 89 ALJ 270, the analysis in Cummings’ case can be seen to be at odds with other authorities, in particular Sykes v Reserve Bank of Australia (1998) 88 FCR 511 per Heerey J, which stands for the proposition that the only reasonable grounds which can be considered and treated as relevant are those on which the representor in fact relied in making the representation. Mr Eastwood refers to a number of decisions of the New South Wales Court of Appeal consistent with Sykes’ case and inconsistent with the dicta in Cummings. Mr Eastwood advocates a review of what was said by the Federal Court in Sykes’ case. Nevertheless, I agree with him that the present balance of authority is against the analysis in Cummings’ case.
Misleading or deceptive conduct – conclusions
119 I turn first to the contention that there was misleading or deceptive conduct by Bluestar as to a present existing fact; namely, its intention to commit to occupy half the premises at Miles Road for the entire five years of Niche’s lease. The evidence of MrEideh as Bluestar’s controlling mind was unequivocal that Bluestar never intended to commit to a five year term. The effect of his evidence was that its intention was to stay only as long as it was convenient for Bluestar to do so in light of the objectives which it was seeking to achieve in working through the Options Paper. It follows that if the representations alleged in paragraph 29 of the Statement of Claim and described as the “present intention representations” to the effect that at the relevant time Bluestar:
“… presently and unconditionally intended to:
(a) occupy 50% of the [Miles Road] Premises for the whole term of the [5 year Niche lease];
(b) pay to Niche Logistics 50% of all rent and outgoings incurred by Niche Logistics under the Lease for the whole term of the Lease; and
(c) enter into a sub-lease with Niche for a period equivalent to the term of the Lease.”
were made, those representations would necessarily have been misleading as to present existing facts mainly Bluestar’s intention. The next question is, were those representations in fact made?
120 I have analysed the progress of the relevant email chain earlier in my reasons. The crucial exchange appears to have occurred on 27 March 2013. At 1.50am, Mr Dickson sent an email to Mr Panagiotou noting that the owners of the Miles Road premises required a five year lease “not three” and there seemed to be general agreement on the terms of the lease otherwise. The email continued:
“I would suggest you ask to extend for 2 months and we will transition you over to miles road from 1 August.”
121 The email from Mr Dickson to Mr Panagiotou concluded:
“Let me know if you are happy with all that and I will respond to Craig and let him know we agree to the 5 year term. If you any (sic) to discuss on the phone first I can give you a call anytime today.” (CB 238) (emphasis added)
122 Mr Panagiotou replied:
“This is okay with me.” (CB 237)
123 Mr Hopper’s submission is that what was significant and what was being discussed between the parties was the commencement date for Bluestar’s occupancy for whatever indeterminate period suited it rather than the end point for any occupancy as flowing from the expiry date of the proposed head lease. Mr Panagiotou’s simple response includes no such limitation. He was responding to a question as to whether Bluestar was happy with “all that” including the five year lease term. Bluestar’s happiness or otherwise with a five year term rather than a three year term would be relevant and significant only if what was under discussion was an arrangement whereby Bluestar would be in possession for the full five years or at any rate the term of the lease whatever Niche signed up for. As a matter of objective analysis, this exchange against the background of what had gone before makes good the present intentions representation as alleged in paragraph 29. As Mr Hay observed, a commitment by Bluestar to be merely a periodic tenant or a tenant at will would not be consistent with its availing itself of the rent free period under the head lease which in fact occurred. This is all consistent with the present intention representations as described but given that it took place after Niche committed itself to the five year lease, it is difficult to see that it can be directly probative on the point of this alleged misleading or deceptive conduct. Again, Mr Hopper, in his closing submission following the supplementary evidence, stressed the existence of reasonable grounds for the view that Bluestar might have remained in possession for the whole of the head lease term, specifically MrEideh’s evidence to this effect. But as Mr Hay correctly observed, these matters, namely, the existence or otherwise of reasonable grounds for future predictions, are not relevant to the analysis as to whether there has been misleading or deceptive conduct as to a present existing fact.
