HECEC Australia Pty Ltd v Hydro-Electric Corp - [1999] FCA 822 - FCA 1999 case summary — Zoe

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HECEC Australia Pty Ltd v Hydro-Electric Corp

[1999] FCA 822

Federal Court of Australia|1999-07-01

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Court

Federal Court of Australia

Decision date

1999-07-01

Source

Original judgment source is linked above.

Judgment (87 paragraphs)

[1]

INTRODUCTION 1 HECEC Australia Pty Ltd (the applicant) is a provider of engineering and management services to the power, water and environmental protection industries in Australia and overseas. By an amended application dated 6 July 1998, it has sued the Hydro-Electric Corporation (the HEC), a public enterprise constituted under Tasmanian legislation to generate, transmit, distribute and sell electricity in that State, three other Tasmanian representative parties (the Premier, who was also the Treasurer, the Minister for Energy and the State itself), and two new State-owned corporations, Aurora Energy Pty Ltd (Aurora) and Transend Networks Pty Ltd (Transend), (together, unless otherwise obvious or stated, the Tasmanian parties), under the Trade Practices Act and in law and equity for damages, injunctions and declaratory and other relief. HEC Enterprises Corporation (HEC Enterprises) was a government business enterprise which provided technical services in the hydro-electricity field to the public and private sectors both at home and abroad using the expertise of the HEC, but upon the introduction of a major restructuring program which is at the centre of this litigation, and the commencement in business of Aurora and Transend, it was dissolved and ceased to exist. Speaking generally enough for present purposes, HEC Enterprises did not employ its own staff or have its own premises but relied on the personnel and resources of the HEC to carry on its business. It was originally joined as a party to these proceedings but was deleted in the amended application, apparently because at the relevant time it and its contractual obligations had been taken over or back by, or merged into, the HEC. 2 An amended statement of claim was filed with the amended application, but by notices dated 19 and 26 October 1998 by the Tasmanian parties on the one hand, and the HEC on the other, the respondents moved for orders that the amended statement of claim be struck out. In reliance on Order 11 rule 16 of the Federal Court Rules, all respondents alleged that the applicant's pleading disclosed no reasonable cause of action and caused or tended to cause prejudice, embarrassment or delay. The Tasmanian parties also relied on Order 20 rule 2 to seek a dismissal of the amended application on the ground that no reasonable cause of action was disclosed. Aurora and Transend separately applied, although in the same notice of motion, for the dismissal of the case against them and also sought an order that they cease to be parties to the proceedings pursuant to Order 6 rule 9. It is therefore necessary to consider the amended statement of claim in some detail. For the purposes of the motions, it is of course assumed that the material facts alleged are true and would be proved at trial.

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THE FACTUAL ALLEGATIONS 3 In 1995, the HEC and HEC Enterprises decided that as part of the then mooted corporatised disaggregation of the HEC, a new company should be established, to be owned and controlled by senior staff of HEC Enterprises, to take over its business under an exclusive worldwide licence. The intention was to keep the HEC's expertise together and continue to develop and provide the expertise to all who sought it while freeing up the new company from the financial and other constraints which applied to government business enterprises. Accordingly, in April 1995, the management and staff of HEC Enterprises was invited to submit a proposal for a management buyout, and in May, Taspower Pty Ltd (Taspower), a company consisting of the senior management of HEC Enterprises, made an offer. After lengthy negotiations, the buyout was finalised on 11 January 1996 when a number of agreements were entered into by the parties (the agreements). Three of them were amended on 14 June 1996. On 26 July 1996, the agreements were assigned to the applicant which was majority owned by the owners of Taspower. The relevant agreements were for 5 years from then with an automatic extension for a further 5 years subject to satisfactory performance. Under the agreements, the applicant acquired the assets and business interests of HEC Enterprises, and the HEC gave the applicant an exclusive worldwide licence to provide and use a number of its services. Part of the exclusivity was that the HEC agreed not to undertake any business activity, at any rate in the fields taken over by the applicant. 4 The applicant described its acquisition in paragraphs 39A and 39B of the amended statement of claim, further amended later, (statement of claim) thus: 39A. Substantial entitlements of [the applicant] conferred by [the agreements] discretely and in combination comprised: (a) access to human resources and intellectual property of [HEC Enterprises] and HEC relating to the generation, transmission and distribution of electricity and matters incidental and ancillary thereto including planning, consultation, construction, installation, operation and maintenance of electricity industry facilities for the duration of [the agreements]; and

