Hera Project Pty Ltd v Woolworths Ltd

This dispute started as a commercial property and development matter. Hera Project Pty Ltd and Woolworths entered into an agreement for lease on 18 October 2013 for a proposed shopping centre in Cranbourne East, Victoria. The arrangement contemplated Woolworths taking a supermarket lease from Hera once the development was completed.

The agreement set important milestones. Hera had to use its best endeavours to obtain development approval by 30 June 2015 and reach practical completion by 1 June 2017. The termination date was 1 June 2019. According to the judgment, those milestones were not met by the required dates, or at all. Woolworths terminated the agreement on 7 June 2019.

Hera then sued in the Federal Court in June 2021. Its case included an allegation that Woolworths' termination was invalid, including on misleading deceptive grounds under section 18 of the Australian Consumer Law. That is the part of the dispute that may attract business readers looking for guidance on misleading conduct. But this 2026 judgment is not the decision that resolved that allegation. It is a later procedural decision about whether Hera should be allowed to continue with an application for leave to appeal after the original proceeding had already been dismissed.

The procedural history is central to understanding the result. After Hera commenced the proceeding in 2021, Woolworths sought security for costs. Hera was ordered to provide $550,000. When it did not do so, Woolworths applied to have the proceeding dismissed. On 21 November 2024, McElwaine J dismissed the proceeding.

The 2026 judgment reproduces important parts of the 2024 reasons. Those passages show that the primary judge regarded the case as one where Hera had been given time and opportunity but had still failed to provide security or a satisfactory explanation. The quoted reasons refer to Hera being insolvent, indebted to Woolworths for unpaid interlocutory costs, having failed to comply with a statutory demand, and having no concrete proposal or timeframe to fund the litigation. The primary judge also found significant prejudice to Woolworths through costs already incurred and likely to remain unrecovered.

Hera then filed an application for leave to appeal on 5 December 2024. That application, and any appeal if leave were granted, was listed before a Full Court for hearing on 13 March 2026. Anderson J made timetabling orders on 4 September 2025 requiring Hera to file any further affidavits, provide draft indices for the appeal book, file the appeal book, and file submissions and a chronology. Time for affidavits was later extended by consent to 7 October 2025.

Hera did not comply. Woolworths' solicitors wrote on 20 January 2026 and again on 22 January 2026 asking about the missing draft indices. On 28 January 2026 they warned that Hera’s failure was affecting the timetable and Woolworths’ ability to prepare for the appeal. Hera’s solicitors responded on 29 January 2026 saying counsel had been on leave and asking Woolworths to draft the appeal book indices instead. They also said Hera intended to seek consent to late filing of an affidavit. Woolworths replied that preparing the appeal book was Hera’s obligation and warned it would seek to relist the matter if the indices were not provided. There were further exchanges, but still no compliance.

Hera also failed to file submissions and a chronology by 6 February 2026 as required. On 9 February 2026, Woolworths said it had no option but to relist the matter because of Hera’s continued defaults. Later that day, Hera’s solicitors filed a notice of ceasing to act. The matter then came before O'Callaghan J on 19 February 2026, when Woolworths sought dismissal of the leave application.

The legal issue before O'Callaghan J was narrow but commercially important. The Court had to decide whether Hera’s application for leave to appeal should be dismissed for want of prosecution or for failure to comply with directions of the Court. The judge referred to section 25(2B) of the Federal Court of Australia Act 1976 (Cth), which gives a single judge power to dismiss an appeal for want of prosecution or for failure to comply with a direction. The judge also referred to rule 36.74 of the Federal Court Rules 2011 (Cth), which sets out the procedure for a respondent to seek that relief.

The Court adopted principles summarised in earlier authorities. Dismissal of an appeal or appeal-related application is a drastic remedy and should not be lightly exercised. A court should be slow to deprive a litigant of a right of appeal. But those considerations must be balanced against other interests: the respondent’s interest in finality, the need for compliance with court orders, the overarching purpose of resolving disputes justly, quickly, inexpensively and efficiently, and the broader public interest in proper case management.

The Court also considered Hera’s request for more time. Hera sought an extension of the timetable and an adjournment of the leave application until July or August 2026. In deciding whether that indulgence should be granted, the Court treated the apparent merits of the proposed appeal as relevant. If the proposed appeal looked very weak, that counted against granting further delay.

O'Callaghan J dismissed Hera’s application for leave to appeal. The Court also ordered Hera to pay Woolworths’ costs of the application on an indemnity basis, to be determined on a lump sum basis.

