CCL Secure Pty Ltd v Berry
[2019] FCAFC 81
•24 May 2019
FEDERAL COURT OF AUSTRALIA
CCL Secure Pty Ltd v Berry [2019] FCAFC 81
Appeal from: Berry v CCL Secure Pty Ltd [2017] FCA 1546
Berry v CCL Secure Pty Ltd (No 2) [2018] FCA 1351
File number: NSD 1622 of 2018 Judges: MCKERRACHER, ROBERTSON AND LEE JJ Date of judgment: 24 May 2019 Catchwords: TRADE PRACTICES – misleading and deceptive conduct – s 52 of the Trade Practices Act 1974 (Cth) – findings relating to conduct at meeting between two participants with no witnesses – whether two oral representations were conveyed to respondents – whether primary judge erred in respect of factual and credit findings including in relation to findings of fraud
DAMAGES – statutory compensation – s 82 of the Trade Practices Act 1974 (Cth) – where quantum to be assessed by reference to the position the respondents would have been in absent contravening conduct – whether primary judge erred in calculation of loss
Legislation: Evidence Act 1995 (Cth), ss 131(2)(h), 140
Trade Practices Act 1974 (Cth), ss 52, 82
Cases cited: Aldi Foods Pty Ltd v Moroccanoil Israel Ltd [2018] FCAFC 93; (2018) 358 ALR 683
Axon v Axon (1937) 59 CLR 395
Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279
Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission [2007] FCAFC 132; (2007) 162 FCR 466
Cubillo v Commonwealth [2000] FCA 1084; (2000) 103 FCR 1
Devries v Australian National Railways Commission (1993) 177 CLR 472
Dublin, Wicklow & Wexford Railway Co v Slattery (1878) 3 App Cas 1155
Farley (Aust) Pty Ltd v JR Alexander & Sons (Queensland) Pty Ltd (1946) 75 CLR 487
Flint v Lowe (1995) 22 MVR 1
Fox v Percy [2003] HCA 22; (2003) 214 CLR 118
Gnych v Polish Club Ltd [2015] HCA 23; (2015) 255 CLR 414
Henville v Walker [2001] HCA 52; (2001) 206 CLR 459
Jones v Dunkel (1959) 101 CLR 298
Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70
Lazarus Estates Ltd v Beasley [1956] 1 QB 702
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357
R v Teal (1809) 11 East 307; 103 ER 1022
Robinson Helicopter Company Incorporated v McDermott [2016] HCA 22; (2016) 90 ALJR 679
S v M (1984) 36 SASR 316
Scott Fell v Lloyd (1911) 13 CLR 230
Suttor v Gundowda (1950) 81 CLR 418
SZFDE v Minister for Immigration and Citizenship [2007] HCA 35; (2007) 232 CLR 189
Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514
Watson v Foxman (1995) 49 NSWLR 315
Date of hearing: 19, 20 and 21 February 2019 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Category: Catchwords Number of paragraphs: 234 Counsel for the Appellant: Mr G Rich SC with Ms J Roy Solicitor for the Appellant: Arnold Bloch Leibler Counsel for the Respondents: Dr C S Ward SC with Mr P F Santucci Solicitor for the Respondents: Marque Lawyers ORDERS
NSD 1622 of 2018 BETWEEN: CCL SECURE PTY LTD (ACN 072 353 452)
Appellant
AND: BENOY BERRY
First Respondent
GLOBAL SECURE CURRENCY LIMITED (05 127 761)
Second Respondent
JUDGES:
MCKERRACHER, ROBERTSON AND LEE JJ
DATE OF ORDER:
24 MAY 2019
THE COURT ORDERS THAT:
1.The appeal be allowed in part.
2.Order 2 made by the primary judge on 17 August 2018 be set aside.
3.By 4pm on 31 May 2019, the parties file:
(a)an agreed minute of orders identifying the further orders necessary to dispose of all issues on the appeal so as to reflect these reasons; or
(b)failing agreement as to the orders, a minute of the orders for which that party contends, together with any affidavit material relied upon in relation to costs and any submissions (not exceeding two pages in length).
4.Subject to further order, any issue as to further orders is to be determined by the Full Court on the papers.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
THE COURT:
A INTRODUCTION
This is an appeal against an award of almost $65 million in favour of the respondents on the appeal (Dr Benoy Berry and Global Secure Currency Ltd (GSC)). It is common ground that the award by the primary judge was one of statutory compensation following a finding of misleading or deceptive conduct contrary to the provisions of s 52 of the Trade Practices Act 1974 (Cth) (TPA) although, in circumstances which will be necessary to examine, the primary judge found the behaviour of officers of the appellant, CCL Secure Pty Ltd (formerly known as Securency Pty Ltd (Securency)), amounted to fraud.
A singular aspect of the dispute is that the impugned conduct allegedly occurred at one meeting held prior to and over an Indian repast attended in London by Dr Berry (an agent of Securency in the Federal Republic of Nigeria and territories within the Economic Community of West African States (ECWAS)) and Mr Peter Chapman (a director of business development of Securency), on 24 February 2008 (February Meeting). The primary judge (in the judgment below (J) at [13]) identified the “central issue” as to liability as being precisely what was said at the February Meeting. There were no others present, and no contemporaneous records were kept. Oral evidence was adduced by the two participants, over nine and a half years after the event.
The determination of this “central issue” led to what was described by Securency, accurately, as the “central finding”, being that two representations were conveyed by Mr Chapman to Dr Berry at the February Meeting.
The grounds of appeal were prolix, diffuse and overlapping but were ultimately placed by senior counsel for Securency (who came into the appeal shortly before the hearing), into seven groupings as follows:
(1)Grounds directly impugning the central findings;
(2)Adverse findings not pleaded and/or not put to relevant witnesses;
(3)Errors of principle affecting fact finding;
(4)Findings that there was “no evidence” when there was evidence, or otherwise misstating the evidence, in the course of making credit findings;
(5)Discrete errors supporting adverse credibility findings;
(6)Reliance grounds; and
(7)Damages.
