RCR Energy Pty Ltd v WTE Co-Generation Pty Ltd [2017] VSCA 50

Court of Appeal (Vic)|2017-03-16|Before: Vickery J, Weinberg JA, Whelan JA, Santamaria JA

SUMMARY JUDGMENT - Misleading and deceptive conduct - Promises in written contract alleged to be misleading conduct - Whether contractual promise a representation - Whether claim has no prospect of success - Civil Procedure Act 2010 ss 62, .

PRACTICE AND PROCEDURE - Application for summary judgment - Leave to appeal - No substantial injustice - Supreme Court Act 1986 s 14C.

1 On 15 October 2008, the first applicant ('RCRE') entered into the Coolaroo Cogeneration Plant Boiler Contract ('Contract') with Visy Paper Pty Ltd ('Visy Paper').[2] Pursuant to the Contract, RCRE was required to design, construct and commission a cogeneration plant in Coolaroo, Victoria ('the Plant') to burn fuel supplied by Visy Paper and achieve certain performance standards.

2 On 6 September 2010, Visy Paper, RCRE and the first respondent ('WTE') entered into a Deed of Novation to assign the rights and obligations of Visy Paper under the Contract to WTE.

3 Visy Energy Pty Ltd ('Visy Energy'), the second respondent and the second plaintiff, is not, nor was it ever, a party to the Contract.

4 Solid fuel was first supplied to the Plant in the third quarter of 2011. Visy Paper (and then WTE, following novation) was responsible for the supply of fuel to the Plant. The Plant did not achieve a three week period of continuous operation which was required to attain practical completion.

(a) the parties exchanged various show cause notices and responses; and

(b) WTE purported to take over the works on the basis that RCRE had failed to show cause.

(a) WTE issued a further show cause notice in relation to RCRE's materials and standard of work; and

7 On 5 April 2013, WTE issued to RCRE a letter purporting to terminate the Contract under cl 39.4(b) and at law.

8 On 11 April 2013, RCRE responded to WTE's termination letter. In it, RCRE purported to accept WTE's alleged repudiation of the Contract (said to be constituted by its purported termination of the Contract) and purported to rescind the Contract.

9 On 8 April 2013, WTE and Visy Energy filed a writ and statement of claim naming RCRE and RCR Tomlinson Ltd ('RCRT') as the defendants. In May 2013, Vickery J dismissed a stay application brought by the defendants.[3] In September 2013, RCRE and RCRT brought a strike out application. The statement of claim was struck out (in part), with leave to replead granted and the application was otherwise dismissed. On 31 January 2014, WTE and Visy Energy filed an amended statement of claim and expert evidence in support. On 20 June 2014, RCRE and RCRT filed a defence and counterclaim. Visy Paper was added as a party to the proceeding (as the second defendant by counterclaim). On 25 May 2016, WTE and Visy Energy filed a further amended statement of claim. On 17 October 2016, RCRE and RCRT brought an application seeking summary judgment on WTE and Visy Energy's misleading or deceptive conduct claim. On 10 November 2016, Justice Vickery dismissed RCRE and RCRT's summary judgment application.

10 WTE and Visy Energy's claim against RCRE and RCRT can be separated into two parts.

(a) The first part is WTE's claim for rectification costs and liquidated damages. WTE's claim is made pursuant to terms of the Contract.

(b) The second part of WTE and Visy Energy's claim - and the subject of the summary judgment application and now appeal - comprises WTE and Visy Energy's Trade Practices Act/Australian Consumer Law Claim ('TAP/ACL Claim') (paragraphs 10-17A, 20 and 36-38 of the Further Amended Statement of Claim ('FASOC') dated 25 May 2016).[5]

11 The TPA/ACL Claim is based on the terms and conditions of the Contract, which are alleged to constitute actionable misrepresentations.

12 Paragraphs [10] and [10A] are pleaded as follows:

In the Contract, [RCRE] and [RCRT] represented to Visy Paper and Visy Energy that the Plant would have certain performance characteristics, namely that it would:

(a) have a 100% MCR of, and be capable of producing, 39,600 kg of steam per hour; and

(b) be capable of achieving its 100% MCR (that is, of producing 39,600 kg of steam per hour) using fuel comprising 9,350 kg/hr of PMR and material recovery facility residue (Operating Condition 1); and

(c) be capable of achieving its 100% MCR (that is, of producing 39,600 kg of steam per hour) using fuel comprising 9,350 kg/hr of PMR and demolition wood residue (Operating Condition 2); and

(d) be capable of achieving its 100% MCR (that is, of producing 39,600 kg of steam per hour) using fuel comprising 14,303 kg/hr of PMR (Operating Condition 3); and

(e) be complete and capable of:

(i) achieving 100% MCR (that is, of producing up to 39,600 kg of steam per hour); and

(ii) satisfying Operating Condition 1; and

(iii) satisfying Operating Condition 2; and

(iv) satisfying Operating Condition 3,

by the date for practical completion,

(the Representations).

Particulars

The Plaintiffs rely upon the whole of the Contract and, in particular, upon:

(a) the Technical Schedule which forms Annexure Part H of the Contract;

(b) the Proposal which forms Annexure Part I of the Contract; and

(c) the Performance Guarantees which forms Annexure Part K of the Contract.

Further particulars may be provided prior to trial.