124 The final part of this cause of action is made good by Niche’s reliance on the representation described. It was only after having received the answer to the question if Bluestar was “happy with all that” in the affirmative that Niche proceeded to commit to the five year lease.
125 I turn next to the more difficult and perplexing question as to whether a cause of action arising out of the same facts has been made out by way of misleading or deceptive conduct by Bluestar as to future matters. In accordance with my analysis above, the question is, whether in light of all the circumstances the representations as to the future were misleading or deceptive, having regard to the existence of any reasonable grounds for the representation, but not upon the basis that the existence of reasonable grounds, in itself, negates the possibility that the conduct could be judged misleading or deceptive.
126 For the same reasons as expressed with regard to the present intention representations, I conclude that representations as to future matters were made to the effect as alleged in paragraph 12 of the Statement of Claim that Bluestar would occupy 50 per cent of the premises for the whole term of the lease and pay Niche 50 per cent of all rent and outgoings incurred by Niche under the lease for that entire term. Given MrEideh’s clear evidence that Bluestar never had such an intention, it is difficult to see that there were any reasonable grounds for such a representation as to the future. There certainly were reasonable grounds for a representation that Bluestar would enter into occupancy, pay 50 per cent of the costs of occupation and stay for as long as it suited Bluestar. But that is a distinctly different future matter from the one which, in light of the email exchanges, was in fact represented. The cause of action as to misleading or deceptive conduct as to future matters is also made out.
Plaintiff’s contentions as to promissory estoppel
127 I turn next to the contention that Niche was entitled to relief based upon equitable estoppel in the well-known judgment of the High Court in Waltons Stores (Interstate) Ltdv Maher (1988) 164 CLR 387. The judgment which is customarily regarded as having stated the modern Australian synthesis of the principles of promissory or equitable estoppel is that of Brennan J. His Honour said:
“In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed or expected that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs. (1988) 164 CLR 387, 428-9
128 According to Mr Hay, the requirements of such estoppel were established by the same facts which have led me to conclude that Niche was entitled to relief for misleading or deceptive conduct.
Equitable estoppel – defendant’s submissions
129 Mr Hopper noted that his client, Bluestar, denied that there was any representation that it would remain at Miles Road for the full five year term. Further, he said there was no evidence that Bluestar knew or intended reliance by Niche on any such representations. Mr Hopper submitted that a promissory estoppel does not give rise to positive rights and only gives rise to negative rights in the plaintiff’s hand. He referred to Saleh v Romanous [2010] NSWCA 274 [74] per Handley AJA; Ben McFarlane “Equitable Estoppel as a Cause of Action: Neither One Thing Nor the Other”, in Dageling, Edelman and Goudkamp, Editors, “Contract in Commercial Law” (2016) Chapter 16. He also referred to Ashton v Pratt [2015] NSWCA 12 [138] and Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825 [766] to [769]. These authorities post‑dated, he said, the decision of the Victorian Court of Appeal in ACN 074 971 109 Pty Ltd v The National Mutual Life Association of Australasia Ltd [also referred to as Argot v National Mutual] (2008) 21 VR 351.
Promissory estoppel – conclusions
130 The findings of fact which I have made with respect to the allegation of misleading or deceptive conduct require me to reject the factual submissions as to promissory or equitable estoppel made by Mr Hopper on behalf of Bluestar. I have already found that there was a representation made in the course of the email exchanges that Bluestar would remain at Miles Road for the full five year term. Further, it was obvious from the circumstances and the email exchanges and I therefore find on the balance of probabilities that it was known to Bluestar and those representing it that Niche was committing to the five year term with premises much larger than it required in reliance upon the representation that Bluestar would take up a 50 per cent share of this leased property and remain there for the full term of the lease.