It is convenient to deal with the first five groupings of grounds initially as they all directly or indirectly seek to impugn the central findings. Other than the grounds relating to reliance and damages, each of the grounds are advanced in aid of, or are subsidiary to, this primary argument (although some of the attacks on individual factual findings are, at best, of marginal relevance).
B RELEVANT BACKGROUND TO APPEAL
It is unnecessary to detail the factual background to the dispute in any real detail. What follows is sufficient to understand the issues that arise on the appeal.
Securency was the manufacturer and designer of polymer technology, which was commercialised by Securency in association with the Reserve Bank of Australia including by the production of polymer banknotes. Efforts had been made as early as 1999 to obtain an order from the Central Bank of Nigeria for the production of polymer-based banknotes for Nigerian currency.
Dr Berry, a director and shareholder of GSC, is an Irish national of Indian descent with substantial business experience in Nigeria. As a result of his experience, Dr Berry was well-placed to assist Securency in its efforts to promote the introduction of polymer banknotes in Nigeria. Dr Berry began working on behalf of Securency which initially involved travel to Nigeria and attending meetings with key personnel, including with the Governor of the Central Bank of Nigeria in 2003. Following this meeting with the Governor, Dr Berry reported to Mr Hugh Brown (the director of sales and marketing of Securency) and Mr Chapman his view that the only way that Nigerian authorities would be convinced to change from paper banknotes to polymer banknotes would be for production of banknotes, and ultimately the polymer substrate through a process called opacification, to be undertaken in Nigeria.
Although throughout the period 2003 to June 2006, Dr Berry did not have any formal contract in place, Securency described Dr Berry as its partner (J[51]-[52]) when negotiating the adoption of polymer notes in Nigeria. Dr Berry acted in that capacity from the outset on the basis of his belief that, in the long term, an opacification plant would be built in Nigeria with the participation of the Nigerian Government and Dr Berry (J[7]).
In June 2006, Dr Berry met with Mr Brown in India to negotiate a formal contract and in or around August 2006, the parties executed an agency agreement. A slightly revised version of this agreement was re-executed by the parties in or around March 2007. It is this version of the agency agreement (Agency Agreement) which is presently relevant.
The material terms of the Agency Agreement were identified by the primary judge at J[93]. It will be necessary to make further reference to its provisions when considering the grounds of appeal relating to damages, but the provisions relevant for background purposes are as follows:
(1)Dr Berry and GSC were named as the agent of Securency in Nigeria and ECWAS territory;
(2)Dr Berry and GSC would use their best endeavours as agent to advertise, market, promote and obtain orders in the territory for Securency’s product of opacified polymer (cl 2.2);
(3)the scope of the agency was restricted to advertising, marketing and promoting the product in the territory, obtaining orders from customers located in the territory, submitting them to Securency and any matter incidental to those tasks (cl 2.3);
(4)the Agency Agreement commenced on 2 February 2006 and continued until the Expiry Date “unless terminated earlier in accordance with this Agreement” (cl 3.1);
(5)the Termination Date was defined (in cl 1.1) as meaning the earlier of the “Expiry Date” (being 30 June 2008 “automatically renewed for further terms every two years unless terminated as per the Termination clauses contained in the contract”) or the date upon which “this Agreement is terminated”;
(6)the various Termination clauses provided for termination upon:
(a)Securency giving Dr Berry and GSC 60 days’ written notice (cl 2.6);
(b)30 days’ written notice given by either party to the other party, which notice could be given at any time on or after the date which was 30 days before the Expiry Date (cl 3.2);
(c)an event of default or insolvency occurring under cl 16;
(7)if Securency received an order for the product from a customer located in the territory, “it must forward a copy of the order to [Dr Berry and GSC] as soon as practicable” (cl 5.1(c));
(8)commission was payable on invoice sales (defined in cl 1.1 to mean, relevantly, the amount of all invoices rendered by Securency and paid by customers relating to sales in the territory) in accordance with a formula set out in cl 8;
(9)on the expiry or termination of the Agency Agreement, Dr Berry and GSC were not entitled to payment of any commission in respect of invoice sales from the date of expiry or termination (cl 17.1(a));
(10)the rate of commission was 15% (sch 1).
The primary judge found that Securency, by its senior employees and officers, set out to deceive the Nigerian Government and Dr Berry by making representations that an opacification plant in Nigeria was in the serious contemplation of Securency. Securency used the promise of the opacification plant to encourage further orders of polymer from Nigeria, including adopting polymer in further denominations, without intending any definite commitment to proceed with constructing a plant (J[11] and [147]).
In particular, in November 2007, shortly before the February Meeting, Dr Berry attended a meeting in London between the Governor of the Central Bank and Mr Brown. At that November meeting, the primary judge found that the Governor made clear that he required a letter from Securency with a commitment to move towards establishing an opacification plant in Nigeria (J[10]), a matter the Governor regarded as being of great significance (J[140]-[143]).
After the November meeting, a draft of a misleading letter was prepared to satisfy the Governor’s requests (J[145]) and was provided to Dr Berry (although he was unaware it was deceptive (J[144])). The primary judge found that this misleading conduct of Securency was not only an indictment upon its business practices (and that of Mr Brown (J[137]-[149])), but was important contextual background to assessing what occurred at the February Meeting.
Another important matter of context was that by the time of the November meeting, but unknown to Dr Berry and GSC, efforts were being made by Mr Chapman to replace Dr Berry and GSC (J[124]-[125]) with the company that became known as SPT Limited (SPT). It will be relevant to come back to some aspects of the evidence as to the intended replacement of Dr Berry and GSC when considering damages, but it presently suffices to note that the primary judge found that at the time of the November meeting, just as revenues were flowing to Dr Berry for the first time after years of effort, Mr Chapman was getting the “ducks in a row” (J[179]) by creating a paper trail that falsely asserted Dr Berry was ill (J[114], [116], [169], [170], [191], [294]) as a means of justifying the proposed termination of Dr Berry and GSC.
At the February Meeting, Dr Berry signed a letter (termination letter) on behalf of himself and GSC that Mr Chapman had brought with him. The termination letter was in the following form:
Securency Agency Agreement – Nigeria
I refer to our recent discussions and confirm that the Agency Agreement with Securency dated 2nd February 2006 was terminated in accordance with the terms of the Agreement as from 31 December 2007.