10A. Further, in the Contract, [RCRE] and [RCRT] represented to Visy Paper and Visy Energy that [RCRE]:

(a) was suitably qualified and experienced, and would exercise due skill, care and diligence in the carrying out and completion of the works (General Condition 2.2(a)(i)); and

(b) had prepared the Proposal (as defined) so that the works under the Contract, performed in accordance with the Proposal, would enable the works to meet and continue to meet the Performance Guarantees on and from achievement of practical completion (General Condition 2.2(a)(iii)).

(the Further Representations).

13 It will be observed that the sole source of the alleged representations is said to be the Contract, including its various relevant annexures. The prefatory words in paragraphs 10 and 10A provide that the alleged representations were made 'in the Contract'.

14 At paragraph 12, WTE and Visy Energy allege that Visy Paper 'was acting for and on behalf of Visy Energy in relation to the conduct of Visy Paper that is alleged'.

Between 26 February 2010 and 6 September 2010, the Representations and Further Representations were, to the knowledge of [RCRE] and [RCRT], made known to WTE.
At no relevant time did [RCRE] or [RCRT] withdraw or qualify the Representations or Further Representations, or any of them, or otherwise inform Visy Paper, Visy Energy and WTE, or any of them, that the Plant would not have the performance characteristics referred to in the Representations, or that RCR did not possess the qualifications and experience, or that it had not done the things, described in the Further Representations.

16 At paragraph 16, WTE and Visy Energy rely upon s 51A of the TPA and s 4 of the ACL in relation to the representations pleaded in paragraph 10 and 10A.[6]

17 In paragraphs 17 and 17A, the alleged falsity of the alleged representations is pleaded, relying on the following:

(a) the Plant was not, and is not capable of producing, 39,600 kg of steam per hour and satisfying each of Operating Condition 1, Operating Condition 2 and Operating Condition 3 and non-completion; and

(b) RCRE's not being suitably qualified and experienced and not having prepared the proposal so that the works, when performed in accordance with the proposal, would achieve the performance guarantees.

18 In the Defence to the FASOC and Counterclaim, RCRE and RCRT deny the representations pleaded in paragraph 10 and 10A of the FASOC and allege that, if the alleged representations were made, they were representations that, in the event of breach and subject to the terms of the Contract, the applicants would be liable for damages for breach of contract, and nothing more. With respect to the representations pleaded in paragraph 10 of the FASOC, the applicants allege that, if the alleged representations were made and were in respect of future matters, then the applicants had reasonable grounds for making them.

19 In reply, WTE and Visy Energy allege that the applicants did not have reasonable grounds for making the representations alleged in paragraph 10 of the FASOC.

20 At paragraph 20 of the FASOC, WTE and Visy Energy allege that, in reliance on the alleged representations:

(a) Visy Paper entered into the Contract dated 15 October 2008;

(b) WTE entered into the Deed of Novation dated 6 September 2010 and Deed of Sub-sublease and Chattel Lease dated 30 June 2010 (together, 'Chattel Lease'); and

(c) Visy Energy entered into a Chattel Lease and the Take and Pay Agreement dated 30 June 2010 ('Take and Pay Agreement') - an agreement between Visy Energy, Visy Industries Australia and Westpac.

21 At paragraph 36, the alleged representations are said to be misleading or deceptive in breach of s 52 of the TPA (and/or s 18 of the ACL). WTE and Visy Energy contend that the representations in paragraph 10 (but not 10A) are representations as to future matters (i.e. predictions) and rely (solely) on the deeming provision s 51A of the TPA (and/or s 4 of the ACL).

22 At paragraph 37, WTE (which is a party to the Contract) alleges it has suffered loss and damage by reason of the alleged conduct comprising the cost of completing construction of, and rectification work to, the Plant less any additional cost it may have incurred under an alternative contract.

23 At paragraph 38, Visy Energy (which is not a party to the Contract) alleges that it has suffered loss and damage by entry into the Take and Pay Agreement. In summary, Visy Energy says that in reliance on contractual warranties given by RCRE to Visy Paper (in the Contract between RCRE and Visy Paper):

(a) it entered into the Take and Pay Agreement with Visy Industries Australia and Westpac (on 30 June 2010); and

(b) it has suffered loss of income of approximately $24.7 million[7] pursuant to the Take and Pay Agreement.

Summary judgment application and first instance decision (subject of the present application for leave to appeal)

24 By summons dated 6 September 2016, RCRE and RCRT sought an order that:

(a) WTE and Visy Energy's TPA/ACL Claim be dismissed; and

(b) summary judgment be given under ss 62 and 63 of the Civil Procedure Act 2010 ('the CPA'),

on the ground that the claim had no real prospect of success.

25 On 26 September 2016, RCRE and RCRT filed and served submissions in support of the summary judgment application. In those submissions, RCRE and RCRT argued that WTE and Visy Energy's TPA/ACL Claim had no real prospect of success for the following reasons:

(a) First, [RCRE and RCRT] did not make representations in the form pleaded by [WTE and Visy Energy]. No relevant representations were made in addition to, or different from, the contractual promises.

(b) Secondly, entering into a contract - containing contractual promises - constitutes assent to, and intention to be bound by, the terms agreed. Nothing more.

(c) Thirdly, if the contractual promises are unfulfilled or false, then the promisee's remedy lies within the relevant contract (i.e. the agreed liability regime).

