mdroth/huggingface-course_section-5_zst huggingface dataset:
Case: McGrath v Australian Naturalcare Products Pty Limited [2008] FCAFC 2 ; (2008) 165 FCR 230
Outcome: cited
s 51A is a qualified and complex deeming provision: McGrath v Australian Naturalcare Products Pty Limited [2008] FCAFC 2 ; (2008) 165 FCR 230. What the section does is, first, provide that where a corporation makes a representation with respect to any future matter and it does not have reasonable grounds for making the representation, the representation shall be taken to be misleading: s 51A(1). Secondly, s 51A(2) provides that for the purposes of s 51A(1) the corporation is deemed not to have had reasonable grounds for making the representation "... unless it adduces evidence to the contrary". If the alleged representor does adduce evidence to the effect that it had reasonable grounds for making the representation, the deeming provision does not operate: Australian Naturalcare 165 FCR at 242 [44] per Emmett J and 283 [191]- [192] per Allsop J. That throws back onto an applicant the ultimate onus of proof to make good a claim that there were no reasonable grounds for making the representation. The Court then decides in the ordinary way, on the balance of probabilities whether the representee has established that the representor did not have reasonable grounds for making the representation. And, the representor must have had reasonable grounds for a representation as to a future matter at the time he, her or it made the representation: Australian Naturalcare 165 FCR at 284 [198] per Allsop J. The quality of the evidence adduced by the representor under s 51A(2) must be sufficient to be capable, if accepted, of amounting to providing the representor with reasonable grounds for making the representation at the time it was made. The Court must determine whether the evidence is "evidence to the contrary" so as to throw onto the representee the onus of proving that the representor did not have reasonable grounds for making the representation: Australian Naturalcare 165 FCR at 282-283 [191]-[192] per Allsop J. In the context of a trial, the representee will not need to lead evidence in chief on the issue since he, she or it can rely on the deeming in the provision which is only displaced by the representor adducing evidence to the contrary. That evidence, if adduced, will lead to a case in reply. The Court still has to decide whether the evidence relied on as being "to the contrary" adduced by the representor is capable of amounting to reasonable grounds for making the representation. Then, if it is so capable, the Court assesses whether the representee has proved, on the whole of the evidence, that the representor did not have reasonable grounds for making it.
Case: Milner v Delita Pty Limited (1985) 9 FCR 299
Outcome: followed
savings, if any, made by an applicant should not be taken into account in reduction of a claim made under s 82 of the Act: Milner v Delita Pty Limited (1985) 9 FCR 299 at 304, per Lockhart J. Lockhart J held that money contributed by an applicant who was induced by conduct that contravened s 52 to enter into a partnership for the processing and growing of guavas had been applied for the purposes of the partnership. He said that it had been envisaged in the misleading promotional brochures that the expenditures would give rise to tax losses that could be claimed as deductions against their income by the investor tax payers. But Lockhart J held that that was an irrelevant consideration for the purposes of an assessment of damages under s 82. He found that there was no relevant nexus between the contravention of the Act by the respondent and any benefit gained by the applicant by reason of the allowability of the claimed losses. Lockhart J applied Simpson Ltd v Hubbards Pty Limited (1982) 44 ALR 695 at 702-703. There Bowen CJ, Franki and McGregor JJ held that since damages were compensatory, the question of deducting probable taxation did not arise. They said that an applicant could not be required to set off past tax losses against an award of damages so as to reduce the total sum of damages ordered by the Court. They regarded the tax losses as being, in one sense, an asset of the applicant who should not be required to dissipate that asset for the benefit of the person who contravened s 52 of the Act: Simpson 44 ALR at 703.
Case: Minister for Youth and Community Services v Health and Research Employees' Association of Australia, NSW Branch (1987) 10 NSWLR 543
Outcome: cited
general principle in contract is that " ... if a man signs a written contract, he is considered as the contracting party, unless it clearly appears that he executes it as agent only": Cooke v Wilson [1856] EngR 883 ; (1856) 1 CB (NS) 153 at 164 per Crowder J, see too at 162 per Cresswell J; Minister for Youth and Community Services v Health and Research Employees' Association of Australia, NSW Branch (1987) 10 NSWLR 543 at 558E-F per McHugh JA; H O Brandt &amp; Co v H N Morris &amp; Co Ltd [1917] 2 KB 784 at 793-794 per Viscount Reading CJ, 796-797 per Scrutton LJ. The same principle must apply where the contract is made orally. The question of whether a person so acts as to be a party is determined objectively: Carminco 243 ALR at 479 [23].
