Case: McGrath v Australian Naturalcare Products Pty Ltd [2008] FCAFC 2 , 165 FCR 230
Outcome: referred to
has suffered loss and damage by this breach of the Dealership Agreements. Particulars of loss and damage Loss of profits from the Dealership from around October 2003. Loss of monies invested in the Dealership unable to be recouped from profits of the Dealership after April 2004. Losses incurred in connection with closing down the Dealership. Thereafter, when addressing those allegations relevant to equitable estoppel and unconscionable conduct, the Amended Statement of Claim also states: In giving the Notice of Termination and terminating the Dealership, COA, acting both for itself and on behalf of CAT, COCC and CSARL, departed from the Relevant Understandings and acted contrary to the Relevant Representations. It would thus appear that the claim in contract sought to be advanced on behalf of the Applicant is as follows: (i) the parties to the Dealership Agreements are the Applicant and the First Respondent; (ii) the " rights, interests and obligations under the Dealership Agreements " are said to have been first assigned " on or around 1 January 2003 " from the First Respondent to the Third Respondent and thereafter (but at the same time) from the Third Respondent to the Fourth Respondent; and (iii) the First Respondent was the entity that is said to have given the notice of termination on 7 October 2003. With reference to the implied duty of good faith, it is then said that: (iv) the giving of the notice of termination " breached this term of the Dealership Agreements ". The allegation is that those entities that " failed to act reasonably and in good faith " and without " due regard to the objects of the Dealership Agreements " are: (v) the First, Third and Fourth Respondents. Notwithstanding the amendments effected by the Amended Statement of Claim , the following difficulties nevertheless remain, namely: (i) how can it be said that the Third and Fourth Respondents acted in breach of a term of agreements, namely the Dealership Agreements , to which they were not a party? Moreover, and assuming that there were at least two " deeds of assignment " and that the parties to those " deeds " were one or other of the First, Third and Fourth Respondents: (ii) how can it be said that the Third Respondent remains exposed to liability to the Applicant if the Third Respondent " reassigned " the " rights, interests and obligations " to the Fourth Respondent? No novation agreement of the Dealership Agreements to which the Applicant is a party is apparently relied upon. Reservation may also be expressed as to whether the Applicant is correct in its allegations as to the manner in which the " deeds of assignment " operated. That which may be exposed in due course remains the commercial objective sought to be achieved by the two " deeds " being executed on apparently one and the same day " assigning " and thereafter " reassigning " the same " rights, interests and obligations ". But that is not a matter which need be further addressed at this stage. Nor need attention presently be given to whether it is possible to unilaterally assign the " obligations " or burden of an agreement in a manner which binds the other contracting party without its consent: Carter J, Peden E and Tolhurst G, Contract Law in Australia (5 th ed, LexisNexis Butterworths, 2007) at [17-37]. At least one further difficulty in relation to the contract claim is: (iii) a manner of pleading whereby the draftsman seeks to set forth the manner in which the First, Third and Fourth Respondents " failed to act reasonably and in good faith " by way of " Particulars " rather than by way of a statement of " material facts " as required by O 11 r 2. Sections 51A and 52 Section 51A , it has been recognised, " is a qualified and complex deeming provision ": Ackers v Austcorp International Ltd [2009] FCA 432 at [354] per Rares J. It is, however, properly characterised as an interpretation provision and does not of itself create a cause of action: Ting v Blanche [1993] FCA 524 ; (1993) 118 ALR 543 at 552. Section 51A provides as follows: Interpretation (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. In Ting , supra, Hill J observed of this provision: The section is but an interpretation section; it does not of itself create a cause of action, nor define a norm of conduct. The relevant cause of action is to be found in s 82(1) of the Act by reference to the norm of conduct laid down in s 52 of the Act. What s 51A does, in a practical sense, in cases where it applies, is to cast the burden of proof upon the respondent corporation who has made a representation about a future matter to show that in making that representation it had reasonable grounds for so doing. In the language of Sheppard and Neaves JJ in Cummings v Lewis (1993) 113 ALR 285 ; ATPR (Digest) 46-103, s 51A is "designed to facilitate proof" (at ALR 294; ATPR 53 ,450). In the present proceeding, the course pursued by the draftsman has been to expressly plead reliance upon s 51A where it has been considered appropriate to do so. Whether it was necessary to pursue such a course may be left to one side. That which may also be presently left to one side is whether each of the representations which the Applicant presently maintains are representations in respect " to any future matter " truly falls within that description. Of present relevance is the importance assumed by s 51A in casting the " burden of proof " upon the Respondents. Different views have also been expressed as to the manner of operation of s 51A and the nature of the evidence to be adduced by a respondent before the " deeming " effect of s 51A ceases to operate: McGrath v Australian Naturalcare Products Pty Ltd [2008] FCAFC 2 , 165 FCR 230 ; Skiwing Pty Ltd t/as Caf&eacute; Tiffany's v Trust Co of Australia Ltd (Stockland Property Management Ltd) [2009] FCA 347 at [21] to [24] [2009] FCA 347 ; , 255 ALR 339 at 343 to 344 per Buchanan J. But all of these matters may be left to be resolved at a later date.