Federal Court of Australia

Dove v Xmeta Pty Ltd (formerly known as Everforex Financial Pty Ltd) (No 3) [2023] FCA 1320

ORDERS

THE COURT ORDERS THAT:

Re-opening application

1.    The cross-respondents’ interlocutory application dated 27 October 2023 be dismissed.

Strike out application

2.    Paragraphs 198 to 206 and 263 to 273 of the Further Amended Statement of Cross-Claim be struck out.

3.    The cross-respondents’ interlocutory application dated 6 June 2023 be otherwise dismissed.

4.    The cross-applicant have leave to replead the cause of action in paragraphs 263 to 273 of the Further Amended Statement of Cross-Claim.

5.    The cross-applicant’s Second Further Amended Statement of Claim be filed and served by 16 November 2023.

Security for costs application

6.    The cross-respondents’ amended interlocutory application dated 18 October 2023 be dismissed.

Separate question application

7.    The cross-applicant’s interlocutory application dated 1 August 2023 be dismissed in so far as it relates to the determination of a separate question.

Costs of the applications

8.    Costs of the above applications be reserved.

Case management

9.    The proceeding be listed for a further case management hearing at 9:30am on 30 November 2023.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

GOODMAN J

A.    Introduction

1    These reasons deal with three substantive interlocutory applications.

2    The first is an application by the cross-respondents for an order pursuant to r 16.21 of the Federal Court Rules 2011 (Cth) to strike out, as an abuse of process, the whole of the Further Amended Statement of Cross-Claim (FASCC) filed by the respondent/cross-applicant (Xmeta Pty Ltd, formerly known as Everforex Financial Pty Ltd). Alternatively, the cross-respondents seek an order to strike out particular paragraphs of the FASCC. These applications are considered at (D. [14] to [38]) and (E. [39] to [110]) below and for the reasons there set out the application to strike out the whole of the FASCC should be refused, but some of the impugned paragraphs of the FASCC should be struck out. For the reasons discussed at [111] to [116] below, there should be a limited grant of leave to replead.

3    The second is an application by the cross-respondents for an order pursuant to s 1335 of the Corporations Act 2001 (Cth), r 19.01 of the Rules or the inherent jurisdiction of the Court that Xmeta – alternatively, a former director and former shareholder of Xmeta, Mr Yun (or Andrew) Chen – provide security for the cross-respondents’ costs, together with ancillary orders. Leave to amend this application was granted during the hearing so as to include Mr Chen as a person against whom an order for the provision of security could be made. The grant of such leave was unopposed by Senior Counsel for Xmeta, who also indicated Mr Chen’s lack of opposition. This application is considered at (F. [117] to [142]) below and for the reasons there set out should be dismissed.

4    The third is an application by Xmeta for an order pursuant to r 30.01 of the Rules to the effect that the question of liability on Xmeta’s cross-claim is to be determined separately from damages. This application is considered at (G. [143] to [144]) below and for the reasons there set out should be dismissed.

B.    APPLICATION TO RE-OPEN

5    These reasons were scheduled to be delivered on 27 October 2023. During the afternoon of 26 October 2023 the solicitors for the cross-respondents notified my Associate that they wished to apply to re-open their case on their applications (re-opening application).

6    I heard the re-opening application on the morning of 27 October 2023. I reserved my decision on that application, including with respect to an objection to an item of evidence upon which that application was dependent.

7    By the re-opening application, the cross-respondents sought to re-open their case to tender an article from the Australian Broadcasting Corporation news website titled “Australian Federal Police raids target alleged money laundering by Changjiang Currency Exchange”. In broad terms, the article referred to an arrest of seven people in Melbourne and the seizure of luxury cars and property with a value of $50,000,000. One of the persons reportedly arrested was a Mr Ye Qu. As noted at [16] and [17] below, a person of that name was a director of Xmeta between August 2018 and August 2020 and is one of the three Sellers named in the Share Purchase Agreement.

8    Counsel for Xmeta resisted the application to re-open and objected in particular to the tender of the article.

9    The statements within the article upon which the cross-respondents seek to rely are clearly previous representations made by the author of the article. As such, they are not admissible to prove the existence of the facts in those statements (such as the person named therein as Mr Ye Qu having been arrested and his assets having been seized): s 59 of the Evidence Act 1995 (Cth). No exception to the hearsay rule was suggested by counsel for the cross-respondents other than the tender of the article for a purpose other than proof of the facts asserted in the article (s 60). However, the submissions, as expounded, did not identify a purpose that was not dependent upon the proof of facts asserted in the article.

10    Thus, the article is not admissible and its tender is rejected. It follows that there is no evidential basis for the re-opening application and it must be dismissed.

C.    Background

11    In Dove v Everforex Financial Pty Ltd [2023] FCA 1171 at [3] to [6], I set out the general background to this proceeding as follows:

3.    Everforex operated at material times a foreign exchange, margin and CFD trading business. It appears to be common ground between Everforex and Mr Dove that the latter was employed by the former as its Chief Executive Officer during the period from about January 2019 until about February 2020. Everforex also contends that the fourth cross-respondent, Mr Starkey, was employed by it in various positions during the same period.

4.    In October 2020, Mr Dove commenced this proceeding in the (then) Federal Circuit Court of Australia. In broad terms, Mr Dove contends that Everforex: (1) contravened various provisions of the Fair Work Act 2009 (Cth) (FW Act) and the Banking, Finance and Insurance Award 2020 (Cth); (2) contravened ss 18 and 31 of the Australian Consumer Law (ACL), being Sch 2 to the Competition and Consumer Act 2010 (Cth), by engaging in conduct in trade or commerce which was misleading or deceptive; and (3) breached a contract of employment between Mr Dove and Everforex.

5.    The second applicant, GFY Markets Pty Ltd, contends that Everforex is liable to it in contract for breaches of an “Introducing Broker Agreement”, pursuant to which GFY Markets claims to be entitled, in broad terms, to payments of commissions for introducing clients to Everforex.

6.    Everforex has brought a cross-claim against Mr Dove, GFY Markets, DK International Pty Limited and Mr Starkey. The present version of that pleading is the FASCC, which Judge Cameron of the Federal Circuit and Family Court of Australia (Division 2) granted Everforex leave to file on 9 September 2022: Dove v Everforex Financial Pty Ltd [2022] FedCFamC2G 752. The principal allegations in the FASCC are that:

(1)    Mr Dove:

(a)    contravened statutory, contractual and equitable duties owed by him to Everforex including: the making of unauthorised payments to third parties, a failure to return property of Everforex, and the disabling of a trading platform/server which had the effect that Everforex’s business was unable to be continued from February 2020;

(b)    engaged in conduct in contravention of s 18 of the ACL;

(2)    Mr Starkey:

(a)    contravened statutory, contractual and equitable duties owed by him to Everforex including by signing an authorised representative agreement with a third party and working for a competitor of Everforex;

(b)    engaged in conduct in contravention of s 18 of the ACL;

(3)    each of DK International and GFY Markets:

(a)    is accessorily liable for certain conduct of Mr Dove and Mr Starkey; and

(b)    knowingly received and knowingly participated in breaches of fiduciary duty by Mr Dove and Mr Starkey.

(emphasis in original)

12    To this background I add that the Statement of Cross-Claim in its original form was filed in the Federal Circuit and Family Court of Australia (Division 2) (Federal Circuit Court) on 27 January 2021.

13    It is common ground that the principal claim by Mr Dove and Xmeta’s cross-claim are each a proceeding “in relation to a matter arising under” the Fair Work Act 2009 (Cth) (FW Act) for the purposes of s 570(1) of the FW Act. It is also common ground that costs orders have previously been made against Xmeta in this proceeding by the Federal Circuit Court and by this Court. Each of the past costs orders has been paid promptly (I was told from the bar table, without demur).

D.    Application to strike out the whole of the FASCC as an abuse of process

14    The essence of the application to strike out the FASCC as a whole is that Mr Chen is in control of Xmeta’s conduct of the proceeding and will benefit from any order made in favour of Xmeta.

Background

15    There is no substantial dispute as to the underlying facts, which are as follows.

16    In or about July 2021, a Share Purchase Agreement was entered into between: (1) Delmore & Solomon Investments Pty Ltd, Mr Chen and Mr Ye Qu as “Sellers”; and (2) I-Chen Hsieh as “the Buyer”.

17    As at the date of the Share Purchase Agreement, Mr Chen was one of the three shareholders of Xmeta and its only director. Mr Qu, another of the three shareholders, had been a director of Xmeta between August 2018 and August 2020.

18    The Share Purchase Agreement provided for the sale and purchase of all of the issued share capital in Xmeta (defined as the “Company” in the Share Purchase Agreement).

19    Clause 9.3 of the Share Purchase Agreement provides:

9.3    Christian Dover Matter

9.3.1    The parties acknowledge that the Company and Mr Christian Dover have a few ongoing court proceedings as well as various claims against each other arising out of and/or associated with Mr Christian Dover’s former employment and work relationship with the Company.

9.3.2    The parties agree that:

a.    The Sellers shall be solely responsible for any fees, costs, expenses, compensation, liabilities, or any other amount the Company pays or is required to pay associated with or in relation to the Christian Dover Matter and any GST that arises because of any payment by the Sellers; and

b.    Any compensation received by the Company from the Christian Dover Matter belongs to and shall be paid by the Company to the Sellers less any Tax arising because of the compensation and less any amount payable under sub paragraph 9.3.2 a.

9.3.3    The parties agree that this clause 9 is not subject to clause 10, meaning that clause 10 is not applicable to the Christian Dover Matter.

