Sharma v Defence Housing Australia

1. [1]

   By notice of motion filed 14 July 2022, Defence Housing Australia (DHA), the defendant, sought an order, pursuant to Uniform Civil Procedure Rules 2005 (NSW) r 14.28(a) and (c), striking out paragraphs 3-9 and 29-31 of the Statement of Claim filed 14 April 2022, with leave being granted to the plaintiff to file any amended statement of claim within 14 days of the Court’s order, together with costs.

2. [2]

   The substantive claim concerns a property in Casula purchased by Mr Sudesh Sharma, the plaintiff, in November 2008 and subject to a 12-year lease to DHA. At the auction, the plaintiff says DHA employees made certain oral representations, including in relation to the possible extension of the lease (Lease Extension Representation), which he says constituted misleading and deceptive conduct under section 18 of the Australian Consumer Law (ACL). Mr Sharma also makes claims that DHA is liable for damage or defects in the property.

3. [3]

   The motion only concerned whether Mr Sharma’s claims under the ACL can be maintained or should be struck out.

4. [4]

   Previously, in September 2015, the plaintiff commenced proceedings in the National Civil and Administrative Tribunal (NCAT) seeking relief in the form of payment of $12,500 for overpaid “maintenance” and also asserting that DHA had promised him a 20-year lease. Those proceedings were discontinued because NCAT did not have jurisdiction. Subsequently, the parties entered into settlement discussions which concluded with the plaintiff receiving $12,500 in “full and final settlement” of its claims against DHA (2015 Settlement Agreement). The effect of the settlement agreement is considered further below.

5. [5]

   DHA was represented by Ms Jaffray of counsel. DHA read the affidavit of Mr Jason Munstermann, solicitor, in support of the motion.

6. [6]

   Mr Sharma appeared in person and relied upon his affidavit sworn on 8 September 2022 and his written and oral submissions in resisting the motion. Mr Sharma was previously legally represented; his solicitors filed the Statement of Claim and Reply and then filed a notice of ceasing to act on 3 August 2022.

7. [7]

   As foreshadowed in email correspondence to my Associate, Mr Sharma originally sought an adjournment of the hearing of the motion so that he could subpoena two employees DHA had in its employ at least between 2008 and 2018. Mr Sharma alleges that those employees made representations to him during the 2015 settlement negotiations and beyond.

8. [8]

   He pleads at paragraphs 5, 6, 7, 29, 30 and 31 of the Statement of Claim:

9. [9]

   DHA submitted that, for the purposes of the motion, it did not dispute that misrepresentations were in fact made as Mr Sharma alleged. Mr Sharma was not able to identify to the Court any additional purpose for requiring those employees to give evidence for the purpose of the motion. He withdrew his application.

10. [10]

    DHA’s submissions were threefold. It was submitted that Mr Sharma’s misrepresentation claim was all of:

    1. (1)

       statute barred;

    2. (2)

       bad in law; and

    3. (3)

       unavailable to Mr Sharma by reason of a settlement agreement between the parties in November 2015.

11. [11]

    DHA accepted that the Court would only strike out on the basis of a limitation period “in the clearest of cases”: Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 533 (Mason CJ, Dawson, Gaudron and McHugh JJ) (Wardley); General Steel Industries Incorporated v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129-130 (Barwick CJ). DHA also accepted that it must demonstrate that Mr Sharma’s claim has no reasonable prospects of success: Saridas v Papuan Oil Search Ltd [2022] NSWSC 825 at [19] (Schmidt AJ).

12. [12]

    Further, the Court will be slow to strike out pleadings of a self-represented litigant, but, nevertheless, in balancing the interests of both parties, will not permit itself to become a forum for “the agitation of grievances which lack any juridical foundation”: Seidler v Carrol & O’Dea [2013] NSWSC 338 at [8]-[10] (McCallum J).

13. [13]

    I note that Mr Sharma was in fact legally represented throughout the pleading process and for a while after DHA filed its motion. Mr Sharma primarily resisted the motion on the following bases, outlined in writing and orally:

    1. (1)

       He is self-represented and would like legal representation.