Case: Mirror Newspapers Limited v Harrison [1982] HCA 50 ; (1982) 149 CLR 293
Outcome: cited
all, the intended market for this investment were people holidaying at The Entrance who were attracted to walk into PRD's office at the site, as each of the applicants here did. These applicants were ordinary members of the public, not professional landlords or real estate investors or developers. They were the very class of persons who were intended to be attracted by the brochure viz: namely the kind of investor who would be looking for a return in something which it was hard to imagine could be offered at that level. In another context, to do with the law of defamation, Lord Devlin once observed tellingly in Lewis v Daily Telegraph Limited [1964] AC 234 at 285 (and see also Mirror Newspapers Limited v Harrison [1982] HCA 50 ; (1982) 149 CLR 293 at 304 per Brennan J): "A man who wants to talk at large about smoke may have to pick his words very carefully if he wants to exclude the suggestion that there is also fire; but it can be done. One always gets back to the fundamental question: what is the meaning that the words convey to the ordinary man: you cannot make a rule about that ." (emphasis added)
Case: Munchies Management Pty Ltd v Belperio (1988) 58 FCR 274
Outcome: cited
82(1) of the Act permits recovery by an applicant for loss or damage notwithstanding his, her or its failure to mitigate or contributory negligence unless the applicant's own carelessness or disregard of his, her or its interests is the cause of some or all of the loss or damage: Munchies Management Pty Ltd v Belperio (1988) 58 FCR 274 at 286G-287C per Fisher, Gummow and Lee JJ applying what French J had said in Pavich v Boira Nominees Pty Ltd [1988] ANZ Conv R 556 at p 23; see too Sykes v Reserve Bank of Australia (1998) 88 FCR 511 at 517B-E per Heerey J, Sundberg J agreeing at 521F. The misrepresentations were a link in the causal chain between Mr Owers' entry into the transaction and his loss: cf: Henville v Walker [2001] HCA 52 ; (2001) 206 CLR 459 at 469 [14] per Gleeson CJ. At best, from Austcorp's perspective, there may have been two concurrent causes of the imprudent decisions of Mr Owers and Ms Tan-Bounkeua to buy their apartments and lease them to Mustara. Austcorp's conduct was one of the causes, the other being those applicants' failure to receive legal advice exposing to them the effect of cl 20.9. 3.1 THE APPLICANTS 3.1.1 BRIAN OWERS
Case: National Exchange Pty Ltd v Australian Securities and Investments Commission [2004] FCAFC 90 ; (2004) 61 IPR 420
Outcome: cited
I accept that a careful solicitor ought to have picked up the significance of cl 20.9 of the lease, the evidence before me indicates that solicitors did not always do so. Indeed, Austcorp recommended that Mr Walker distribute to purchasers the memorandum prepared by Penhryn Parker, solicitors, identifying the significant features of the transaction. That memorandum in itself did not pick up the limitation in cl 20.9. Nor did Mr Owers' solicitor pick it up. While Mr Fullerton, who advised the Luciani/Taldarmar applicants did pick it up, I am satisfied that by failing to advert in the brochure itself to any limitation of confidence by those promoting the venture such as is contained in cl 20.9, should sound against Austcorp where solicitors for purchasers or the purchasers themselves did not pick this up. After all, Austcorp set the misleading representations in motion. It cannot simply rely upon the overstatements in the brochure to be corrected where they were seriously made and used as powerful marketing tools by it in preparing the brochure with the knowledge that they had that affect. And as Mason J observed in Puxu 149 CLR at 210-211 in a passage applied by Jacobson and Bennett JJ in National Exchange Pty Ltd v Australian Securities and Investments Commission [2004] FCAFC 90 ; (2004) 61 IPR 420 at 437 [52] - [53] (a case where the communication was made in a letter of offer to individual shareholders in a company): "There may be situations where to exploit the mistaken views of the public would contravene s 52 and would not be corrected by an inconspicuous accurate representation e.g. in a concealed label or the 'fine print' of a contract ." (emphasis added) In the context of the unqualified powerful assertions in the representations, the terms of cl 20.9 were inconspicuous and part of the "fine print" of the contract in the sense referred to by Mason J in Puxu 149 CLR at 210-211. As Jacobson and Bennett JJ said in National Exchange 61 IPR at 437 [50] (applied by Keane JA in Downey [2005] QCA 199 at [83] ): "A document which, when read as a whole, is factually true and accurate may still be capable of being misleading if it contains a potentially misleading primary statement which is corrected elsewhere in the document but without the reader's attention being adequately drawn to the correction."