Kindly acknowledge the formal termination of the Agency Agreement by signing and returning the duplicate copy of the letter attached.
Yours faithfully
John Ellery
Chief Financial Officer
Securency International Pty Ltd
At J[184]-[189] the primary judge made a number of findings as to what occurred at the February Meeting. These critical findings are reproduced in full at [39] below, but based upon what his Honour found occurred at the February Meeting, the primary judge (at J[303]-[304]) concluded that he was “comfortably satisfied” that Mr Chapman made:
(1)a representation that if Dr Berry and GSC agreed to terminate the Agency Agreement, the existing terms would continue, and the parties would make a new agreement on those terms; and
(2)a further representation that if Dr Berry signed a memorandum of understanding or partnership agreement for the goal of establishing an opacification plant in Nigeria prepared by Securency, Mr Chapman would cause it to be sent to Securency in Australia and it would execute that document.
As noted above, these were the central findings in the liability aspect of the case and are the focus of this appeal as to liability.
C GROUNDS RELATED TO THE CENTRAL FINDINGS
C.1 Introduction and Relevant Principles
Before turning to the large number of grounds which directly or indirectly impugn the central findings, it is worth revisiting some well-established principles of appellate review, which assume importance in the disposition of this appeal.
In Robinson Helicopter Company Incorporated v McDermott [2016] HCA 22; (2016) 90 ALJR 679 at 686-687 [43], the High Court (French CJ, Bell, Keane, Nettle and Gordon JJ) observed, by reference to a series of well-known cases (Devries v Australian National Railways Commission (1993) 177 CLR 472, Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 and Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357) that an intermediate court of appeal conducting, such as here, an appeal by way of rehearing, is bound to conduct a real review of the evidence given at first instance and the judge’s reasons to determine whether the judge has erred in fact or law and:
… (i)f the court of appeal concludes that the judge has erred in fact, it is required to make its own findings of fact and to formulate its own reasoning based on those findings. But a court of appeal should not interfere with a judge’s findings of fact unless they are demonstrated to be wrong by “incontrovertible facts or uncontested testimony”, or they are “glaringly improbable” or “contrary to compelling inferences”.
Reflecting the fact that these observations were footnoted with references to the cases identified above, in Aldi Foods Pty Ltd v Moroccanoil Israel Ltd [2018] FCAFC 93; (2018) 358 ALR 683 at 686 [3] Allsop CJ (Markovic J agreeing and Perram J to similar effect at 697 [54]), explained that this approach did not involve any departure from long-standing principle and that nothing in Robinson Helicopter means that any finding made by a trial judge can only be interfered with if the expressions referred to by the High Court derived from Fox v Percy are satisfied. At 694-697 [43]-[54] Perram J (Allsop CJ and Markovic J agreeing) discussed the nature of appellate review, commencing with findings which involve an evaluative assessment of unchallenged facts. At 695 [45]-[47] his Honour said:
How should this Court in the exercise of its appellate jurisdiction approach the review of such findings? One begins with the proposition that this Court’s appellate jurisdiction involves an appeal by way of rehearing (Branir Pty Ltd v Owston Nominees Pty Ltd (No 2) [2001] FCA 1833; 117 FCR 424 (‘Branir’) at 434-435 [20] per Allsop J, Drummond and Mansfield JJ agreeing). Next, it is established that in an appeal by way of rehearing what is involved is the correction of error (Branir at 435 [22]). Error is not demonstrated merely because the appellate court disagrees with the primary judge. At the risk of stating the obvious, error is demonstrated where it is shown that some aspect of the trial judge’s reasoning is wrong. How the trial judge’s reasoning may be shown to be wrong depends on what that reasoning is about (Branir at 435 [24]). At one extreme, where no deference at all is shown to a trial judge’s conclusions, are errors of law. An appellate court is not influenced in its view of the law by the conclusions of a trial judge and, in this case, mere disagreement on the part of the appellate court with the trial judge will justify the conclusion that an error has been made.
At the other extreme are a trial judge’s finding of fact where the credibility of witnesses is involved. In such cases, it is accepted that the trial judge enjoys very considerable advantages over an appellate court by reason of having seen the witnesses and having been immersed in the milieu of the trial. Where this is so it is commonly said that the appellate court will not depart from the trial judge’s conclusions unless they are shown to be wrong by reference to ‘incontrovertible facts or uncontested testimony’ (Fox v Percy [2003] HCA 22; 214 CLR 118 (‘Fox v Percy’) at 128 [28]) or otherwise be ‘contrary to compelling inferences’ (Fox v Percy at 128 [29]).
Between these two extremes lies a grey area in which the amount of deference shown to a trial judge’s conclusions is a function of the relative advantage enjoyed by the trial judge over the appellate court. That the appellate court can review in such cases is not in doubt. Speaking of the question of when an appellate court can review inferences drawn from facts already found, the High Court explained it this way in Warren v Coombes [1979] HCA 9; 142 CLR 531 at 551:
‘[I]n general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge, but, once having reached its own conclusion, will not shrink from giving effect to it.’
Here the liability grounds of appeal all relate directly or indirectly to errors in the fact-finding process which led to credibility-based fact findings. Given the pivotal issue was a disputed account as to whether the impugned conduct occurred at a meeting between two people with no other witnesses, the liability case turned upon an assessment as to whether Dr Berry’s account was to be accepted. Once this is appreciated, given there was conflicting evidence as to this account, this Court in the exercise of its appellate function will not depart from the primary judge’s conclusion just because the appellate court may disagree with the primary judge, but only if the central findings are shown to be contrary to compelling inferences.
The consideration of the grounds said to justify appellate intervention in accordance with these principles must start by identifying the case pleaded by Dr Berry and GSC as to what occurred at the February Meeting, and the process of reasoning that led to the central findings being made.
C.2 The Relevant Pleaded Issue and the Credit Based Findings Generally
The proceeding was commenced almost six years after the February Meeting. The primary judge required evidence in chief to be adduced viva voce and, as noted above, Dr Berry gave his account of the February Meeting almost a decade after it occurred.
