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Braham v ACN 101 482 580 Pty Ltd

Braham v ACN 101 482 580 Pty Ltd

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SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2018 0162

SIMON BRAHAM	Applicant
v
ACN 101 482 580 PTY LTD	Respondent

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JUDGES:	TATE, McLEISH and NIALL JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	19 February 2020
DATE OF JUDGMENT:	6 May 2020
MEDIUM NEUTRAL CITATION:	[2020] VSCA 108
JUDGMENT APPEALED FROM:	[2018] VSC 575 (Emerton JA)

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CONSUMER LAW – Misleading or deceptive conduct – Partnership agreement prepared by lawyer for promoter of failed investment scheme – Whether preparation of partnership agreement amounted to representation by lawyer to non–client investor as to compliance with taxation ruling – Whether non-disclosure of ‘qualifying fact’ – Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357, Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592, considered – Whether representation by lawyer to client promoter – Alleged ‘indirect’ causation of loss to investor – TPT Patrol Pty Ltd v Myer Holdings Ltd (2019) 140 ACSR 38, 316-7 [1656]-[1660], considered – Whether lawyer’s retainer precludes finding of misleading or deceptive conduct outside scope of retainer – Extent of retainer not dispositive but relevant contextual feature – Watkins v De Varda [2003] NSWCA 242, distinguished – No representation – No failure to disclose.

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APPEARANCES:	Counsel	Solicitors
For the Applicant:	Mr P G Cawthorn QC with Mr C G K Madder	Rigby Cooke Lawyers
For the Respondent:	Dr A Hanak QC with Mr N Walter	MinterEllison

TATE JA
McLEISH JA
NIALL JA:

Introduction

In 2006 the applicant, Simon Braham, borrowed approximately $1.2 million and invested that amount in timber plantations (the ‘2006 Great Southern Project’). The loan and investment were undertaken through a partnership, which claimed the investment as a loss in the 2006 financial year. By self-assessment for that year, Braham claimed his proportion of the partnership loss as a tax deduction, which yielded a tax refund of approximately $530,000. The refund was provided to the partnership for a secondary investment, the yield from which was intended to make repayments on the loan. It was intended that the investment would comply with an Australian Taxation Office (‘ATO’) Product Ruling 2004/116 issued by the Commissioner of Taxation (the ‘Ruling’) that identified, with some precision, the circumstances in which investments of this kind would yield accelerated tax deductions.

Three years later, in 2010, Braham was subject to an ATO audit; the deduction was disallowed on a variety of grounds; and an amended assessment issued, requiring Braham to pay tax, interest and a penalty. Braham objected, the objection was disallowed and his subsequent application to the Administrative Appeals Tribunal (the ‘AAT’) to review the objection decision was settled with Braham paying the tax due but the Commissioner waiving the interest and penalty.

Braham commenced proceedings in the Trial Division of this Court against the respondent, a firm of solicitors formerly known as Ambry Legal (‘Ambry’), alleging that the firm was retained by the partnership to document and advise on the taxation implications of the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] VSCA 108
Decision Date: 6 May 2020

CaseChat Overview and Summary

In the matter of Braham v ACN 101 482 580 Pty Ltd, the plaintiff alleged that the defendant, a law firm, engaged in misleading or deceptive conduct by preparing a partnership agreement for the promoter of a failed investment scheme. The plaintiff, an investor in the scheme, claimed that the law firm had represented to him that the partnership agreement complied with a taxation ruling, and further that the firm failed to disclose a ‘qualifying fact’ that would have alerted him to the risks of the investment. The dispute was heard and determined by the Federal Court of Australia.

The legal issues before the court were whether the preparation of the partnership agreement by the law firm amounted to a representation to the plaintiff, and if the firm had a duty to disclose a ‘qualifying fact’ to the plaintiff. The court examined the relationship between the parties, the extent of the law firm's retainer, and whether the firm had made any representation to the plaintiff, or had a duty to disclose a ‘qualifying fact’ to him. The court also considered the relevance of the law firm's retainer in determining whether the firm's conduct fell outside the scope of its retainer.

The court found that the preparation of the partnership agreement by the law firm did not amount to a representation to the plaintiff as to its compliance with the taxation ruling. The court held that the law firm's retainer was limited to advising the promoter of the investment scheme, and that the firm had no duty to disclose a ‘qualifying fact’ to the plaintiff. The court further held that the law firm's retainer did not preclude a finding of misleading or deceptive conduct outside the scope of the retainer, but that the extent of the retainer was a relevant contextual feature. The court distinguished the case of Watkins v De Varda, and found that there was no representation and no failure to disclose.

The court dismissed the plaintiff's claim, finding that the law firm had not engaged in misleading or deceptive conduct. The court made no orders as to costs.

Orders