Case: NMFM Property Pty Ltd v Citibank Ltd [2000] FCA 1558 ; (2000) 107 FCR 270
Outcome: followed
extensively reviewing the authorities in NMFM Property Pty Ltd v Citibank Ltd [2000] FCA 1558 ; (2000) 107 FCR 270 at 550 [1244] Lindgren J concluded that an act is done "on behalf of" a corporation for the purpose of s 84(2) if either the actor engaged in the conduct intending to do so as representative of or for the corporation, or the actor did so in the course of the corporation's business, affairs or activities. He also concluded that it is not necessary to show that the actor engaged in the conduct for the benefit of the corporation: see too Walplan Pty Ltd v Wallace [1985] FCA 479 ; (1985) 8 FCR 27 at 37-38 per Lockhart J, (Sweeney and Neaves JJ agreeing); Downey [2005] QCA 199 at [56] - [60] per Keane JA.
Case: NSW Mutual Real Estate Fund Ltd v Brookhouse [1979] FCA 7 ; (1978) 38 FLR 257
Outcome: cited
was the guiding hand and ultimately benefited from what its subsidiaries did. It argued that its conduct vis a vis its subsidiaries should be viewed as akin to a real estate agent who passes on the vendor's instructions. I reject that argument. Austcorp did not confine itself to communicating what its subsidiary said, did or represented, without adopting or endorsing it: cf: Butcher v Lachlan Elder Realty Pty Limited [2004] HCA 60 ; (2004) 218 CLR 592 at 605 [38] - [40] per Gleeson CJ, Hayne and Heydon JJ. To the contrary, the reality was that the subsidiaries were Austcorp's vehicle for realising its investment in the project. The subsidiaries acted as Austcorp caused them to act. While each of Austcorp and its subsidiaries was a separate legal person, acting through the individuals who were employees of Austcorp, all acted in dual capacities: cf: Hamilton v Whitehead [1988] HCA 65 ; (1988) 166 CLR 121 at 128 per Mason CJ, Wilson and Toohey JJ. The activities of each member of the Austcorp group involved in the development and marketing of the resort were interlocking and Austcorp controlled each of them: cf: NSW Mutual Real Estate Fund Ltd v Brookhouse [1979] FCA 7 ; (1978) 38 FLR 257 at 263 per Franki J, 264 per St John J, 266 per Deane J.
Case: Pavich v Borba Nominees Pty Ltd [1988] ANZ Conv R 556
Outcome: cited
82(1) of the Act permits recovery by an applicant for loss or damage notwithstanding his, her or its failure to mitigate or contributory negligence unless the applicant's own carelessness or disregard of his, her or its interests is the cause of some or all of the loss or damage: Munchies Management Pty Ltd v Belperio (1988) 58 FCR 274 at 286G-287C per Fisher, Gummow and Lee JJ applying what French J had said in Pavich v Boira Nominees Pty Ltd [1988] ANZ Conv R 556 at p 23; see too Sykes v Reserve Bank of Australia (1998) 88 FCR 511 at 517B-E per Heerey J, Sundberg J agreeing at 521F. The misrepresentations were a link in the causal chain between Mr Owers' entry into the transaction and his loss: cf: Henville v Walker [2001] HCA 52 ; (2001) 206 CLR 459 at 469 [14] per Gleeson CJ. At best, from Austcorp's perspective, there may have been two concurrent causes of the imprudent decisions of Mr Owers and Ms Tan-Bounkeua to buy their apartments and lease them to Mustara. Austcorp's conduct was one of the causes, the other being those applicants' failure to receive legal advice exposing to them the effect of cl 20.9. 3.1 THE APPLICANTS 3.1.1 BRIAN OWERS
Case: Poulet Frais Pty Ltd v The Silver Fox Company Pty Ltd [2005] FCAFC 131 ; (2005) 220 ALR 211
Outcome: distinguished
Austcorp wished to disclaim liability for what was said in the brochure or to have advised investors or members of the public who read it that they could not rely on it, it would have been easy to put a disclaimer on the document. But, there is not a word of caution in the brochure. It is full of optimistic predictions and assurances of a long term and significant return. And, of course, a disclaimer might undermine the message of a "sure thing". Austcorp or the other promoters did not exhort the applicants to make their own inquiries about the "guaranteed" return or the certainty of its receipt unlike in Poulet Frais Pty Ltd v The Silver Fox Company Pty Ltd [2005] FCAFC 131 ; (2005) 220 ALR 211 at 232 [104] per Branson, Nicholson and Jacobson JJ. Austcorp attacked the claim by Ms Tan-Bounkeau. It contended that no-one would think that advertisements, brochures