This no doubt presented challenges for the primary judge, but those challenges were compounded by the fact that, for reasons examined in detail below, Dr Berry’s oral account differed in significant and material respects from what had been pleaded at various times during the course of the proceeding.
Relevantly, in the ultimate version of the pleading, the second further amended statement of claim (2FASOC) at [26]-[26B], a course of conduct is pleaded as having occurred at the February Meeting. For reasons that will become evident, it is necessary to set this out with some specificity. The pleaded conduct was that Mr Chapman:
(1)made the Renewal Representation to Dr Berry, being that: “if [Dr Berry and GSC] agreed to terminate the [Agency] Agreement, the existing terms would continue and a new agreement would be made between the parties” (2FASOC [26]); and
(2)provided a document (called the “New Agreement” at [26A]) and, “[a]t the time of handing” this document to Dr Berry, Mr Chapman conveyed the New Agreement Representation, being that: “if you [Dr Berry] signed this now [being the new agreement handed to Dr Berry], I will take it back to Australia and have it executed by Securency straight away” (2FASOC [26B]).
Significant confusion has arisen by the loose use of the term “new agreement” in this case to refer to different things. It will be necessary to examine the varying ways Dr Berry and GSC have articulated their case as to which documents, if any, were present at the February Meeting, but the case at the hearing before the Full Court was that there were two documents present. One was the termination letter, which was said to be routine and would not affect a replacement or “new” agency agreement being put in place, and the other document being an agreement called, in the evidence, a partnership agreement. To avoid further confusion, in the balance of these reasons, we will eschew reference to the “new agreement” and refer to the pleaded New Agreement Representation as the Second Representation.
The primary judge at [14] identified that the “decisive factual issue” was:
…whether, as Securency asserted based on Mr Chapman’s evidence, Dr Berry simply signed [the termination letter] in response to Mr Chapman’s telling him, “This is the letter of release from the agency agreement”, before the two men proceeded to have a pleasant interchange about other matters for about two hours, over a good lunch prepared by Dr Berry’s Indian chef or whether, as Dr Berry and GSC asserted, Securency, through Mr Chapman, made one or both of the… false representations which induced Dr Berry to act as he did…
This was resolved by his Honour (at J[22]) accepting Dr Berry’s account and, as noted at [17] above, finding that the Renewal Representation had been made as pleaded; and that a representation described as “to materially the same effect” as the Second Representation had also been made.
In making his credit findings and accepting Dr Berry’s account, this is not a case where his Honour was vexed in deciding whether he preferred one of two, apparently plausible, accounts. The primary judge was in no doubt as to who emerged as the more reliable historian of events. His Honour found Mr Chapman to be disingenuous, tricky, unbelievable, slippery, a backdater of documents, a fabricator and generally dishonest. These were serious and emphatic findings. At J[168], the primary judge said he was led:
…to the firm conclusion that he was a person in whose uncorroborated evidence I could not place any confidence or credibility. In my opinion, he is a person who is and was prepared to say or do anything in his dealings with others, including Dr Berry (and GSC), regardless of what the standards of ordinary reasonable people as to honesty and integrity require.
By way of contrast, the primary judge found that Dr Berry was a generally honest witness doing his best to tell the truth about events that had occurred. He was described as a successful entrepreneur and an intelligent and savvy businessman. Overall, the primary judge found Dr Berry to be credible. Ultimately, in a finding which rests at the heart of this appeal, his Honour found (at J[22]) he was “satisfied affirmatively that Dr Berry’s account was more probably than not true”.
We now turn to the evidence before the primary judge detailing Dr Berry’s account.
C.3 The Relevant Evidence
As there were no contemporaneous records, nor affidavits, to identify what Dr Berry said about the events at the February Meeting, it is necessary to consider both Dr Berry’s evidence in chief and under cross-examination.
The following table sets out how each representation was finally pleaded and “particularised” and the evidence pointed to by Dr Berry and GSC as having made out each of these representations drawn from the oral testimony of Dr Berry in chief. The “particulars” are not particulars in the usual sense; for reasons that are not readily apparent, those acting for Dr Berry considered it appropriate to incorporate Dr Berry’s anticipated evidence (set out in a served but unfiled proof of evidence) as particularisation of the material facts pleaded. This is not to say that the “particulars” were unimportant. When taken together with what is pleaded at 2FASOC [26]-[26E], they identify what was contended to have happened with real specificity. The case advanced was that the Renewal Representation was made while referring to the intention to enter into a future renewal agreement, but that the Second Representation was made contemporaneously with the provision to Dr Berry of the document being the then unsigned partnership agreement.
The representation allegations at trial and the evidence given in chief, with matters of particular significance emphasised, were as follows:
Renewal Representation Evidence Pleading
2FASOC [26]: In February 2008 the Respondent by its officer Mr Chapman represented to the First Applicant that if the Applicants agreed to terminate the Agreement, the existing terms would continue and a new agreement would be made between the parties.
Particulars
Paragraphs 10.1 to 10.11 of the Statement of Dr Benoy Berry dated 8 September 2016:
10.1 On a date which I believe to have been 24 February 2008, Mr Chapman attended my house. I remember that we met in the conservatory for lunch in my house with the fire going.
10.2 The meeting had been arranged after exchanges of phone and text messages earlier in February. I recall that I was in India on 19 February 2008, and that Mr Chapman had asked to meet with me urgently. I recall that I eventually suggested that he meet me for lunch at my house in London on Sunday 24 February 2008. I expected that the meeting was to progress Securency’s work to meet Nigeria’s expectations around the introduction of other denomination notes.
10.3 Mr Chapman arrived in an old Volvo. We joked about the age of his car. When he was with me at my house, Mr Chapman said:
“Benoy, I believe we have finally nailed it.”
I understood him to mean that he had finally reached a point where Securency was prepared to move ahead to polymer production in Nigeria. As he said those words he placed two documents on the table in front of me.