(emphasis in original)

20    The expression “Christian Dover matter” is defined in cl 1.1 of the Share Purchase Agreement as meaning “all claims and proceedings the Company brought against Mr Christian Dover or Dove and all claims and proceedings Mr Christian Dover or Dove brought against the Company”.

21    I pause at this point to identify and reject the suggestion made on behalf of the cross-respondents that I should read cl 9.3 as a clause not directed to the proceedings between Xmeta and Mr Dove, because of the use of the word “Dover”, which it was suggested indicated (or may have indicated) a person other than Mr Dove. In circumstances where: (1) as at the date of the Share Purchase Agreement there were proceedings between Xmeta and Mr Dove; (2) cl 1.1 of the Share Purchase Agreement uses the expression “Mr Christian Dover or Dove” which is broad enough to include Mr Dove, despite the drafter’s apparent uncertainty as to the spelling of his surname; and (3) the absence of any evidence suggesting that Xmeta is involved in proceedings with a Mr Christian Dover, I am satisfied that cl 9.3 is directed to the proceedings between Xmeta and Mr Dove.

22    Returning to the Share Purchase Agreement, its effect was to make I-Chen Hsieh the sole shareholder of Xmeta. Since then, there have been numerous changes of ownership of the shares in Xmeta.

23    Since about 2 August 2021, when Mr Chen resigned as a director, Mr Gang Wang has been the sole director of Xmeta.

24    On 19 May 2022, Mr Wang and Mr Chen signed a letter addressed to the solicitor for Xmeta in the following terms:

Re: Authority to Act

I write as the director of Xmeta Pty Ltd (ACN 115 459 124) (formerly Everforex Financial Pty Ltd) (“Company”).

I have the previous shareholder and former director of the Company, Yun Chen (Andrew), co-sign this letter.

I understand that:

•    The Company has engaged SHL & Associates Lawyers (“you”) in a few proceedings with Christian Dover, and Andrew has been the person you have been taking instructions on behalf of the Company; and

•    You require a new authority to act to confirm that the Company’s engagement with you continues.

I confirm that:

•    The Company will continue the appointment of your firm to act on its behalf in relation to the proceedings with Christian Dover; and

•    Andrew is the person nominated by the Company to manage these proceedings.

Further to the above, I also require that despite Andrew is the person you should take instructions from, all your communication with the Company should be copied to [particular email addresses].

(emphasis in original)

25    On 31 March 2023, the parties engaged in a mediation conducted by a Registrar of this Court. In preparation for that mediation, on 28 March 2023, the solicitors for Xmeta wrote to the Court and to the solicitors for the cross-respondents indicating that Mr Chen would attend the mediation with full authority to make decisions on behalf of Xmeta.

26    This message was repeated in an email dated 30 March 2023, which email attached an authority signed by Mr Wang, as sole director of Xmeta, in the following terms:

Written Authority

XMETA Pty Ltd ACN 115 459 124 hereby authorising Mr Yun Chen (Also known as Andrew Chen) to act for and on behalf of XMETA Pty Ltd in relation to the upcoming mediation before Registrar Morgan on 31 March 2022 at 10:15 am and the Federal Court proceedings generally (Case Number: NSD817/2022). This is a continuing and ongoing written authority until revoked.

Mr Yun Chen (Also known as Andrew Chen) has full authority to act, to decide and to settle on behalf of XMETA Pty Ltd ACN 115 459 124 (previously known as Everforex Financial Pty Ltd ACN 115 459 124) in relation to the above Federal Court proceedings.

(emphasis in original)

27    Mr Chen (and not Mr Wang) attended the mediation and created the impression in the minds of Mr Dove and Mr Starkey that he was the decision-maker on behalf of Xmeta with respect to this proceeding.

28    Other communications have occurred between Mr Starkey and Mr Chen, again creating the impression in the mind of Mr Starkey that Mr Chen is the decision-maker on behalf of Xmeta with respect to this proceeding and is conducting the proceeding for his own benefit.

Consideration

29    It is clear from the background set out above that Mr Chen is managing Xmeta’s conduct of this proceeding and that as one of the three Sellers in the Share Purchase Agreement he is entitled to share in any compensation received by Xmeta as a result of this proceeding (Share Purchase Agreement, cl 9.3.2b).

30    The essence of the cross-respondents’ submission is that these matters constitute an abuse of process.

31    An allegation of abuse of process is a serious allegation and a party contending that there has been such an abuse bears a heavy onus: Mariconte v Nobarani [2021] FCAFC 96 at [32] (Allsop CJ, Farrell and Derrington JJ) and the authorities there cited. Further, the power to stay or dismiss a proceeding on the basis that it is an abuse of process is to be exercised sparingly and only in exceptional cases: Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509 at 529 (Mason CJ, Dawson, Toohey and McHugh JJ); Clarke v Nursing and Midwifery Council of New South Wales [2019] FCA 1782 at [80] per Flick J, and the authorities there cited. When a stay is ordered, this is done so as to protect the integrity of the Court’s processes and not for purposes related to punishment or deterrence: Victoria International Container Terminal Ltd v Lunt [2021] HCA 11; (2021) 271 CLR 132 at 141 [19] and 146 [32] (Kiefel CJ, Gageler, Keane and Gordon JJ). It is a measure of last resort: Lunt at 142 ([21] to [22]).

32    It is well-established that the categories of abuse of process are not closed.

33    Whilst an exhaustive definition of what will constitute an abuse of process is not available, many instances of abuse will exhibit at least one of the following characteristics: the invocation of the Court’s processes for an illegitimate or collateral purpose; the use of the Court’s procedures in a manner which would be unjustifiably oppressive to a party; and the use of the Court’s procedures in a manner that would bring the administration of justice into disrepute: PNJ v The Queen [2009] HCA 6; (2009) 83 ALJR 384 at 385 to 386 [3] (French CJ, Gummow, Hayne, Crennan and Kiefel JJ (as her Honour then was)); Lunt at 140 [14].

34    In the Lunt proceeding in the Full Court of this Court – Lunt v Victoria International Container Terminal Limited [2020] FCAFC 40 – Bromberg, Kerr and Wheelahan JJ stated at [16], in a passage quoted with apparent approval by the plurality of the High Court of Australia in Lunt at 139 [12]:

As is made clear by the observations of Brennan J in Spautz, where a person has commenced or maintained a proceeding desiring to obtain a result within the scope of the remedy sought, the presence of a motive or reason for pursuing a proceeding which may be fulfilled as a consequence of obtaining the legal remedy which the proceeding is intended to produce, does not ground an abuse of process.

35    At 143 [23], the plurality of the High Court of Australia held that the Full Court of this Court correctly concluded that whilst Mr Lunt may have been motivated to bring that proceeding out of loyalty to the Union that would benefit from his success in the proceeding, this did not mean that the proceeding was brought for an improper purpose. The plurality emphasised the importance of the distinction between motive and purpose in this context, citing the following passage from Spautz at 526 to 527 (Mason CJ, Dawson, Toohey and McHugh JJ):

To say that a purpose of a litigant in bringing proceedings which is not within the scope of the proceedings constitutes, without more, an abuse of process might unduly expand the concept. The purpose of a litigant may be to bring the proceedings to a successful conclusion so as to take advantage of an entitlement or benefit which the law gives the litigant in that event.

Thus, to take an example mentioned in argument, an alderman prosecutes another alderman who is a political opponent for failure to disclose a relevant pecuniary interest when voting to approve a contract, intending to secure the opponent’s conviction so that he or she will then be disqualified from office as an alderman by reason of that conviction, pursuant to local government legislation regulating the holding of such offices. The ultimate purpose of bringing about disqualification is not within the scope of the criminal process instituted by the prosecutor. But the immediate purpose of the prosecutor is within that scope. And the existence of the ultimate purpose cannot constitute an abuse of process when that purpose is to bring about a result for which the law provides in the event that the proceedings terminate in the prosecutor’s favour.

It is otherwise when the purpose of bringing the proceedings is not to prosecute them to a conclusion but to use them as a means of obtaining some advantage for which they are not designed or some collateral advantage beyond what the law offers.

36    In the present case, the jurisdiction of the Court was regularly invoked. There is no suggestion (and no evidence) that either Xmeta or Mr Chen is using the processes of the Court in pursuit of the cross-claim for any purpose other than seeking an award of damages in favour of Xmeta. Such an award is a remedy which is available as part of the ordinary processes of the Court. Put another way, Xmeta and Mr Chen are not seeking an object beyond that which the legal process offers: see Morningstar Research Pty Ltd v Fiduciary Ltd [2003] FCA 870; (2003) 131 FCR 236 at 242 [29] (Hely J).

37    Whilst Xmeta’s ultimate motive – as reflected in the Share Purchase Agreement – is to pay any amount awarded to it to the Sellers, this does not render Xmeta’s legitimate use of the processes of the Court available to it an abuse of such processes. The argument to the contrary impermissibly conflates Xmeta’s purpose in engaging the processes of the Court with its ultimate motive for maintaining the proceeding.

38    For the above reasons, the application to strike out the FASCC as a whole on the basis of an abuse of process should be dismissed.

E.    Application to strike out particular paragraphs of the FASCC

39    I turn now to consider the cross-respondents’ application to strike out particular paragraphs of the FASCC.

Generally

40    The strike out application is brought under r 16.21. The cross-respondents have not sought to invoke s 31A of the Federal Court of Australia Act 1976 (Cth) (FCA Act). For the cross-respondents to succeed on this application, they must satisfy the Court that the proceeding should not proceed to trial with the FASCC in a form which contains the impugned paragraphs. As the plurality (Gaudron, McHugh, Gummow and Hayne JJ) explained in Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552 at 575 to 576 [57], the issues raised in a proceeding should not be decided in a summary way except in the clearest of cases. As their Honours stated, “the test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way”.

