Romeo v Wesley College

BARKER J: 1 On 17 November 2015, a judge of the Federal Circuit Court of Australia conducted a de novo hearing of the application, made by the appellant, Mr Jim Vincent Romeo, for review of orders made by a Registrar refusing to set aside a bankruptcy notice served on him on 30 July 2015, at the instance of Wesley College. The judge dismissed the application with costs. See Romeo v Wesley College [2015] FCCA 3098. This proceeding is Mr Romeo's appeal from that judgment and the orders made. 2 The relevant question both before the Registrar and before the judge in the Court below was whether Mr Romeo had committed an act of bankruptcy in terms of s 40(1)(g) of the Bankruptcy Act 1966 (Cth). That provision relevantly provides that: if a creditor who has obtained against the debtor a final judgment … being a judgment … the execution of which has not been stayed … and the debtor does not: (i) where the notice was served in Australia - within the time specified in the notice; … comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt …, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment … was obtained 3 In her Honour's judgment, the judge noted that the evidence before the Federal Circuit Court included: the application of Mr Romeo dated 17 August 2015, and his affidavit in support of it; a 2015 general procedure claim lodged by Mr Romeo on 9 November 2015 in the Magistrates Court of Western Australia civil jurisdiction claiming the amount of $75,199.91 to be paid by the defendants, including Wesley College and Mr Trevor O'Sullivan, to Mr Romeo; a 2014 general procedure claim lodged by Mr Romeo on 22 December 2014 in the Magistrates Court claiming the amount of $75,045.51 against differing defendants, namely Mr David Gee and Mr Geoff Searle, which her Honour said contained essentially the same description of claim as described in the 2015 general procedure claim. 4 The judge noted that in submissions, Mr Romeo confirmed that the subject matter of both the 2014 and 2015 general procedure claims was the same as the subject matter in an earlier counter-claim he had filed in proceedings issued by Wesley College against him in the Magistrates Court in proceeding PER/GCLM/15278 of 2012 - the 2012 proceeding. 5 The bankruptcy notice, number BN182827, issued by the official receiver on the application of Wesley College as a judgment debtor, her Honour said, was founded in the judgment obtained by Wesley College in the 2012 proceeding. 6 Her Honour noted that Mr Romeo's counter-claim was dismissed by the Magistrates Court on 20 December 2013. 7 The judge said that, in essence, what Mr Romeo's counter-claim and his claims in the 2014 and 2015 general procedure claims in the Magistrates Court claimed, was that Wesley College had failed properly to supervise his son's education and that as a consequence, his son was bullied by his peers. Her Honour noted the period in which Mr Romeo claimed Wesley College failed to supervise properly, was the same period in each of the outstanding two general procedure claims and the earlier counter-claim, and the quantum sought was or was approximately the same sum in each proceeding. The judge said the subject matter of each of the claims and counter-claim was, as confirmed and conceded by Mr Romeo in submissions before her, the same subject matter. 8 The judge noted that the counter-claim was dismissed in the 2012 proceeding and the dismissal was upheld on appeals to the District Court of Western Australia (Judge Wager) and the Court of Appeal of the Supreme Court of Western Australia. The judge noted Mr Romeo did not argue that his outstanding claims, on which he relied before her, were different from that contained in the dismissed counter-claim. Her Honour added that nor, were they different, was any reason proffered as to why such claims could not have been litigated in the proceedings in which the counter-claim was dismissed. 9 The judge further said that, in the affidavit in support of his application before the Court before her, Mr Romeo set out a number of matters on which he sought to rely. However, he withdrew in respect of three such matters. 10 In the result, the judge said that the matter before her proceeded on one ground, namely, Mr Romeo's assertion that he had a counter-claim exceeding the amount claimed in the bankruptcy notice and that he otherwise satisfied s 40(1)(g) of the Bankruptcy Act. 11 The judge accepted a submission that Mr Romeo had failed to comply with R 3.02 of the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth), in that his affidavit did not provide an evidentiary basis to his claim. Her Honour added, that in fact, none of the matters referred to in R 3.02(2)(a), (b) and (c) were included in his affidavit. 12 Ultimately, her Honour ruled as follows in [11] and [12] of her judgment: 11. The ground relied upon by the applicant does not warrant the setting aside of the bankruptcy notice. The counter-claim sought to be raised by the applicant has already been dismissed in the original substantive application between these parties in the Magistrates Court of Western Australia, and on appeal to the two superior courts, the applicant's appeals have been dismissed. The applicant appealed the dismissal of the counter-claim to the District Court of Western Australia in the case of Romeo v Wesley College [2014] WADC 152. Such appeal was dismissed. The applicant then unsuccessfully appealed the decision of Judge Wager to the Supreme Court of Western Australia - Court of Appeal. The Supreme Court of Western Australia - Court of Appeal dismissed the appeal in the case of Romeo v Wesley College [2015] WASCA 52. 