Several factors drove that result. First, the Court accepted that Hera had a serious and extended history of delay. The judgment refers to a chronology showing Hera’s delay since the proceeding began in 2021. The judge noted Woolworths’ submission that by May 2024 Hera had defaulted in respect of eleven separate court orders, including the failure to provide security for costs, and that Hera had failed to comply with any order made in relation to the leave application.

Second, Hera’s explanation for non-compliance was inadequate. Ms Konstandellos was given leave to appear for the limited purpose of making submissions about Woolworths’ dismissal application. She relied on an affidavit referring in very general terms to the cessation of retainers, failures by former lawyers to take steps, unspecified correspondence with other solicitors, a Sandhurst development and VCAT orders. The Court found there was no proper explanation for Hera’s wholesale failure to comply with any order in relation to the leave application until the day before the hearing.

Third, the Court considered the proposed appeal to be very weak. O'Callaghan J said the reasons given by McElwaine J for dismissing the proceeding struck him as overwhelming, particularly given Hera’s repeated failures to comply with orders and directions.

Fourth, the Court accepted that Woolworths was suffering real prejudice. Woolworths continued to incur costs that it would probably never recover. The Court also accepted that delay would prejudice witnesses because the underlying case involved, at least in part, alleged oral assurances said to have been given in 2018 and 2019. If the adjournment sought by Hera were granted, and if Hera later succeeded on leave and appeal, the trial would probably not occur until late 2027 or 2028, almost a decade after the alleged representations.

Finally, the Court took into account the broader burden on the Court and other litigants. Appeals should be heard in a timely way, and adjournments can disrupt the efficient use of judicial resources, especially where a Full Court has already been listed.

This judgment gives a practical explanation of why procedural defaults can become decisive in commercial litigation. Hera’s problem was not a single missed date. It was a pattern of non-compliance in both the original proceeding and the leave application. The Court was dealing with repeated failures to meet orders, repeated reminders from the other side, and no timely, detailed evidence explaining why compliance had not occurred.

The Court also linked delay to fairness. Part of Hera’s underlying case was said to depend on oral assurances allegedly given by Woolworths representatives at meetings in 2018 and 2019. Claims based on conversations are often harder to prove than claims based on signed documents or clear written communications. As years pass, memories fade, witnesses move on, and the reliability of recollection becomes harder to test. The Court accepted that this would obviously prejudice Woolworths’ witnesses.

There was also a cost dimension. Woolworths had already incurred substantial costs in a matter where the Court considered recovery unlikely. The quoted 2024 reasons referred to costs that had either exhausted or nearly exhausted the security amount and to a significant shortfall. By 2026, Woolworths was still incurring costs because the leave application had not been properly progressed.

The Court further noted the public and institutional side of delay. A Full Court appeal requires judicial resources and scheduling. If a listed appeal cannot proceed because one party has not done the necessary work, that affects the Court and other litigants waiting for hearing time. The overarching purpose provisions in the Federal Court legislation require parties to conduct litigation consistently with the just, quick, inexpensive and efficient resolution of disputes.

Businesses should read this case in two layers. The first layer is transaction management. If a project depends on milestone dates, approvals, practical completion, extensions or assurances about future conduct, those matters should be documented carefully. The judgment indicates that Hera’s underlying Australian Consumer Law case relied at least in part on alleged oral assurances. That kind of allegation can become much harder to prove after years of delay.

The second layer is dispute management. Once litigation starts, a business needs a realistic plan for funding, evidence, legal representation and compliance. If security for costs is ordered, the business must deal with that issue directly and quickly. If a deadline cannot be met, the business should seek relief promptly and support the request with detailed evidence. General references to adviser changes, funding hopes or related developments may not be enough.

This is especially important for owner-managed businesses and project companies. Cash flow pressure, changing lawyers, incomplete records and management distraction can all lead to procedural default. Courts understand that litigation can be difficult, but they still expect parties to obey orders and move the case forward. A business that does not do that risks losing the case without ever obtaining a ruling on the commercial merits.

The judgment was delivered on 19 February 2026 by O'Callaghan J in the Federal Court of Australia. The orders dismissed Hera’s application for leave to appeal and awarded Woolworths indemnity costs on a lump sum basis to be determined. The judgment records that the leave application and any appeal, if leave were granted, had been listed before a Full Court for 13 March 2026. Because the leave application was dismissed on 19 February 2026, the Court did not proceed to determine the underlying misleading or deceptive conduct allegation in this judgment.

Readers should therefore treat this case as an authority on procedure, case management and the consequences of non-compliance, rather than as a substantive decision on the content of section 18 of the Australian Consumer Law.