[4]

39B. By reason of the matter pleaded in paragraph 39A above, [the applicant] thereby acquired the consequential capacity and entitlement of [the applicant] to represent itself in the Australian and world market places as having such entitlement in terms of a vertically integrated HEC (inclusive of its offshoot [HEC Enterprises]), in the sense of integration of the functions and activities of generation, transmission and distribution of electricity, inclusive of the aspects thereof referred to in sub-paragraph (a) above. 5 The total cost of the assets purchased was $2.42 million payable by instalments, the first of which was $1.5 million, plus annual licence fees for the exclusive right to market the HEC's expertise totalling $1.9 million. Moreover, subject to novation, the applicant agreed to carry on four existing contracts of HEC Enterprises. Pursuant to the agreements, the applicant alleges that it has since provided a significant number of expert services in the power and water industries and employed more than 100 people in this work. 6 On 10 April 1997 the Premier announced his Government's decision to corporatise and disaggregate various elements of the electricity industry in that State and to pass a volume of legislation to achieve that result. By these intended enactments, the State was to retain ownership of the dams used for and generators of electricity but to dispose of electricity distribution and transmission and its retailing. The legislation would establish two new corporations, Aurora and Transend, of both of which the State would hold the shares, Aurora to take over electricity distribution and sale, and Transend to take over electricity transmission, in each case from the HEC, on 1 July 1998. 7 Immediately after the Premier's announcement, the applicant sought information from the HEC on the practical implications for its position of the proposed reforms. By letter dated 24 April 1997, the HEC replied to the applicant's Managing Director as follows: Re : Possible sale of the Hydro-Electric Corporation Thank you for your letter of the 16th April concerning the Premier's Directions Statement paper. At this stage there are a number of hurdles which must be cleared before the Premier's proposals could be implemented, in full or part, and the timing of any implementation is therefore unknown. I do not, at this stage, envisage any impact on the Hydro's commercial relationship with HECEC Australia Pty Ltd flowing from the Premier's proposals. That relationship will of course be a consideration in any implementation process. We will keep HECEC Australia Pty Ltd informed of any developments which may impact them [sic]. I would be pleased to meet with you to discuss these matters and those related to our recent visit to Manila. Would you please arrange a suitable time with my secretary. Yours sincerely Daniel T Norton Chief Executive Officer 8 In June 1997 the Government established a Steering Committee to implement the restructure and make a range of important recommendations including on the future role and structure of the HEC. The HEC occupied an influential even pivotal place on that Committee. 9 On 15 October 1997, representatives of the applicant met with the Premier and made their concerns known. The applicant alleges that the Premier responded: I will follow up on your behalf and do what I can to see that your interests are acknowledged. The disaggregation legislation will be introduced into Parliament shortly. However, a contract is a contract and must be honoured. 10 The Electricity Companies Bill (EC Bill) was introduced into Parliament on 22 October 1997, and the applicant alleges that six days later the Private Secretary to the Minister for Energy (the Minister) told the applicant's General Manager, who had expressed further concerns about his company's position in the event of the proposed reforms: I am aware of your recent meeting with the Premier and want to assure you that your contracts will be honoured. 11 On the same day, the applicant wrote to the Premier that the EC Bill did not guarantee the protection of its interests. The Premier replied on 10 November 1997 acknowledging the applicant's concerns that its rights and interests be preserved, confirmed earlier assurances that the applicant would be consulted about implementation arrangements after the EC Bill passed, and expressed the Government's keenness to hold discussions with the applicant on the implementation of disaggregation. The Premier's letter stated that he had asked the Minister to meet with the applicant to establish the mechanism for these consultations. At some stage the EC Bill passed the Lower House.