131 The proposition that equitable estoppel gave rise only to a defensive right was a matter much debated when I was at law school in the 1970s. The metaphors frequently resorted to asserted that equitable estoppel was “a shield rather than a sword”. Even in the 1960s, this proposition was not unquestioningly accepted. Professor David Jackson published an article in the Law Quarterly Review entitled “Estoppel as a Sword” (1965) 81 LQR 223. This article was commented upon without apparent disapproval by Mason CJ and Wilson J in Waltons’ case (1988) 164 CLR 387, 401. More tellingly, the use made of equitable estoppel in Waltons’ case as upheld by the High Court was very much of a swordlike character. The land owner who was respondent to the High Court appeal brought proceedings in the Supreme Court of New South Wales seeking specific performance of the contract whereby he said it was agreed that he and his wife would demolish and existing property and construct a building to Waltons’ order to be leased by it. The trial judge gave judgment for Mr and Mrs Maher for damages in lieu of specific performance (1988) 164 CLR 387, 390. This judgment was upheld both by the New South Wales Court of Appeal and the High Court of Australia.
132 In Argot v National Mutual Life Association of Australasia Ltd (2008) 21 VR 351, also referred to as ACN 074 971 109 Pty Ltd v The National Mutual Life Association of Australasia Ltd, the Victorian Court of Appeal gave relief based on equitable estoppel by enforcing a promise which gives the doctrine of equitable estoppel a positive rather than a merely negative operation; or, to use the popular metaphor, employed it as a sword rather than merely as a shield. In Saleh v Romanous (2010) 79 NSWLR 453, in the Court of Appeal of New South Wales, Giles J and Handley and Sackville AJJA dismissed an appeal from a judgment of Foster J enforcing what was described as a collateral promise. Vendors of real estate were held disentitled to enforce a contract of sale and were required to repay a deposit and a loan. The contention was that the collateral promise was excluded from contractual enforcement as inconsistent with the principal contract. The trial judge and the Court of Appeal nevertheless held that this collateral promise by resort to the doctrine of promissory estoppel. The principal judgment was delivered by Handley AJA and concurred in by Giles JA and Sackville AJA. His Honour said:
“A promissory estoppel is a restraint on the enforcement of rights, and thus, unlike a proprietary estoppel, it must be negative in substance. In Hughes (1877) 2 App Cas 439, Lord Cairns LC in his classic statement of principle quoted by Lord Wilberforce in Bank Negara Indonesia said (at 448): ‘[T]he person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which had thus taken place between the parties.’” (2010) 79 NSW LR 453, 462 [74]
133 His Honour said at [77]:
“The inherent limitations on the scope of promissory estoppel do not matter in this case because the purchasers can rely on the statutory remedy conferred by s 55(2A) of the Conveyancing Act to recover their deposit without the need to rescind the contract.”
134 It will be seen that the statement that equitable estoppels were of a negative character, only, was not essential to the Court’s decision. Had the estoppel been regarded as potentially operating in a positive rather than a merely negative manner, the outcome would have been the same a fortiori. The apparently swordlike use of equitable estoppel in the Waltons Stores case was not commented upon and the Victorian Court of Appeal’s decision in Argot was not referred to. In Ashton v Pratt (2015) 88 NSWLR 281, the New South Wales Court of Appeal, in a judgment of Bathurst CJ, treated the issue of whether equitable estoppel could be treated as being no more than a restraint on the enforcement of legal rights as distinct from the source of an obligation as open. (2015) 88 NSWLR, 306 [138]. Edelman J treated the question as open in the Mineralogy case. [2015] FCA 825 [769]. Once again, the decision of the Victorian Court of Appeal in Argot is not mentioned.
135 Mr Hay relied on an article by Ms Allison Silink, “Can Promissory Estoppel be an Independent Source of Rights?” (2015) 40 UWALR 39. She stated her conclusion as follows:
“Notwithstanding recent judicial expressions of uncertainty as to the scope of promissory estoppel to be a source of rights under Australian law, it was the ratio of Waltons Stores that promissory estoppel is capable of being a source of rights under Australian law. As such, the ‘one common law’ of Australia on this question is not unclear. Even if the reasons of the majority in that case are no higher than strongly considered dicta, the reasoning ought to be followed. Accordingly, the law is not in an ‘unresolved’ state in which it is open to trial judges, or intermediate courts of appeal, to apply a contrary principle.”
136 The position is different, she said, in New South Wales by virtue of Saleh v Romanous (2015) 40 UWALR 39, 70-71. In my view there is no basis in Victoria for the contention that promissory estoppel cannot be used in the manner in which Niche seeks to use it on the facts of the present case.
