Carr v Empirical Works Pty Ltd & Anor [2017] FCCA 1813 (4 August 2017)

Last Updated: 7 August 2017

FEDERAL CIRCUIT COURT OF AUSTRALIA

REPRESENTATION

ORDERS

(1) The respondents’ (in the substantive proceedings) Application in a Case made on 7 December 2016 is allowed.

(2) The applicant’s (in the substantive proceedings) Application in a Case made on 13 March 2017 is dismissed.

SYG 549 of 2016

Applicant

And

First Respondent

Second Respondent

REASONS FOR JUDGMENT

1. On 9 March 2016 Mr Peter Carr made an application to this Court seeking an extension of time within which to make a competent application pursuant to s.340 of the Fair Work Act 2009 (Cth) (“the FWA”), alleging dismissal from employment in contravention of certain general protections under the FWA by Empirical Works Pty Ltd (“the first respondent”) and Mr Paul Lin (“the second respondent”). The application to extend time was subsequently granted on 30 March 2016 (see below at [3]).
2. While the matter involved a number of issues, the following is relevant to the issues currently before the Court for consideration.
3. On 30 March 2016, the Court made the following orders (as amended) and the matter was sent for mediation:
   • “1. Pursuant to Section 370(a)(ii) of the Fair Work Act 2009 (Cth) the time for the filing of the application is extended to 9 March 2016.
   • 2. The applicant to file and serve points of claim on or before 13 April 2016.
   • 3. The respondent to file and serve a response on or before 20 April 2016.
   • 4. The proceedings be the subject of mediation, pursuant to Part 27 of the Federal Circuit Court Rules 2001 (Cth), between all the parties to be held on or before 15 June 2016, or any other such date as the Registrar may direct, or as the parties may agree, with the mediation to be conducted by a Registrar of the Court.
   • 5. The matter is listed for further directions on 22 June 2016 at 9.30am at Court 8.2, 80 William Street, Sydney before Judge Nicholls.”
4. On 13 April 2016 the applicant filed a Statement of Claim (“SOC”). On 2 May 2016 the respondents filed their Response to the SOC. Relevantly, this included a “Cross Claim” in the following terms
   
   ([49] – [50] of the SOC):

“Cross Claim

[49. The Cross-Respondent engaged in conduct in trade and commerce that was misleading and deceptive within the terms of section 18 of Schedule 2 to the Competition and Consumer Act 2010.

Particulars

• 49.1 The Cross-Respondent gave misleading and deceptive information about his resume, his experience, and his prior clients.
• 49.2 The Cross-Respondent, by omission, gave misleading and deceptive information about his relationship with Maximumm, a purported former employer.

[50] The Cross-Applicant suffered loss as a result of being misled and deceived by the Cross-Respondent.

Particulars of loss

5. The mediation held on 9 August 2016 was unsuccessful.
6. On 7 December 2016 the respondents filed an Application in a Case (“the respondents’ AIC”) seeking leave to amend their Response. The respondents’ AIC was accompanied by the affidavit of Brian Powles, Solicitor, made on 6 December 2016 (the affidavit was read into evidence with no objection).
7. For current purposes the following is of note. Mr Powles is employed by PCC lawyers who were instructed by the respondents on 8 September 2016. They were not the lawyers who prepared and filed the original Response and cross-claim on 2 May 2016.
8. Mr Powles’ evidence is that he reviewed the matter which included, by this time, evidence filed by the applicant, and “advised the respondents that the cross-claim needed to be amended”, given the “deficiencies in the way it [had] been pleaded” ([4] of the affidavit of Mr Powels).
9. Further, Mr Powles’ evidence is that the respondents sought the applicant’s consent to the amendment. This was refused. The respondents persisted in seeking this consent, and on 11 November 2016, among other things, the proposed amended Response and cross-claim were sent to the applicant’s counsel (at the relevant address for service) (see [5] – [8] of the affidavit of Mr Powels and annexures “BP-1” and “BP-2” of that affidavit).
10. The applicant again refused his consent on 22 November 2016 (see [10] of the affidavit of Mr Powles and annexure “BP-3” of that affidavit) and again on 28 November 2016 ([11] – [12] of the affidavit of Mr Powels and annexure “BP-4” to that affidavit). This necessitated the respondents’ AIC filed with the Court on 7 December 2016.
11. I should also note from the evidence of Mr Powles, that the applicant was required by orders made by the Court to file his evidence in reply on or before 25 November 2016. The applicant sought, and was given, consent by the respondents to seek an extension of time for the filing of his evidence in reply, having not complied with the timetable set by the Court’s orders.
12. The proposed amended Response seeks to strike out paragraph [49] and [50] of the Response and to substitute (see [8] of the affidavit of Mr Powles and annexure “BP-2” of that affidavit):
    • “[51] On or about 20 July 2015, the Cross-Respondent entered into an employment contract with the Cross-Applicant.
    • [52] Prior to entering into this employment contract, the
      