41    The impugned paragraphs are paragraphs 167 to 180, 186 to 206 and 263 to 273 of the FASCC. Senior Counsel for Xmeta accepted during the course of argument that paragraphs 198 to 206 could not survive the present application. Thus, those paragraphs will be struck out.

42    The remaining impugned paragraphs concern alleged misleading or deceptive conduct by Mr Dove (Dove Pre-Contractual Representations) and Mr Starkey (Starkey Pre-Contractual Representations) prior to their entry into their respective employment contracts.

43    It is convenient to consider the grounds of complaint which relate to the Dove Pre-Contractual Representations first and then to deal with those which relate to the Starkey Pre-Contractual Representations.

Dove Pre-Contractual Representations

44    The Dove Pre-Contractual Representations are described at paragraphs 167 to 177 of the FASCC. Those representations are alleged to have been made by Mr Dove to Xmeta “during the negotiations” of his employment contract. Paragraphs 167 to 175 allege particular acts said to give rise to representations; and paragraphs 176 and 177 allege omissions on the part of Mr Dove during those negotiations (i.e., that he failed to mention or explain identified matters to Xmeta). Paragraph 179 pleads that the Dove Pre-Contractual Representations were predominantly as to future matters.

45    The Dove Pre-Contractual Representations are alleged to have been: made in “trade or commerce” (paragraph 178 of the FASCC); misleading or deceptive or likely to mislead or deceive within the meaning of ss 4 and 18 of the Australian Consumer Law (ACL, being Schedule 2 to the Competition and Consumer Act 2010 (Cth)) (paragraphs 191 to 196 of the FASCC); and causative of loss and damage to Xmeta which entered into the employment contract with Mr Dove on 14 January 2019 in reliance upon the Dove Pre-Contractual Representations (paragraphs 4, 180 and 197 of the FASCC).

46    I turn now to the grounds on which the cross-respondents contend that the impugned paragraphs or parts of them should be struck out.

Ground 1: The Dove Pre-Contractual Representations and the requirement that the impugned conduct be conduct in “trade or commerce”

47    Section 18(1) of the ACL provides:

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

48    The cross-respondents contend that the Dove Pre-Contractual Representations cannot have been conduct in “trade or commerce” and thus that the cause of action based on those representations, under s 18 of the ACL, cannot succeed.

49    I do not accept this contention, for the following reasons.

50    The seminal case concerning the meaning of “trade or commerce” for the purposes of s 18 of the ACL is Concrete Constructions (NSW) Pty Ltd v Nelson [1990] HCA 17; (1990) 169 CLR 594.

51    The relevant reasoning of the plurality (Mason CJ, Deane, Dawson and Gaudron JJ) was conveniently summarised by the Full Court of this Court (French J as his Honour then was; Sackville and Conti JJ) in Village Building Co Ltd v Canberra International Airport Pty Ltd [2004] FCAFC 240; (2004) 139 FCR 330 at 338 to 340 ([44] and [45]):

44.    The joint judgment addressed the meaning of the expression “in trade or commerce” in s 52. The following propositions emerge from the judgment (cf the judgment of Dowsett J, dissenting, in Hearn v O’Rourke (2003) 129 FCR 64 at [28]):

(i)    The phrase “in trade or commerce” in s 52 has a restrictive operation (at 602);

(ii)    Two competing constructions of the phrase are available. The broader view would encompass (at 602-603):

... 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.

This would extend, for example, to a case where one employee gives inaccurate information to another in the course of carrying on the building activities of a commercial builder. The narrower view is that the phrase “in trade or commerce” refers only (at 603):

... 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 … 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.

The narrower view is the correct construction of s 52;

(iii)     Accordingly, what s 52 is concerned with is (at 604):

the conduct of a corporation towards persons, be they consumers or not, with whom it (or those whose interests it represents or is seeking to promote) has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character. Such conduct includes, of course, promotional activities in relation to, or the purposes of, the supply of goods or services to actual or potential consumers, be they identified persons or merely an unidentifiable section of the public.

(iv)     In some areas the dividing line between what is and what is not conduct in trade or commerce may be less clear and (at 604):

... may require the identification of what imports a trading or commercial character to an activity which is not, without more, of that character. The point can be illustrated by reference to the examples mentioned above. The driving of a truck for the delivery of goods to a consumer and the construction of a building for another pursuant to a building contract are, no doubt, trade or commerce in so far as the relationship between supplier and actual or potential customer or between builder and building owner is concerned. That being so, to drive a truck with a competitor’s name upon it in order to mislead the customer or to conceal a defect in a building for the purpose of deceiving the building owner may well constitute misleading or deceptive conduct “in trade or commerce” for the purposes of s 52. On the other hand, the mere driving of a truck or construction of a building is not, without more, trade or commerce and to engage in conduct in the course of those activities which is divorced from any relevant actual or potential trading or commercial relationship or dealing will not, of itself, constitute conduct “in trade or commerce” for the purposes of that section. That being so, the giving of a misleading handsignal by the driver of one of its trucks is not, in the relevant sense, conduct by a corporation “in trade or commerce”. Nor, without more, is a misleading statement by one of a building company’s own employees to another employee in the course of their ordinary activities. The position might well be different if the misleading statement was made in the course of, or the purposes of, some trading or commercial dealing between the corporation and the particular employee.

45.    Since the alleged misleading or deceptive conduct in Concrete Constructions itself consisted of an internal communication between employees in the course of their ordinary activities in constructing a building, the conduct was not in trade or commerce (at 605). Thus the employer had not contravened s 52 of the TP Act.

(emphasis added)

52    The Full Court in Village Building Co then explained at 340 ([46] to [48]) matters to be borne in mind when applying the principles set down in Concrete Constructions:

46.    In applying the principles laid down by the High Court it is helpful to bear in mind the context in which Concrete Constructions was decided. As Wilcox J observed in Barto v GPR Management Services Pty Ltd (1991) 33 FCR 389 at 393:

It is easy to understand the policy reasons underlying Concrete Constructions. A contrary result would have led to s 52 being used as a vehicle for the recovery of personal injury damages in a large number of industrial and motor accident cases; even cases where the respondent was not negligent, but only if it happened to be a “corporation” as defined in s 4 of the Trade Practices Act. And this development would have occurred at the very time that some States were legislating to exclude personal injury damages claims in industrial and/or motor accident cases.

47.    The context assists in understanding the import of remarks in the joint judgment, which sometimes appear to be treated as though they are contained in a statute rather than a judgment construing a statute. For example, their Honours observed (at 604) that s 52 was:

… not intended to impose, by a side-wind, an overlay of Commonwealth law upon every field of legislative control into which a corporation might stray for the purposes of, or in connection with, carrying on its trading or commercial activities.

    Clearly enough, this observation was directed at the construction worker’s attempt to use s 52 of the TP Act to circumvent restrictions imposed by State law on the recovery of damages in personal injury cases. It should not be regarded as an independent principle of construction intended to narrow the scope of s 52 beyond what follows from the construction adopted by the joint judgment.

48.    The joint judgment in Concrete Constructions acknowledged that the “dividing line” between conduct that is or is not in trade or commerce, according to the narrower construction of s 52 of the TP Act, may be difficult to draw. However, once the narrower construction of s 52 was adopted, the facts of Concrete Constructions clearly fell outside s 52. Other fact situations will be much closer to the line.

(emphasis added)

53    The Full Court in Village Building Co then referred to the divergence in views in this Court, as at 2004, concerning the application of the principles in Concrete Constructions to conduct involving representations made by an employer to an employee in connection with the employee’s terms of employment. At 340 to 341 [49], the Full Court stated:

The difficulty that can arise in applying the principles in Concrete Constructions is illustrated by the different views expressed in this Court as to whether representations made by a corporation to an employee in connection with the employee’s terms of employment constitute conduct in trade or commerce. In Barto v GPR Management, in the context of a strike out application, Wilcox J held (at 395) that negotiations with a prospective or present employee in respect of that person’s employment contract are capable of falling within s 52 of the TP Act. In Martin v Tasmania Development & Resources (1999) 89 IR 98 (Martin) at [70]-[77] Heerey J disagreed, holding that a communication to an employee asserting that termination of his employment was required on operational grounds was not a dealing of a trading or commercial nature. (This issue was not addressed on appeal: Tasmania Development & Resources v Martin (2000) 97 IR 66.) In Stoelwinder v Southern Health Care Network (2000) 97 IR 76, Finkelstein J preferred Barto to Martin. In Hearn v O’Rourke (2002) 193 ALR 264, a case involving a different fact situation, Kiefel J at first instance expressed a preference for the reasoning in Martin. The Full Court allowed an appeal (Finn and Jacobson JJ; Dowsett J dissenting), but did not find it necessary to resolve the conflict: Hearn and Another v O’Rourke and Another (2003) 129 FCR 64.

54    The controversy does not appear to have been quelled in the interim. Of particular present relevance is that it cannot fairly be said that conduct prior to the creation of an employment relationship cannot be conduct in trade or commerce.

55    This is illustrated by Rakic v Johns Lyng Insurance Building Solutions (Victoria) Pty Ltd (Trustee) [2016] FCA 430; (2016) 259 IR 47 (Bromberg J). In that case, allegations were made that a prospective employer made misrepresentations to a prospective employee during pre-contractual negotiations. The person who became an employee of the representor claimed that such conduct contravened ss 18 and 31 of the ACL. Bromberg J at 65 [62] followed Kenny J in Walker v Salomon Smith Barney Securities Pty Ltd [2003] FCA 1099; (2003) 140 IR 433, noting that her Honour’s finding in Walker that representations in pre-employment negotiations could support a s 52 Trade Practices Act 1974 (Cth) (TP Act) action was directly on point and formed part of the ratio decidendi in Walker. Bromberg J ultimately found that the pre-contractual representations made in Rakic were conduct that contravened s 18 of the ACL and that damages were payable (see 52 [6]).

