Aco Pty Ltd v Culligan & Anor

[2010] HCATrans 63

[2010] HCATrans 063

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney     No S274 of 2009

B e t w e e n -

ACO PTY LTD ACN 050 568 682

Applicant

and

ANDREA CULLIGAN

First Respondent

UNIMAIL PTY LTD ACN 091 085 148

Second Respondent

Application for special leave to appeal

HEYDON J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 12 MARCH 2010, AT 2.42 PM

Copyright in the High Court of Australia

MR N. MANOUSARIDIS:   If it please the Court, I appear with MR H.P.T. BEVAN for the applicant.  (instructed by Scarfone & Co.)

MR A.J.L. BANNON, SC:   May it please the Court, I appear with my learned friend, MR J.B. SPINAK, for the respondents.  (instructed by Bundock/Palmer Lawyers)

HEYDON J:   Yes, Mr Manousaridis.

MR MANOUSARIDIS:   Your Honour, the cause of action which the applicant, through its notice of contention, sought to persuade the Court of Appeal to uphold was a very simple one.  It was a cause of action in which the applicant claimed that it acquired a business under the inducement of misleading or deceptive conduct of the respondents.  After a six‑day trial and after the parties had provided to the primary judge extensive detailed submissions that cause of action was rejected and was rejected in reasoning which occupied three sentences.  It goes without saying that that case was not addressed by the primary judge.  The Court of Appeal also rejected the cause of action which was the subject of the notice of contention, but it rejected it on a narrower basis.  The Court of Appeal held that the applicant failed to prove causation. 

However, like the primary judge, it is the applicant’s submission that the Court of Appeal did not address the submissions which the applicant made in relation to causation and did not refer to the uncontradicted evidence, which all of it was, or unchallenged evidence or, by the stage it got to the Court of Appeal, unchallenged findings which the applicant in detailed submissions both in writing and orally referred the court as proving causation.  Worse, the Court of Appeal plainly misread the statement of claim and in a way which we submit led it to deal with an imagined case rather than the case that was being submitted before it.

The end result of it is that neither the primary judge nor the Court of Appeal addressed the applicant’s case on its cause of action.  There is no evidence in any of the two sets of reasoning which indicates that either court understood the submissions which the applicant was making or which the court by any process of rational reasoning considered and dismissed.  The applicant seeks special leave in order to reclaim what it says was a right of which it was deprived through two sets of litigation, and that right is to have its cause of action just to be determined according to law.

Now, in order to identify the submissions which the Court of Appeal and the applicant’s submission failed to address it is, of course, necessary to identify the cause of action and the reasoning of the Court of Appeal by which it held that causation had not been established.  If I can first state and reiterate that it was a simple cause of action.  The allegation was that at a meeting in November of 2005 representations were made, those representations were false and they induced the applicant to acquire a business.  If I can first turn to what the pleadings were as to the representations.  They are to be found in the application book at page 39.  One can see at paragraph 9 of the Court of Appeal’s reasons what those representations are.  The relevant ones are paragraphs (a), (b) and (c).

BELL J:   The Court of Appeal at application book 56, paragraph 60, accurately referred to those paragraphs of the pleading, did it not?

MR MANOUSARIDIS:   No doubt, your Honour.  Yes, it did.  The effect of that representation, those representations, one and the same, the representation pleaded is that during the period of 2004 to July 2005 the only people who had been undertaking work in the business were the first respondent, Ms Culligan, and bookkeeping on a part‑time basis by Ms Peeters.

BELL J:   I understand that.  I am just trying to grasp this.  At paragraph 60 of its reasons the Court of Appeal refers to those representations pleaded at paragraph 9.

MR MANOUSARIDIS:   Yes, it does.

BELL J:   Yes.  Your point is that later in the reasoning the court fastens on the question of whether the bookkeeper was working full time, or nearly full time, is that right?

MR MANOUSARIDIS:   It is not the bookkeeper.  It is some other person, a Ms Wood.

BELL J:   Ms Wood, yes.