[8]

every endeavour would be made to provide the applicant with advance Transfer Notices in draft as would affect the company's existing contracts with these enterprises for the purpose of "comment and constructive discussion" prior to their presentation to the Treasurer for signature 13 The so-called "Transfer Notices" were the means by which the assets and business of the HEC were to be transferred to Aurora and Transend. 14 According to the statement of claim, the Minister was thereafter informed that the existing EC Bill did not address the applicant's concerns and was supplied with the company's legal advices. Then on 4 December 1997 the Tasmanian Legislative Council considered and passed amendments to the EC Bill (the amendments) after being informed, so it is alleged, in the presence of representatives of the applicant, that the amendments were designed to allow the applicant to continue its existing contracts with the HEC and HEC Enterprises and to ensure that the HEC continued to be bound by its existing contracts including with the applicant. 15 On 10 December 1997 the amendments were introduced into the House of Assembly. During the debate the Minister is said to have described the amendments as intending to ensure that the HEC honoured its existing contracts and to give assistance and comfort to the applicant. He stated that the Government accepted the amendments and they were passed, the Act receiving Royal Assent on 22 December [EC Act]. The statement of claim alleges that in consequence of the Parliamentary debates, the applicant "formed the belief that its concerns regarding the Government's disaggregation proposals would be duly satisfied". 16 On 20 April 1998 the Minister wrote to the applicant advising of the proposed disaggregation of the HEC, including statements about the formation and proposed functions of Aurora and Transend, and of the proposed legislative timetable to commence on the following day. Effectively the new arrangements were to commence on 1 July 1998. He also advised the applicant that the Government was keen to ensure that the applicant's work would continue so that Tasmania would be enabled to build on its reputation as an internationally recognised provider of technical services in the hydro-electric power industry. 17 The statement of claim next states that the applicant immediately apprehended that the proposed scheme would operate to its severe disadvantage and would substantially alter its existing contractual arrangements to its significant detriment. Accordingly it wrote to the Premier and the Minister seeking urgent advice of the Government's intention to require the HEC to novate its existing obligations to the applicant and Aurora and Transend thereafter to meet these obligations. It submitted a proposed Deed of Novation. 18 On 30 April, representatives of the applicant met the Minister and his adviser. They complained that there had been no apparent progress towards preserving the applicant's contractual rights. The Minister advised that the HEC had proposed retaining certain of the contracted activities or functions. The applicant rejected this proposal and on 6 May wrote to the Premier stating that despite his assurances on 15 October 1997 that existing agreements would be honoured, the Government had still not given any indication that it was taking steps in this direction. It sought an urgent meeting to discuss its fears that the Government did not intend to novate the two principal contracts to Aurora and Transend, pointing out that these agreements were vital to the applicant's business. 19 The statement of claim states that draft notices to transfer to Aurora and Transend the various properties and functions of the HEC were prepared in the week preceding 28 May 1998. It is said that these drafts did not provide for the two companies to continue the HEC's existing agreements with the applicant and were not disclosed to or discussed with the applicant prior to their public release. The applicant believed that if the contents of the notices did not change, the disaggregation would have an "adverse impact" on the HEC's relationship with the applicant. Accordingly it sought the Government's assurance that there would be novation and consultation. In reply the Premier said that the future of the existing contractual obligations would be considered together with other disaggregation issues. 20 Despite two letters from or on behalf of the applicant seeking information, undertakings and draft notices of the proposed transfers protecting the applicant's contractual rights, the Premier announced on 12 June 1998 the proposed employment, asset and revenue profiles of the HEC, Aurora and Transend under the new arrangements, including significantly that the HEC would retain 650 employees and assets of $3 billion, and have a projected annual revenue of $300 million. Obviously the HEC was to remain an important and powerful organisation carrying on major activities. 21 Aurora and Transend were incorporated on 17 June 1998 and on 25 June the two notices transferring parts of the HEC's business to them were gazetted. The notices were not shown to or discussed with the applicant prior to their gazettal. The statement of claim states that their effect was "to substantially and materially deprive" the applicant of its alleged contractual rights with the HEC, causing substantial damage and detriment to its future business earnings and capacities. On the same day, the Premier told the applicant by letter that its contracts with the HEC would not be novated ("will stay with HEC") or, presumably, honoured. 22 There has been an extensive array of particulars requested. Some have been supplied. Much of what has been requested and supplied is argumentative and distinctly unrevelatory of anything other than forensic, and no doubt expensive, point-making and point-taking. Little of it clarifies the issues that arise on these motions.