56    In Walker, Mr Walker claimed that misrepresentations had been made to him qua prospective employee by his prospective employer during negotiations which culminated in his entry into a contract of employment. At 472 to 473 ([180] to [185]), Kenny J surveyed various authorities concerning the question of the application of Concrete Constructions to conduct occurring during the negotiation of employment contracts; and whether such conduct can be conduct in trade or commerce. Having done so, her Honour concluded that “misleading and deceptive conduct in the course of negotiations for employment may support a cause of action under s 52 of the TPA”. Her Honour held that some of the alleged misrepresentations were made out and that Mr Walker was entitled to relief by way of damages.

57    A further example of a case in which representations made by a prospective employer to a prospective employee were found to have been conduct within trade or commerce is Russell v RCR Tomlinson Ltd (No 2) [2016] WASC 240 (Tottle J). In that case the “First Representation” was described as a representation made by the prospective employer to the prospective employee, in a conversation in which the Chief Executive Officer of the prospective employer told the prospective employee that he would be paid a retirement benefit by the prospective employer if his employment were terminated otherwise than for cause (see [5], [160(a)]). Tottle J reasoned relevantly as follows (at [171] to [175]):

Was the First Representation made in trade or commerce?

171    There are conflicting authorities as to whether representations made in the course of pre-employment negotiations are made in ‘trade or commerce’. The authorities from which the conflict emerges were reviewed by Buchanan J in Westpac Banking Corporation v Wittenberg [2016] FCAFC 33 [181] - [196]. At [195] his Honour expressed the view that s 53B of the TP Act ‘did all the work that was necessary with respect to pre-employment negotiations and that the more limited view of the reach of s 52 was the correct one’. That view was obiter dicta. McKerracher J relevantly agreed with Buchanan J’s view. White J preferred not to consider the issue.

172    More recently in Rakic v Johns Lyng Insurance Building Solutions (Victoria) Pty Ltd (Trustee) [2016] FCA 430 [62], Bromberg J declined to follow the obiter view expressed by Buchanan J in Westpac Banking Corporation v Wittenberg and followed the decision of Kenny J in Walker v Salomon Smith Barney Securities Pty Ltd [2003] FCA 1099; (2003) 140 IR 433 [185], in which her Honour, after reviewing the relevant authorities, held that misleading or deceptive conduct in the course of negotiations for employment may support a cause of action under s 52 of the TP Act.

173    In Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594, 603 the majority (Mason CJ, Deane, Dawson & Gaudron JJ) held that the words ‘in trade or commerce’ in s 52 of the TP Act refer to the ‘central conception’ of trade or commerce and not to the immense field of activities in which corporations engage in the course of, or for the purposes of, carrying on some overall trading or commercial business.

174    In my view, the negotiations between Mr Russell and Mr Noordhoek fell within the central conception of trade or commerce because they concerned an agreement that related not only to Mr Russell’s prospective employment but also to the protection, by means of the non-competition clause in the Services Agreement, of RCR’s business and the business of any ‘Related Body Corporate’ for up to five years after the termination of Mr Russell’s employment. The protection of a business by means of a non-competition clause is a matter undertaken in trade or commerce.

175    Accordingly, I conclude that the First Representation was made in trade or commerce.

(emphasis in original)

58    The existence of differing views as to whether conduct occurring as part of pre-contractual negotiations may be conduct in trade or commerce was also the subject of comment by McKerracher J in Zaghloul v Woodside Energy Limited (No 7) [2019] FCA 818 at [118]:

There are certainly cases since Concrete Constructions, including those on which Dr Zaghloul relies, where specific elements of the pleaded conduct have led courts to conclude that pleadings should not be struck out on a summary basis because of the manner in which conduct fell within the employment relationship sphere. But those cases have invariably involved features taking the conduct outside of the key realm of employment activities or transactions which, of their nature, bear a trading or commercial character. So, for example, differing views, mainly at a summary judgment level, have been expressed in relation to activities which are negotiations with an existing employee about a variation to an employment contract or negotiations with a prospective employee: Barto v GPR Management Services Pty Ltd (1991) 33 FCR 389 per Wilcox J (at 393-394), Stoelwinder v Southern Health Care Network (2000) 177 ALR 501 per Finkelstein J (at [6]), David Walker v Salomon Smith Barney Securities Pty Ltd [2003] FCA 1099 per Kenny J (at [185]-[188]) and McCormick v Riverwood International (Australia) Pty Ltd (1999) 167 ALR 689 per Weinberg J (at [28]-[31]).

(emphasis added)

59    More recently, in Sheehy v Nuix Pty Ltd [2023] FCA 56 at [36] Halley J noted that: “Conduct occurring in the negotiation of employment terms (for example, misleading statements) might be in trade or commerce”, citing Walker at 472 to 473 ([180] to [185]).

60    In support of their submission that the Dove Pre-Contractual Representations should be struck out because such representations could not have been conduct in trade or commerce, the cross-respondents placed heavy reliance upon the decision of the Full Court (Buchanan, McKerracher and White JJ) in Westpac Banking Corporation v Wittenberg [2016] FCAFC 33; (2016) 242 FCR 505 and in particular the views expressed by Buchanan J at 540 [195]:

It is not necessary to address the wider question raised in some of the cases to which I have referred, although my own view is that s 53B of the TP Act did all the work that was necessary with respect to pre-employment negotiations and that the more limited view of the reach of s 52 of the TP Act was the correct one. In the present cases, the offers of a retention incentive payment were concerned with the internal affairs and management of SGB.

61    The cross-respondents submitted that the views expressed by Buchanan J at 540 [195], together with the concurrence of McKerracher J at 563 [334], are binding authority for the principle that representations made in pre-employment negotiations cannot be conduct in trade or commerce.

62    There are two aspects to the observations made by Buchanan J. The first is that s 53B of the TP Act operated to the exclusion of s 52 of that Act with respect to pre-employment contract conduct. The second is that the “more limited view” of the reach of s 52 of the TP Act was correct.

63    I do not accept that either of these views compels the striking out of the paragraphs of the FASCC which concern the Dove Pre-Contractual Representations, for the following reasons.

64    First, those views were each obiter.

65    So much is clear from the opening words of [195]. Further, Wittenberg involved alleged representations made during the employment relationship, as is clear from the judgment of Griffiths J at first instance: see Murphy v Westpac Banking Corporation [2014] FCA 1104 at [690] to [706] and [901] to [906] and Rakic at 64 [60]. Griffiths J held that as the representations were made to extant employees, the representations were not conduct in trade or commerce for the purposes of s 52 of the TP Act, or conduct “in relation to employment that is to be, or may be offered by the corporation or by another person” within the meaning of s 53B of the TP Act.

66    The Full Court upheld the approach taken by Griffiths J. Further, and importantly, as the Full Court agreed that the employees had failed to prove loss, the decision of the Full Court did not depend upon any finding as to whether the impugned conduct was conduct in trade or commerce. Thus, the ratio decidendi of the decision of the Full Court in Wittenberg does not extend to any conclusion as to whether conduct occurring prior to the formation of an employment relationship was in trade or commerce.

67    I note also that both Bromberg J in Rakic at 65 [62] and Tottle J in Russell at [171] treated the views of Buchanan J as obiter.

68    Secondly, it is not apparent, as a matter of statutory construction, that s 53B of the TP Act necessarily precluded the operation of s 52 of the TP Act with respect to pre-employment conduct; or in the present context that such a relationship exists between ss 31 and 18 of the ACL (noting also that there are textual differences between the two pairs of provisions). It is open to argument that the Court would be slow to conclude that s 31 of the ACL operates to the exclusion of s 18 of the ACL with respect to pre-employment conduct in circumstances where: (1) there is no textual imperative in either section for the conclusion that s 31 operates to the exclusion of s 18 with respect to pre-employment conduct; (2) the two provisions can operate together, albeit with overlap, with s 31 operating exclusively only where the conduct cannot be said to be conduct in trade or commerce; and (3) the objects of the Competition and Consumer Act include the enhancement of the welfare of Australians through the promotion of fair trading and it might be inferred that Parliament intended each section to operate to its fullest extent.

69    I note also that the cross-respondents have cited no binding authority in support of their submission that s 31 precludes the operation of s 18 in the present case.

70    Thirdly, the “more limited view of the reach of s 52” referred to in [195] of Wittenberg, which appears to be that s 52 of the TP Act did not apply to conduct in an employment context, is difficult to reconcile with the approach taken in the cases discussed at [55] to [59] above. I note also that Bromberg at 64 ([61] to [62]) expressed his agreement with the reservations expressed by White J, the third member of the Full Court in Wittenberg, at [347]:

Buchanan J has reviewed the authorities indicating divergent views on the question in this Court. Given that divergence, I would prefer to reserve to an occasion when it is necessary to do so consideration of the question of whether an employer’s statements made to a prospective employee in relation to contemplated employment, or to an existing employee with a view to retaining the services of that employee, may be “conduct which is … an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character” (Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 603). I would not wish presently to preclude the possibility that an employer’s statements of those kinds may be characterised differently from statements made by an employer in the context of an existing employment relationship concerning the place, manner or circumstances of an employee’s work, which are generally thought not to have a commercial character. It may also be that misleading or deceptive statements to prospective or existing employees about future employment are analogous to misleading or deceptive statements to prospective or existing suppliers or goods or services about future supply arrangements. Conduct of the latter kind is commonly regarded as having a trading or commercial character.