10.4 I then looked at the two documents. One was a short document dealing with the termination of the existing agency agreement. The other was a document described as an MOU between an un-named company and Securency.
Mr Chapman said:
“This is the new document that I can get them to agree to. It finally gets us to the technology transfer stage. This document has been drafted by our lawyers in Australia. Now is the time for us to move forward with the implementation of the opacification plant with you. You need to sign this termination of the old agency agreement as well – it is just routine and will have no effect on our existing terms. You just can't have the old agency agreement existing at the same time. You need to sign the termination now and we can get the new arrangement in place straight away.”
10.5 I read the new agreement fairly quickly. It clearly dealt with the transfer of technology to Nigeria and the development by Nigeria of a polymer production industry.
10.6 In reliance upon Mr Chapman’s statement to me that I had to sign the termination document in order to move forward, I placed my signature on that document and handed it to Mr Chapman. A copy of the signed termination letter dated 14 February 2008 appears at INN.001.001.0920. The only basis upon which I signed the termination letter and provided it to Securency, was the representation made by Mr Chapman that I would secure the new agreement (which included the technology transfer) while having no impact whatsoever upon the existing terms by which I received commission payments, being the orders placed by Nigeria for polymer bank notes. I would never have agreed to sign the termination document without the promise of a new agreement, and I relied on that promise when signing the termination letter.
10.7 I believed that signing the termination document was entirely routine and that it would lead to the conclusion of the long-awaited progression to the construction of a polymer production facility in Nigeria. As set out above, that was the basis upon which polymer notes were adopted in Nigeria. I believed that the imminent production of polymer notes in Nigeria would provide the significant benefits to Nigeria that I had originally envisaged. It would also provide the significant return on investment for me or one of my nominees, again, as I (along with Securency) had always envisaged by Securency.
10.8 I recall that Mr Chapman said to me:
“If you are OK with the new agreement can you initial it, and I will take it back to Australia and get it signed there.”
10.9 I recall that I initialled the new agreement at that time and handed it to Mr Chapman.
10.10 I did not have the ability to photocopy the new agreement or the signed termination letter in my house. I recall Mr Chapman saying to me:
“Your driver can come to my house and collect a copy of them tomorrow.”
10.11 Throughout my relationship with Securency this was the scenario that I had consistently been met with. That is, Securency would produce an unsigned document for me to sign, and I would sign first. The document would then be returned to Securency to be countersigned.Dr Berry, did he show you show any documents?---Yes. He showed me the two documents. One was an agency termination, which he said, “We’ve got to – this is routine. We have to bring this to an end before the – the partnership agreement can be put into place. This is the partnership agreement that has been drafted by the lawyers in Australia.” So all I needed to do was to sign it and – and they would take it back and go through the normal routine of endorsing it and sending it back to me. (T127.42-47 29/08/17)
And, Dr Berry, did Mr Chapman say anything to you about the topic of your commission payments? ---Yes, very distinctly. He said that this was – when he asked me to – to sign the termination – I think that’s what you’re referring to – he said to me that this is – this is routine and this does not affect our agreements in any way whatsoever for the continuing supply of – of polymer. (T129.37 29/08/17)
Second Representation Evidence Pleading
2FASOC [26B]: At the time of handing the First Applicant the New Agreement, Mr Chapman on behalf of the Respondent said words to the effect:
“If you sign this now I will take it back to Australia and have it executed by Securency straight away”.
[Unparticularised in Pleading]Do you recall what you discussed while you were eating lunch?---Yes. While we were eating lunch we spoke about the technology transfer, and he had said to me very clearly that he has got some documents with him, which he would show me as soon as we had finished with lunch, that had been drafted by lawyers in Australia, and we eventually would be able to move forward on the partnership and the opacification plant. (T127.24-29 29/08/17) Do you recall what happened when you finished eating lunch?---Yes. We – we had lunch in the conservatory and we left and got up and went into the study, after washing our fingers and things, and that’s where we sat down to discuss matters that Peter had said to me he had discussed with the Governor in – in Nigeria, and that was his urgency because he wanted me to sign off on – on both the documents so we could have this put in place very quickly. (T127.35-40 29/08/17)
Dr Berry, did he show you show any documents?---Yes. He showed me the two documents. One was an agency termination, which he said, “We’ve got to – this is routine. We have to bring this to an end before the – the partnership agreement can be put into place. This is the partnership agreement that has been drafted by the lawyers in Australia.” So all I needed to do was to sign it and – and they would take it back and go through the normal routine of endorsing it and sending it back to me. (T127.42-47 29/08/17)
Dr Berry, just focusing, if you can, on the document that you were shown – that you say you were shown on 24 February – can you recall – well, first of all, can I ask you this. Do you still have a copy of that document in your possession?---No. I – I signed it and gave it back to Peter, as is normal.
When you say “as is normal”, what do you mean by that?---Normally all documents would be – would be drafted by lawyers in Australia. I would then look at it, sign off on it. It would go back to Australia where it would be endorsed to signing, then sealed and sent back. (T128.32-40 29/08/17)
In cross-examination in relation to the Renewal Representation, Dr Berry gave evidence that Mr Chapman had said that “our existing terms would continue” (T154.37 29/08/17). By this he meant “under the new agreement” (T154.40), but he drew an apparent contrast between these terms (of a proposed renewal agreement) and the partnership agreement which was “different in every respect” from his existing Agency Agreement (T155.37-38 29/08/17; see also T156.3 29/08/17).
In cross-examination in relation to the Second Representation, Dr Berry gave the following evidence (T152.22-28 29/08/17) as to the partnership agreement:
[Counsel for Securency] And that. Dr Berry, is because it [that is, the partnership agreement] does not exist, does it? It is a figment of your imagination, to put it kindly?—The document I signed was not the same document that’s here. I signed a document, gave it back to Peter, and Peter was going to give it on to get to Australia. Hugh was travelling to Australia; he was going to carry it. There were some issues that we needed to discuss on that, which I thought were longer issues. As soon as the document got to Australia, we would begin discussions.