It is the position of [RCRE and RCRT] that no relevant representations were made in addition to the contractual promises embodied in the Contract between RCRE and Visy Paper. It follows that all that was being represented - or, more correctly, promised - by [RCRE and RCRT] entering into the Contract was that [RCRE and RCRT] assumed the obligations imposed by the Contract, subject to its terms and conditions. Accordingly, if it is established that the warranties were false or [RCRE and RCRT] has failed to fulfil its promises, then [RCRE and RCRT] will be liable in accordance with the liability regime agreed between the parties. That was the bargain struck by the parties. There is no additional and different 'conduct' relied upon by the plaintiffs, which would attract the operation of the TPA/ACL.

27 On 13 October 2016, WTE and Visy Energy filed and served their submissions in opposition. In those submissions, WTE and Visy Energy contended that the summary judgment application should be dismissed for the following reasons:

(a) the law on the area is sufficiently settled to demonstrate that RCRE and RCRT's contentions are unsupported by, or are inconsistent with higher, binding authority than those relied upon by them;

(b) on the current state of the law, properly considered, WTE and Visy Energy's TPA/ACL claims have real prospects of success;

(c) alternatively, if the asserted 'absence of uniform authority' be accepted, such that the law is unsettled, it should not be decided by summary judgment; and

(d) even if s 63 of the CPA is satisfied (which WTE and Visy Energy deny), the discretion in s 64 ought to be exercised to refuse summary judgment.

28 At the hearing before the primary judge on 17 October 2016, RCRE and RCRT argued that the case should be characterised as one where the conduct claimed to be misleading or deceptive comprised contractual promises which were made but not fulfilled. RCRE and RCRT argued that there is no authority dealing with the case of supposed misleading or deceptive conduct by a supposed representation conveyed by a contractual promise falsified by the promise not being fulfilled.

29 WTE and Visy Energy rejected the submission made on behalf of RCRE and RCRT that the case should be characterised as one of misleading and deceptive conduct comprised by non-fulfilled contractual promises. WTE and Visy Energy claimed that the application should be refused because the law on the area is sufficiently settled and that WTE and Visy Energy's claim has real prospects of success. WTE and Visy Energy further argued that, even if there was an absence of uniform authority, the decision should still not be made by way of summary judgment.

30 During the hearing, WTE and Visy Energy further contended that the represented performance of the Plant, as well as RCRE and RCRT's professed expertise and capacity to complete the project, were critical factors for entry into the agreements described at paragraph 20, above.

31 On 10 November 2016, the primary judge dismissed the application for summary judgment, with costs. On 1 December 2016, orders disposing of the application were made and then authenticated.

32 After examining the relevant authorities, the primary judge considered that the comments of French CJ in Campbell v Backoffice Investments Pty Ltd[8] were of sufficient weight to dismiss the summary judgment application.[9]

33 In relation to the FASOC, the primary judge observed that WTE and Visy Energy were confined to the 'four walls of their pleaded case', which, as pleaded, relies upon the text of the contractual provisions pleaded as giving rise to the representations relied upon.[10]

34 The primary judge identified a number of factors that could, at trial, arise and be relevant to the meaning and effect of the contractual terms relied upon as actionable misrepresentations at paragraphs 10 and 10A of the FASOC.[11]

35 The primary judge concluded that the alleged representations may need to be considered at trial to determine their meaning and effect in the 'contractual context'.[12] He was, therefore, unable to find that WTE and Visy Energy's TPA / ACL Claim had 'no real prospect of success' as required under ss 62 and 63 of the CPA for RCRE and RCRT to succeed.[13]

36 On 10 November 2016, consistent with his reasons, the primary judge made the following orders in order to dispose of RCRE and RCRT's application:

(a) RCRE and RCRT's application for summary judgment brought by summons dated 6 September 2016 be dismissed; and

(b) RCRE and RCRT pay WTE, Visy Energy and Visy Paper's costs of and incidental to the application brought by summons dated 6 September 2016.[14]

Application for leave to appeal and proposed grounds

37 The applicants (RCRE and RCRT) filed an application for leave to appeal (from the decision made by the primary judge) on 6 December 2016. The applicants claim he erred in three ways:

(a) First, he erred in finding (at [55] to [57]) that the meaning and effect of the alleged representations may be affected by evidence adduced at trial.

(b) Secondly, he erred in failing to make a finding about the content of the alleged representations.

(c) Thirdly, he erred in failing to find that WTE and Visy Energy's TPA / ACL Claim has no real prospect of success.

38 The primary judge had held that the meaning and effect of the representations may be affected by evidence adduced at the trial. The applicants, however, say that the particulars of the representations did not go beyond the words of the Contract. Moreover, the ruling had the effect that the respondents could refer to further (material) facts and particulars at trial without having given notice of them. On the contrary, the meaning of the contractual promises depended upon the construction of the Contract, not upon unpleaded 'surrounding circumstances'. The respondents, having elected to rely only on contractual terms to found the relevant representations, should be held to their pleaded case. As they have not pleaded any surrounding circumstances, no evidence will be admissible in respect of such circumstances.

39 The primary judge erred in holding that the observations of French CJ in Campbell v Backoffice Investments Pty Ltd[15] were sufficient to dispose of the summary judgment application. The applicants said that those observations were made in response to a contention that a contractual warranty could never ground an actionable misrepresentation. For their part, the applicants said they had not contended otherwise. The application for summary judgment depended on the particular representations in the present case.