12. Finally, and for completeness sake, the bankruptcy notice was in the form of form 1 of Schedule 1 to the Bankruptcy Regulations 1996 (Cth) and in accordance with reg.4.02 and s.41(2) of the Bankruptcy Act. There is no issue as to service, it having been personally served, and service is acknowledged by Mr Romeo. The act of bankruptcy is said to be committed under s.40(1)(g) of the Bankruptcy Act. The judgment debt is a final judgment or final order of the Magistrates Court of Western Australia. The bankruptcy notice is valid and there are no defects which are required to be cured or which would render the notice fatal. The notice accurately follows the judgment. The Court is not satisfied that the applicant has any counter-claim as required under the relevant section of the Bankruptcy Act. 13 In appealing from this decision, Mr Romeo relies on the following primary ground: 1. That Her Honour Judge Hartnett erred by accepting and finding that the subject of both the Appellant's general procedure claims where the same in that one was related to a breach of contract in respect to bullying of the Appellant's son and the second related to misleading and deceptive conduct on the part of the Respondent's employee in which pursuant to a master servant relationship a claim against the Respondent was made in respect to vicarious liability of the Respondent/Employer. 14 He also relies on the following further grounds: 2. That the Appellant was not afforded nature justice by being compelled to respond to questions put to him in respect to both claims whilst he was in court. Her Honour erred by not giving the Appellant the right to stand the matter down and consider his position before accepting response from the Appellant. 3. That Her honour erred by not granting the Appellant an adjournment in which he as a self-represented litigant would have required to satisfy the Court in respect to rule (3.02) (2006) (Cth), and therefore the Appellant was not afforded nature justice by the Court. 4. That Her Honour erred by placing too much emphasis on the Appellant previously dismissed claim when in fact her honour emphasis should have been directed towards the distinguishing elements between a claim made pursuant to a breach of a fundamental term of a contract and a claim made against an employer pursuant to a common law obligation of vicarious liability. 15 He thereby seeks the following orders: 1. An order that the appeal be allowed. 2. An order that the Registrar's decision to dismiss the Applicant's Form 2 application to set aside the Respondent's Bankruptcy Notice pursuant to section 30(1) of the Bankruptcy Regulations 1996 (Cth), be set aside and that the Respondent's Bankruptcy Notice be set aside. 3. An order setting aside the orders made the Federal Circuit Court on 17 November 2015. 16 It will be noted that the primary ground of appeal challenges the primary finding of the judge in the Court below that the counter-claim or counter-claims, made in the 2014 and 2015 general procedure claims in the Magistrates Court, were in substance the same as the counter-claim made, and dismissed, in the 2012 proceeding. 17 As noted in [8] above, the judge added that even if they were different, no reason was proffered as to why the claims, in terms of the 2014 and 2015 general procedure claims, could not have been litigated in the proceedings in which the counter-claim in the 2012 proceeding was dismissed. 18 Taking a broad view of the terms of ground 1, it would appear that Mr Romeo intended to appeal against both of the findings referred to at [8] above. Certainly Wesley College, by its written and oral submissions, has understood that to be the case, because it has addressed submissions directly to that point. Mr Romeo has responded to those submissions in his reply submissions. 19 Consequently, I consider a second primary issue arises on the appeal and that is whether the judge was wrong to find that if the 2014 and 2015 general procedure claims were different from the counter-claim in the 2012 proceeding, no reason was proffered as to why such claims could not have been litigated in the 2012 proceeding in which that counter-claim was dismissed.

Did the judge err by finding that the subject matter of the 2014 and 2015 general procedure claims were the same? 20 Mr Romeo makes the following submissions in respect of this ground of appeal: 21. The subject matter of the general procedure claims filed on 22 December 2014 ('GPC 1') and 9 November 2015 ('GPC 2') respectively are different in respect of claims made against the Respondent. 22. As was said in South Australia v Victoria[1911] HCA 17; (1911) 12 CLR 667 at 675 by Chief Justice Griffith: 'the word "matters" was ... the widest term to connote controversies which might come before a Court of Justice.' 23. Justices Gummow and Hayne noted in Re Wakim 198 CLR 511 at 585-86 [139]-[142]: 'The central task is to identify the justiciable controversy. In civil proceedings that will ordinarily require close attention to the pleadings (if any) and to the factual basis of each claim.' 24. In the circumstances of this case, the pleadings in relation to the aforementioned general procedure claims are substantially dissimilar in nature. 25. The pleadings of 'GPC 1' [the first general procedure claim] focus on the fact that there was a breach of the education contract by the Respondent in that the essential terms of the contract were not fulfilled by failure to provide a safe learning environment to the Appellant's Child who was the victim of bullying. 26. The bullying to which the Child was subjected to occurred repeatedly on numerous occasions but the Respondent failed to act accordingly to protect the Child from such acts and inappropriate behavior. 27. In Oyston v St Patrick's College [2013] NSWCA 135, Justice Schmidt held that if a school becomes aware, as a result of complaint, or by direct observation, that a student is being bullied, it is required to intervene in order to meet its duty of care and to eliminate the foreseeable risk of injury. 28. The Child of the Appellant was bullied at Wesley College and due to lack of actions to deal with the situation, there was a breach of the education contract in that the Respondent did not provide safe environment for the Child to be provided with education, which is a fundamental term of the education contract. 