Somewhat surprisingly in the light of this evidence, later evidence given by Dr Berry was that the partnership agreement was a draft that could be “corrected or modified” (T169.13-18 29/08/17) and required a final sign off by all parties (T169.18 29/08/17; T169.41-44 29/08/17); indeed it was said to be “incomplete” in fundamental respects (T169.46-170.3 29/08/17), and “fundamentally deficient” for Dr Berry’s purposes (T171.11-16 29/08/17). Further confused and confusing aspects of the evidence of Dr Berry concerning the partnership agreement will be examined in detail below.
C.4 The Findings as to the February Meeting
In making the central findings that the representations were conveyed, his Honour referred to earlier factual findings he had made at J[184]-[189] which, given their importance, are worth setting out in full (other than internal references). At the risk of stating the obvious, in reading these paragraphs it is important to bear in mind that the “second document” to which his Honour refers, is the partnership agreement:
Dr Berry’s account of the discussion at his home on 24 February 2008 was as follows. He said that the two men ate an Indian lunch in the conservatory of his house. He said that they spoke over lunch about the technology transfer, involving the construction of an opacification plant in Nigeria. Mr Chapman told Dr Berry that he had brought some documents with him, drafted by lawyers in Australia, that he would show Dr Berry once they finished lunch and that “we eventually would be able to move forward on the partnership and the opacification plant”.
Whe[n] they finished lunch, Dr Berry said they sat down to discuss matters that Governor Soludo and Mr Chapman had spoken about in Nigeria which made it urgent that Dr Berry sign both the documents Mr Chapman brought “so we could have this put in place very quickly”. He said that Mr Chapman:
showed me the two documents. One was an agency termination, which he said, “We’ve got to ... this is routine. We have to bring this to an end before the partnership agreement can be put into place. This [being the second document] is the partnership agreement that has been drafted by the lawyers in Australia”. So all I needed to do was to sign it and they would take it back and go through the normal routine of endorsing it and sending it back to me. (emphasis added)
Dr Berry said that Mr Chapman told him that their existing financial terms would continue. Dr Berry said that after they had chatted for 30 to 45 minutes he signed the termination letter in the form set out at [13] and [183] above. He said that the second document was not like the draft memorandum of understanding described at [150] above but that “I signed it and gave it back to Peter, as is normal”. He said that normally lawyers in Australia had drafted documents that he “would look at …, sign off on it. It would go back to Australia, where it would be endorsed by signing, then sealed and sent back” to him. Dr Berry described the second document as follows:
The content of the document … was dealing specifically with how we were going to proceed with the partnership agreement and how we were going to lay the foundations of the opacification plant. It also dealt very clearly with the fact that the Reserve Bank of Australia was not going to participate … in investing in Nigeria and would not want a share of this, but they would instead want to get a royalty on every substrate … that was supplied and then pacified.
Dr Berry said that he did not read the second document, but only flicked through it and that it “must have been about 35, 40 pages”. He looked for the parts that dealt with the technology transfer, its timing and “what our total investment was going to be”, while chatting with Mr Chapman “about all sorts of things”, including “how soon we can get this in place” and why the second document provided that the price that he or GSC would be investing for constructing the opacification plant had increased to USD35 million. He said that “about 15, 20 minutes” after Mr Chapman handed the second document to him, he “would have ... signed it”.
Dr Berry said that Securency would supply the Nigerian opacification plant with the polymer film (hence, as I understood him, the RBA as a joint venture partner in Securency would benefit from that sale). After opacifying the polymer, the plant would supply that (substrate) product to the Mint, so that it could print polymer banknotes that the CBN had ordered. He then gave this evidence in chief:
And, Dr Berry, did Mr Chapman say anything to you about the topic of your commission payments? --- Yes, very distinctly. ... when he asked me to sign the termination ... he said to me that ... this is routine and this does not affect our agreements in any way whatsoever for the continuing supply of polymer. (emphasis added)
Dr Berry said that he had no copying facilities at his home and Mr Chapman was to send a copy of the second document back to him the next day. He denied fabricating his evidence about the existence of that document and what he did in relation to it at the meeting on 24 February 2008. He said that subsequently he had not demanded that Mr Chapman provide him with a copy of the second document “because that was not how I communicated with Peter”. Indeed, when challenged that he had not ever written to Mr Chapman asking for a copy of the second document, he said that since meeting Mr Chapman in 2000 and up to 2008, “I had never written to him and asked him for any document”. I accept Dr Berry’s evidence that in giving those answers, he understood (as did I) that he was being asked about writing a letter. He accepted that he had made requests for documents in text messages but said, “It’s not writing”. And, based on Dr Berry’s past experience of Securency taking its time to finalise, execute and return the agency agreement and Mr Chapman’s reference to the “routine” nature of what he was doing at Dr Berry’s home on 24 February 2008, I accept that Dr Berry handed over the signed second document without taking a copy or feeling perturbed that he did not receive a copy soon after...
(emphasis in original)
Having identified the pleading and particularisation of the representations, the evidence adduced, and the adjectival findings made by the primary judge, it is next appropriate to identify the principles informing how his Honour was to approach the task of determining whether Dr Berry and GSC had established that one or other of the representations were made and that they were wrongful.
It is important to recall that this process logically involves two stages: first, what were the relevant facts or circumstances (in this case, most critically, what happened at the February Meeting) and secondly, the consideration as to whether conduct as found to have occurred has a particular character. Whether conduct is misleading or deceptive is a question of fact to be determined in the context of the evidentiary findings as to the alleged conduct and all relevant surrounding facts and circumstances: Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177 at 199 per Deane and Fitzgerald JJ. In this regard, as French CJ noted in Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 at 319 [26], characterisation of the conduct proceeds by reference to the circumstances and context of the questioned conduct as found (including the state of knowledge of the person to whom the conduct is directed, to the extent relevant).
Although in this case his Honour found fraud, that legal characterisation is also one which is based on the logically anterior step of identifying what actually occurred.
Many misleading and deceptive conduct cases are less about what occurred but rather the proper characterisation of conduct; as no doubt by now is already evident, this is a case which turned on what actually occurred and, more specifically, on his Honour’s central findings as to what was conveyed.