(emphasis added)

71    I respectfully agree with White and Bromberg JJ.

72    In summary, as the above analysis demonstrates, the question whether conduct which is alleged to have occurred – as in the present case – between a prospective employer and a prospective employee can be conduct in trade or commerce is an open question. There are authorities to the effect that a claim under s 18 of the ACL (or its predecessor, s 52 of the TP Act) based upon an allegation concerning pre-contractual conduct by a prospective employer to a prospective employee may be conduct in trade or commerce, and that an allegation to that effect should not be struck out: see e.g. Barto v GPR Management Services Pty Ltd [1991] FCA 659; (1991) 33 FCR 389 (Wilcox J) and Stoelwinder v Southern Health Care Network [2000] FCA 444; (2000) 177 ALR 501 (Finkelstein J). Further, in Walker, Rakic and Russell such conduct was found – on a final basis – to have been conduct in trade or commerce for the purposes of s 52 of the TP Act or s 18 of the ACL.

73    I note that in the cases discussed above the person alleged to have engaged in the contravening conduct was the prospective or extant employer, and that in the present case the person alleged to have engaged in the contravening conduct is the prospective employee. However, I do not regard this as a point of distinction that compels a conclusion that the alleged misrepresentations cannot have been conduct in trade or commerce. No authority has been cited to the Court to the effect that a representation made by a prospective employee to a prospective employer cannot be conduct in trade or commerce. To adopt the expression of Wilcox J in Barto at 395, it cannot be said, without an investigation of the facts, that the proposition that such conduct is conduct in trade or commerce is so clearly untenable as to justify striking out a pleading which relies upon it. Those facts may include the terms of the draft employment contract, including any post-employment restraints upon Mr Dove such as those set out at cll 20.6 to 20.8 of his employment contract (cf Russell at [174]).

74    For all of the above reasons, ground 1 fails.

Ground 2: Paragraph 175 of the FASCC

75    The cross-respondents’ next ground concerns specific complaints about paragraph 175 of the FASCC. That paragraph is in the following form:

From about 20 December 2018 to 11 January 2019 during the negotiations, the first cross respondent represented to the cross applicant in relation to his employment contract that:

(a)    He and Starkey would review their draft employment contracts and revert (Line 671), were making some small changes to their draft employment contracts which they would show to the drafting solicitor (Line 711), were ready to proceed if the cross applicant was (Lines 946 and 979);

(b)    He and Starkey had completed the changes they desired for their draft employment contracts (Line 739) including as to appendices (Line 750) and they were ready to sign (Line 750);

(c)    Everything in relation to the draft employment contracts was agreed and the drafting solicitor just needed to finalise it (Line 861);

(d)    His and Starkey’s draft employment contracts incorporated their suggested amendments (Line 979) and they were ready to sign (Line 982);

(e)    He was aware that his draft employment contract did not refer to a legally enforceable sign on bonus and was content to keep any alleged rights he had about such a sign on bonus at the level of a non-enforceable ‘gentlemen’s agreement’ so he could just sign and start doing some real work (Lines 995 – 997);

(f)    Consequently or additionally, he was content with any performance bonus being conditional on the new margin forex business making a profit, including as set out in the draft of his employment agreement

(‘Employment Contract Is Acceptable Representations’).

Particulars

i.    From about 20 December 2018 to 11 January 2019 the first cross respondent made via WeChat the Employment Contract Is Acceptable Representations directly and/or by not contradicting Starkey or Eric Qu;

ii.    From about 8 October 2018 to 2 November 2018 the first cross respondent made via email the Employment Contract Is Acceptable Representations directly and/or by agreeing with Jack Jian;

(emphasis in original)

76    The cross-respondents’ first complaint is that the alleged representations set out at paragraph 175(c) to (e) are alleged to have been made after the employment contract between Mr Dove and Xmeta was “deemed to commence” on 1 January 2019 and as intra-employment conduct cannot be conduct in trade or commerce, relying upon Concrete Constructions and Wittenberg.

77    I do not accept this submission. Paragraph 175 of the FASCC alleges that the representations set out therein occurred during the negotiation of Mr Dove’s employment contract between 20 December 2018 and 11 January 2019. That contract is alleged by Xmeta to have been entered into on 14 January 2019 (FASCC, paragraph 4) and Mr Dove’s evidence on this application includes that he signed his employment contract on 14 January 2019. That the employment contract bears a date of 1 January 2019 does not alter the fact that the representations are alleged to have occurred prior to the physical act of signing the contract on 14 January 2019.

78    The cross-respondents’ second complaint is that paragraph 175(f) “is bad for form in that it is not more than supposition, is neither a pleading of fact nor law and should therefore be struck out”.

79    I do not accept this submission. Read with the chapeau to paragraph 175, paragraph 175(f) is an allegation that Mr Dove made a representation that he was content with any performance bonus being conditional on the new margin forex business making a profit, including as set out in the draft of his employment agreement.

80    Thus, ground 2 fails.

Ground 3: Paragraphs 176 to 178 of the FASCC

81    Paragraphs 176 to 178 are in the following form, in so far as is presently relevant:

176    During the negotiations, the first cross respondent did not mention to the cross applicant that:

(a)    The cross applicant and/or its shareholders would need to continuously and/or periodically inject significant sums of money, beyond his quoted sums of $1.1M for regulatory capital requirements and $750,000 for operating expenses, into the new margin forex business;

(b)    If the cross applicant and/or its shareholders injected his quoted sums of $1.1M and$750,000, and even further significant sums of money, into the new margin forex business there was still a possibility that such money could be permanently lost.

(‘Failure To Warn Of Risk Of Loss Representations’)

Particulars

i.    During the negotiations, the first cross respondent made the Failure To Warn Of Risk Of Loss Representation to the cross applicant by remaining silent as to the risks associated with hiring him as the CEO of the new margin forex business.

ii.    The first cross respondent’s quoted sums of $1.1M for regulatory capital requirements and $750,000 for operating expenses was made via an email dated 14 October 2018.

177    During the negotiations, the first cross respondent did not explain or mention to the cross applicant:

(a)    The differences between using introducing brokers and corporate authorised representatives, on the one hand, versus growing sales organically, on the other;

(b)    The implications for profitability if the sales and marketing team failed to grow sales organically;

(c)    Whether and why the cross applicant might need to rely heavily on introducing brokers and corporate authorised representatives and for how long;

(d)    What it cost to use introducing brokers and corporate authorised representatives;

(e)    The possibility that Starkey might fail as head of sales and marketing

(f)    What kind of funding the sales and marketing team might need if Starkey was not its head;

(g)    The risks of the new margin forex business failing and how such risks could be managed

(‘Failure To Warn Of Risk of Sales Team Failure Representations’).

Particulars

i.    During the negotiations, the first cross respondent made the Failure To Warn Of Risk Of Sales Team Failure Representations by remaining silent about these matters.

178    At all material times, the first cross respondent made the following representations in trade or commerce:

...

(j)    Failure To Warn Of Risk Of Loss Representations;

(k)    Failure To Warn Of Risk of Sales Team Failure Representations

(Together, the ‘Dove Pre-Contractual Representations’)

(emphasis in original)

82    The cross-respondents contend that these paragraphs should be struck out for three reasons.

83    The first is that these allegations are doomed to fail because, the cross-respondents contend, Xmeta was a sophisticated business entity, being the holder of an Australian Financial Services licence and as such it should be taken to have already been aware of the matters of which it suggests Mr Dove failed to inform it. In support of that submission the cross-respondents cited the following passage from the judgment of Franki J (with whom Fisher J agreed) in Annand & Thompson Pty Ltd v Trade Practices Commission [1979] FCA 36; (1979) 40 FLR 165 at 176:

Broadly speaking it is fair to say that the question is to be tested by the effect on a person, not particularly intelligent or well informed, but perhaps of somewhat less than average intelligence and background knowledge although the test is not the effect on a person who is, for example, quite unusually stupid. The question is not whether the purchaser was deceived but whether the conduct was misleading or deceptive.

(emphasis of the cross-respondents)

84    I do not accept this submission. The cross-respondents’ submissions did not specify whether the allegations were doomed because Xmeta’s suggested status as a sophisticated business entity meant that the representations could not have been misleading or deceptive or likely to mislead or deceive, or because Xmeta as such an entity could not be found to have relied upon those representations. Whichever way it is put, it would be inappropriate to strike out the paragraph prior to the determination of critical factual questions including: (1) whether Xmeta was in fact a “sophisticated business entity”, or perhaps more relevantly, a determination of the level of sophistication and knowledge of the natural persons who decided on behalf of Xmeta to cause it to enter into an employment contract with Mr Dove; and (2) whether such persons in fact relied upon the representations.

85    The second reason put forward by the cross-respondents is that the mere failure to say something is insufficient to amount to a representation as to a future matter and that it is necessary for such an omission to have been intentional conduct of Mr Dove. In support of this submission, the cross-respondents rely upon Edgar v Farrow Mortgage Services Pty Ltd [1992] FCA 614 at [89] (Einfeld J):

Thus when the actionable representation is silence, the significant limitation is that the silence must be intentional. In other words, while the failure to disclose may in fact mislead, it will not be actionably misleading conduct unless this failure was intentional. Under the common law, this limitation exists in contract law only with fraudulent misrepresentations giving rise to damages. The limitation does not exist in tort law with negligent misrepresentations, and the scope for an action in tort when the relationship between the parties is contractual will be considered later. Of course intention may and will in many cases be inferred. The starker the unrevealed matter in terms of the subject matter in hand, and the greater its actual or potential benefits to the representor, the more readily will intention be implied.