40 The applicants said that the representations, because they had been made in a contract, must be objectively understood by reference to that 'very important commercial circumstance'. The applicants did not contend that, because there is a valid contract on foot, the consumer protection legislation is ousted, nor that the amount recoverable is somehow limited by the limitation of liability clause contained in Special Condition 21.[16] Instead, they said that the existence of the Contract - and reliance upon it to found the alleged representations - necessarily informs and limits the content of the alleged representations. Further, the parties to the Contract had expressly provided for its breach. Particular reliance was placed in this context on Special Condition 21. Given that the parties had expressly contemplated that the Contract might be breached, it is difficult to see how the promises alleged can be characterised as either a prediction (i.e. a representation as to a future matter) or any other unconditional representation that the promises will be honoured. If the terms of the Contract are not to be characterised as a prediction, they are nothing more than a representation that the applicants have made a promise and, in the event of breach, have promised to pay the damages agreed in the Contract. The law of contract provides for risk-allocation between contracting parties. To allow a non-party to detach a contractual promise from the context in which it was made would be to introduce an incoherence into the law that governs commercial relations.

41 The primary judge should have held that the misleading and deceptive conduct case had no real prospects of success. Each of the contractual provisions relied upon by the respondents as giving rise to the pleaded representations are promises that the applicants will do something, or achieve some specified results, in the future. Given that, in the contract, the parties had made express provision in the event that those promises were not performed, they could not be construed as representational predictions.

42 Assuming for the purposes of the summary judgment application that the plant did not perform according to its contractual specifications, the only relief at trial must be contractual. There could be no separate relief for the TPA/ACL claim.

43 In oral submissions, the applicants disavowed any contention that a party could contract out of the norms imposed by the statute. They accepted that the entry into a contract could constitute 'conduct' for the purposes of the TPA/ACL. The relevant conduct, here the representations, had to be considered before any questions of causation or loss and the form of any relief could be considered. The applicants contended that, in the present case, the primary judge had not grappled with the primary task of determining the content of the conduct said to be misleading. Where the 'conduct' alleged to be misleading was the entry into a contract, any representation arising therefrom must be qualified by everything else in the contract. It was not permissible for a plaintiff to refer to part of the contents of a contract without reference to the whole of a contract. In the present case, the content of the conduct referred to in the pleading could not possibly have conveyed the pleaded representations. There was simply no representation that the warranties in the Contract would not be breached. On the contrary, Special Condition 21 of the Contract (which was part of the relevant conduct) contemplated that the representations would not be performed. The respondents had confined their particulars of conduct to the terms of the Contract. There were no further particulars other than what was contained in the Contract. Any evidence purporting to deal with matters collateral to the Contract, such as pre-contractual negotiations, would be inadmissible, given the way the case had been pleaded and particularised. Evidence should be confined to issues joined. In allowing the matter to proceed to trial so as 'to determine the meaning and effect [of the representations] in the contractual context', the primary judge had opened up the possibility of an 'uncontrolled and dimly understood zone of evidence'.

44 The applicants also said that, while there would still have to be a trial on the contractual claims, the removal of the TPA/ACL claim would have a substantial impact on the dimensions of the case. First, it would be unnecessary for the applicants to establish that it had a reasonable basis for what were said to be the future representations and, secondly, the whole of the claim made by Visy Energy, which was large and fully contested, would be removed.

45 The respondents said that the primary judge's discussion of the facts to be considered at trial in 'determining precisely what the Representations and the Further Representations contained in the Contract could reasonably be understood to mean and convey' is entirely consistent with the well-settled approach. They referred to Butcher v Lachlan Elder Realty Pty Ltd.[17] Central to the Representations and the second of the Further Representations is the issue of fuel to be used in the plant to achieve the performance guarantees. The pleadings in this regard identify a central (arguably, pivotal) issue in the case, that is the nature and composition of the fuel intended by the parties during their negotiations and development of the various technical specifications (which ultimately formed part of the Contract), and what fuel has been fed to the boiler since construction. That pleaded controversy reveals that the concept of 'fuel', and the language used to describe it, may be considered ambiguous or susceptible of more than one meaning, and therefore evidence of surrounding circumstances will be admissible to assist in the interpretation of that aspect of the Contract. Even if not ambiguous, evidence of surrounding circumstances existing prior to the entry of the Contract and known to the parties will in any event be relevant.

46 The primary judge was not asked (either in written submissions or during oral argument) by the applicants to make a finding about the content of the Representations and/or Further Representations. In any event, he found that the TPA/ACL Claim had 'real prospects of success'. The respondents said that it is implicit in that conclusion that the content of the representations as alleged are capable of supporting a claim for contravention of the TPA/ACL. The applicants had repeated their argument below that the content of the representations is affected by Special Condition 21. The primary judge was correct to decide that the content of the representations is best dealt with at trial.

47 The respondents said relief arising from breach of contract (and any limitations agreed between the parties on that liability) is concerned with conduct during the performance or operation of the Contract. Relief arising from contraventions of the TPA/ACL is concerned (here, at least) with conduct leading to and inducing entry into the Contract.