      Cross-Respondent made representations (Representations) to the Cross-Applicant as follows:
      • a. The Cross-Respondent was a sales person with over 10 years experience in B2B sales.
      • Particulars
        • i. The representation was express
        • ii. The representation was written
        • iii. The written representation was made on or about 23 May 2015
      • b. The Cross-Respondent worked as an employee in a sales director role for a company called 'Maximumm' that was a similar size to the Applicant.
      • Particulars
        • i. The representation was express
        • ii. The representation was written and oral
        • iii. The written representation was made on or about 23 May 2015
        • iv. The oral representation was made by the
          
          Cross-Respondent to Paul Lin on or about 29 May 2015
      • c. The Cross-Respondent had held the sales director role for 6 years.
      • Particulars
        • i. The representation was express
        • ii. The representation was written
        • iii. The written representation was made on or about 23 May 2015
      • d. The Cross-Respondent was currently employed in the sales director role referred to in paragraph [52](c) above.
      • Particulars
        • i. The representation was express
        • ii. The representation was written and oral
        • iii. The written representation was made on or about 23 May 2015
        • iv. The oral representation was made by the
          
          Cross-Respondent to Paul Lin on or about 29 May 2015
      • e. The Cross-Respondent had experience in technical sales.
      • Particulars
        • i. The representation was express
        • ii. The representation was written and oral
        • iii. The written representation was made on or about 23 May 2015
        • iv. The oral representation was made by the
          
          Cross-Respondent to Paul Lin on or about 29 May 2015
      • f. The Cross-Respondent had experience working with large multi-national companies.
      • Particulars
        • i. The representation was express
        • ii. The representation was written and oral
        • iii. The written representation was made on or about 23 May 2015
        • iv. The oral representation was made by the
          
          Cross-Respondent to Paul Lin on or about 29 May 2015 and 11 June2015
      • g. The Cross-Respondent had experience selling to large multi-national companies.
      • Particulars

i. The representation was express

ii. The representation was written and oral

iii. The written representation was made on or about 23 May 2015

iv. The oral representation was made by the

Cross-Respondent to Paul Lin on or about 29 May 2015

h. The Cross-Respondent would be able to source sales leads independently.

Particulars

• i. The representation was express
• ii. The representation was written and oral
• iii. The written representation was made on or about 23 May 2015
• iv. The oral representation was made by the
  
  Cross-Respondent to Paul Lin on or about 11 June 2015 and 19 June 2015

i. The Cross-Respondent had close business connections that would result in sales for the Cross-Applicant

Particulars

• i. The representation was express
• ii. This representation was oral
• iii. The oral representation was made by the
  
  Cross-Respondent to Paul Lin on or about19 June 2015

j. The Cross-Respondent had made $2,000,000 in sales in the last financial year forMaximumm.

Particulars

• i. The representation was express
• ii. This representation was oral
• iii. The oral representation was made by the
  
  Cross-Respondent to Paul Lin on or about 29 May 2015 and 19 June 2015.

53 The Representations collectively gave an impression to the Cross-Applicant that the Cross-Respondent was a highly-skilled and successful sales person (Combined Representation)

Particulars

• i. The representation was implied as a matter of fact.

54 The Representations were made by the Cross-Respondent in trade or commerce.

Particulars

• i. The Representations were made during the interview process for employment.
• ii. The Representations were made during negotiations for employment

55 In reliance on the Representations and Combined Representation, each representation as materially contributing in its own right, the Cross-Applicant:

a. Offered a salary to the Cross-Respondent that was much higher than he would have offered had the Representations not been made;

b. Entered into the Employment Contract; and

c. Paid a recruiter fee of $45,781.32.