[37]

41 The HEC contended that the "unconscionable conduct" doctrine presupposes or is dependent on dealings or transactions between the parties. It pointed to the allegation of unconscionability in the content of the Transfer Notices and said that the Notices do not amount to a transaction entered into by the applicant due to the HEC's conduct referred to, but are the product of activity by the HEC and the Tasmanian Government and legislature. 42 The present question for determination raised by these submissions is therefore whether it is reasonably arguable that the availability of the doctrine is not limited to contractual or contract-type situations where the disadvantaged party's commitment has been procured by the unconscionable conduct. In my view this must be so. The facts of this matter are and will be complex. The applicant will no doubt seek to offer evidence at the trial that in Tasmanian terms, the HEC is a unique and powerful organisation : Commonwealth v Tasmania (The Tasmanian Dams Case) [1983] 158 CLR 1. If this evidence is accepted and the applicant is also able to produce evidence to support its factual complaints including of the HEC's promises to it, and of the HEC's significant role in the formulation of the Transfer Notices and in the Government's refusal to require the novation of the agreements, and of course if it can show loss, it seems to me that there is an arguable if controversial case of unconscionable conduct whether by statute or in law or equity. 43 The HEC did not argue, and there is nothing in the authorities which suggests to me, that the doctrine of unconscionability cannot apply in favour of small corporations vis a vis governments and large and powerful government monopolies. Accordingly, as it seems to me, it is at least arguable that the principle will be available for example where a disadvantaged party including a company declines to enter an apparently beneficial contract due to a superior party's, including a government's, or a government enterprise's or agency's, unconscionable conduct. By the same token, if a much weaker party, including a company, fails to take a step to protect its own interests by reason of unconscionable conduct by a much stronger party and as a consequence suffers irreversible damage, there must arise a real possibility that the doctrine will deliver relief. By definition there will be no rights in contract and there may be no semblance of trade or commerce such as to found proceedings under the TPA. It would be odd if unconscionability was not at least arguably justiciable in such circumstances. 44 For present purposes, it is not necessary for me to decide the matter finally. All that is necessary at this time is to determine whether the point could be respectably argued if all the applicant's allegations are proved. For the reasons given, I believe that it is. 45 The Tasmanian parties alleged a failure of the statement of claim to plead facts establishing a relevant disability, the unconscientious taking advantage of the disability, the obtaining of a benefit thereby, and causation of loss of reason of the impugned conduct. The explanatory outline given in paragraphs 38 to 40 of this judgment is sufficient to dispose of these contentions. 46 They next submitted that in any event, no relief under section 87 is available unless loss or damage has been suffered by reason of the unconscionable conduct or could have a relationship to or provide compensation for the alleged detriment. They submitted that none of the alleged detriment could have been caused by the unconscionable conduct. These contentions were not elaborated or explained. All I can say is that in my view, they do not raise issues for determination on these motions.

[48]