48 Contrary to the applicants' submissions, the respondents' case is not that the Representations were falsified by non-fulfilment of contractual promises (i.e. by breach of the Contract) but rather that the applicants did not have reasonable grounds for making the Representations at the time they were made. The Further Representations, as to then presently existing facts, are alleged to have been false when made.

49 In their oral submissions, the respondents said that the conduct involved not only the representations that had originally been made when the Contract was executed but also the fact that the representations had not been withdrawn or qualified before WTE accepted a novation of the Contract or Visy Energy entered into the Take and Pay Agreement. In effect, the pleading was, in part, a silence pleading: by their failure to qualify the representations given in the Contract, the respondents had misled WTE. The respondent said the representations were in writing. The relevant 'writing' was the Contract. The fact that the writing was a contract and that the representations also had the character of contractual promises did not detract from their character as 'representations' for the purposes of the TPA/ACL claim. It would have been possible to plead out fully all the warranties without any reference to their also being contractual promises.[18] The Contract is evidence of the representations. The fact that it contains contractual promises is a distraction.

50 The respondents identified where in the Contract each of the representations were made.[19] True, the applicants had submitted that, by reference to Special Condition 21, it could not be said that they had ever made unqualified representations that they would perform its promises. However, the respondents said that whether a representation was made is a question of fact best left to trial. In a summary judgment application, the Court should not determine whether any, and if so which, representations were made. The respondents accepted that, at trial, no reliance would be propounded on any representations other than the pleaded representations.

51 In so far as WTE had a claim, it said that it had relied on the representations and the fact that they had not been withdrawn or qualified, when it accepted the novation of the Contract.

52 In so far as Visy Energy had a claim, it was put that it had relied on the representations (a) in entering the Take and Pay Agreement whereby it was to source a particular volume of energy and (b) had suffered damage in loss of earnings from the fact that it was unable to sell to third parties the volumes of energy that it had anticipated.

53 The applicants made an application for summary judgment under the Civil Procedure Act 2010.[20] Having lost that application, they must now apply for leave to appeal.[21]

54 We can see no error in the primary judge's holding that the application for summary judgment should be refused.

55 The test to be applied under ss 62 and 63 of the Civil Procedure Act 2010 is whether a plaintiff's claim 'has no real prospect of success'. In Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd Warren CJ and Nettle JA described the test as follows:

(a) the test for summary judgment under s 63 of the Civil Procedure Act 2010 is whether the respondent to the application for summary judgment has a 'real' as opposed to a 'fanciful' chance of success;

(b) the test is to be applied by reference to its own language and without paraphrase or comparison with the 'hopeless' or 'bound to fail test' essayed in General Steel;

(c) it should be understood, however, that the test is to some degree a more liberal test than the 'hopeless' or 'bound to fail' test essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent's case is not hopeless or bound to fail, it does not have a real prospect of success;

(d) at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.[22]

56 In our view, it cannot be said that the respondents' TPA/ACL claim has no real prospect of success. Any other conclusion is not available given (a) the subtle interplay between contractual warranties and conduct said to be misleading and (b) the state of the authorities.

57 In the present case, the respondents have identified 'the Representations' (para 10) and 'the Further Representations' (para 10A).

58 In para 10, they have alleged the representation that the Plant 'would' have certain performance characteristics. In itself and as expressly pleaded in para 15, the Representations are about the future. By reason of s 51A, the Representations will be taken to be misleading 'if the corporation does not have reasonable grounds for making the representation'. The onus will be upon the applicants to establish reasonable grounds.[23]

59 In para 10A, the Further Representations are pleaded as representations about the present: that the applicants were 'suitably qualified and experienced' and 'had prepared the Proposal'. In para 17A, the respondents have alleged that, when made, the Further Representations were false in that RCR 'was not suitably qualified and experienced' and 'had not prepared the Proposal'.

60 Before the enactment of the TPA, conduct that induced the entry into a contract was usually analysed separately from what had subsequently become the contractual promises. If a representation that induced the contract had become a contractual term, it was unnecessary to determine whether its force as a factor that induced the contract was innocent, negligent or fraudulent.[24] However, the TPA enjoins 'misleading conduct'. But for the requirement that the conduct must be in trade and commerce, the statute imposes no other qualifications upon the statutory norm. The fact that the conduct might also be analysed through the rubrics of contract or tort does not take it outside the statutory norm.

61 A contract may contain a representation. This could be a representation of a present state of fact, or a representation as to the future, which, on proper analysis, is also a representation of a present state of facts (a present belief or intention based on presently existing reasonable grounds). Such a representation could amount to misleading and deceptive conduct. In Futuretronics International Pty Ltd v Gadzhis,[25] Ormiston J said:

It would seem on the authorities that, at the least, a contractual promise would amount to an implied representation that the promisor then had an intention to carry out that promise. If it can be shown that he had no such intention he would be guilty of misleading or deceptive conduct. Likewise it would seem that such a representation connotes a present ability to fulfil that promise which, if shown to be untrue at the time of making, would likewise characterise the implied representation as misleading or deceptive.

...