    2. (2)

       He considers that DHA, together with Westpac (the former owner of his property), have engaged in misleading conduct towards the public and a class action or government inquiry may be appropriate.

    3. (3)

       He had been previously advised, and it is not clear by whom, that the settlement agreement did not bind him because it was unsigned. I note Mr Sharma nonetheless accepted the settlement sum on 24 November 2015 without objection. It may be that he recalled a previous offer that did refer to a requirement for signature, outlined below.

14. [14]

    The Court’s power to strike out the whole or part of a pleading is governed by UCPR r 14.28 which provides:

15. [15]

    In exercising the power under UCPR r 14.28, the usual considerations in the Civil Procedure Act 2005 (NSW) ss 56-60 must be kept in mind.

Is the claim unavailable by reason of a settlement agreement?

1. [16]

   As noted above, after the commencement of the NCAT proceedings, DHA and Mr Sharma engaged in discussions with an attempt to resolve the matter.

2. [17]

   On 16 October 2015, DHA emailed Mr Sharma an offer of settlement in relation to “Matters” defined as:

3. [18]

   The “Work Items” were defined as particular “items of work or repair”, such as carpentry, fencing, air conditioning, and amounted to $12,595.86.

4. [19]

   The Terms of Offer provided to Mr Sharma by email on 16 October 2015 included:

5. [20]

   Mr Sharma did not agree to the offer; he did not sign and return it as requested.

6. [21]

   Instead, on 9 November 2015, he sent an email in response:

7. [22]

   On 12 November 2015, DHA responded, acknowledging receipt, and asking whether Mr Sharma accepted that clause 12 of the lease bound the parties. Clause 12 created an obligation on the part of the landlord to carry out, at its expense, any repair and maintenance work of the kinds outlined in the provision.

8. [23]

   On 13 November 2015, Mr Sharma responded:

9. [24]

   On 18 November 2015, DHA emailed Mr Sharma:

10. [25]

    On 19 November 2015, Mr Sharma responded:

11. [26]

    On 23 November 2015, a DHA representative emailed Mr Sharma:

12. [27]

    There was no further response by Mr Sharma to that email. There was no suggestion that the “2 things” were condition precedents which were otherwise not satisfied.

13. [28]

    The lease term was from 21 December 2006 to 20 December 2018, and clause 2 did provide DHA with power to elect to reduce the lease term by no more than 12 months or increase the lease term by no more than 3 years. In 2018, DHA did elect to reduce the length of the lease term by 6 months, and it ended in June 2018.

14. [29]

    Mr Sharma’s submissions contained the following in response to the receipt of that email:

15. [30]

    On 24 November 2015, DHA paid Mr Sharma the specified settlement sum (in a payment also including some rent), which Mr Sharma retained.

16. [31]

    Mr Sharma’s pleading as to the agreement in his Reply was:

17. [32]

    In his submissions, Mr Sharma raised matters that are not pleaded. His oral submissions referred to the fact that he never signed the settlement agreement and therefore did not consider himself bound. In his written submissions, he included, without elaboration:

18. [33]

    Whether a settlement agreement was reached is to be determined objectively, based on the communications and actions of the parties. I consider that, objectively, Mr Sharma agreed to enter into the settlement agreement on the terms specified in the 18 November 2015 email. His email of 9 November 2015 represented that he had read the offer and rejected it on the basis of the sum of money proffered, rather than a disagreement with the terms of the Lease or anything else in the offer.

19. [34]

    I consider that on its natural and ordinary meaning the settlement agreement has the legal effect of preventing Mr Sharma from bringing any claims related to the “Matters” as defined. That includes the misleading and deceptive conduct claim concerning the Lease Extension Representation.

20. [35]

    Therefore, that part of the currently pleaded claim discloses no reasonable cause of action under UCPR r 14.28(1)(a): see Wardley at 533 (Mason CJ, Dawson, Gaudron and McHugh JJ), and is struck out. In those circumstances, I do not consider DHA’s alternative submission that Mr Sharma should be estopped.

Is the claim statute-barred?

1. [36]

   A misleading or deceptive conduct claim under s 18 of the ACL must be commenced within 6 years of the date the cause of action accrued: ACL s 236(2). Loss or damage is the gist of the s 18 action: Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 348 (Mason CJ, Dawson, Gaudron and Toohey JJ).