53 Referring to the applicant's claim for damages for the time of two of the applicant's senior executives who were from April 1997 onwards allegedly "engaged virtually full time in purported protection of [its] interests under [the agreements]", the Tasmanian parties contended that the applicant could not have relied on the HEC's representations because it was informing itself of developments at all relevant times. In the present context, this contention is simply argumentative. It may be open to put this proposition to the applicant's executives in cross examination at the trial and to base a submission to this effect on their answers, but it cannot be a ground for summary dismissal or strike out. 54 The HEC contended that it was presumably not accidental that the pleading was deficient in these respects because if the applicant had in fact relied on the representation made to it, it would not have suffered the loss alleged. Moreover, the HEC argued that in any event any reliance ceased when further assurances of protection were sought. It therefore submitted that the claim was fundamentally flawed and must fail. In response, the applicant said that in a case where future conduct is being relied on, the usual concept that the loss be occasioned because the victim was induced by the offending conduct to act to his detriment is inapplicable. Only when the promises as to the future are not withdrawn or corrected, or kept, do they become misleading and deceptive. That is the time when the link between the loss and the conduct is to be established and that time in this case was when the Transfer Notices were gazetted. The forerunners to the present form of application and statement of claim were filed immediately thereafter. The applicant's claimed link between the conduct and the damage appears to be that in reliance on the representation as to the future, it pursued or refrained from a course of action which, when the representations were replaced by contrary actions and thus became misleading and deceptive, caused loss which would not have been sustained had they been honoured. 55 The cases are at pains to emphasise that the formulation of damages claims under section 82 will be as varied as is the multiplicity of statutory contraventions which can give rise to them. Although evidence of causation/reliance/inducement will normally be required : Pappas v Soulac Pty Ltd [1983] 50 ALR 231; Gould v Vaggelas [1985] 157 CLR 215; Sutton v AJ Thompson Pty Ltd (in liquidation) [1987] 73 ALR 233; Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd [1987] 14 FCR 215; Kabwand Pty Ltd v National Australia Bank [1989] ATPR 40-950; Argy v Blunt & Lane Cove Real Estate Pty Ltd [1990] 26 FCR 112, the rules applicable to the establishment of the necessary link should not be regarded as inflexible. In Wardley Australia Ltd v State of Western Australia [1992] 175 CLR 514, Mason J said at 525 that determining the measure of damages under section 82 in a particular case requires a thorough analysis of the provisions applicable to the particular statutory cause of action. In Janssen-Cilag Pty Ltd v Pfizer Pty Ltd [1992] 37 FCR 526 at 529, Lockhart J said that the circumstances in which damage from contravention of the TPA may arise will vary considerably from case to case. So long as the contravener's conduct is the real, direct or effective cause of the victim's loss, it will have been brought about "by", meaning 'by virtue of', the contravening conduct. This concept was adopted by a Full Court of this Court (Wilcox, Lee and Lindgren JJ) in Australian Breeders Co-operative Society Ltd v Jones [1997] 150 ALR 488 which involved a claimed loss by investors in a horse breeding operation where there was no evidence of reliance by the investors on the promoter's valuation of the investment. The Full Court described the need for evidence of reliance leading to loss as "typical" of section 52 claims but that it is not the only situation of availability of a claim. See also Phoenix Court Pty Ltd & Ors v Melbourne Central Pty Ltd [1997] ATPR (Digest) 46-179 and the cases therein cited.

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Contract 60 Although this section of the statement of claim is headed "Claims based on breach and anticipatory breach of contract", presumably by the HEC, the essence of the contract claims is to be found elsewhere in the document. The applicant's case is that the agreements were entered into in January, June and July 1996 and that there was significant performance of them. After a series of events in the following 2 years which the applicant submitted amounted to "much dissembling" by the HEC and the Tasmanian parties, the applicant claims that the agreements were ultimately breached on 25 June 1998 with the gazettal of the Transfer Notices not providing for the novating of the agreements by the HEC or their honouring by anyone. These breaches of contract are said to have led to loss and damage to the applicant. 61 Under this heading, the applicant "apprehends" what is called "a substantial reduction in further observance and performance" of the agreements by the HEC, from which the applicant claims to have suffered and to be likely to suffer damages. The statement of claim alleges that this apprehended (anticipated) breach of contract, which, it is said, will be procured by the Tasmanian parties, will occur unless the HEC and the Tasmanian parties ensure that Aurora and Transend are given and carry out the HEC's obligations to the applicant under the agreements. If so, the applicant will suffer substantial continuing loss and damage. 62 Relying on the definition of 'anticipatory breach of contract' provided by Halsbury's Laws of Australia (110-8200), headed "Forms of Breach", viz: An anticipatory breach arises where, prior to the time appointed for performance by the promisor, the promisee justifiably terminates the performance of the contract for the promisor's repudiation or inability to perform. the HEC submitted that the applicant has not pleaded a breach of the agreements by a repudiation of or failure to perform the agreements nor has it terminated the agreements and pleaded anticipatory breach. Therefore, the HEC says, the claim is fundamentally flawed.