C.5 The Principled Approach to Fact Finding
The relevant principles are well-established, not in dispute and were referred to by the primary judge, but it is worth revisiting them given both their importance to the consideration of the appeal and the submission that his Honour could not have reached the requisite level of satisfaction so as to sustain the findings made if those principles were applied properly (see Grounds 1 and 8 dealt with at C.14 below).
After referring to the very significant effluxion of time since the February Meeting and the tendency of persons to view past events more favourably to their own interest than a detached observer, his Honour directed himself to the seminal caution of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 as to proof in a case where reliance is placed upon spoken words as making out a case of misleading and deceptive conduct. At 318-319, the Chief Judge in Equity explained, in an oft-quoted passage:
Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously described [sic] as “misleading”) within the meaning of s 52 of the [TPA]…, it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.
Each element of the cause of action must be proved to the reasonable satisfaction of the court, which means that the court “must feel an actual persuasion of its occurrence or existence”. Such satisfaction is “not ... attained or established independently of the nature and consequence of the fact or facts to be proved” including the “seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding”: Helton v Allen (1940) 63 CLR 691 at 712.
Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of a causes of action based on s 52 of the [TPA] ... in the absence of some reliable contemporaneous record or other satisfactory corroboration.
(emphasis added by primary judge)
The primary judge then made reference to the truth that a mere mechanical comparison of probabilities, independent of any belief in the reality of a fact, cannot justify a finding that it occurred: see Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia v Australian Competition and Consumer Commission [2007] FCAFC 132; (2007) 162 FCR 466 at 479-482 [29]-[38] per Weinberg, Bennett and Rares JJ.
It is worth pausing to state that the central task for the primary judge on liability was assessing whether Dr Berry and GSC had proved, on the evidence adduced, that the pleaded contravening conduct had occurred in accordance with s 140(1) of the Evidence Act 1995 (Cth) (EA). Relevantly, in doing so, the court was to take into account: (a) the nature of the cause of action; (b) the nature of the subject-matter of the proceeding; and (c) the gravity of the matters alleged. These mandatory considerations specified in s 140(2) of the EA reflect the need to be mindful that the more serious the allegation or the consequences of what is contested, the more a court will have regard to the strength and weakness of evidence in coming to a conclusion: Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia at 480 [30]. Additionally, as the primary judge recognised, a party bearing the onus will not succeed unless the whole of the evidence establishes a reasonable satisfaction on the preponderance of probabilities such as to sustain the relevant issue (Axon v Axon (1937) 59 CLR 395 at 403 per Dixon J); and the “facts proved must form a reasonable basis for a definite conclusion affirmatively drawn of the truth of which the tribunal of fact may reasonably be satisfied”: Jones v Dunkel (1959) 101 CLR 298 at 305 per Dixon CJ.
Hence the usual difficulties of proof for a party relying upon spoken words as the foundation of a cause of action alleging misleading conduct to which McLelland CJ in Eq referred, inform the consideration as to whether the evidence forms a basis upon which actual persuasion of a definite conclusion can be affirmatively drawn.
C.6 Factors Relevant to Actual Persuasion and Approach to Assessing Error
While making no complaint as to his Honour’s identification of the principled approach, Securency point to a number of matters which it contends undermine the central findings to such an extent that, notwithstanding the primary judge’s advantages, the proper application of principle should have prevented the primary judge being satisfied the representations had been made and hence the primary judge’s conclusion to the contrary is demonstrably wrong. These seven matters are set out below.
First, when attention is directed to Dr Berry’s oral evidence as set out above, taken at its highest, it was not capable of supporting the making of the pleaded case as to the making of either the Renewal Representation or the Second Representation (Ground 1).
Secondly, an adverse inference as to Dr Berry’s credibility was not drawn notwithstanding “multiple and radically inconsistent accounts” of the February Meeting contained in different iterations of the pleadings and particulars (Ground 3).
Thirdly, the primary judge did not sufficiently take into account the fact that, as was found at J[20], Dr Berry had lied in his evidence about visiting Nigeria in the period between mid-2006 and mid-2010 (Ground 12).
Fourthly, it is said Dr Berry’s account was uncorroborated by contemporaneous documents, including various SMS messages following the February Meeting, and was implausible in a number of respects (Grounds 14 and 27).
Fifthly, contrary to the primary judge’s finding at J[309], there were entirely rational reasons why Dr Berry would agree to the termination of an agreement that could be terminated without cause on 60 days’ notice (Ground 19).
Sixthly, there are numerous attacks made by Securency relating to what are said to be errors colouring the assessment of the credibility of Mr Chapman (Grounds 5, 6, 13, 17, 18, 20, 21, 22, 23, 24, 25 and 26).
Seventhly, even assuming the primary judge’s adverse assessment of Mr Chapman’s credibility was not undermined by error, it is said the primary judge fell into error (at J[35]) because he held that Dr Berry’s evidence should be accepted as reliable and truthful because Mr Chapman lacked credibility (Ground 2).
We will deal with each of these seven contentions in turn in C.7 to C.13 below. It is necessary to stress at the outset, however, that each ground has a common thread: each error is said to directly or indirectly undermine the “comfortable satisfaction” of the primary judge as to the central findings. However, Securency does not place all its eggs in one basket: it contends that although a particular ground may not be fatal to the central findings when considered in isolation, it may, when combined with other factors, reach a level where error is established (Grounds 1 and 8). It follows that it is necessary, in C.14 below, to consider the combination or culmination of factors identified to the extent they have some substance.
C.7 The Pleaded Representations and the Evidence Adduced
As is already evident from the table reproduced at [35] above, there are differences between the particulars provided for the Renewal Representation and the evidence adduced from Dr Berry orally. Although these particulars were not subjoined to 2FASOC [26B], which was the paragraph pleading the Second Representation, the relevant paragraphs particularised in relation to 2FASOC [26], were sufficiently broad so as to notify the evidence that was to be adduced in support of the Second Representation.