I am persuaded that if there be an unconditional promise which forms part of the contractual obligations, then it is proper to treat the giving of that promise, at least in the ordinary case, as the making of a representation as to a future matter, being either the doing of an act or the 'refusing' (sic) to do an act, being in each case the subject of the promise. Perhaps conditional promises may also be treated as the making of a representation as to future conduct, but in each case the qualified terms of the promise would usually lead to the conclusion that the maker had reasonable grounds therefor, unless it could be shown that under no circumstances would the promisor have fulfilled his promise. It is, however, not necessary to determine this latter point.[26]

62 Whether contractual promises can form representations for the purposes of the TPA or the ACL remains a matter of controversy. In several cases, judges have said that the fact that the particulars of the alleged misleading conduct are based upon the making of a contractual promise does not prevent a claim being made under either the TPA or the ACL. In Campbell v Backoffice Investments Pty Ltd,[27] French CJ said:

There is no reason in principle why the fact that a false statement is contained in a contractual document thereby takes the use of that statement in the document out of the scope of 'misleading or deceptive conduct'. Whether the proffering of a contractual document containing a false statement amounts to a misrepresentation or to misleading or deceptive conduct, is a matter of fact to be determined by reference to all the circumstances. The circumstance that such a representation is the subject of a contractual warranty does not, as a matter of law, exclude the making of it from the purview of the statutory prohibition.[28]

63 In Australian Competition and Consumer Commission v Valve Corporation (No 3),[29] Edelman J said:

Since 'engaging in conduct' includes the 'the making of, or the giving effect to a provision of, a contract or arrangement', representations contained within a contract are capable of being misleading or deceptive conduct: see Competition and Consumer Act s 2(2). Indeed, a contractual provision can constitute misleading conduct even towards persons who are not party to the contract. In Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia, Lockhart and Gummow JJ said that it is 'no objection to relief [under provisions for breach of the equivalent of s 18(1)] that the misleading conduct is found in the making of a contractual provision, and the complainant does not have contractual privity with the defendant'.[30]

64 Subject to what we say in the next paragraph, where the representation is said to appear in a contract, it will be necessary to examine all the terms of the contract to see if the allegation that there is a representation is made good. Where, as is usually the case, a claim for loss and damages is made by reason of a breach of the statutory norm, the fact that the conduct forms part of a contract will raise particular issues when causation (reliance) is to be proved. This is particularly so when persons who are not parties to the contract claim to have relied upon some representation that arises from the contract. Causation and loss and damage would be difficult issues which would depend on the facts of each case

65 On the other hand, it may be that, properly construed, a provision of a contract is not a representation but nothing more than the undertaking of an obligation. In that eventuality, there can be no misleading conduct. This is because nothing is 'represented' other than that an obligation has been undertaken, which is self-evidently true.

66 Before us, the applicants said that the representations relied upon by the respondents could not be made out because of the presence in the Contract of Special Condition 21. As indicated above, the applicants contended that, since the respondents had confined themselves to the very terms of the Contract, the content of any representation had to be determined by reference to every provision in the Contract. Given the presence of Special Condition 21, which governed the assessment of damages in the event that the contractual promises are not performed, it could not be said that the applicants had given an unqualified warranty of performance; the special condition was predicated upon a failure of performance, and expressly provided for the consequences of such a failure.

67 Whether a contractual promise involves conduct that is capable of being misleading is something that will depend on all the circumstances of the case. Analysis of a contractual promise, abstracted from all the circumstances that surrounded its making, may involve an inappropriately narrow inquiry. In the present case, we think that the determination of the content of any representation should be left to trial. The presence of the special condition may affect a finding on that issue. In the circumstances, we should not opine on that content in an application such as the present. Further, the presence of such a provision may affect (a) the contention of a third party that it relied upon the existence of the contractual promise and (b) the assessment under the statute of any damages. Those matters are best left to trial.

68 In reaching this conclusion, we bear in mind that neither of the present respondents was a party to the Contract when it was originally executed in October 2008. So far as the applicants are concerned, the relevant counterparty was Visy Paper. In September 2010, WTE became a party to the Contact by novation, replacing Visy Paper. In its TPA/ACL claim, WTE has contended that, but for the Representations and the Further Representations, Visy Paper would not have entered into the Contract with RCRE and 'would have contracted with a party capable of designing and constructing a plant which was capable of fulfilling the Principal's project requirements (Alternative Contract)'. It has then said 'WTE would have accepted a novation of such Alternative Contract from Visy Paper. WTE's loss and damage includes the cost of completing construction of and rectification work to the Plant less any additional cost (over and above the Contract price) which may have been incurred under an Alternative Contract'. It was explained to us by the respondents that, in part, their claim is based on 'silence': the failure of the applicants to qualify the Representations and the Further Representations between the making of the Contract and its novation. Claims under the TPA or the ACL are claims made in respect of 'conduct'.[31] In our opinion, it cannot be said, at this stage, that the respondents' claim 'has no real prospect of success'.

69 So far as contractual parties are concerned, there will be questions whether a claim for misleading conduct, founded on a representation in a contract, will give any additional remedy.