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63 On the other hand, the Australian edition of Cheshire and Fifoot (7th Ed) at para 23.5 says that it is not clear why damages for anticipatory breach can only follow termination of the contract. The authors say that the requirement of termination is inconsistent with the acknowledged right of a party to sue for specific performance following anticipatory breach. They state further that there will be circumstances where the victim of an anticipatory breach will be entitled to affirm the contract while preserving the right to sue for damages. 64 It is not appropriate on an application for strike out to decide such interesting if quaintly esoteric questions. The pleading alleges that the anticipatory breaches date from 1 July 1998 and that the losses commenced then, continue now, and will stretch into the future. Thus the applicant's allegation is that although a victim of the expected breaches, it wishes nevertheless to maintain the agreements, and to seek damages without first being required to repudiate. 65 The substantive answer to the HEC's argument is far from clear. Certainly this claim is not of the kind referred to in Halsbury or in the cases gathered by Cheshire and Fifoot. Chitty on Contracts 27th Ed para 24-020 and Carter and Harland's Contract Law in Australia 3rd edition para 1906 add more learning to the subject without resolving the issue raised. In my opinion, however, while the HEC's argument throws significant doubt on the claim, it does not make out a sufficiently definitive case for striking it out of the pleading. 66 The Tasmanian parties described this claim, and the alternative claim that loss will follow from a failure by them to ensure that Aurora and Transend carry out the obligations of the HEC to the applicant under the agreements, as "embarrassing". They did not say, and I cannot see, how or why. As to the alleged apprehended breach of contract, the Tasmanian parties said that instead of the global reference to conduct pleaded in more than 30 separate paragraphs of the statement of claim, the statement of claim must identify which particular facts are relied on to ground each claim made. If so, it is a matter for particulars or amendment, not for strike out. As to the alternative claim, the Tasmanian parties submitted that no basis for their suggested obligation to procure compliance from Aurora and Transend is shown or alleged. 67 The point was also taken that the State of Tasmania, although made a party and said to be liable under this heading, is not identified as having played any relevant part in the matter. I confess not to understand why the State of Tasmania was made a party to this application at all, and what claims or relief will affect the State as a distinct entity. But that question can be raised and dealt with at a directions hearing or determined at the commencement of the trial. It does not warrant any order at this stage of the proceedings. 68 The rest of the submission either is an exercise in point-taking or manifests a misconception of the claim. Although some further particulars and amendment may be appropriate, I do not see how the pleading is "embarrassing" to the Tasmanian parties. For my part, the statement of claim is replete with explanations of how the obligation of the Tasmanian parties to procure compliance by Aurora and Transend with the HEC's suggested obligations to the applicant is said to arise. It will be a matter for the trial Judge as to whether it succeeds.

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72 There is an abundance of authority that the word "may" sometimes denotes "must" and gives rise to an obligation to do what is provided for: Julius v Bishop of Oxford [1880] 5 App Cas 214 at 222-3; Finance Facilities Pty Ltd v Federal Commissioner of Taxation [1971] 127 CLR 106 at 134-5; Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd [1994] 182 CLR 51 at 84-5. 73 This question is to be decided in the light of the particular statute construed according to the apparent legislative intention and the rules of statutory construction. The facts may well bear on its determination. It will rarely fall to be determined on a motion for summary relief as evidence will often assist in the construction to be given. 74 It is my opinion that the submissions of the Tasmanian parties concerning the relevant considerations allegedly not taken into account are not in point. The basic facts underlying the applicant's assertions were not challenged - ie. that the agreements fall within section 10(2), that the Transfer Notices did not novate the agreements, that the alleged assurances and undertakings were given, and that Parliament intended that the HEC's contractual obligations to the applicant be honoured. Accordingly the Peko-Wallsend reference is not relevant to the resolution of this matter because the trial Judge will have to decide the subject matter, scope and purposes of the EC Act and whether they give rise to the implications sought. Without evidence and full argument, the Court cannot, and is not permitted to, determine those questions on these motions. 75 The proffered defence to the Wednesbury claim was an unelaborated statement that the matters pleaded do not disclose a reasonable cause of action. Effectively this point was not seriously argued. It need be answered only by the decision that if the matters pleaded are proved, the claim is available and arguable. 76 The assertion that section 10(3) of the EC Act operates as a statutory bar to the claim of denial of procedural fairness raises a challenging question of statutory construction. The subsection provides: The Treasurer must not make a transfer notice unless he or she has first - (a) provided the Hydro-Electric Corporation with a draft of that notice; and