86    I am not satisfied that the views expressed by Einfeld J at [89] provide a sufficient basis to strike out paragraphs 176, 177 and 178 of the FASCC.

87    In my view it is well open to argument that proof of a representation where silence is an element may occur by reference to all of the relevant circumstances surrounding the failure to speak, and the presence or absence of an intention to remain silent is one circumstance, among others, to be considered and as such that silence need not be intentional: see e.g. Johnson Tiles Pty Ltd v Esso Australia Ltd [2000] FCA 1572; (2000) 104 FCR 564 at 591 [66] and 592 [70] (French J, as his Honour then was); Noor Al Houda Islamic College Pty Ltd v Bankstown Airport Ltd [2005] NSWSC 20; (2005) 189 FLR 14 at 47 to 48 ([184] to [190]) (Hoeben J as his Honour then was); Miller and Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357 at 368 to 371 ([14] to [23]) (French CJ and Kiefel J (as her Honour then was)); Addenbrooke Pty Ltd v Duncan (No 2) [2017] FCAFC 76; (2017) 348 ALR 1 at 118 to 120 ([480] to [483]) (Gilmour and White JJ).

88    For all of the above reasons, ground 3 must fail.

Ground 4: The Dove Pre-Contractual Representations and expressions of opinion

89    The cross-respondents’ next ground is that each of the Dove Pre-Contractual Representations was no more than an expression of an opinion by Mr Dove and as such cannot be misleading or deceptive or likely to mislead or deceive. In support of this submission the cross-respondents cited Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682; [2009] ATPR 42-290 at 40,880 to 40,881 [10] (Gordon J), where her Honour stated:

The following principles are worth restating.

...

6.    A statement of opinion will not be misleading or deceptive or likely to mislead or deceive merely because it turns out to be incorrect, misinforms or is likely to do so: Elders Trustee 78 ALR 193, 242 and Bateman v Slatyer (1987) 71 ALR 553, 559. An incorrect opinion does not of itself establish that the opinion was not held by the person who expressed it or that it lacked any or any adequate foundation: Global Sportsman Pty Ltd 2 FCR 82, 88. An expression of an opinion which is identifiable as an expression of opinion conveys no more than that the opinion is held and perhaps that there is a basis for the opinion. If that is so, an expression of opinion however erroneous misrepresents nothing: Global Sportsman Pty Ltd 2 FCR 82, 88.

90    I do not accept this submission. Whether the Dove Pre-Contractual Representations are merely expressions of Mr Dove’s opinion is a matter for determination following a final hearing. They are not presently pleaded as such, no responsive pleading has yet been filed to the paragraphs which plead the Dove Pre-Contractual Representations and no evidence has been adduced or tested as to what Mr Dove said.

91    Further, an expression of opinion may be found to be conduct in contravention of s 18 of the ACL, including in the circumstances set out in the next subparagraph of Dukemaster:

7.    However, an opinion may convey that there is a basis for it, that it is honestly held and when it is expressed as the opinion of an expert, that it is honestly held upon rational grounds involving an application of the relevant expertise. If the evidence shows that the opinion was not held or that it lacked any or any adequate foundation, particularly if the opinion was expressed as an expert, a statement of opinion may contravene s 52 of the TPA: Elders Trustee 78 ALR 193, 242, proposition (4): see also Hannaford [2008] FCA 1591 at [253] and RAIA Insurance Brokers Ltd v FAI General Insurance Co Ltd (1993) 41 FCR 164; Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388; NC Seddon and MP Ellinghaus, Cheshire and Fifoot’s Law of Contract (9th Australian Edition, 2008), [11.116].

92    Thus, ground 4 fails.

Ground 5: The form of relief sought

93    The next ground is a complaint that Xmeta seeks no declarations, orders or relief as to the alleged breaches of the ACL, which it should not now be permitted to seek, and therefore each of the impugned paragraphs is otiose, can sound in no order against Mr Dove or Mr Starkey, and should be struck out.

94    Whilst it is true that the FASCC does not include a claim for declaratory relief concerning the alleged contraventions of s 18 of the ACL, this is not a pre-requisite to an order under s 236 of the ACL for the payment of loss or damage. That relief is sought by way of an order for damages is clear from the claims for relief in the FASCC for “Damages” and, to the extent necessary, “Such other or further order as this Court deems necessary”.

95    Thus, ground 5 fails.

Starkey Pre-Contractual Representations

96    I turn now to consider the cross-respondents’ complaints concerning Xmeta’s case based upon the Starkey Pre-Contractual Representations.

97    The Starkey Pre-Contractual Representations are described at paragraphs 263 and 264 of the FASCC. The Starkey Pre-Contractual Representations are alleged to have been made during the negotiation of Mr Starkey’s employment contract.

98    Paragraph 264 pleads that the Starkey Pre-Contractual Representations were predominantly as to future matters.

99    The Starkey Pre-Contractual Representations are alleged to have been: misleading or deceptive or likely to mislead or deceive within the meaning of ss 4 and 18 of the ACL (paragraphs 266 to 272); and causative of loss and damage to Xmeta which entered into the employment contract with Mr Starkey in reliance upon the Starkey Pre-Contractual Representations (paragraph 265 and 273). However, there is no allegation that the Starkey Pre-Contractual Representations were conduct engaged in in trade or commerce.

Ground 6: The Starkey Pre-Contractual Representations and the requirement that the impugned conduct be conduct in “trade or commerce”

100    The cross-respondents contend that the case based upon the Starkey Pre-Contractual Representations contains no allegation that those representations were conduct in trade or commerce and that this is sufficient to strike out paragraphs 263 to 273 of the FASCC. As noted above, it is clear that there is no allegation that the Starkey Pre-Contractual Representations involved conduct in trade or commerce. As s 18 of the ACL requires that the impugned conduct be conduct in trade or commerce, paragraphs 263 to 273 cannot succeed in their present form and should be struck out.

101    For completeness, I note that the cross-respondents also contend that the Starkey Pre-Contractual Representations are not capable of being conduct in trade or commerce. I do not accept this submission, for the reasons set out with respect to ground 1 above.

102    Thus, ground 6 should be upheld.

Ground 7: Paragraph 263 of the FASCC and the pleading of involvement

103    The seventh ground of complaint concerns paragraph 263 of the FASCC. As I have determined that this paragraph should be struck out (see ground 6), it is not strictly necessary to address this ground, but I will do so in deference to the submissions that the parties have made.

104    Paragraph 263 of the FASCC is in the following form:

At all material times, the fourth cross respondent:

(a)     Himself made the following representations (as defined) to the cross applicant directly and/or by not contradicting the first cross respondent or Jack Jian when he had the opportunity and duty to do so;

(b)     Further and/or alternatively, was ‘involved’ in the first cross respondent’s making of such representations within the meaning of sections 2 and 236 – 237 of the Australian Consumer Law;

namely the:

(a)     Effective Team Representations (defined in [168] above);

(b)     Run Margin Forex Business With Ease Representations (defined in [169] above);

(c)     8 October 2018 Representations (defined in [170] above);

(d)     Conflicts Of Interest Will Be Managed And 3 Years AFSL Representation (defined in [171] above);

(e)     Cash Flow Projection Representation (defined in [172] above);

(f)     Cash Flow Projection Details Representation (defined in [173] above);

(g)     Ability To Train Sales Staff Representations (defined in [174] above);

(h)     Failure To Warn Of Risk Of Loss Representations (defined in [176] above);

(i)     Failure To Warn Of Risk Of Sales Team Failure Representations (defined in [177] above)

(Together, the ‘Starkey Pre-Contractual Representations’).

Particulars

i.     To be clear:

a.     The fourth cross respondent engaged in misleading and deceptive conduct by making claims about what he himself could and would do for the cross applicant if hired;

b.     The fourth cross respondent was also involved in the first cross respondent’s misleading and deceptive conduct by not contradicting or qualifying the first cross respondent’s claims about what the (i) first cross respondent alone, (ii) the fourth cross respondent alone and (iii) the first and fourth cross respondents as a team could and would do for the cross applicant if hired in circumstances where he had the opportunity and duty to do so;

ii.     In relation to that component of the above listed representations which were sent via:

a.     WeChat, the fourth cross respondent either made the representation directly or by not contradicting the first cross respondent or Jack Jian.

b.     Email, the fourth cross respondent was either copied in, the sender or forwarder of, or included in an email chain which contained the email bearing the representation.

(emphasis in original)

105    The cross-respondents contend that paragraph 263(b) is fatally flawed because Xmeta has failed to plead that Mr Starkey “aided or abetted or counselled or procured or was knowingly concerned in or conspired to effect the alleged contraventions other than by silence” and failed to particularise any email forwarded by Mr Starkey .

106    Section 236 of the ACL provides, inter alia, that a person who suffers loss or damage as a result of conduct in contravention of s 18 of the ACL may recover the amount of such loss and damage from the person who contravened s 18 “or against any person involved in the contravention”. Section 2 of the ACL defines “involved” as follows:

involved: a person is involved, in a contravention of a provision of this Schedule or in conduct that constitutes such a contravention, if the person:

(a)  has aided, abetted, counselled or procured the contravention; or

(b)  has induced, whether by threats or promises or otherwise, the contravention; or

(c)  has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or

(d)  has conspired with others to effect the contravention.