70 So far as third parties are concerned, there will be difficult questions of reliance and causation.

71 In our opinion, in the light of what Ormiston J said in Futuretronics International Pty Ltd v Gadzhis,[32] it cannot be said that the respondents' claim 'has no real prospect of success' within the meaning of s 62 of the Civil Procedure Act 2010. The same should be said about the Further Representations; it is at least arguable that they did not cease to be representations merely because they were incorporated into the Contract as warranties.[33]

72 It is true that, as a general rule, evidence of the facts and circumstances in which a contract wholly in writing was made is not admissible in the interpretation of that contract. However, if what is contained in such a contract is a representation answering the description of 'conduct' in the TPA or ACL, then evidence of surrounding circumstances will be admissible on what the representations should be understood as conveying.[34]

73 In the present case, we see no error in the primary judge's holding that, given the controversy in the authorities, it is undesirable to make any assessment whether the conduct is misleading or whether a party has suffered loss as a result of it until all the evidence is in.[35]

74 There is a further reason why the present application should be refused. An application for summary judgment is interlocutory. Moreover, it concerns a matter of practice and procedure. Under the former rules, there was no right of appeal from an interlocutory order; only final orders could be appealed as of right. However, some orders made on interlocutory applications were usually treated as if they were final.[36] For example, an order granting summary judgment (because it meant the effective conclusion of the proceeding) was treated as final.[37] An order refusing an application for summary judgment always required leave to appeal.

75 Now, under s 14A(1) of the Supreme Court Act 1986 (subject to certain exceptions) there is no right of appeal in respect of any order; leave is required in respect of all decisions be they final or interlocutory. In this Court, the old jurisprudence that distinguished appeals from final orders and applications for leave to appeal from interlocutory orders has become vestigial.

76 Pursuant to s 14C of the Supreme Court Act 1986, leave to appeal requires the Court to be satisfied that there is a 'real prospect of success' on the appeal. In Kennedy v Shire of Campaspe,[38] the Court (Whelan and Ferguson JJA) said 'the Court may only grant leave where the appeal has a "real" as opposed to a "fanciful" chance of success'.[39] A 'real prospect of success' is a necessary, but not a sufficient condition, for the grant of leave to appeal. The Court may refuse an application for leave to appeal despite its having a 'real prospect of success'. In Kennedy v Shire of Campaspe, the Court also said that:

There are, of course, some different considerations that may play a part in the exercise of the Court's residual discretion to refuse leave, even where the appeal has a real prospect of success. For example (and without limiting the possibilities), there may be cases where even though the prospects of the appeal are real, no substantial injustice will be done if the decision stands. This may be particularly so when the appeal is from an order as to practice and procedure.[40]

77 In part, the exercise of the discretion conferred by s 14C may be informed by some of the things said in the classic authorities that dealt with the jurisdiction of the Court in granting leave to appeal in cases of interlocutory orders. We have in mind, for example, the classic statement of Sir Frederick Jordan in Re the Will of Gilbert:

[I]f a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal.[41]

78 It is true that the presence of the impugned allegations will extend the trial and, to that extent, the applicants may suffer injustice if the present decision stands and the TPA/ACL claim goes to trial. Were the present application to have succeeded, the claims of Visy Energy would not require adjudication. It was also suggested to us that it would be unnecessary for the applicants to establish that there was a reasonable basis for the Further Representations. So far as can be determined at present, if the impugned allegations are dismissed, that is a matter that the trial judge can take into account in the making of any costs order.

[1] This section is substantially based on paragraphs 6 to 13 of the trial judge's decision the subject of the application for leave to appeal: WTE Co-Generation Pty Ltd v RCR (No 3) [2016] VSC 674 ('Reasons').

[2] Second defendant by counterclaim in the proceedings below.

[3] WTE Co-Generation v RCR Energy Pty Ltd [2013] VSC 314.

[4] This section is substantially based on paragraphs 15 to 25 of the Reasons.

[5] The Trade Practices Act 1974 (Cth) ('TPA') was renamed by sch 5 item 2 of the Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth) ('the Second TPA Amendment Act') to become the Competition and Consumer Act 2010 (Cth). The Australian Consumer Law ('ACL') is contained within sch 2 of the Competition and Consumer Act 2010 (Cth). That law commenced on 1 January 2011. Item 6 of sch 7 of the Second TPA Amendment Act provides that the TPA as in force immediately before the commencement on 1 January 2011 continues to apply after the commencement, in relation to acts or omissions that occurred before 1 January 2011.

[6] Section 4 of the ACL reads as follows:

(1) If:

(a) a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act); and

(b) the person does not have reasonable grounds for making the representation;

the representation is taken, for the purposes of this Schedule, to be misleading.

(2) For the purposes of applying subsection (1) in relation to a proceeding concerning a representation made with respect to a future matter by:

(a) a party to the proceeding; or

(b) any other person;

the party or other person is taken not to have had reasonable grounds for making the representation, unless evidence is adduced to the contrary.

...

Section 51A of the TPA reads as follows:

(1) For the purposes of this Division, where a corporation makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act) and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading.

(2) For the purposes of the application of subsection (1) in relation to a proceeding concerning a representation made by a corporation with respect to any future matter, the corporation shall, unless it adduces evidence to the contrary, be deemed not to have had reasonable grounds for making the representation.

(3) Subsection (1) shall be deemed not to limit by implication the meaning of a reference in this Division to a misleading representation, a representation that is misleading in a material particular or conduct that is misleading or is likely or liable to mislead.

[7] As assessed by the respondents' forensic accounting expert, Mr Grouios in his report dated 10 September 2015.

[14] On 1 December 2016, the orders were authenticated.

[16] Special Condition 21 of the Contract provided:

The Contractor's maximum liability shall be the greater of 50% of the Contract Sum or the proceeds received from the Principal from the Contractor's insurance whether that liability arises by way of indemnity in contract or tort or otherwise.