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Promissory estoppel 78 This claim by the applicant relies on the same alleged oral and written representations and promises of the HEC and the Tasmanian parties referred to under other causes of action. Believing up to the receipt of the Premier's letter of 25 June 1998 that these parties would carry out their promises, the applicant says that it delayed commencing legal proceedings, inter alia, to stop the gazettal of the Transfer Notices. Because the respondents failed to carry out their undertakings, and the applicant did not commence proceedings, it has suffered and will continue to suffer loss. It seeks equitable damages. 79 In The Commonwealth of Australia v Verwayen [1990] 170 CLR 394, the High Court held that the principle of estoppel will permit a claim for loss suffered by a party who has sustained a detriment as a result of reliance on the correctness of an assumption induced by the actions or words of another. As in relation to the claim for misleading and deceptive conduct, the HEC argued that if the applicant had in fact relied on the assumptions or beliefs as to the truth of the representations, it would not have suffered the damage alleged. It said that the damage in this case occurred when reliance on the representations ceased which occurred when and because the applicant sought additional and later assurances that it would be protected, and thus demonstrated that it did not rely or was no longer relying on the original or earlier oral and written statements. 80 So far as they are said to ground a strike out of the claim, I reject these submissions. In the reality of commercial experience, a party who has been relying on promises might, while still relying on them, nevertheless seek confirmation or reassurances that the promises will be kept. If the applicant had not done so here, it is not unlikely to have been criticised for commercial naivete or worse by sitting back on its original assurances of protection by others and doing nothing to protect itself. These contentions raise an issue to be litigated at trial, not to be decided without evidence on a motion for summary dismissal. 81 The Tasmanian parties argued, on the authority of Waltons Stores (Interstate) Ltd v Maher [1988] 164 CLR 387 at 428-9 (Brennan J), that in order for a promissory estoppel to be found, the applicant would have to comply with a complex set of factual criteria. It is not necessary, indeed I have not found it possible, to recount intelligibly here all of those proposed. They depend upon a suggested requirement that "a legal relationship" must, or be assumed to, have existed, or be anticipated to exist, between the applicant and the Tasmanian parties. Such a relationship is not pleaded here but it is clear from Verwayen, in which the High Court revisited Waltons Stores, that this allegation is not essential and may not be necessary to a claim for equitable estoppel : see also Meagher, Gummow and Lehane, Equity Doctrines and Remedies 3rd edition chapter 17. 82 The Tasmanian parties' submissions on this claim also depend on an assertion that the inducement of the applicant to adopt the assumption must be expressly pleaded. On the facts and for the reasons given earlier in relation to other causes of action pleaded concerning (a) the alleged representations and promises of the Tasmanian parties,

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83 The Tasmanian parties also attack the claim for damages under this heading. They say firstly that no claim for damages can be made "in respect of" promissory estoppel. No reason was given and no authority was cited for this bald statement. There is no apparent reason why loss sustained as a consequence of events on which an equitable estoppel is found should not sound in equitable damages. There were many statements in Waltons Stores and Verwayen on matters akin to damages such as "detriment" and "restitution", and it is now well settled that estoppel may operate not only as a "shield" but as a "sword" : Meagher, Gummow and Lehane at para 1713. This concept would have little meaning or practical effect in many cases if damages were not awardable. 84 As mentioned earlier in another connection, the act of reliance alleged in the statement of claim is delay in seeking (it is, in truth, not seeking) injunctive relief against the gazettal of the Transfer Notices. The detriment is said to be and have been uncertainty in the applicant's business planning, security, commitments and future directions, loss of the purchase price of the business and assets of HEC Enterprises, and loss of the time of the executives who worked on restructure issues and problems. The Tasmanian parties submitted that none of this detriment is causally connected to the non-commencement of injunction proceedings or bears any "correlation to the alleged representations". 85 The applicant claimed that the suggested nexus in each case is a rational conclusion to draw from the facts alleged, and I must say that a fair reading of the statement of claim suggests that this description is at least arguable and may be correct. However, it is only necessary for present purposes to hold that these submissions essentially raise questions of fact for the trial, and do not amount to or establish a set of undeniable legal principles requiring the summary excision of the allegations from the amended statement of claim

Parties

Applicant/Plaintiff:

HECEC Australia Pty Ltd

Respondent/Defendant:

