Brophy v NIAA Corporation Limited

[1995] HCATrans 208

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S45 of 1995

B e t w e e n -

KIERIN JOHN BROPHY

Applicant

and

NIAA CORPORATION LIMITED (in Liquidation)

Respondent

Application for special leave to appeal

DAWSON J
McHUGH J
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON MONDAY, 14 AUGUST 1995, AT 12.05 PM

Copyright in the High Court of Australia

MR D.E. GRIEVE, QC:   May it please your Honours, I appear for the applicant.  (instructed by Berne Murray & Tout)

MR B.W. WALKER, SC:   If it please your Honours, I appear for the respondent.  (instructed by Corrs Chambers Westgarth)

DAWSON J:   Mr Grieve.

MR GRIEVE:   There was a compelling body of evidence before the primary judge that the respondent knew of the agent’s insolvency and pattern of fraudulent conduct.  That knowledge was not the subject of any real contest nor could it have been.  The material in question is in the application book at pages 98 to 106.

GUMMOW J:   Say that again, Mr Grieve.

MR GRIEVE:   The material upon which we rely is reproduced in the application book at pages 98 to 106.

GUMMOW J:   They are submissions, are they not?

MR GRIEVE:   Yes, but they gather together the evidentiary material before the court.

GUMMOW J:   The findings of the trial judge are at page 14, are they not?

MR GRIEVE:   Yes.

GUMMOW J:   Pages 14 and 15?

MR GRIEVE:   That is right, yes.

GUMMOW J:   That is really what is picked up in the Court of Appeal at 119 at the bottom of the page?

MR GRIEVE:   That is right.  The information which the respondent had referable to the agent’s standing or lack of it was, in my submission, quite obviously significant to any party such as the applicant who proposed to have any business dealings with the agent.  With respect, it belies reality for the respondent to submit that it is easy to imagine a case where the circumstances preclude “the passing of such information because the relevant silence does not or cannot induce the other party’s detrimental course of action”.  I quote from paragraph 2 of my friend’s outline.

In my submission, it is easy to imagine that a party proposing to deal with another who has the outward appearance of commercial viability and probity would be, in the ordinary course of events, misled by that appearance.

DAWSON J:   It is a question of fact, though, is it not, Mr Grieve?

MR GRIEVE:   That leads me to the heart of the application and, in my submission, the question is not one of fact but one of principle; namely, does section 52 impose upon a party interested in a business transaction, possessed of information pertaining to the second party, a duty to warn the innocent party of his knowledge of a true position?  That, we submit, is the question and we submit that that question is of sufficient significance to warrant the grant of special leave.

GUMMOW J:   The word “duty” is fairly mischievous, I suppose. 
It is not in the statute.  The question at the end of the day is, in all the circumstances, is there misleading or deceptive conduct?

MR GRIEVE:   That is right.  I submit that that question though, in a case such as the present, ought not to be determined on a case‑by‑case basis but, rather, should be addressed by this Court along these lines, that there is, we submit, a principle to be recognised arising out of section 52, namely that the section requiring candour in business dealings goes so far as to proscribe the withholding of relevant information no less than the promulgation of positively misleading information.

McHUGH J:   But in what circumstances?  That is the whole question, is it not?

MR GRIEVE:   In any case where, as here, one has a situation of party A proposing to deal with party B, out of which dealing party C will derive a benefit.  Party C knows of matters concerning party  B of which party A is unaware.  In those broadly stated circumstances, in point of principle, C, because of his interest in the transaction should be recognised as duty-bound to acquaint A of what he knows.

McHUGH J:   Does that mean that a shareholder in a company that is aware of some deficiency in the company’s business is under an obligation to warn people who is dealing with the company?

MR GRIEVE:   It depends on the nature of the dealing, I suppose.

McHUGH J:   But you framed it in terms of benefit; somebody will derive a benefit.

MR GRIEVE:   Yes, if one assumes as a premise in your Honour’s question a benefit to the company as a result of a dealing then, logically, I am bound to submit, the answer is “yes, the principle would go so far”.  Those are the submissions we would put, your Honours.

DAWSON J:   We need not trouble you, Mr Walker. 

This case turns on its own facts and raises no point of principle which would warrant the grant of special leave.  Special leave to appeal is accordingly refused.

MR WALKER:   We seek costs, if your Honour pleases.

DAWSON J:   Do you say anything to that, Mr Grieve?  With costs.

AT 12.11 PM THE MATTER WAS CONCLUDED