or the other promotional material would contain terms or representations that could be relied on as the basis of a serious investment in real property. It argued that she had failed to take reasonable care of her own interests relying on Puxu 149 CLR at 199 per Gibbs CJ and Poulet Frais 220 ALR at 233 [107] per Branson, Nicholson and Jacobson JJ. I reject that submission. Austcorp, the author of the false descriptions of the investment, should not be able to say that its representations could not be taken at face value. It had made misleading and deceptive representations of a guaranteed 7% p.a. return relying on the perception of the investors that "Pacific International Hotels" was the lessee. Yet, Austcorp was conscious that cl 20.9 of the lease made a fundamental qualification to this assertion and that its marketing message would have been far less compelling if accurate information had been conveyed about cl 20.9. The assurance of a return would have been undermined if Austcorp had complied with s 52. Potential investors, including Ms Tan-Bounkeua, would have been less enthusiastic had the promotional material revealed that the only promoter offering any long term financial commitment to an investor, Pacific International Hotels, was not prepared to back its judgment beyond the limited extent of cl 20.9. As Mr Hung acknowledged, the consequence of cl 20.9 meant that it was not a "sure thing" that the investors would receive their promised 7% p.a. net return for 10 years.
Case: RAIA Insurance Brokers Limited v FAI General Insurance Co Limited [1993] FCA 92 ; (1993) 41 FCR 164
Outcome: cited
I am satisfied that it would be unreasonable to read the brochure as offering an assurance against anything that might happen in the market, the use of an apparently reputable hotel operator's name, Pacific International Hotels, in connection with the promise of a 7% p.a. return for 10 years from the investment was calculated to induce confidence that the promoters of the venture had a foundation for the confidence expressed concerning future matters. Those who were named in the brochure as organisations, rather than particular identified corporate identities, included the hotel operator, as "Pacific International", and a developer, "Austcorp". Ordinarily, a statement which involves the state of mind of the maker will convey the meaning expressly, or by implication, that the maker of the statement had a particular state of mind when it was made and, commonly, that there was a basis for that state of mind: Global Sportsman Pty Limited v Mirror Newspapers Limited [1984] FCA 180 ; (1984) 2 FCR 82 at 88 per Bowen CJ, Lockhart and Fitzgerald JJ; RAIA Insurance Brokers Limited v FAI General Insurance Co Limited [1993] FCA 92 ; (1993) 41 FCR 164 at 172-175 per Beaumont and Spender JJ, with whom Davies J generally agreed at 165-166.
Case: Ricochet Pty Ltd v Equity Trustees Executors and Agency Company Ltd [1993] FCA 99 ; (1992) 41 FCR 229
Outcome: cited
Gould v Vaggelas (1984) 157 CLR 215 at 236 Wilson J identified four principles which are frequently used as a practical guide to assess the issue of whether a person has been induced to contract based on a misrepresentation (cf: Ricochet Pty Ltd v Equity Trustees Executors and Agency Company Ltd [1993] FCA 99 ; (1993) 41 FCR 229 at 234 per Lockhart, Gummow and French JJ; Dominelli Ford (Hurstville) Pty Ltd v Karmot Auto Spares Pty Ltd [1992] FCA 550 ; (1992) 38 FCR 471 at 482-483 per Beaumont, Foster and Hill JJ; Sutton v AJ Thompson Pty Ltd (1987) 73 ALR 233 at 240 per Forster, Woodward and Wilcox JJ), namely: "1. Notwithstanding that a representation is both false and fraudulent, if the representee does not rely upon it he has no case. If a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact enters into the contract there arises a fair inference of fact that he was induced to do so by the representation. The inference may be rebutted, for example, by showing that the representee, before he entered into the contract, either was possessed of actual knowledge of the true facts and knew them to be true or alternatively made it plain that whether he knew the true facts or not he did not rely on the representation. The representation need not be the sole inducement. It is sufficient so long as it plays some part even if only a minor part in contributing to the formation of the contract."