29. Effectively, there was substantial breach of the conditions of the contract between the Appellant and the Respondent in that: i. The Respondent failed to appropriately supervise students at the school premises and on school outings, to have appropriate bullying prevention policies in order to prevent and/or reduce the risk of bullying, to act promptly on all allegations of bullying, to take active steps to substantially reduce the risk of bullying; ii. The Respondent failed to provide a safe environment for students to be in receipt of education; iii. Even if the issue of bullying directed at the Appellant's Child was brought to the attention of the Respondent on numerous occasions by the Appellants and several complaints were made about the continuous acts of bullying, the Respondent had failed to take the appropriate steps to prevent or reduce the risk of such bullying repeatedly occurring to the detriment of the Child; and iv. That there was a complete failure of consideration in relation to the contract to educate the Appellant's child. 30. On the other hand, the subject matter of 'GPC 2' [the second general procedure claim] was as follows: a. A claim of $75,045.51 was made against 3 defendants, namely Uniting Church, Wesley College and Trevor O'Sullivan; and b. The nature of claim is that there was misleading and deceptive conduct under s18 of the Australian Consumer Law 2010 (Cth) on the part of the Trevor O'Sullivan as Employee of the Respondent and Uniting Church in these proceedings, which, pursuant to a master servant relationship, a claim against the Respondent was made in respect to vicarious liability of the Respondent. 31. In Blake v JR Perry Norminees Pty Ltd [2012] VSCA 122, the Court of Appeal held that in order to establish vicarious liability, the act must be committed: i. By an employee both in the course of employment and within the scope of authority; and ii. As an act the employee was employed to carry out or an act which was regarded as within the scope of his employment. 32. Trevor O'Sullivan was an employee and/or servant of the Respondent, owned and operated by the Uniting Church which is registered as a body corporate. 33. In the course of his employment, Trevor O'Sullivan engaged in misleading and deceptive conduct in respect of representations of statements that were made to the Appellant. 34. In Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54, the High Court shows that whether an advertisement or statement is misleading contrary to s 18 of the Australian Consumer Law 2010 (Cth) should, as the words of the section suggest, be assessed by reference to the impressions conveyed by the advertisement or statement in the circumstances in which it is delivered, and not merely by reference to the existence of technically correct information available to those who choose to look for it or by reference to the presumed background knowledge of those people who relies on such statements. 35. Hence, in the circumstances of the case, the actions of Trevor O'Sullivan is most likely to constitute misleading and deceptive, which conduct or act was done during the course of his employment, for which the Uniting Church and Respondent would be vicariously and jointly and severally liable because the Appellant relied on those misrepresentations and was induced into entering the education contract and consequently sending his Child to Wesley College. 36. Essentially, 'GPC 1' and 'GPC 2' encompass two different subject matter pleadings. 21 Wesley College responds as follows: 1. The Appellant did, in fact, bring a counter-claim ('the Counter-claim') in the proceeding in which the Respondent obtained judgment, being case number PER/GCLM/15278/2012. 2. The Counter-claim alleged that the Respondent had breached an implied term of the contract between the Appellant and the Respondent, and the Appellant therefore sought a refund of the monies that had been paid by the Appellant to the Respondent for school fees for his son, Gabriel. 3. The Counter-claim lacked merit, as the authorities are clear that there can be no refund of monies paid under a contract, where there has not been a total failure of consideration. [Footnote omitted.] 4. An application was made by the Respondent for the Counter-claim to be struck out. 5. The Counter-claim was struck out by His Honour Magistrate Malone on 20 December 2013. 6. The Appellant applied to the Magistrates Court of Western Australia to set aside the decision of His Honour Magistrate Malone. This application came before Her Honour Magistrate Atkins, who dismissed the application on. 7. The Appellant then appealed the decision of Her Honour Magistrate Atkins to the District Court of Western Australia. The appeal came before Her Honour Judge Wager, who, on 6 November 2014, dismissed the appeal and upheld the decision of the Magistrates Court of Western Australia to strike out the Counterclaim. 8. The Appellant appealed the District Court decision to the Supreme Court of Western Australia Court of Appeal. 9. The Respondent applied to the Supreme Court of Western Australia Court of Appeal for an order for security for costs, on the basis that the Appellant did not appear to have means to pay the Respondent's costs of an appeal in the Court of Appeal, and the appeal was unlikely to be successful. The security for costs application came before Justice Newnes, who made an order on 5 March 2015 that, unless the Appellant pay the sum of $12,000.00 into court, the appeal would be dismissed. The Appellant failed or refused to pay the security into court, and the appeal was dismissed on 7 April 2015. 10. Having exhausted his options with respect to his counterclaim, the Appellant, albeit under different aliases, has recently commenced two new claims in the Magistrates Court of Western Australia. 11. The first of these claims, being case number PER/GCLM/22709/2014 [the first general procedure claim], has been brought by the Appellant under the name of Vincenzo Romeo, against Geoffrey Searle and David Gee, two employees of the Respondent. This claim is not against the Respondent. 12. The second claim, being case number PER/GCLM/16091/2015 [the second general procedure claim], has been brought by the Appellant under the name of Jim Vincent Romeo, against the Uniting Church, Trevor O'Sullivan and the Respondent. 