Breaches of the Statutory Norms

56 By making the Representations, and each of them, the

Cross-Respondent engaged in conduct that was misleading and deceptive or likely to mislead or deceive in contravention clause 18 of the Australian Consumer Law contrary to the Representations (Contraventions) in that:

a. The Cross-Respondent did not have over 10 years experience in B2B solution sales;

b. The Cross-Respondent had not been an employee at Maximumm.

c. The Cross-Respondent had not been working as an employee for the past 6 years;

d. The Cross-Respondent had been self-employed for the past 6 years;

e. Maximumm did not have 8 employees;

f. The Cross-Respondent had not achieved sales of $2million per annum in the past financial year;

g. The Cross-Respondent had no connections that resulted in sales for the Cross-Applicant;

h. The Cross-Respondent could only convert inbound sales leads;

i. The Cross-Respondent had no sales or proposals as a result of outbound sales leads or cold calls;

j. The Cross-Respondent did not identify any new business opportunities;

k. The Cross-Respondent did not have sufficient experience or technical knowledge to presentproposals;

1. The Cross-Respondent did not achieve targets;

m. The Cross-Respondent was not a highly-skilled and successful salesperson.





Loss and Damage by the Contraventions

57 By the contraventions of section 18 of the Australian Consumer Law pleaded above and each of them the

Cross-Applicant has suffered loss and damage.

• Particulars
  • i. The Cross-Applicant incurred a recruitment fee of $45,781.32.”

[Errors in original.]

13. On 13 March 2017 the applicant filed an Application in a Case to strike out the original cross-claim (“the applicant’s AIC”).

14. On 24 March 2017 both the respondents’ AIC and the applicant’s AIC were set down for hearing on 12 April 2017. The respondents filed written submissions in support of their AIC on 15 February 2017. I note that the submissions are titled “First Respondent/Cross-Applicant’s Outline of Submissions”, but in context, the submissions appear to be made on behalf of both respondents.
15. The applicant filed his written submissions in relation to the respondents’ AIC on 10 March 2017. As part of his argument opposing the amendment to the cross-claim, the applicant submitted that the amendment contains entirely new claims and arguments and a new cause of action. Further, that in any event, the original cross-claim was not a maintainable course of action and was an abuse of process ([3] and [5] of the applicant’s written submissions filed on 10 March 2017). It appears that it was in this light that he filed the applicant’s AIC on 13 March 2017.
16. Given the sequence of events set out above, it is appropriate to deal with the respondents’ AIC first. The applicant had been on notice since at least May 2016, of the respondents’ original cross-claim. The applicant took no action to strike out the original cross-claim until well after being put on notice of the respondents’ intention to seek an amendment to it. Yet the applicant now submits that the original
    
    cross-claim was not maintainable, and an abuse of process.
17. The applicant has not provided any satisfactory explanation for not moving earlier in this regard, particularly in circumstances where he then sought to allege an abuse of process (see further below).
18. The starting point for the consideration of the respondents’ AIC is the Court’s power, and the exercise of that power in relation to the application to amend the Response.
19. Rule 7.01 of the Federal Circuit Court Rules 2001 (Cth) (“the
    
    FCC Rules”) expresses the Court’s capacity to allow the amendment of any document at any stage in a proceeding. Rule 7.01 of the FCC Rules is in the following terms:
    • “7.01
    • Power to amend
    • (1) At any stage in a proceeding, the Court or a Registrar may allow or direct a party to amend a document (other than an affidavit) in the way and on the conditions the Court or the Registrar thinks fit.
    • (2) Subject to rule 7.03, the Court or a Registrar may allow an amendment even if the effect would be to include a cause of action arising after the proceeding was started.”
20. Section 82(2) of the Federal Circuit Court of Australia Act 1999 (Cth) (“the FCCA Act”) relevantly provides:

“Section 82

Documents

...

(2) The Rules of Court may make provision for:

(a) the amendment of a document in a proceeding; or

(b) leave to amend a document in a proceeding;

even if the effect of the amendment would be to allow a person to seek a remedy in respect of a legal or equitable claim that would have been barred because of the expiry of a period of limitation if the remedy had originally been sought at the time of the amendment.”