MR MANOUSARIDIS:   I will go directly to where the misreading is, your Honour, because the misreading goes to the pleaded misrepresentation.  So I have taken your Honours to the pleaded representation which is a very simple substantive representation.  Then one goes over the page at page 40 and there is there repeated the allegations of falsity and one will see there there are two subparagraphs, subparagraph (a), subparagraph (b).  The falsity allegation is in subparagraph (a).  One can see that in terms refers to paragraph 8(d) of the statement of claim which was of an earlier meeting, but paragraphs (a), (b) and (d) which were the November representations. 

There the allegation simply is the allegation was false because Ms Culligan and the bookkeeper were not the only persons who did all the work.  Then if you look at the particulars immediately below, the person it is alleged who did all the work was a Ms Wood.  Now, the misreading of the Court of Appeal is, they were of the view that the case on the falsity of the representation is what is pleaded in paragraph (b) and what that paragraph says is contrary to the representation pleaded in paragraph 8(a).

BELL J:   That goes to the October representation, is that right?

MR MANOUSARIDIS:   It is not only a different meeting, it is a different representation, and if one goes back to page 39, your Honour, you will see what that representation is,”One person can run the business on 20 hours a week,”  A more amorphous, more difficult representation, certainly not the clarity in terms of its truth value that the pleaded representation in paragraph 9 had.  While we are on that, your Honour, I should take your Honour right now to where the misreading is plain and palpable, and that is at page 61 of the application book in paragraph 76.  Now, this comes after the Court of Appeal refers to some evidence of reliance.  Our complaint is they did not refer to our submissions about it.  The Court of Appeal says that:

It will be seen that both Mr D’Angelo and Mr Wallace –

and they are the directors of the applicant –

directed his attention to what he would have done had he known that Ms Wood was employed on a full time basis . . .  It is not surprising that the evidence should have been presented in this form since, as the particulars to par 11 of the Statement of Claim show, Aco’s case was that the pleaded representations were false because, during the relevant period, Ms Wood

“devoted all, or substantially all of her time as employee of [Unimail], in running the business.”

Now, that is a quotation, if I can take your Honours back to page 40, of a particular to subparagraph (b).  In our respectful submission, this is quite a material error because the Court of Appeal, for views which are not entirely clear, were of the view that the evidence on reliance was somehow related to the case on misrepresentation as the Court of Appeal understood it – was relevant to the applicant’s case on the falsity of the representations as the Court of Appeal understood it, but the case as to the falsity of the representations which the court referred to had nothing to do with the representations pleaded in paragraph 9.  That might well explain, although it is certainly not evident in the reasoning of the court, why the Court of Appeal did not refer to the evidence which the applicant had submitted did establish causation of the representations pleaded in paragraph 9.

BELL J:   Is that evidence referred to in the Court of Appeal’s judgment?

MR MANOUSARIDIS:   No, it is not, your Honour, and I will take your Honours to that.  So far I have taken your Honours to the pleading and there is the bald allegation of reliance on the pleading.  The Court of Appeal said it would not deal with whether the representations were in fact made, and that part of the Court of Appeal is at application book 60, paragraph 72.  They felt that the Court was not in a position to do so, quite extraordinarily, because they say that they had no opportunity for evaluating the understanding of Mr D’Angelo and Mr Wallace, and that is quite remarkable because the evidence that those two gentlemen gave was not contradicted or challenged. 

At any rate, the Court of Appeal did not deal with the question of whether the representations were made, they deal with the question of causation.  So the first step in that reasoning is at paragraph 74.  There they set out some of the evidence.  This is our first complaint.  What they do not refer to there or anywhere else are the submissions with the applicant made that there ‑ ‑ ‑

BELL J:   Here the court is looking at the evidence.

MR MANOUSARIDIS:   There were other submissions, and I will take your Honours to it.  They are in the application book.  If I can take your Honours to page 107, what is there reproduced are the applicant’s written submissions on reliance and causation and if one looks at paragraph 49 that is where the analysis begins.  Those submissions refer to, first, what is described as the direct evidence of Mr D’Angelo and Mr Wallace. 