(emphasis in original)

107    The particulars to paragraph 263 relevantly provide:

...

b.     The fourth cross respondent was also involved in the first cross respondent’s misleading and deceptive conduct by not contradicting or qualifying the first cross respondent’s claims about what the (i) first cross respondent alone, (ii) the fourth cross respondent alone and (iii) the first and fourth cross respondents as a team could and would do for the cross applicant if hired in circumstances where he had the opportunity and duty to do so;

...

108    It may be thought that a failure to contradict or qualify a statement made by another, without more would satisfy only sub-section (c) of the definition of “involved”. Nevertheless, if the claim based on the Starkey Pre-Contractual Representations is to be repleaded (as to which see [111] to [116] below) then the precise part or parts of the definition relied upon should be made clear. Further, the material facts relied upon to justify the particular sub-section or sub-sections should be expressly pleaded (rather than particularised).

Other grounds

109    Grounds 1, 3, 4 and 5, raised with respect to the Dove Pre-Contractual Representations are repeated with respect to the Starkey Pre-Contractual Representations.

110    Again, in view of the conclusion that I have reached above with respect to ground 6 – that paragraphs 263 to 273 of the FASCC should be struck out – it is strictly unnecessary to address the grounds referred to in the previous paragraph, in so far as they apply to the Starkey Pre-Contractual Representations. It is sufficient to note that I would reach the same conclusions with respect to those grounds in so far as they apply to the Starkey Pre-Contractual Representations as I did with respect to the Dove Pre-Contractual Representations, for the reasons earlier set out.

Leave to replead

111    For the reasons set out above, paragraphs 198 to 206 and 263 to 273 of the FASCC should be struck out.

112    Senior Counsel for Xmeta submitted that if parts of the FASCC were struck out, then Xmeta should be granted leave to replead. I did not understand this submission to include paragraphs 198 to 206 which were effectively abandoned (and which relate to conduct occurring during the employment relationship). Counsel for the cross-respondents vehemently resisted any grant of leave to replead, on the bases that: (1) the FASCC is the third version of the Statement of Cross-Claim; (2) the FASCC was drafted meticulously by Senior Counsel; and (3) a grant of leave to replead would defeat the purpose of the cross-respondents’ strike out application.

113    The relevant principles were conveniently summarised by Abraham J in Webb v Commonwealth [2021] FCA 1215 at [40]:

Ordinarily, a party whose pleadings have been struck out will be afforded an opportunity to replead so long as it is clear that there is purpose in doing so and that the further time and opportunity will have utility. That is, where an amendment may remedy the deficiencies. The guiding principle is doing what is just: Thorpe v Commonwealth of Australia (No 3) [1997] HCA 21; (1997) 71 ALJR 767 at 774-775 per Kirby J; Channel Seven Adelaide Pty Ltd v Manock [2007] HCA 60; (2007) 232 CLR 245 at [175] per Kirby J (in dissent); Nulyarimma v Thompson [1999] FCA 1192; (1999) 96 FCR 153 (Nulyarimma v Thompson) at [208], Merkel J (Wilcox and Whitlam J relevantly agreed). Where no reasonable cause of action is available to be pleaded, liberty to replead may be refused: Takemoto v Moody’s Investor Service Pty Ltd [2014] FCA 1081 at [87] per Flick J.

114    In Nulyarimma v Thompson [1999] FCA 1192; (1999) 96 FCR 153 at 210 [208], to which Abraham J referred, Merkel J stated:

In Thorpe at 774-775 Kirby J stated the relevant principles to be applied on a strike out application analogous to that that has been made in the present case. His Honour said:

“Setting aside, striking out, summarily dismissing or permanently staying proceedings of a litigant who has come to a court of law, are self­evidently serious steps. They are to be reserved to a clear case. If there is any doubt, a court should err on the side of allowing the claim to proceed. Evidence at trial may sometimes lend colour and strength to a claim. Reformulation of a pleading should normally be permitted where justice requires that course, particularly where a party does not have the assistance of legal representation. A court will ordinarily provide some assistance in such a situation although not to the point of unfairly disadvantaging the other party or losing either the reality or appearance of neutrality and impartiality which is the hallmark of the judiciary under the Australian Constitution and under international human rights law.

Even if a party makes good its attack on another’s pleading, a court will ordinarily permit the opponent to reframe the pleading so long as it is clear that there is point in doing so and that the further time and opportunity will have utility. The guiding principle is doing what is just. Courts, particularly today, strive to uphold efficiency and economy in the disposal of proceedings before them. But they also remember that pleadings are a means to the end of justice according to law. Pleadings are the servants, not the masters of the judicial process.”

See also Lindon v Commonwealth (No 2) (1996) 70 ALJR 541; 136 ALR 251; Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 128-129.

115    The application of these principles to the present case requires that Xmeta be provided with the opportunity to replead paragraphs 263 to 273 of the FASCC. The defects in the pleading of those paragraphs identified at [100] and [108] above are defects in the form of the pleading which appear to be remediable.

116    Turning to the specific objections made on behalf of the cross-respondents:

(1)    I accept that the FASCC is the third iteration of the Statement of Cross-Claim. However, it is the first in which the Starkey Pre-Contractual Representations have been pleaded and this is the first challenge to the pleading of those representations;

(2)    that the FASCC may have been drafted by Senior Counsel is not a reason to deprive Xmeta the opportunity to replead. Drafting infelicities may occur in pleadings drafted by senior practitioners; and

(3)    I accept that the grant of leave to replead may defeat the purpose of the cross-respondents’ strike out application. However, any party seeking to strike out a pleading runs the risk that the party propounding the pleading will – in accordance with the above well-established principles summarised by Abraham J in Webb (see [113] above) – be given an opportunity to replead their case (and to use the arguments advanced by the party seeking the strike out to improve the impugned pleading).

F.    The security for costs application

117    I turn now to consider the security for costs application.

The discretion

118    As noted at [3] above, this application is brought under r 19.01 of the Rules and s 1335 of the Corporations Act and the inherent jurisdiction of the Court. These sources, as well as s 56 of the FCA Act, provide the Court with a discretion to order security for the payment of costs. The discretion is unfettered but must be exercised judicially; and each application for an order for the provision of security turns on its own facts: Bell Wholesale Co Ltd v Gates Export Corp (1984) 2 FCR 1 at 3 to 4 (Sheppard, Morling and Neaves JJ).

119    Section 1335(1) of the Corporations Act provides:

Where a corporation is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his, her or its defence, require sufficient security to be given for those costs and stay all proceedings until the security is given.

The financial position of Xmeta

120    The financial position of Xmeta is a factor centrally relevant to the exercise of the Court’s discretion to award security for costs regardless of the source of power to do so. However, in the case of s 1335 of the Corporations Act the discretion is only enlivened if it appears by credible testimony that there is reason to believe that Xmeta will be unable to pay the cross-respondents’ costs if the cross-respondents successfully defend the cross-claim.

121    Senior Counsel for Xmeta indicated early in the hearing that he would not be suggesting that there is any evidence before the Court that Xmeta has any appreciable accessible assets in Australia and that he was content for the application to proceed on that basis. Thus, I will proceed on the basis that Xmeta will not be able to satisfy an adverse costs order if one were to be made. This not only enlivens the discretion in s 1335 of the Corporations Act but also informs the exercise of that discretion; and more generally informs the exercise of the discretion based upon other sources of power to require the provision of security for costs.

Other factors informing the exercise of the discretion

The purpose of an order for the provision of security for costs

122    The purpose of an order for the provision of security for costs, consistent with the requirement to seek justice between the parties, is to provide a measure of protection to a respondent (or cross-respondent) that succeeds in a proceeding and has a costs order in its favour against the risk of being placed into a position in which that costs order is pyrrhic, because the party is required to pay the costs is not in a position to do so.

Strength of Xmeta’s case on the cross-claim

123    The cross-respondents submitted that Xmeta’s cross-claim is “highly speculative” . This submission was not elaborated upon save to the extent it was suggested that a cause of action under s 18 of the ACL based upon representations made between a prospective employer and a prospective employee was not maintainable. For the reasons set out above with respect to ground 1, it is my view that such a case is arguable. It follows that I do not accept that Xmeta’s cross-claim is “highly speculative”.

124    The strength of Xmeta’s case on its cross-claim is a matter which I regard as neutral in the exercise of the discretion. The general principle is that the Court should not embark upon a detailed consideration of the merits of a case where, as in the present case, it is evident that the claims made appear to have been made bona fide and to be arguable: see Fiduciary Ltd v Morningstar Research Ltd [2004] NSWSC 664; (2004) 208 ALR 564 at 574 [37] to [38] (Austin J) and the authorities there cited; Hill v Zhang [2019] FCA 1562 at [40] (Griffiths J); Chief Disruption Officer Pty Ltd as Trustee for the McDonald Family Trust v Michel, in the matter of Laava ID Pty Ltd [2022] FCA 148 at [54] (Goodman J); and General Trade Industries Pty Ltd (in liquidation) v AGL Energy Limited (No 2) [2023] FCA 556 at [207] (Derrington J).

The likelihood that there will be an award of costs against Xmeta

125    Security for costs applications in the usual course proceed upon an assumption that an unsuccessful party will be liable for the costs of a successful party. However, that assumption is not a valid assumption in a case, such as the present, in which the exercise of the costs discretion is informed by s 570 of the FW Act. As White J explained in Augusta Ventures Ltd v Mt Arthur Coal Pty Ltd [2020] FCAFC 194; (2020) 283 FCR 123 at 161 [133], the operation of s 570 of the FW Act, when engaged, is a matter to be given prominence in the exercise of the costs discretion. The presence of s 570 as a factor informing the exercise of the discretion requires the Court not to assume that there will be an award of costs against the unsuccessful party, but instead to make an assessment based on the facts presently known to it, of the likelihood that the party against whom security is sought will be required to pay the costs of the party seeking security.