21. The respondents refer to Cai v Tiy Loy & Co Ltd (No.2) [2015] FCCA 2924 per Judge Manousaridis at [27] (citing Medich v Bentley-Smythe Pty Ltd [2010] FCA 494 at [8]) for the relevant general principle to be applied in relation to r.7.01 of the FCC Rules:

“Rule 7.01 of the FCC Rules provides that the Court ‘may allow or direct a party to amend a document . . . in the way and on the conditions the Court . . . thinks fit’. This is a variation of rules which are to be found in the rules of other courts When applied to applications to amend pleadings, the general principle is that:

leave to amend should be granted unless the proposed amendment is obviously futile or would cause substantial prejudice or injustice which could not be compensated for. These considerations require the Court to take account of the nature of the proposed amendment, whether it is made in good faith, the stage in the proceedings at which leave is sought, the nature of the prejudice that may be caused and the means by which such prejudice might be redressed. The question of delay is relevant to these considerations however it is not the purpose of the Court to punish a party for delay in seeking an amendment.”

22. The respondents also submitted that this power should be exercised in light of the objects of the FCC Rules, as set out in s.3 and s.42 of the FCCA Act, and as expressed in r.1.03 of the FCC Rules. The respondents rely on the summary of these objects as set out in Goodal v Nationwide News Pty Ltd [2007] FCMA 218 (“Goodall”) at [21] and as followed in The Director of the Fair Work Building Industry Inspectorate v Linkhill Pty Ltd (No 3) [2013] FMCA 165 (“Linkhill”) at [31]:
    • “The principles and considerations referred to above need to be applied in the context of the Federal Magistrates Act 1999 (Cth) and the Federal Magistrates Court Rules 2001 (Cth) which, as this Court has observed in Goodall v Nationwide News Pty Ltd:
    • Reading together the objects of the FM Act in s.3, the mode of operation in s.42, and having regard to the objects of the FMCA Rules in r.1.03, it is apparent that the Court is intended to operate in a manner:
      • (a) as informally as possible in the exercise of judicial power;
      • (b) which is not protracted in its proceedings;
      • (c) which resolves proceedings justly, efficiently and economically;
      • (d) which uses streamlined procedures; and
      • (e) that avoids undue delay, expense and technicality.”
23. The authorities relied on by the respondents are all judgments of this Court (although in part relying on judgments of the Federal Court). It is also of note that the applicant took no objection, nor did he seek to challenge the respondents’ submissions in this regard. I respectfully agree with what has been said in Goodall and Linkhill, and find that it is appropriate to use these as the context within which the subsequent consideration should be carried out.
24. One further and important aspect of the respondents’ submission was also not challenged by the applicant. That is, that the power to grant the leave the respondents seek is broad and has a remedial objective of ensuring “pleading defects are cured”, and the “real issues and questions in the proceedings” are properly addressed (Casson Investments Pty Ltd v Cao [2015] FCAFC 94; (2015) 236 FCR 322 at [21] per Gilmour and Foster JJ and see [21] of the respondents’ written submissions filed on 15 February 2017).
25. The respondents’ position, in short, is that “[t]he proposed amendments do not raise any new claim, argument or cause of action”. They rely on the “same factual matrix”. The essential character of that factual matrix remains, in substance, unchanged. While the cause of action in the cross-claim was raised in the original Response, it was not “comprehensively” pleaded, and this may have led to a difficulty in determining the real issues between the parties ([22] – [24] of the respondents’ written submissions filed on 15 February 2017).
26. The respondents assert that the proposed amendments seek to clarify what is said to be the “sole cause of action” of the cross-claim. That is, in essence, the matter of representations said to have been made by the applicant, how they can be said to be misleading and/or deceptive, and the claimed damage that results from the first respondent’s reliance on the representations ([25] – [26] of the respondents’ written submissions filed on 15 February 2017).
27. The applicant raised two broad arguments against the respondents’ position. The first is that the respondents’ cross-claim (as originally made), does not disclose a reasonable cause of action and therefore is not capable of being made out against the applicant. The second is that it was an abuse of process. For these reasons, the applicant says the original cross-claim should be struck out.
28. The applicant argues that the proposed amended cross-claim, in effect, suffers from the same defects and should not be permitted to proceed, particularly in light of the impact it would unfairly place on the applicant in meeting this “new” case raised against him. That is, the prejudice he would suffer in having to deal with, and meet, the respondents’ argument which the applicant submits, is essentially futile.
29. In the context of the applicant’s application to strike out the original cross-claim (and consequently not to proceed with the proposed amended cross-claim), it is important to note that the power to strike out a part of a pleading, that is, to dispose of it summarily, should be approached with caution (Spencer v Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118 at [24] per French CJ and Gummow J, Favell v Queensland Newspapers Pty Ltd [2005] HCA 52; (2005) 221 ALR 186 at [6] per Gleeson CJ, McHugh, Gummow and Heydon JJ, Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) v Oswal (No 2) [2011] FCA 731 at [21] per McKerracher J and Morton v Mitchell Products [1996] FCA 828; (1996) 21 ACSR 497 at 513 per Sackville J).
30. I agree with the respondents that while the applicant has not expressly articulated any relevant rule of Court on which he relies for his strikeout application, it would appear that he ultimately seeks to invoke r.16.21 of the Federal Court Rules 2011 (Cth) as it applies to proceedings in this Court.
31. In that regard I note the respondents’ submissions filed on 31 March 2017 at [8] (I note that these submissions are also titled “First Respondent/Cross-Applicant’s Outline of Submissions” but in context, appear to be made on behalf of both respondents):
    • “As held by Bromberg J in Winter v Fogarty, the power to strike out all or part of a pleading under r16.21(1)(e) because it discloses no reasonable cause of action is a power that should only be exercised in plain and obvious cases. The power should only be exercised where it is clear that no reasonable amendment can cure the alleged defect and there is no reasonable question to be tried. In Polar Aviation Pty Ltd v Civil Aviation Authority, their Honours adopted the following observations made by Beaumont J in Allstate Life Insurance Company v Australian and New Zealand Banking Group Ltd:
      • (1) A ‘reasonable cause of action’ means one with some chance of success if regard be had only to the allegations in the pleadings relied upon by the claimant; in such a case, the claim cannot be struck out (Davey v Bentinck ([1893] 1 QB 185)).
      • (2) The mere fact that the case appears to be a weak one is not of itself sufficient to justify the striking out of the action (cf Wenlock v Moloney ([1965] 1 WLR 1238; [1965] 2 All ER 871)).
      • (3) Normally, the power to strike out should be exercised only in plain and obvious cases, where no reasonable amendment could cure the alleged defect (cf Hodson v Pare ([1899] 1 QB 455)).
      • (4) It goes without saying that if a substantial case is involved in the claim, the power to strike out cannot be exercised.
      • (5) Where a point of law has to be decided, and the judge is satisfied that this can be done by him appropriately, thereby avoiding the necessity of, and expense in going to trial, he is entitled to determine the point (cf Williams & Humbert v W & H Trade Marks [1986] AC 368; [1986] 1 All ER 129).”