Conventional estoppel
137 I turn next to the plaintiff’s claim based on conventional estoppel. The doctrine of estoppel by convention is said to have developed from the ancient doctrine of estoppel by deed, “reflecting the concern of ancient jurisprudence with form as opposed to substance”. Spencer Bower: Reliance-Based Estoppel (5th ed 2017) [8.1] 316.
138 The learned editors of Spencer Bower define estoppel by convention as follows:
“An estoppel by convention is an estoppel from denying a proposition established, not by representation or promise by B to A, but by mutual, express or implicit, assent. The estoppel is not founded on A believing a representation by B, but on a common assumption of facts or law as a basis of their relationship, to which B has so assented as to make B responsible for A’s reliance on it. When the parties have so acted in their relationship upon that shared assumption that it would be unfair on A for B to resile from it, then A will be entitled to relief against B.” (Ibid, 8.2, 317-8)
139 Mr Hopper, on behalf of Bluestar, relied on the formulation of the doctrine by Edelman J (then a Judge of the Federal Court of Australian) in Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825 [760], where his Honour stated some five requirements for the operation of the doctrine.
“(1) the plaintiff has adopted an assumption as to the terms of its legal relationship with the defendant;
(2) the defendant has adopted the same assumption;
(3) both parties have conducted their relationship on the basis of that mutual assumption;
(4) each party knows or intends that the other will act on that basis; and
(5) departure from the assumption will cause detriment to one of them.”
140 Mr Hopper correctly submitted, on behalf of Bluestar, that the common assumption which would be required to make out the alleged conventional estopped necessarily meant that both Niche and Bluestar assumed that Bluestar was committed to a five year sub-lease. The conduct of Niche, in general terms, committing to a five year lease of a property that was approximately twice the floor space which it required, is consistent with such an assumption so far as Niche is concerned. For the purposes of this analysis, I proceed upon the basis that Niche made the necessary assumption. It is far from clear that Bluestar made that assumption.
141 Mr Hopper referred to the decision of the Court of Appeal in LCY Pty Ltd v Ma [2017] VSC 383 where, in a joint judgment, Tate and Ashley JJA stated:
“… that estoppel by convention requires that there be a common assumption. It must be an assumption subjectively held. It is not enough that each party makes the same assumption independently.” [45]
142 In the well-known case of Amalgamated Investment & Property Co Ltd (in liq) v Texas Commerce International Bank Ltd [1982] QB 84, the plaintiff claimed a declaration that it was under no liability inter alia under a guarantee relative to advances made to a company known as ANPP. The loan transaction in question had gone through a number of iterations, initially upon the footing that the advance would be made directly by the defendant bank. As ultimately made, the advance to ANPP came from a wholly owned subsidiary of the bank, Portsoken Pty Ltd, acquired by the bank as a shelf company for the sole purpose of facilitating the transaction. The monies were lent by the bank to Portsoken and then on-lent to ANPP. The interposition of Portsoken removed the necessity for the bank to register itself as carrying on business in the Bahamas. The guarantee held by the bank secured advances made by it but did not mention Portsoken.
143 Both the trial judge, Robert Goff J, and the Court of Appeal (Lord Denning MR, Eveleigh and Brandon LJJ) held that the plaintiff was bound by a conventional estoppel not to deny that the guarantee cross-collateralised its liability for the loan advanced to ANPP by Portsoken. The trial judge reached his conclusion as to the existence of a common assumption based upon an analysis of the evidence given by the witnesses, both on behalf of the bank and the plaintiff company.