13. Paragraphs 21 to 36 of the Appellant's Outline of Submissions assert that claim number PER/GCLM/22709/2014 is different to case number PER/GCLM/16091/2015. The mere fact that these two claims appear to be based on different causes of action has no relevance to whether the Appellant has satisfied section 40(1)(g) of the Bankruptcy Act 1966 (Cth), specifically that he has a counter-claim equal to or exceeding the judgment in favour of the Respondent, that he could not have set up in the action or proceeding in which the judgment was obtained. 14. Given that the Respondent is not a party to PER/GCLM/22709/2014 [the first general procedure claim], this case has no relevance to the appeal. 15. Only PER/GCLM/16091/2015 [the second general procedure claim], a copy of which was tendered by the Appellant at the hearing before Her Honour Judge Hartnett on 19 November 2015, hereinafter referred to as the New Claim, is relevant to the appeal. B. Section 40(1)(g) of the Bankruptcy Act 1966 (Cth) 16. Section 40(1)(g) of the Bankruptcy Act 1966 (Cth) states that a debtor commits an act of bankruptcy if: '...a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia ... a bankruptcy notice under this Act and the debtor does not ... where the notice was served in Australia - within the time specified in the notice ... comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained...'. [Footnote omitted.] 17. The bankruptcy notice may only be set aside, if the Appellant can satisfy the Court that: (a) he has a counter-claim against the Respondent; (b) the counter-claim is equal to or exceeding the amount of the judgment debt; and (c) he could not have set up the counter-claim in the proceeding in which the Respondent obtained judgment [footnote omitted]. C. The Merits of the Counter-claim 18. The test as to what the Appellant must satisfy in order to show that he has a counter-claim is set out by Justice Lindgren in the case of Glew v Harrowell, in the matter of Glew [footnote omitted], specifically, the Appellant must satisfy the Court that: (a) he has a 'prima facie case', even if he does not adduce evidence which would be admissible on a final hearing making out that case; (b) he has a 'fair chance of success' or is 'fairly entitled to litigate' the claim; and (c) he is advancing a 'genuine' or 'bona fide claim'. 19. The Appellant 'bears the onus to satisfy the Court that he has a counter-claim' [footnote omitted]. 20. The cause of action in the New Claim has been expressed differently to the Counter-claim, but the remedy sought by the Appellant is the same as that sought in the Counter-claim, specifically, a refund of the fees paid by the Appellant to the Respondent for school fees for the Appellant's son, Gabriel, to attend at Wesley College. The Counter-claim was unsuccessful, because the Appellant is not entitled to a refund of the fees paid, because there had not been a total failure of consideration [footnote omitted]. 21. There is no sworn evidence before the Court of the counter-claim that the Appellant seeks to rely on for an order to set aside the bankruptcy notice. A copy of the New Claim was tendered by the Appellant at the hearing before Her Honour Judge Hartnett, but has not been annexed to any affidavit that has been filed by the Appellant. [It was received as Exhibit 2, however, on the hearing of this appeal.] 22. The cause of action that is the basis of the New Claim is misrepresentation. 23. The elements that the Appellant must show in order to make out a cause of action in misrepresentation are as follows: (a) the Respondent made a false statement of fact; (b) the Respondent intended the false statement to induce the Appellant to enter into a contract with the Respondent; and (c) the Appellant relied on the false statement to the Appellant's detriment [footnote omitted]. 24. The Appellant has adduced no evidence of the false statement of fact that he alleges was made by Mr Trevor O'Sullivan and why it was false. 25. The Appellant has not adduced any evidence that Mr Trevor O'Sullivan intended for the alleged false statement of fact to induce the Appellant to enter into a contract with the Respondent. 26. The Appellant has [not] adduced any evidence that it was the alleged false statement of fact that induced the Appellant to enter into the contract with the Respondent. 27. The Appellant has not set out any details or calculations of the loss suffered by him or how that loss was caused by the alleged misrepresentation by Mr O'Sullivan. 28. In fact, the Appellant has not satisfied any of the elements of misrepresentation. 29. There was nothing before Her Honour Judge Hartnett, and indeed there is nothing before the Court on appeal, that could satisfy the Court of the tests set out by Justice Lindgren in the case of Glew v Harrowell, in the matter of Glew [footnote omitted], that the Appellant has a counter-claim for the purposes of section 40(1 )(g) of the Bankruptcy Act 1966 (Cth). D. The Counter-claim Equals or Exceeds the Judgment Debt 30. The Appellant has not set out any basis in the New Claim for the remedy sought or the how the amount of $74,500.01 has been calculated. 31. Given that the amount sought by the Appellant in the New Claim ($74,500.01) is only one cent different to the amount claimed in the Counter-claim ($74,500.00) being for the refund of the school fees paid by the Appellant to the Respondent, it may be that the amount claimed by the Appellant in the New Claim is also for a refund of school fees paid. 32. The New Claim does not set out any details of the cause of action allegedly relied upon by the Appellant, but it may be that the cause of action relates to the allegation of bullying of the Appellant's son whilst he was at Wesley College. 33. If this is the case, it has already been determined by the Magistrates Court of Western Australia, and by the District Court of Western Australia that the Appellant is not entitled to a full refund of the fees paid, as there has been no total failure of consideration. The New Claim, as it stands, cannot succeed. 