[Footnotes omitted.]

32. Before the Court, the applicant understood that the relevant test is that to succeed in his strike out application, the cross-claim would need to be seen as so untenable that it could not possibly succeed (see General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 especially at [8] – [9]). The applicant plainly understood that the test was not whether the respondent would ultimately fail in his cross-claim, but whether the cross-claim should not be permitted to go to a final hearing because it is apparent it must fail.
33. To make good this application to strike out as against that test, the applicant’s argument was essentially as follows. The alleged conduct of which the respondent complains was not conduct “in trade or commerce” that is, “Mr Carr was not acting in trade or commerce when answering questions on his previous experience to obtain employment with the [f]irst [r]espondent” ([20] of the applicant’s written submissions filed on 10 March 2017). This is said to be the central proposition in the original cross-claim and for that matter, in the proposed amended cross-claim.
34. The applicant relies on Concrete Constructions (NSW) Pty Ltd v Nelson [1990] HCA 17; (1990) 169 CLR 594 (“Concrete Constructions”) at page 603 to make good his argument ([19] of the applicant’s submissions filed on 10 March 2017):
    • “The phrase ‘in trade or commerce’ in s.52 has a restrictive operation. It qualifies the prohibition against engaging in conduct of the specified kind. As a matter of language, a prohibition against engaging in conduct ‘in trade or commerce’ can be construed as encompassing conduct in the course of the myriad of activities which are not, of their nature, of a trading or commercial character but which are undertaken in the course of, or as incidental to, the carrying on of an overall trading or commercial business. If the words ‘in trade or commerce’ in s.52 are construed in that sense, the provisions of the section would extend, for example, to a case where the misleading or deceptive conduct was a failure by a driver to give the correct handsignal when driving a truck in the course of a corporation's haulage business. It would also extend to a case, such as the present, where the alleged misleading or deceptive conduct consisted of the giving of inaccurate information by one employee to another in the course of carrying on the building activities of a commercial builder. Alternatively, the reference to conduct ‘in trade or commerce’ in s.52 can be construed as referring only to conduct which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character. So construed, to borrow and adapt words used by Dixon J. in a different context in Bank of N.S.W. v. The Commonwealth [1948] HCA 7; (1948) 76 CLR 1, at p 381, the words ‘in trade or commerce’ refer to ‘the central conception’ of trade or commerce and not to the ‘immense field of activities’ in which corporations may engage in the course of, or for the purposes of, carrying on some overall trading or commercial business.”
35. It is to be remembered that the respondent’s cross-claim, as pleaded in the original Response, is that the applicant engaged in conduct “in trade and commerce that was misleading and deceptive within the terms of section 18 of Schedule 2 to the Competition and Consumer Act 2010 [Cth]” ([49] of original Response).
36. The applicant’s position is that he was not acting “in trade or commerce” when answering questions as to his previous employment in the context of seeking employment with the first respondent.
37. Before the Court, the applicant’s lengthy submissions sought to explain what was meant by the term “in trade or commerce”, in the context of s.52 of the Trade Practices Act 1974 (Cth) (“TPA”) and Concrete Constructions, and as the phrase is used in the Australian Consumer Law (“ACL”).
38. It is not necessary for current purposes to go into great detail as to what these submissions were. In essence, the submissions were that the representations said to have been made by the applicant, and relied on subsequently by the respondents, were representations made by an applicant for employment during an “interview process”, for the purpose of securing employment. That is, this was a completely different context to making representations when engaged “in trade or commerce”.