The evidence of Mr Wallace is at application book page 95.  If I can ask your Honours to go that page of the application book, there is an extract from the affidavit of Mr Wallace, paragraph 38.  What that paragraph does is set out a series of beliefs which Mr Wallace says he had immediately before or at the time he committed the applicant to acquire the business.  The specific belief stated there – and I again repeat none of this was challenged below in the first instance – is the sentence beginning at the end of line 4.  He says:

I believed that, apart from the bookkeeping services provided by Jan Peeters, Andrea Culligan was the only person running the business during the period over which the issues referred to in the costs break‑up were supplied, and that she was so running the business part time on no more than 20 hours a week.

That, in effect, is a statement of a belief in terms of what is pleaded.

BELL J:   But is it not significant to read on?  The next sentence:

I believed that the business could be run on a part time basis ‑ ‑ ‑

MR MANOUSARIDIS:   It is.  All those beliefs are set out.  They were all his beliefs and, of course, the position is that a representation need not be the sole cause.  Human beings operate for a number of causes and the relevant test of causation is if the representation is one of a number which have a material effect that makes out causation.  I have not put that precisely, but I will return in a minute.  But the critical sentence is this assertion not challenged:

I would not have agreed to ACO entering into the agreement without my holding these beliefs.

Our complaint is that this evidence was referred to in writing, as we were required to put our submission in writing, not referred to by the Court of Appeal.  I will not go into in as much detail, but the other direct evidence is that of Mr D’Angelo which is at page 97 of the application book, paragraph 33.  I suppose I should read out what he says on the second line.  He says:

I believed that it took only up to 20 hours a week to run the business, and that, apart from the bookkeeping undertaken by Jan Peeters, Andrea Culligan was the only person who had been involved in running the business.

He set out some other beliefs, and then he says:

I would not have signed the agreement or otherwise have agreed to ACO signing the agreement had I been aware that my beliefs were incorrect.

This was evidence which, I have to repeat, was not challenged, referred to in our written submissions.  Just in case it is thought it was just a submission put in writing, it was dealt with as well in the oral submissions.  If I can take your Honour to at least a transcript to at least show that it was done.  If your Honours can turn to page 110 of the application book at around line 30 of the transcript which is reproduced there.  Counsel – that is me – took the Court of Appeal to paragraph 38 of Mr Wallace’s and read out that passage.  Then at line 35, his Honour Justice Sackville puts to me the proposition which ultimately is the base of the Court of Appeal’s decision.  Then if one goes to page 111, again reference is made to paragraph 38 and submission is made that his Honour Justice Sackville is reading the evidence selectively. 

There are other references, but I need only take your Honours to the reference in the oral submissions to Mr D’Angelo’s evidence and that is at application book 113, up the top.  The reference is made to Mr D’Angelo.  So, none of that evidence is referred to in the Court of Appeal’s decision and that is, we say, a denial of procedural fairness at the very least and is indicative of the Court of Appeal addressing some case which, in fact, was not presented to it by the applicant.  If one goes back to 107, which is the written submission, at paragraph 51 down the bottom, reference is not only made to the direct evidence, or what is referred to as direct “evidence of reliance”, reference is there made to what is described as “circumstantial evidence”. 

The fact is that you can see that the representation was made in response to a specific question, the subject matter was inherently relevant and material and if one goes over the page, in paragraph 52 it is said the representations were made at an important meeting where one would expect that serious questions would be asked, answers would be given and seriously relied on.  That was a due diligence meeting.  Not only did we refer to that sort of evidence in support of the case on reliance, at paragraph 53 reference is made to unchallenged findings.  Reference is made at paragraph 11 of the submissions, which are not reproduced, however, the findings on which the applicant relied are set out in the notice of contention. 

If I can briefly take your Honours to the notice of contention which is at application book 33.  These are the findings of the judge.  Admittedly they were made in his dealing with representations which were ultimately overturned, but at any rate, they are unchallenged.  Paragraph (f), that is the belief that the first appellant, which was Ms Culligan, had been running the Impulse.  Paragraph (g), the belief that there were no other expenses.  Paragraph (h), in our submission, is significant.  Those last two mentioned matters:

were critical to the decision of Mr Wallace and Mr D’Angelo to cause the respondent to purchase the Impulse business.