34. The Appellant may amend the New Claim so as to claim damages in the sum of that portion of the school fees paid during the relevant period, which is stated in the New Claim to be 2009 to 2011, that the Appellant alleges relate to the prevention of bullying, and not to the provision of an education and other benefits that schooling at Wesley College provides. 35. The Appellant, who bears the onus of proof in this regard, has not set out any details of the amount of the school fees paid, or the breakdown of the portion of the school fees that relate to the service of the protection of the Appellant's child from bullying. 36. Even if we were to suppose that the portion of the school fees paid by the Appellant to the Respondent, between 2009 to 2011, that were attributable to the specific service of the protection from bullying, was one quarter, which is a generous estimate, this amount would certainly not be equal to or exceed the judgment debt, which is $39,896.94 . D. The Counter-claim Could Not Have Been Set Up in the Action in Which Judgment Was Obtained 37. Even if the Appellant could satisfy the Court that he has a counter-claim that is equal to or exceeds the judgment debt, the bankruptcy notice can only be set aside if the counter-claim could not have been set up in the action in which judgment was obtained (footnote omitted). 38. 'The mere fact that there was an excuse as to why the cross-claim was not brought will not avail a debtor seeking to come within section 47(1) of the Act if a cross-claim could legally have been brought' [footnote omitted]. 39. The question of whether the counter-claim could have been set up in the action in which judgment was obtained is a question to be 'answered by reference to legal considerations' not practicalities [footnote omitted]. 40. In the case of Nath v Clipway Pty Ltd [footnote omitted], Justices Spender, Kifel and Hely of the Federal Court of Australia all agreed with His Honour Justice Drummond at first instance that 'there is a long line of authority which establishes, in the context of s 40(1)(g) the Bankruptcy Act 1966 (Cth), that considerations personal to a debtor which prevent him, as a matter of practical reality from pursuing a cross-claim in proceedings in which judgment is given on which a bankruptcy notice is founded do not constitute circumstances which entitle the debtor to characterise such a cross-claim as one which he could not have set up in the action or proceeding in which the judgment was obtained'. 41. At paragraph 6 of the Reasons for Decision, Her Honour has correctly identified that the Appellant had not proffered any reason as to why the New Claim could not have been litigated in the action in which the Respondent obtained judgment. 42. The New Claim is based in misrepresentation and contract law, and could have been set up in the action in which judgment was obtained. 22 In reply to Wesley College's submission, Mr Romeo submits that: 1. … 2. The nature of the counter-claim to case number PER/GCLM/15278/2012 ('the First Counter-Claim') is, as stated in the Respondent's submissions at paragraph 2, in that the Respondent had breached a fundamental implied term of the contract between the Appellant and the Respondent. 3. The essential feature of the first counter-claim was that the Appellant argued that there had been a total failure of consideration on the part of the Respondent because they had failed to educate his son within the meaning of what education meant to the Appellant, in that education as advertised by the Respondent involved a 'holistic education' - meaning that the term education involved more than simply reading and writing but included supervising and personally developing his child. 4. As the Appellant felt that education had not been provided to his son pursuant to a contract with the Respondent he was of the view that he was entitled to a total refund of his money because there was a total failure of consideration. 5. The Appellant subsequently appealed this case to the District Court, and this was dismissed but, if one considers the judgement, it is submitted that the court erred because it focussed on the narrow meaning of what education meant in deciding that there had not been a total failure of consideration. 6. The Appellant maintains that there was in fact a total failure of consideration in its education contract with the Respondent because education as it was represented to him prior to entering into a contract with the Respondent was not provided. 7. The original counter-claim is substantially different to the present claim (case number PER/GCLM/16091/2015 - 'GPC2') in that: a. The present claim deals with misleading and deceptive conduct on the part of the Respondent's servants whom in effect were acting as the Respondent's agents, when the Applicant chose to enrol his Child at Wesley College. b. The test that the courts will apply when making an assessment of conduct that is misleading and deceptive under s18 of the Australian Consumer Law (Cth) is an objective one, and the overarching question that needs to be answered when applying the test is: i. Whether the person induced into believing an erroneous assumption; and ii. The person relied on the misleading and deceptive conduct when entering the contract and the conduct need only be one of the factors that induced the person to enter into the contract. c. Based on the above, the Appellant relied on the conduct of the employees of the Respondent as a result of which he was induced to enter into an educational contract with the Respondent and paid them substantial monies to educate his son and give his son a holistic education which included providing a safe learning environment. 8. Essentially, pursuant to GPC 2, the Appellant has claimed that the Respondent be held vicariously and jointly and severally liable for the actions of its employees which were conducted during the course of their employment. 9. The Appellant further submits that the original counter-claim was a reply to an action brought by the Respondent to recover school fees, but GPC2 is a claim brought against the employees/agents of the Respondent who engaged in misleading and deceptive conduct by making incorrect representations to the Appellant which induced him to enter into an education contract with the Respondent. 