39. In reply, and in support of their position, the respondents argued that Concrete Constructions dealt with the wording of s.52 of the TPA, and in the specific context of the TPA. The respondents argued that the wording of s.18 of the ACL is much broader than that in the TPA. For example, s.18 prohibits a “person” from engaging in misleading or deceptive conduct, rather than just a “corporation”. In that sense, Concrete Constructions does not provide a complete answer to the cross-claim.
40. The parties agree that there has been no decided case considering the precise issue raised here. That is, in particular, where a person who while applying for employment, has made representations to a prospective employer, can be said to have engaged in conduct “in trade or commerce”.
41. It may be that the respondents’ cross-claim raises a “novel” point. But I cannot accept the applicant’s argument to the extent that it relies on the assertion that that, of itself, means the cross-claim does not disclose a reasonable cause of action.
42. The respondents rely on propositions that flow from a number of authorities to submit that an arguable case, disclosing a reasonable cause of action, does exist within their proposed amended cross-claim.
43. These propositions include the following. One, pre-employment negotiations have been held to have a commercial character in a number of different circumstances (see [15] of the respondents’ submissions filed 31 March 2017, citing Stoelwinder v Southern Health Care Network [2000] FCA 444; (2000) 177 ALR 501 (“Stoelwinder”), David Walker v Salomon Smith Barney Security Pty Ltd & Anor [2003] FCA 1099 and Re Raymond Leroy Barto v GPR Management Services Pty Ltd and Eckard Solbrandt [1991] FCA 659; (1991) FCR 389).
44. Two, the alleged conduct (engaging in the representation) does not have to occur within the trade of the person making the representation, so long as it is within the trade of the person to whom the representation is made (see [16] of the respondents’ submissions filed 31 March 2017, citing Houghton v Arms [2006] HCA 59; (2006) 225 CLR 553 (“Houghton”) at [34] – [35], TCN Channel Nine Pty Ltd v Ilvarity Pty Ltd [2008] NSWCA 9; (2008) 71 NSWLR 323 at 333 [49]).
45. Three, I note also particular reference to Astra Resources Plc v Full Exposure Pty Ltd [2012] FCA 1061 (“Astra”) (at [31]) at [17] of the respondents’ submissions filed on 31 March 2017, and the references before the Court to Houghton at [34] – [35].
46. In short, these are all propositions that reveal an arguable case. It may be that some, or even all of the respondents’ case, will not ultimately be made out, but that is not the test relevant to the current consideration.
47. I should note that the respondents also submit that there is a reasonable argument that the applicant, as an experienced sales person, would be found, on the evidence, to have engaged “in trade or commerce” in making representations to a less experienced person and further, if the representations were found to be untrue, would fall within the meaning of “misleading and deceptive conduct” in s.18 of the ACL.
48. I do not rely on this submission in finding that the cross-claim does disclose a reasonable cause of action. On the “limited” evidence and arguments before the Court, at best, this argument remains, for now, speculative. Nevertheless, the respondents will have the opportunity to fully explore it at a final hearing.
49. The applicant’s second argument in support of his AIC was that, in essence, the cross-claim was an abuse of process because it lacked merit and was “designed to cause the [a]pplicant to withdraw his claim” (see [23] of the applicant’s written submissions filed on 10 March 2017).
50. To the extent that this argument relies on the “no reasonable cause” submission, it does not succeed for the reasons already set out above. As for the remainder, there is nothing before the Court to substantiate, or even support, this assertion.
51. I did consider whether prejudice would be caused to the applicant if the proposed amendment to the cross-claim was allowed.
52. In this regard, it is important to note that no final hearing had been set down in this matter as at the date of the hearing of the AICs, or indeed at the handing down of this judgment.
53. In my view, the proposed amendment to the cross-claim provides particular detail on the precise boundaries of the
    