Case: S. Pearson &amp; Son, Ltd v Dublin Corp [1907] AC 351
Outcome: cited
Hung's 29 November letter left no room to doubt that Austcorp was the developer of the resort. Of course, none of the present applicants received it, but it makes Austcorp's defence that it did not engage in the conduct complained of ring hollow. A similar line of defence seeking to exculpate a principal for the act of its agent was criticised by the Earl of Halsbury as being like the schoolboy's game of "I did not take it, I have not got it" in S. Pearson &amp; Son, Ltd v Dublin Corporation [1907] AC 351 at 357. After all its activity in promoting the development and the sale of apartments in the resort, it would be extraordinary if Austcorp now could hide behind its previously hidden corporate veils. Mr Zantiotis discussed the guaranteed return and the lease with investors from time to time. In early December 1999, he obtained a letter of advice from Chris Mitchell of Corrrs Chambers Westgarth, solicitors, about the application of Ch 5C of the Corporations Law to Austcorp in relation to its involvement with the development of the resort. Mr Zantiotis was then unaware that on 26 August 1999 the Australian Securities and Investments Commission ( ASIC ) had granted Landillo an exemption for offers made to investors before 1 January 2000. Coudert Bros had acted on Mr Hung's instructions to obtain this. Mr Mitchell recommended seeking an exemption from ASIC. Mr Mitchell reviewed a number of documents including the contract, the lease and the brochure. Corrs Chambers Westgarth's letter referred specifically to the statement in the brochure that "your return will be a guaranteed 7% per annum". Mr Mitchell advised that this "... seems inconsistent with the limitation of the guarantee under the Lease". Mr Zantiotis was not concerned by this inconsistency at the time. He took the view that when asked by potential investors about how the 7% return related to the lease and the guarantee for the 10 years that "... I was always responsible enough to refer the contract and all its contents to their solicitors". I formed the impression that Mr Zantiotis was a fairly straightforward witness and that he chose this response to investors' questions to enable him to avoid giving them the direct answer (exposed in Mr Mitchell's letter) while giving them access to the full contractual position through their own solicitors' advice. Mr Zantiotis reviewed the letter from Corrs Chambers Westgarth with Mr Hung who told him that it was not necessary to get an exemption.
Case: Scarcella v Lettice [2000] NSWCA 289 ; (2000) 51 NSWLR 302
Outcome: followed
am of opinion that until the registration of the strata plan on 1 August 2000 it was not certain that loss would be suffered by any of the applicants, because before then they were not obliged and could not be compelled to complete the contract. Indeed they were entitled, if that registration had not occurred by 31 December 2000, to rescind their contracts. It was only when the strata plan was registered that the applicants were faced with the obligation to complete the contracts and deprived of the opportunity to rescind under cl 33.2. Thus, when each of the applicants became bound to complete or later completed their contracts, they would suffer loss or damage because only then would they pay or be liable to pay more for their apartment than it was worth: Scarcella v Lettice [2000] NSWCA 289 ; (2000) 51 NSWLR 302 at 309 [32] per Handley JA, 310 [41] per Giles JA and cf per Powell JA at 310 [37].
Case: Simpson Ltd v Hubbards Pty Limited (1982) 44 ALR 695
Outcome: followed
savings, if any, made by an applicant should not be taken into account in reduction of a claim made under s 82 of the Act: Milner v Delita Pty Limited (1985) 9 FCR 299 at 304, per Lockhart J. Lockhart J held that money contributed by an applicant who was induced by conduct that contravened s 52 to enter into a partnership for the processing and growing of guavas had been applied for the purposes of the partnership. He said that it had been envisaged in the misleading promotional brochures that the expenditures would give rise to tax losses that could be claimed as deductions against their income by the investor tax payers. But Lockhart J held that that was an irrelevant consideration for the purposes of an assessment of damages under s 82. He found that there was no relevant nexus between the contravention of the Act by the respondent and any benefit gained by the applicant by reason of the allowability of the claimed losses. Lockhart J applied Simpson Ltd v Hubbards Pty Limited (1982) 44 ALR 695 at 702-703. There Bowen CJ, Franki and McGregor JJ held that since damages were compensatory, the question of deducting probable taxation did not arise. They said that an applicant could not be required to set off past tax losses against an award of damages so as to reduce the total sum of damages ordered by the Court. They regarded the tax losses as being, in one sense, an asset of the applicant who should not be required to dissipate that asset for the benefit of the person who contravened s 52 of the Act: Simpson 44 ALR at 703.