10. The subject matter and the nature of the cause of action of 'GPC2' is different to the original counter-claim because both claims rely on two different principles of law and involved a remedy sought by the Appellant and rely on fundamentally different approaches altogether. 11. Furthermore, both claims involved different parties, and it was only by virtue of the principle of vicarious liability that the Respondent has become liable in relation to GPC2. 12. The Appellant was not compelled to bring an action against the employees of the Respondent at the time of the original counterclaim because the original counterclaim was a dispute over school fees. 13. The Court is not here to adjudicate on the reason why the Appellant did not take action against the individual employees at the time of his original counter-claim. These individuals are not a party to these proceedings and were not a party to the proceedings that arose from the original counter-claim. 14. The main issue in respect to these proceedings is whether the appellant could have set up a counter-claim of the current nature at the time that he originally made a counter-claim against the Respondents back in 2012. 15. The Appellant submits that he could not have commenced an action in vicarious liability at the time of the original counterclaim because to do so, he would have had to sue another party to pursue a vicarious liability claim against the Respondent. This is contrary to the intention of the legislation. 16. As the current action against the Respondent involves the principle of vicarious liability, the Appellant submits that the current action against the Respondent is substantially different and could not have been brought at the time of the original counter-claim unless another party was first sued. 17. The Appellant submits that the legislation does not impose an onerous obligation on a litigant to sue a new party to a proceeding in order to establish whether or not a claim could be brought at the time. 18. The Appellant submits that at the time of the original counter-claim that he could not have made the current claim against the Respondent, unless he had sued another party first. 19. Moreover, the Magistrates Court of WA on 5 February 2016 made orders that the proceedings GCLM/22709/2014('GPC1') be consolidated with claim GPC2. Annexed to these submissions are the relevant orders. 20. The effect of these orders are that the Respondent is now a party to the new claim and therefore, the claims of GPC1 and GPC2 have relevance to this appeal contrary to paragraph 14 of the submissions of the Respondent. 21. The Respondent did not oppose the consolidation of GPC1 and GPC2 or the Form 23 application related to it, and in fact did not even enter an appearance at this proceeding. 22. The Appellant further submits that the Respondent has not sought to strike out the current claim against it and in essence did not turn up to the Form 23 Application made by Appellant that sought to consolidate both GPC1 and GPC2, hence holding the Respondent vicariously liable for misleading and deceptive conduct for its employees being Mr David Gee, Mr Geoffrey Searle, Mr Trevor O'Sullivan. 23. Finally there is a pre-trial conference set in the Perth Magistrates Court on 16 March 2016 in respect to a claim involving the Respondent and other parties of GOC1 and GPC2. 24. The Appellant submits that if GPC2 somehow lacks merits and is simply a re-run of the original Counter-Claim, then why has the Respondent not sought to strike out the claim or take any other action in respect to it. 23 The Court now turns to a consideration of these submissions. By virtue of s 40(1)(g) of the Bankruptcy Act, the bankruptcy notice could only be set aside if Mr Romeo satisfied the Court below that: (1) he had a counter-claim against Wesley College; (2) the counter-claim was equal to or exceeded the amount of the judgment debt; and (3) he could not have set up the counter-claim in the proceeding in which Wesley College obtained judgment. 24 As to whether Mr Romeo had a counter-claim, the dicta of Lindgren J in Re Glew; Glew v Harrowell of Hunt & Hunt Lawyers (2003) 198 ALR 331; [2003] FCA 373 should be borne in mind. At [9], his Honour indicated that a person must show the Court that he or she has a prima facie case, that he or she has a fair chance of success or is fairly entitled to litigate, and is advancing a genuine or bona fide claim - all different ways of making the same point. Mr Romeo bears the onus to satisfy the Court that he has a counter-claim in these terms. 25 The first question that arose before the primary judge was whether either of the 2014 or 2015 general procedure claims was a different action in substance from the counter-claim made and dismissed in the 2012 proceeding. 26 In the 2012 proceeding, Wesley College claimed unpaid school fees against Mr Romeo and Ms Karen Lee Romeo. The defendants counter-claimed in the following terms: The sum of $74,500 being money owed by the claimant to the defendants as at 24 March 2013 for school fees paid by the defendants to the claimants pursuant to an agreement and following which the claimant breached a fundamental implied condition of the said agreement by failing to properly supervise the defendant's child … after the claimant accepted the school fees for the years 2008, 2009 and 2010. As a result of the claimant's failure to properly supervise, the said child was severely bullied by his peers and has suffered psychological injury as a result of same. And the defendants claim $74,500 and interest thereon at 6% per annum pursuant to section 12 of the Magistrates Court (Civil Proceedings) Act 2004 from 21 March 2013 to judgment/payment and costs. 27 As will be noted, the counter-claim was not made on behalf of the child. Any such claim would need to have been brought in the name of the child, by an appropriate litigation representative. 