Hydro-Electric Corp

Legislation Cited (2)

Electricity Companies Act 1997(Tas)s 10(2), (3)

Trade Practices Act 1974(Cth)ss 51AA, 51A, 52, 75B(1), 82, 87

Cases Cited (2)

HECEC Australia Pty Ltd v Hydro-Electric Corp [1999] FCA 822 PRACTICE AND PROCEDURE - whether the applicant's pleadings disclose a reasonable cause of action and cause or tend to cause prejudice, embarrassment or delay - circumstances where the amended application is to be dismissed on the ground that no reasonable cause of action was disclosed - whether it is reasonably arguable that the doctrine of unconscionability is only available in contractual or contract-type situations where commitment of disadvantaged party was procured by unconscionable conduct - when "may" means "must" in a statute - principles of promissory estoppel - causal nexus between damages and conduct contravening Trade Practices Act - anticipatory breaches of contract - whether damages only available after termination of contract - novation of contracts - duty of government to make decisions to accord with existing contracts and representations - presumed duty to afford procedural fairness - whether contrary to statutory intention - taking relevant considerations into account - Wednesbury unreasonableness Trade Practices Act 1974 (Cth) ss 51AA, 51A, 52, 75B(1), 82, 87 Electricity Companies Act 1997 (Tas) s 10(2), (3)

Federal Court Rules O 6 r 9, O 11 r 6, O 20 r 2 Burton v Shire of Bairnsdale [1908] 7 CLR 76, applied Blomley v Ryan [1956] 99 CLR 362, applied Dey v Victorian Railways Commissioners [1949] 78 CLR 62, applied General Steel Industries Inc v Commissioner for Railways (NSW) [1964] 112 CLR 125, applied Finance Facilities Pty Ltd v Federal Commissioner of Taxation [1971] 127 CLR 106, referred to Commercial Bank of Australia v Amadio [1983] 151 CLR 447, applied Gould v Vaggelas [1985] 157 CLR 215, referred to Commonwealth v Tasmania (The Tasmanian Dams Case) [1983] 158 CLR 1, referred to Yorke v Lucas [1985] 158 CLR 661, discussed Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] 162 CLR 24, referred to Waltons Stores (Interstate) Ltd v Maher [1988] 164 CLR 387, referred to/discussed Concrete Constructions (NSW) Pty Ltd v Nelson [1990] 169 CLR 594, referred to The Commonwealth of Australia v Verwayen [1990] 170 CLR 394, discussed/followed Annetts v McCann [1990] 170 CLR 596, applied Wardley Australia Ltd v State of Western Australia [1992] 175 CLR 514, applied Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd [1994] 182 CLR 51, referred to Bevanere Pty Ltd v Lubidineuse [1985] 7 FCR 325, applied Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd [1987] 14 FCR 215, referred to Argy v Blunt & Lane Cove Real Estate Pty Ltd [1990] 26 FCR 112, referred to Janssen-Cilag Pty Ltd v Pfizer Pty Ltd [1992] 37 FCR 526, applied Ku-ring-gai Co-operative Building Society (No 12) Ltd [1978] 36 FLR 134, applied Yorke v Lucas [1985] 80 FLR 143, discussed H 1976 Nominees Pty Ltd v Galli & Anor [1979] 30 ALR 181, referred to Pappas v Soulac Pty Ltd [1983] 50 ALR 231, referred to Sutton v AJ Thompson Pty Ltd (in liquidation) [1987] 73 ALR 233, referred to JS McMillan Pty Ltd v Commonwealth of Australia [1997] 147 ALR 419, applied Australian Breeders Co-operative Society Ltd v Jones [1997] 150 ALR 488, applied Kabwand Pty Ltd v National Australia Bank [1989] ATPR 40-950, referred to Phoenix Court Pty Ltd & Ors v Melbourne Central Pty Ltd [1997] ATPR (Digest) 46-179, referred to Pannizutti v Trask [1987] 10 NSWLR 531, applied Wickstead v Browne [1992] 30 NSWLR 1; on appeal [1993] Leg Rep 522, applied Earl of Chesterfield v Janssen [1751] 28 ER 82, referred to Julius v Bishop of Oxford [1880] 5 App Cas, referred to