Those findings of fact are not referred to in the Court of Appeal’s decision or reasoning.  If I can just go back to the Court of Appeal’s reasoning at page 61.  Having set out some evidence, the Court of Appeal, with confidence but incorrectly, sets out its understanding of why the evidence which they understood was relevant to the causation was put in the form in which it did and that is, the Court of Appeal thought that it was due to its case on the falsity of the representation, but the falsity of the representation is directed not to the pleadings at paragraph 9, but the pleadings in paragraph 8.  If one looks over the next page at page 62, that is reinforced:

Aco claimed that the Impulse business could not be run on a part‑time basis.

This part of the claim, the subject of the notice of contention, was a claim was, you said, Ms Culligan and the bookkeeper were the only people who ran this business, and that was false.  That was the case.  The case was not that the Impulse business could be run on a part‑time basis and, in our respectful submission, from this it appears that the Court of Appeal, although it did reproduce paragraph 9, seems to have been addressing a case based on the representations of paragraph 8.  Whether it did so or not, one cannot tell, because the reasoning is not sufficiently clear and it is not sufficiently clear because they have not addressed the applicant’s submissions. 

Then one goes to paragraph 77 and there the court refers to a finding of the primary judge that Ms Wood did not spend all of her time on the business.  Here we have another complaint.  That is indeed what the judge found and the applicant attempted to persuade the court to overturn that finding, but the fact is that for a limited time, maybe not so limited, the undisputed evidence was that Ms Wood did devote all of her time to the business.  If I can just take your Honours to page 101 of the application book.  This is an extract from the written submissions of the applicant.  At paragraph 42 the submissions he has put is that:

Second, on Ms Culligan’s evidence, as from June 2005, Ms Wood devoted all of her efforts to the Impulse business.

In fact, if, as the Court seemed to be of the view, that the evidence of causation was what they would have known had they been aware that Ms Wood devoted all of her time, I mean, there is the evidence.  She did, at least for part of the time.  Our complaint is that was not referred to.  Again, if it be thought that it is a submission which was put in writing and not subject of oral address, I need to refer the Court to that section of the transcript where it was in terms addressed.  That is at page 111 of the application book.  If can just briefly read form line 15, counsel there says:

In para 38 he –

that is Mr Wallace –

sets out a whole number of beliefs, not just one belief, a whole number of beliefs.  He says, “I will not –

the submission is –

Now those beliefs were wrong.

His Honour Justice Sackville says:

But then para 39 –

which is the paragraph we just out in the Court of Appeal’s reasons –

deals with what induced him to act as he did . . . I’m not sure I understand how that demonstrates reliance in terms of the facts that you wish us to find.

There the submission I make is:

Even if you accept his Honour’s finding at how much time she spent –

That is to say, Ms Wood –

the incontrovertible evidence is that at least for June, part of June, July, August, September and part of October Ms Wood was working on the business fulltime and Ms Culligan was putting in five to ten hours.

We are talking about a 40 to 45 hour business for that time.  His Honour thought, well, that is not sufficient because, Ms Culligan’s view, she was not performing.  The submission is there made, how is that relevant?  Then the submissions is:

If you accept she works 70% ‑

of the time – then you have to put a comma there –

for those three and a half months ‑

that is to say, June, July, August, September –

she worked fulltime.  You can’t blame us for not picking that when the question was squarely asked, “Who’s doing all the work?” and the false answer is given, “I’m doing it on 20 hours”.

HEYDON J:   Mr Manousaridis, the red light has been on for some time, are there any concluding points you wish to make?

MR MANOUSARIDIS:   No, your Honour, the submission essentially is that they misread the statement of claim and did not deal with our submission.

HEYDON J:   We will not trouble you, Mr Bannon.

The applicant complains that the New South Wales Court of Appeal failed properly to address its submissions to that court, or at least failed to state its reasoning sufficiently clearly.  Whether or not those points could be made good after full argument on an appeal, in our opinion the prospects of a different outcome on appeal are insufficient to justify a grant of special leave.  Accordingly, special leave must be refused with costs.

AT 3.06 PM THE MATTER WAS CONCLUDED