28 The claim made was plainly on the basis that the defendants, including Mr Romeo, had an education contract in respect of their son with Wesley College, which it was alleged had been breached in respect of a "fundamental implied condition". 29 It was this counter-claim that was dismissed, and was further dismissed on appeal in the District Court by Judge Wager following a substantive hearing. 30 In Romeo v Wesley College [2014] WADC 152 (6 November 2014), Wager DCJ ruled, at [31], after referring to authority, that it could not be successfully argued that the provision of education without bullying was an essential or fundamental term of the contract because it was not disputed that the son received an education from 2008 until 2011. Thus, the contention that there was an implied term to that effect was rejected. 31 Judge Wager also ruled that the Magistrate did not err when she found that the allegation, in the counter-claim, that there had been a "total failure of consideration", was not open given that the child received an education from 2008 until the end of 2011. Thus, at [35], Wager DCJ ruled there was not a total failure of consideration. 32 Judge Wager further noted that the original counter-claim had been apparently prepared by a lawyer, at a time when Mr Romeo was legally represented, and had not been amended despite serious questions concerning the availability of a plea of total failure of consideration having been raised at interlocutory stages in the Magistrates Court. Her Honour then added, at [40], that while it was not her role to comment on the merits of the case further, given she had dismissed the appeal, it "may be open" for the defendants to commence proceedings in respect of breach of contract and to plead the loss he had suffered consistent with the money expended by them in securing medical assistance and counselling support for their son, and that if they chose to commence future proceedings, then it would be likely that the son would be required to give evidence at trial in relation to the bullying, trauma and degradation he allegedly suffered at the hands of teachers and students at material times. Her Honour also commented that if that course were to be followed then the son would most likely be cross-examined by counsel representing Wesley College at a trial about matters that might be distressing for him and that the defendants may choose to consider that, in the event that they were not successful at any such future trial, a further costs order could be made against them. 33 Mr Romeo then sought to appeal from the decision of the District Court to the Court of Appeal, but, as noted above, failed to provide security for costs pursuant to an order of the Court of Appeal, with the result that the appeal was dismissed without more. 34 What then occurred is that Mr Romeo, in his own name, commenced the 2014, and later, the 2015 general procedural claims, which, while not following the particular course of action intimated by the District Court judge, nonetheless abandoned any claim based on total failure of consideration. 35 In the 2014 general procedure claim brought by Mr Romeo against Mr Gee and Mr Searle and lodged on 22 December 2014, Mr Romeo claimed as follows: The Claimant submits that the defendants are and were employees/servants of Wesley College Perth and were jointly and severally authorised to execute an Education Contract containing specific terms and conditions during the Relevant Period (2009 to 2011). The defendants jointly and severally falsely and deliberately misrepresented the terms and conditions of the Education Contract This misrepresentation was contrary to the Fair Trading Act 1987, Fair Trading Act 2010 (WA), The Australian Consumer Law, Competition and Consumer 2010 Act (CWLTH) as adopted by the Far Trading Act (WA) thereby inducing me to sign the contract as they had represented it to me.The defendants did not have ay intention of honouring the contract as represented to me. Further the defendants persistently and repeatedly breached each of the Education Service Term, Supervision Term, Bullying Policy Term and Safe Environment Term during the Relevant Period (2009 to 2011). In summary the defendants owe me jointly and severally the sum of $74,500.01 being the amount of fees ($61,963.76) and levies ($12,536.25) I paid during the relevant period pursuant to the misrepresented contract, plus interest to date plus court costs. 36 The 2015 general procedure claim was lodged on 9 November 2015, this time against the Uniting Church, Wesley College and Mr O'Sullivan as defendants. In it Mr Romeo claimed on the basis that Mr O'Sullivan was an employee and/or servant of Wesley College, which was owned and operated by the Uniting Church, and that during the relevant period, between 2009 and 2011, Mr O'Sullivan misrepresented the terms and conditions of the education contract entered into between Mr Romeo and the defendants. It was on the basis of this "misrepresentation" that Mr Romeo claimed he suffered losses of $74,500.01, the same sum claimed in the 2014 general procedure claim. 37 In the 2015 general procedure claim, Mr Romeo also claimed the same amount on the basis that the Uniting Church and Wesley College were "vicariously and jointly and severally liable" for the acts of its employees during the relevant period and were therefore jointly and severally liable to Mr Romeo for the wrongful acts of its employees in that the employees had caused him to incur losses in the amount of $74,500.01 as a result of their misrepresentations concerning the terms and conditions of the education contract. 38 In the 2014 general procedure claim, Mr Gee and Mr Searle were alleged to be employees and servants of Wesley College authorised by Wesley College - even though Wesley College itself was not named. 39 In the 2015 general procedure claim, Wesley College, together with the Uniting Church and Mr O'Sullivan, were expressly mentioned. The claim concerned misrepresentation of the terms and conditions of the education contract as well as misrepresentations made by "employees" in respect of the terms and conditions of the education contract. 