144 According to his Lordship:
“…the officers of the plaintiffs most concerned … believed that the plaintiffs’ guarantee was likewise binding and effective … In all probability, the basis of Mr Foster’s [one of the plaintiffs’ witnesses] belief was that the money had in fact been advanced by the bank; in particular, the supplemental deeds entered into by the plaintiffs in June and July 1975 to provide charges on real property to secure the guarantee, appear to have been drawn up on the assumption that the advances had been made by the bank. There is no evidence which persuades me to hold that Mr Freeman’s or Mr Foster’s mistaken belief derived from anything said or done on behalf of the bank; it is more probable that their mistaken belief had an origin independent of the bank, though after the question of securities to support the plaintiffs’ guarantee was raised by the bank in January 1975, the mistake of each – the bank and the plaintiffs – must have operated to reinforce the mistaken belief of the other.” [1982] QB 84, 99-100
145 What then is the evidence as to Bluestar’s alleged assumption? Mr Eideh, the controlling mind of Bluestar, gave evidence that at no stage did he, as Bluestar’s controller, intend that Bluestar would commit to a five year sub-lease. Mr Hay, on behalf of Niche, embraced that evidence and invited me to accept it as the basis for a finding of misleading or deceptive conduct as to a present existing fact, namely the true intention of Bluestar at the time that Niche committed to its five year head lease.
146 I accepted Mr Hay’s invitation so to find. If Niche is to be regarded now as contending that, for the purposes of making good a claim in conventional estoppel, I should reject that evidence, then I would reject that invitation.
147 The plaintiff’s case as a whole would lack coherence if it were to be based upon such contradictory bases. More generally, I accepted Mr Eideh’s evidence on this point as being plausible. Necessarily, I must accept it therefore for the purpose of the analysis as to conventional estoppel and dismiss the plaintiff’s claim so far as it is so based.
Damages
148 I now turn to the issue of damages and deal first with the plaintiff’s claim for damages deriving from promissory estoppel.
149 In its prayer for relief, the plaintiff sought in paragraph D “Equitable Compensation”. In final submissions, both counsel, however, dealt with the issue, not of equitable compensation, but of equitable damages. The two expressions seem to have been used as if they were interchangeable. This is incorrect.
150 According to the editors of Meagher, Gummow and Lehane’s Equity Doctrines & Remedies (5th ed):
“‘Equitable compensation’ has become the standard term for equitable monetary relief award for loss suffered by reason of breach of a purely equitable obligation – that is, in the exclusive jurisdiction. Monetary awards for loss, or something like loss, are awarded in a variety of contexts in equity. ‘Equitable compensation’ has come to denote many of these. It has become a category of concealed multiple reference: no single formulation can accurately describe all the applications of this relief.” [23-015] 801.
151 Equitable damages, however, customarily referred to damages awarded under provisions identified by their historical English progenitor, Lord Cairns’ Act, enacted in 1858.
152 According to Meagher, Gummow and Lehane, before the enactment of this provision, the modern equivalent of which in Victoria is s38 of the Supreme Court Act 1986, the rule was that in the Court of Chancery:
“…awards of damages in relation to contract [might] be summarised thus:
(a) the Court of Chancery had no jurisdiction to award damages either in lieu of or in addition to the injunction to protect a purely legal right;
(b) …it probably had no jurisdiction to award damages in lieu of a decree of specific performance; and
(c) it had limited jurisdiction to award damages in addition to decreeing specific performance, one such limitation being that it had no power to award damages for delay in addition to decreeing specific performance.” (Ibid, [24-015] 873)
153 Section 2 of Lord Cairns’ Act provided:
“the Court of Chancery has jurisdiction to entertain an application for an injunction against a breach of any covenant, contract or agreement, or against the commission or continuance of any wrongful act, or for the specific performance of any covenant, contract, or agreement, it shall be lawful for the same court, if it shall think fit, to award damages to the party injured either in addition to or in substitution for such injunction or specific performance…”
154 Section 38 of the Supreme Court Act, which is the relevant statutory provision for the purposes of this proceeding, provides:
“If the Court has jurisdiction to entertain an application for an injunction or specific performance, it may award damages in addition to, or in substitution for, an injunction or specific performance.”
155 The focus on damages awarded in equity and under Lord Cairns’ Act appears to derive from the fact that aside from the Australian Consumer Law, Niche’s successful cause of action relies upon promissory or equitable estoppel.
156 In the Waltons Stores case, it will be recalled that the damages award made by the trial judge was made under the New South Wales equivalent of Lord Cairns’ Act in substitution for specific performance of the contract which his Honour found and the New South Wales Court of Appeal and High Court of Australia agreed could not, in the circumstances, be denied by Waltons.