2. [37]

   DHA submitted that, based on Mr Sharma’s pleading that he relied on the Lease Extension Representation in increasing his bid to purchase the property at auction in November 2008, his cause of action accrued at that time and is well out of time.

3. [38]

   I am not persuaded that Mr Sharma’s cause of action accrued in November 2008 at the time he became the owner of the property. It was the subject of oral submissions by counsel for DHA, but not any written submissions. Fixing accrual as around the time of entry into the agreement is a view that has been rejected in numerous authorities: see Peter Handford, “Limitation of Actions: Laws of Australia” (2nd ed, Lawbook Co, 2007) [5.10.1220] and the authorities collected therein.

4. [39]

   DHA accepted that Mr Sharma was unaware of the alleged falsity of the representation until later and, alternatively, DHA submitted that the cause of action alternatively accrued upon “loss or damage” and such “loss or damage” is not to be equated with detriment. Rather, the loss or damage occurred when the contingency on which the representation was made became reasonably ascertainable. As Mason CJ, Dawson, Gaudron and McHugh JJ put it in Wardley at 527:

5. [40]

   At 533, their Honours went on to note:

6. [41]

   See also Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 at 410.

7. [42]

   The contingency here is said to be the fact that an extension of the lease for a further term of 20 years would not occur. On that view, Mr Sharma’s claim would have accrued when that contingency crystallised. DHA submitted the contingency crystallised when Mr Sharma was explicitly put on notice that DHA would not be extending his lease or, indeed, any lease for 20 years on 23 November 2015 by the following email from a DHA representative to Mr Sharma:

8. [43]

   On that view, DHA submitted that the misleading and deceptive conduct claim would have accrued on 23 November 2015. Therefore, from 23 November 2021, Mr Sharma’s ACL claim would have been statute-barred. Mr Sharma did not commence proceedings until April 2022.

9. [44]

   Mr Sharma advanced an alternative accrual date in June 2018. In 2018, DHA elected to reduce the lease term by 6 months, and it ended in June 2018. Mr Sharma submitted that his cause of action accrued in June 2018 when DHA ended the lease “early and unlawfully”, and that he “might” argue “breach of contract because the defendant broke a promise” or in the alternative “fraud because the defendant lied when the promise was made”. Neither are currently pleaded.

10. [45]

    The issue is whether Mr Sharma could reasonably have ascertained that the alleged representations were wrong by reason of the 23 November 2015 email or earlier on 21 September 2015 when Mr Sharma commenced proceedings in NCAT.

11. [46]

    I consider that a reasonable person in Mr Sharma’s position, having received the email advice that “DHA do not enter into leases agreements for 20 years”, was in a position to ascertain that what was allegedly represented to him at the auction was not the same as what he was being told in 2015. At that point he could have sought to re-agitate his complaint about the 20-year representation or sought legal advice. Particularly in circumstances where it appears that, by 21 September 2015, Mr Sharma had started to doubt whether the renewal would occur. In Mr Sharma’s NCAT application, he stated, inter alia:

12. [47]

    I consider that the misleading and deceptive conduct claim is brought too late. There is no reasonable cause of action if it is statute-barred: Wardley at 533 (Mason CJ, Dawson, Gaudron and McHugh JJ). Accordingly, Mr Sharma’s misleading and deceptive conduct claim is struck out.

Is the claim bad in law?

1. [48]

   I also accept DHA’s submission that the relief claimed for the misrepresentation claim is erroneous because it seeks relief based on an expectation measure rather than a reliance measure. I accept, for that reason, it ought to be struck out.

Orders

1. [49]

   For the reasons above, I make the following orders:

   1. (1)

      Paragraphs 5, 6, 7, 29, 30 and 31 of the Statement of Claim are struck out.

   2. (2)

      The plaintiff has leave to file an Amended Statement of Claim in compliance with this judgment by 18 November 2022.

   3. (3)

      Plaintiff to pay the defendant’s costs of the motion as agreed or assessed.

   4. (4)

      Liberty to apply on three days’ notice.