The Contractor's liability to the Principal for any consequential loss type losses or damages shall be limited to the extent the liability is covered under the Contractor's insurance required under the Contract. In these circumstances the Contractor's liability shall be limited to the extent to which the Contractor's insurance policy pays on such a claim made by the Contractor under that policy.

[17] [2004] HCA 60; (2004) 218 CLR 592, 625 [109], quoted in Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304, 341 [102]. They also referred to Choo v Zhang [2016] NSWCA 193 [57]; ACN 055 378 240 Pty Ltd v SGS Australia Pty Ltd [2013] FCAFC 46 [84], [133], [197]; ABN AMRO Bank NV v Bathurst Regional Council [2014] FCAFC 65; (2014) 224 FCR 1, 146 [770].

[18] The respondents said that the present application for summary judgment traversed practically the same issue raised by the applicant when it had previously (and unsuccessfully) attempted to strike out the statement of claim.

[19] The respondents identified the source of the written representations as follows (note: cl 4 of the instrument of agreement lists the documents comprising the Contract):

General Condition 1: definition of 'Performance Guarantees'

Technical Schedule - Annexure Pt K: 'Content of Performance Guarantees'

General Condition 1: definition of 'Technical Schedule'

Technical Schedule - Annexure Pt H: 'Technical Schedule'

A defendant in a civil proceeding may apply to the court for summary judgment in the proceeding on the ground that a plaintiff's claim or part of that claim has no real prospect of success.

(1) Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires, has no real prospect of success.

(2) A court may give summary judgment in any civil proceeding under subsection (1) -

(a) on the application of a plaintiff in a civil proceeding;

(b) on the application of a defendant in a civil proceeding;

[21] Pursuant to s 14C of the Supreme Court Act 1986, leave to appeal requires the Court to be satisfied that there is a real prospect of success on the appeal. In Kennedy v Shire of Campaspe [2015] VSCA 47, the Court (Whelan and Ferguson JJA) said (at [12]) 'the Court may only grant leave where the appeal has a 'real' as opposed to a 'fanciful' chance of success'.

[22] [2013] VSCA 158; (2013) 42 VR 27, 40 [35]. See also Mandie v Memart Nominees Pty Ltd [2016] VSCA 4 [43]; Roo Roofing Pty Ltd v Commonwealth of Australia [2017] VSC 31 [5]-[10] (John Dixon J).

[23] Futuretronics International Pty Ltd v Gadzhis [1992] VicRp 63; [1992] 2 VR 217, 240 (Ormiston J).

[24] See the discussion in Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470, 504 (Lockhart and Gummow JJ).

[28] Ibid 322 [35] (French CJ). See also Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470, 505-6 (Lockhart and Gummow JJ); Futuretronics International Pty Ltd v Gadzhis [1992] VicRp 63; [1992] 2 VR 217, 239-41 (Ormiston J).

[30] Ibid 691-2 [222] (citation omitted). See also the discussion in Russell V Miller, Miller's Australian Competition and Consumer Law Annotated (Thomson Reuters, 37th ed, 2015) 1523 [1.S2. 18.90].

[31] The applicants contended that the presence of an express damages regime in the event that the contractual promises were not performed necessarily qualified the promises in the Contract such that they could not be unqualified representations of performance. The applicants accepted that it was a 'rule of contract', that, (as a general rule) even if a contract does not contain an express damages regime, the law provides that damages are available on breach.

[33] Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304, 322 [35] (French CJ).

[34] Ibid 341-2 [102] (Gummow, Hayne, Heydon and Kiefel JJ); Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592, 625 [109] (McHugh J); Australian Competition and Consumer Commission v Valve Corporation (No 3) (2016) 337 ALR 647, 689 [213] (Edelman J).

[35] Australian Competition and Consumer Commission v Valve Corporation (No 3) (2016) 337 ALR 647, 689 [212]-[213], and the authorities discussed there; Concrete Constructions Group v Litevale Pty Ltd [2002] NSWSC 670; (2002) 170 FLR 290, 348 [167]-[169] (Mason P); McGrath v Australian Naturalcare Products Pty Ltd [2008] FCAFC 2; (2008) 165 FCR 230, 265 [137]-[138] (Allsop J).

[36] See Licul v Corney [1976] HCA 6; (1994) 180 CLR 213.

[37] See, eg, Wickstead v Browne (1992) 30 NSWLR 1, 5 (Kirby P), 11 (Handley and Cripps JJA).

[40] Ibid [14]. See, eg, 24 Hour Fitness Pty Ltd v W&B Investment Group Pty Ltd [2015] VSCA 216 [53] (Hansen, Ferguson and McLeish JJA); Glass (a pseudonym) v The Chief Examiner [2015] VSCA 127 [81] (Santamaria, Ferguson and McLeish JJA); Bank of New Zealand v Spedley Securities Ltd (in liq) (1992) 27 NSWLR 91, 95 (Kirby P).

[41] [1946] NSWStRp 24; (1946) 46 SR (NSW) 318, 323. See also Livingspring Pty Ltd v Kliger Partners [2008] VSCA 93; (2008) 20 VR 377, 380 [7] (Maxwell P and Buchanan JA); Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc [1981] HCA 39; (1981) 148 CLR 170, 177 (Gibbs CJ, Aickin, Wilson and Brennan JJ); Niemann v Electronic Industries Ltd [1978] VicRp 44; [1978] VR 431, 438 (Murphy J).

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