126    Section 570 of the FW Act provides in so far as is presently relevant:

570      Costs only if proceedings instituted vexatiously etc.

(1)      A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A.

(2)      The party may be ordered to pay the costs only if:

(a)      the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or

(b)      the court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs;

(c)      the court is satisfied of both of the following:

(i)      the party unreasonably refused to participate in a matter before the FWC;

(ii)      the matter arose from the same facts as the proceedings.

127    In Augusta Ventures at 153 to 154 ([100] to [103] and [107]), White J (with whom Allsop CJ and Middleton J agreed) stated:

100    Section 570 operates as a qualification on the general discretion with respect to costs vested in the Court by s 43(1) of the FCA Act: Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20; (2015) 229 FCR 221 at [140]. Section 43(1) makes it plain by stipulating that the Court’s power with respect to costs is subject to s 570. Instead of the usual rule that costs will follow the event, s 570 provides that parties in proceedings in relation to matters arising under the FW Act are not, in the absence of some form of unsatisfactory conduct, to be required to pay the costs of another party.

101    As was noted by Jessup and Tracey JJ in Australasian Meat Industry Employees’ Union v Fair Work Australia (No 2) [2012] FCAFC 103; (2012) 203 FCR 430 at [3], s 570 is the current iteration of provisions which, since 1973, have restricted the making of costs orders under Commonwealth industrial relations legislation. From 1904 when the Conciliation and Arbitration Act was first enacted until 1947, s 38(i) precluded the Court of Conciliation and Arbitration from making orders for the payment of the costs of any counsel, solicitor or agent. Between 1947 and 1973, the Court of Conciliation and Arbitration and later the Commonwealth Industrial Court did have power, subject to some qualifications, to make orders for the payment of costs which included legal costs. The provisions which were the predecessors of s 570 commenced, relevantly, with s 197A of the Conciliation and Arbitration Act 1904 (Cth) which was inserted into that Act by s 47 of the Conciliation and Arbitration Act 1973 (Cth), was continued in s 347 of the Industrial Relations Act 1988 (Cth), was retained with some modifications when that Act was renamed the Workplace Relations Act 1996 (Cth) (WR Act), and became s 824 of the WR Act following the extensive amendments affected by the Workplace Relations Amendment (Work Choices) Act 2005 (Cth). The precise terms of the predecessors of s 570, and of s 570 itself, have varied, but the underlying effect has, in substance, been the same.

102    The object sought to be achieved by s 570 is plain. It is the same as the object of s 347 of the WR Act as described by the Full Court (Black CJ, Tamberlin and Sundberg JJ) in Commonwealth v Construction, Forestry, Mining and Energy Union [2003] FCAFC 115; (2003) 129 FCR 271:

[10] … The object that s 347(1) seeks to achieve is plain enough: it is to give effect to a policy choice about the controversial issue of whether costs should ordinarily follow the event or whether they should ordinarily be borne by the party incurring them. As Northrop J said of its predecessor, s 197A of the Conciliation and Arbitration Act 1904 (Cth), in Heidt v Chrysler Australia Ltd (1976) 26 FLR 257 at 272 (Australian Industrial Court):

The policy of s. 197A of the Act is clear. It is designed to free parties from the risk of having to pay the costs of an opposing party. At the same time the section provides a protection to parties defending proceedings which have been instituted vexatiously or without reasonable cause. This protection is in the form of conferring a power on the court to order costs against a party who, in substance, institutes proceedings which in other jurisdictions may constitute an abuse of the process of a court.

103    The evident legislative policy is that persons who seek by legal proceedings to vindicate rights or to obtain relief under the FW Act should be able to do so without exposing themselves to the risk of having to pay the costs of another party in the event that they are unsuccessful. So much was made express by the Minister in the Second Reading Speech for the introduction of s 197A into the Conciliation and Arbitration Act in 1973:

This is part of our policy of bringing the courts to the people, of overcoming the deterrent which often prevents a person from seeking to right a wrong because of the burden of costs he might incur where his argument has failed to carry the day … The possibility of having costs awarded against an applicant discourages the use of the courts as a means of settling disputes.

...

107    It is important not to lose sight of legislative policy which underpins s 570. This can easily occur if one characterises it as being no more than a statutory fetter on the making of the usual order for costs. It is that, but it also reflects an attempt to address the underlying inequality of position commonly experienced by applicants in litigation for the enforcement of industrial entitlements.

(emphasis added)

128    The prima facie position is that there is no order as to costs; and costs are awarded only “in accordance with subsection (2) or section 569 or 569A”. It follows that it is necessary for the Court to have regard to the likelihood that: (1) the discretion to award costs will be enlivened; and (2) if so, that it will be exercised adversely to the unsuccessful party. Of course, this assessment will vary from case to case as a function of the particular facts known at the time of the exercise of the discretion to order the provision of security for costs.

129    As White J explained in Augusta Ventures at 160 [127]:

First, and perhaps most obviously, the circumstances (if any) in which an applicant in proceedings in relation to a matter under the FW Act should be ordered to provide security for a respondent’s costs are likely to be exceptional. An applicant should not ordinarily be required to provide security for costs which, in the absence of unsatisfactory conduct on his or her part, will never be payable.

130    In the present case, and on the facts presently known, I am not satisfied that there is a likelihood that a costs order will be made against Xmeta if it is unsuccessful in the proceeding sufficient to require it to provide security for costs.

131    The cross-respondents submit that the history of costs orders made against Xmeta provides a basis for concluding that it is likely that a costs order will be made against Xmeta at the conclusion of the proceeding.

132    I do not accept this submission. A costs order, in the circumstances of the present case, will only be made if s 570(2)(a) or (b) is satisfied (and the discretion in s 570(1) is then exercised favourably to the cross-respondents).

133    Sub-section 570(2)(a) appears unlikely to be satisfied. The cross-respondents have not suggested that Xmeta filed the cross-claim vexatiously and any contention that it was filed without reasonable cause would be difficult to maintain in view of the result of the strike out application.

134    Thus, for s 570(2) to be satisfied, the cross-respondents will need to establish that there have been unreasonable acts or omissions and that those acts or omissions caused the cross-respondents to incur costs, within the meaning of s 570(2)(b).

135    I accept that there have been past unreasonable acts and omissions of Xmeta in this proceeding and that these acts and omissions have caused the cross-respondents to incur costs, such that, in theory, s 570(2)(b) would be satisfied. However, there is in my view no realistic possibility that the discretion in s 570(1) would then be exercised favourably to the cross-respondents in circumstances where such costs have been: (1) the subject of previous costs orders; and (2) paid.

136    I also do not consider the fact that previous conduct of Xmeta has resulted in costs orders to provide a sound basis, as a matter of logic, for a conclusion that Xmeta will ultimately be ordered to pay the costs of its cross-claim.

137    It may well be that further interlocutory costs orders are made against Xmeta, but if this occurs the interests of the cross-respondents are likely able to be protected by an order that such costs be paid forthwith and if necessary by an order that the cross-claim be stayed until such costs are paid.

138    The cross-respondents also submitted that a costs order was likely because Xmeta’s claim is “highly speculative”. As noted at [123] above, I do not accept this submission.

139    Thus, it does not appear that the cross-respondents are exposed to any substantial risk of being placed into a position of having a pyrrhic costs order in their favour.

Delay

140    As noted at [12] above, Xmeta’s cross-claim was filed on 27 January 2021. In the usual course, questions of security for costs should have been raised by the then cross-respondents (namely Mr Dove and DK International Pty Ltd) well before the application for security for costs was filed on 15 June 2023. However, in circumstances where: (1) Mr Starkey was not joined as a cross-respondent until the filing of the FASCC pursuant to leave granted on 9 September 2022; (2) the FASCC significantly expanded the scope of the case pleaded against the cross-respondents; and (3) and it appears that inquiries as to the financial position of Xmeta were made reasonably promptly after the filing of the FASCC, I am not inclined to treat any delay as a factor weighing against an order for the provision of security for costs in the present case.

Other factors

141    No other factors relevant to the exercise of the discretion have been suggested by the parties.

Conclusion on the question of security for costs

142    I am not persuaded that an order for the provision of security for costs should be made. In particular, as there does not appear to be any reasonable prospect that there will be a costs order in their favour, I am not persuaded that the cross-respondents are likely to be in a position in which they may be exposed to a pyrrhic costs victory. As a result, it is unnecessary to consider the form or quantum of security, or whether Mr Chen should be ordered to provide security.

G.    The separate determination application

143    Xmeta seeks an order to the effect that the question of liability on Xmeta’s cross-claim is determined before damages. The cross-respondents resist this application.

144    The parties made submissions for and against the making of such an order. However, it is unnecessary to address those submissions at this point as I have formed the view, which I expressed during the hearing, that the application is premature in circumstances where there has been no joinder of issue on the allegations first made in the FASCC and where it seems to me that a more efficient course is to make orders for the filing of a Defence to the FASCC or Second Further Amended Statement of Cross-Claim (and any necessary Reply) and for the filing of any further evidence from all parties. The application may then be re-visited, if appropriate, and assessed in the light of the information then available.

H.    Conclusion

145    For the reasons set out above, I decline to strike out the FASCC as a whole on the basis of abuse of process. However, paragraphs 198 to 206 and 263 to 273 of the FASCC should be struck out. There should be leave to replead paragraphs 263 to 273.

146    The cross-respondents’ application for security for costs and Xmeta’s application for a separate determination should be dismissed. The question of costs of all of the applications should be reserved.

147    I will make orders accordingly.

Associate:

Dated:    2 November 2023

SCHEDULE OF PARTIES