40 In my view, the 2014 general procedure claim in the Magistrates Court against Mr Gee and Mr Searle raised claims of "misrepresentation" under the consumer legislation mentioned. To the extent that those misrepresentations would appear to be in respect of "future matters", Mr Romeo specifically stated, as noted above, that "the defendants did not have any intention of honouring the contract as represented to me". That would appear to suggest an intention by Mr Romeo to allege that those defendants had no reasonable basis for the representations made. 41 In any event, it further appears that Mr Romeo separately claimed breach of the education contract, including as to the "bullying policy term" and "safe environment term", during the relevant period. The 2014 general procedure claim against Mr Gee and Mr Searle therefore raised both statutory and general law causes of action: none of which claimed or relied on a breach of a fundamental implied term of the contract and a resulting total failure of consideration. 42 There are, nonetheless, a number of apparent difficulties with this statement of the claim in the description of the claim, but that is not a matter for this Court, on this appeal, to spend any further time analysing. Both the 2014 and 2015 general procedure claims are being case managed in the Magistrates Court. Any further "pleading" or particulars required to perfect any imperfections with the claims can no doubt be agitated in that Court. The defendants in the 2014 general procedure claim have apparently not sought to strike the claim out on any relevant basis. It is proceeding. 43 While Wesley College is not named as a defendant in the 2014 general procedure claim, I note that, as stated above, the defendants are expressly stated to be "employees/servants of Wesley College and were jointly and severally authorised to execute an Education Contract" etc. In the circumstances, it may well be open to Mr Romeo, or the defendants, to seek to add Wesley College as a further party to that proceeding, given that he has alleged that the defendants were Wesley College's employees/servants and authorised to make the contract referred to on behalf of Wesley College. 44 The 2015 general procedure claim, however, explicitly names Wesley College as one of the defendants. It is not entirely clear whether Mr Romeo sues on the basis of general law/common law misrepresentation, in respect of the contract, or also intends to make statutory consumer law claims, as in the case of the 2014 general procedure claim against Mr Gee and Mr Searle. Plainly, although this may be a misconception of the facts or the law or both, he seems to claim against Wesley College, in the 2015 general procedure claim, on the basis that any liability that may be attributed to Mr O'Sullivan for the alleged misrepresentation of the terms and conditions of the education contract, should be borne by his "employer", Wesley College. 45 Again, in case management in the Magistrates Court, in clarifying the nature of his claim, it may be that Mr Romeo intends to place the 2015 general procedure claim on very much the same terms as the 2014 general procedure claim. 46 Indeed, one wonders whether, if that is the case, Mr Romeo, the other parties or the Court should not consider consolidating the 2014 and 2015 general procedure claims, rather than there be separate proceedings. But that is not an issue for this Court. Rather, I mention these various points, because, while the 2014 and 2015 general procedure claims currently before the Magistrates Court may be considered unclear in a number of respects, it is sufficiently clear that they purport to make claims on causes of action materially different from those upon which the original counter-claim in the 2012 proceeding was made. 47 Much of what I have just stated is entirely by way of surmise, as the 2014 and 2015 general procedure claims maintained by Mr Romeo in the Magistrates Court must be formulated and maintained on the terms that Mr Romeo wishes to maintain them. 48 Just as Judge Wager, on the District Court appeal, could envisage that a potentially separate and valid claim might be made for breach of contract, so it is open to conclude that the two separate general procedure claims might possibly be pursued. 49 In the result, I am not satisfied that either of the general procedure claims currently before the Magistrates Court are, in substance, the same as the counter-claim that was earlier dismissed, and in relation to which Wesley College holds an unsatisfied judgment against Mr Romeo. 50 The fact that the proceeding the subject of the earlier counter-claim and the subject matter of the 2014 and 2015 general procedure claims concerns the contract alleged between Mr Romeo and Wesley College and/or misrepresentation claims, either at general law or pursuant to consumer legislation, is not, in my opinion, entirely relevant to the question at hand when one has regard to the different bases upon which the different proceedings have gone forward. 51 In those circumstances, I do not accept the submission made on behalf of Wesley College that Mr Romeo does not have a counter-claim against Wesley College and I consider ground 1 of Mr Romeo's appeal is made out. 52 It follows, given the amount claimed in the 2014 and 2015 general procedure claims, that those counter-claims are equal to or exceed the amount of the judgment debt. In saying that, I recognise a point made on behalf of Wesley College that the damages or compensation claimed in those general procedure claims is more or less precisely the same as the judgment debt in the 2012 proceeding. Be that as it may, the amount claimed is equal to or exceeds the amount of the judgment debt. 53 The critical further issue, therefore, is whether Mr Romeo could not have set up the current claims in the 2014 and 2015 general procedure claims in the proceeding in which Wesley College obtained judgment.

At a glance

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Judgment (8 paragraphs)

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Legislation Cited (4)

Cases Cited (14)