157 Mr Hopper submitted that the limitations on the equitable jurisdiction were such that since any alleged contract between the parties as to a sub-lease had been repudiated with that repudiation accepted and the contract thereby terminated, no decree for specific performance could be made as a basis for the award of damages under s.38. (T50, 56 and 394)
158 Mr Hay responded:
“The submission here is that while we haven’t sought an injunction we either have in substance … by seeking the declaration, or could have, alternatively we could have sought an injunction, for example restraining Bluestar Global from denying assumption or any of the agreed facts or assumed facts for example. So bearing in mind that this is [a] corporate entity, not some individual, an injunction could sensibly issue seeking to restrain that entity from taking any steps or failing to recognise as it were that the assumption had been adopted and was still in force.” (T171, L21 to T172, L1)
159 Mr Hay referred to and relied on the decision of the Court of Appeal in Giller v Procopects (2008) 24 VR 1. As to the availability of equitable damages, Neave JA said:
“It is both necessary and sufficient that an injunction could have been sought. Even the presence of discretionary factors which would have resulted in the refusal of an injunction does not prevent the award of damages under the Lord Cairns’ Act provisions.” (2008) 24 VR 1, 96 [406]
160 The court was dealing at this point with a claim for damages for breach of confidence in circumstances where the plaintiff had not sought an injunction.
161 Mr Hay submitted that it would have been proper to award an injunction. He referred to South Carolina Insurance Co v Assuranti Maatschappij“De Zeven Provincien” NV [1987] AC 24 per Lords Bridge, Brandon and Brightman. Most importantly, said Mr Hay, in Australian Broadcasting Corporation v Lenah Game Meats (2001) 208 CLR 199, where the High Court held that an injunction may only issue to protect an equitable or legal right or, which is often the same thing, to prevent a legal wrong. It was necessary, he said, to identify the legal right or equitable right which was threatened with invasion. (2ndT173)
162 An injunction might issue whereby Bluestar was “commanded not to deny” the assumption (2ndT174, L1), Mr Hay said of the Victorian Court of Appeal, Accurate Financial Consultants Pty Ltd v Koco Black Pty Ltd (2008) 66 ACSR 325. According to Mr Hay, this was an occasion in which the court considered issuing an injunction directed to preventing a threatened detriment created by trustees acting on a compulsory redemption notice. (2ndT177, L4-14) He said, “here we could ask for an injunction to require that Bluestar contribute to the outgoings or to the rent”. Mr Hay conceded, however, that he could not refer me to an example of an injunction being granted in those circumstances despite my seeking an example. (2ndT177, L18-28)
163 In the end, it seems to me that the invocation of s38 in the circumstances is, to use the language of Mr Hopper, “colourable”. The premise upon which this debate has been had is that no decree of specific performance could have been granted at the time the proceeding was commenced because the contract had already been terminated by repudiation. In those circumstances, it is difficult to see how it would be proper to seek an injunction requiring contribution by Bluestar to the costs of occupancy of the Miles Road premises, rather than seeking to recover Niche’s loss as damages.
164 In my view, s38 of the Supreme Court Act is not properly invoked in these circumstances.
165 I turn finally to the issue of quantum of damages. I heard expert evidence as to the quantum of Niche’s loss. In the event, I have upheld a damages claim for Niche under the Australian Consumer Law but not under s38 of the Supreme Court Act. As to the latter, Mr Hay’s submissions stressed the breadth of the court’s discretion in “moulding” the appropriate remedy. No doubt because of the complexity of the issues raised as to liability, including the late recasting of the plaintiff’s case as to misleading or deceptive conduct, counsels’ closing submissions concentrated on those and other liability issues without descending to any submissions as to the appropriate dollar quantum of any damages which might be awarded.
166 In the circumstances, I think it appropriate to indicate my finding on liability and entitlement to damages under s 236 of the Australian Consumer Law in favour of the plaintiff, standing the matter over for further submissions as to the dollar quantum of those damages. Likewise, the issue of costs should be a matter for further submissions.
3
16
0