    cross-claim, which would be an advantage to the applicant in understanding and preparing for the case against him. I do not accept the applicant’s argument that the proposed amended cross-claim raises a completely “new” case. In my view, it gives definition to what was initially, albeit insufficiently, expressed.
54. As set out above, the applicant did not move to strike out the
    
    cross-claim until at least some 9 months after he had notice of it, and then only after the respondent sought to amend it. In written submissions, the applicant submitted that the original cross-claim had no basis in law, and “would argue that at the hearing of the matter” ([13] of the applicant’s written submissions filed on 10 March 2017).
55. The explanation for that position appears to be that rather than have such a “spurious claim” struck out at an earlier time which would cause further expense, it was “appropriate” that the applicant argued the original cross-claim’s lack of merit at a final hearing ([13] of the applicant’s written submissions filed on 10 March 2017).
56. While it is understandable that an applicant may seek to limit costs, what remains is that even though he contends that the original
    
    cross-claim lacks any merit whatsoever, he nonetheless made a strategic and pecuniary decision to wait for a final hearing to challenge it on that basis.
57. The fact that he has been put to any such “expense” now, is not a matter of prejudice to the applicant. The applicant had the opportunity to consent to the proposed amendment to the cross-claim, which would have made the hearing of the respondent’s AIC unnecessary. The applicant would still be in the position, if he chose, to argue the lack of merit in the cross-claim, as amended, at the final hearing, as he says he initially intended.
58. At the hearing of the AICs, the applicant’s counsel stressed that if the respondents’ AIC was allowed, this would result in additional costs to the applicant and incur further time in the management of his case. That may well be the case. However, the applicant has not satisfactorily explained how this can be said to be a dispositive argument, in the circumstances of this case.
59. The applicant’s counsel made reference to the potential for the applicant’s “emotional and financial resources [to] be taxed”. That may well be the case, although I note the submission did not have any evidentiary basis. Nonetheless, on what is before the Court, the respondent’s cross-claim is essentially that the applicant made certain representations and engaged in deceptive and misleading conduct towards to the respondents. The evidentiary basis for this claim is already before the Court, such as to allow the cross-claim to be examined. The applicant may well seek to adduce further evidence, but given that he intended to wait for the final hearing to argue that the cross-claim lacked merit, this was a consequential risk of his decision not to challenge the cross-claim at an earlier time.
60. In all, the respondents’ AIC should be allowed. I will make that order. As a consequence of this, the applicant’s AIC becomes otiose given that the respondents no longer rely on the cross-claim as initially pleaded. To the extent that the applicant’s AIC also seeks to challenge the merits of the proposed amended cross-claim, that is a matter for the final hearing. The applicant’s AIC should therefore be dismissed.

I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of Judge Nicholls



Date: 4 August 2017