It will be necessary to refer to the significantly different accounts given as to both representations in C.9 below, but the present issue is whether the factual findings at J[184]-[189] (reproduced at [39] above) are consistent with the ultimate pleaded case and whether the oral evidence given by Dr Berry, taken at its highest, was capable of making that case out. That is, whether the evidence adduced could ground the findings that the pleaded representations were made. This is a logically distinct question as to whether his Honour should, given the balance of the other evidence and the other matters raised by Securency, have reached a level of reasonable satisfaction as to whether one or other of the pleaded representations were conveyed.
In considering this issue it is appropriate to deal with each representation separately.
As to the Renewal Representation, although the evidence in the witness box was not expressed with anything like the clarity particularised, if the evidence identified in the table reproduced at [35] above was accepted, it was open to find that Mr Chapman said to Dr Berry that what was happening was routine, that the termination letter had to be signed before other arrangements were put in place, and nothing about what was occurring would affect his entitlements to commission to the extent he was entitled to it under the Agency Agreement. What was being conveyed, in substance, was that if Dr Berry and GSC agreed to terminate the Agency Agreement, the existing terms would continue pursuant to the terms of some form of new arrangement between the parties reflected in a renewal agreement. If accepted, this was sufficiently similar to what was pleaded in the 2FASOC at [26], to make out the Renewal Representation, and was not undermined by the evidence given in cross-examination; indeed, Dr Berry was clear that the existing terms (including, importantly, as to commission) would continue (see [36] above). Contravening conduct was capable of being found, depending upon whether his Honour was able to be satisfied that the evidence of Dr Berry should be accepted.
As will be explained in detail in C.8 below, the relationship between the foreshadowed renewal agreement and the partnership agreement caused some confusion and, at times, the cross-examination is difficult to follow. The evidence at trial was that the partnership agreement, drafted by lawyers in Australia, dealt with the establishment in Nigeria of an opacification plant and also dealt with how the Reserve Bank would be entitled to a royalty on substrate supplied and opacified (T127.45; T129.15-23 29/08/17). The partnership agreement would be sent to Australia for signing, then sealed and sent back to Dr Berry (T128.39-40 29/08/17).
The primary judge did not find that the Second Representation was conveyed as pleaded. What his Honour relevantly found (at J[303]-[304]) was three things. First, that a representation was conveyed that if Dr Berry signed a memorandum of understanding or partnership agreement for the goal of establishing an opacification plant in Nigeria prepared by Securency, Mr Chapman would cause it to be sent to Securency in Australia and it would execute that document. Secondly, it was then said that this representation was materially to the same effect as the Second Representation as pleaded (which his Honour had defined, in an attempt to avoid the confusion introduced by the pleading, as the “opacification plant representation”). Thirdly, the primary judge then explained that the reason why the representation conveyed was materially similar was because Mr Chapman proffered the partnership agreement as being:
…prepared by Securency (and thus an offer capable of acceptance by Dr Berry and GSC) which, if Dr Berry (and GSC through him) accepted it by signing it, Securency would formalise in due course – as a matter of “routine” – by executing it. This occurred in the context in which Mr Chapman also persuaded Dr Berry to sign the termination letter, namely that the two men were engaged in a bit of “routine admin”. Dr Berry had for the preceding four years been seeking, as had the Nigerian authorities from President Obasanjo down (including Governor Soludo), that Securency agree to Dr Berry (and GSC), with or without Securency itself participating, arranging the construction and operation of an opacification plant in Nigeria. Mr Brown and Dr Berry had met Governor Soludo in late November 2007, when he had insisted, forcefully, that he wanted Securency to act on the matter of the opacification plant.
Despite the confusion in the evidence and the fact that Dr Berry did not come up to his proof in all respects, his evidence, taken in isolation, was capable of supporting a finding that a representation similar to the Second Representation was made.
It follows that Dr Berry’s evidence was capable of making out both representations. Whether his Honour should have accepted that evidence as to one or other of the representations, is the subject of consideration below.
C.8 The Evolution of the Relevant Allegations
Leaving aside the disparity between the way in which the representations were particularised and the oral evidence adduced by Dr Berry, Securency submits that a “major error underpinning the judge’s purported attaining of the requisite degree of satisfaction” was the failure to draw a significant adverse inference as to Dr Berry’s credibility and the likelihood of the representations as pleaded having been made from what are described as “the multiple and radically inconsistent accounts” of the February Meeting, and the inconsistency in turn between those versions of events and Dr Berry’s oral evidence in chief. In assessing this submission, it is necessary to wade into the detail of the evolution of the relevant allegations.
First, in the statement of claim filed in December 2013 (SOC), in contrast to the notion advanced at trial that Dr Berry signed the termination letter and reviewed and then signed the partnership agreement at the February Meeting, it was not alleged that any document was signed. Moreover, it was asserted that Mr Chapman brought no documents with him to the February Meeting. The particulars subjoined to SOC [27] were:
Mr Chapman attended [Dr Berry’s] house and said words to the following effect. “We are in the process of carrying out some internal house-keeping on our agency agreements. It’s something the lawyers want to do. We will issue a new agreement to you this week on the same terms but before the agreement can be replaced we need you to first agree to terminate your current agreement. I have forgotten the letter of termination which you must sign and return to us but I will email it to you later. When we receive the signed termination, we will forward the new agreement to you for signing.”
(emphasis added)
Additionally, the first version of the case proceeded on the basis that it was the renewal agreement that was the only “new agreement” that was spoken about: see the particulars subjoined to SOC [31].
Secondly, in the amended statement of claim filed in February 2014 (ASOC), Dr Berry and GSC added to the particulars of the same averment (by then ASOC [26]) a reference to a letter from Mr Chapman to Dr Berry dated 16 March 2008. However, this letter does not refer to any agreement being signed. The particulars of the only representation then pleaded, being the Renewal Representation, were otherwise identical to that in the SOC (extracted at [67] above).
As can be seen, confusingly, there was only one “new agreement” spoken about, being the proposed renewal agreement.
Thirdly, by the time a further amended statement of claim was filed in December 2015 (FASOC), the reference to the 16 March 2008 letter was deleted. The allegation was transformed to Mr Chapman bringing two copies of the “new agreement”, which was said (at particulars to FASOC [26]) to be on “substantially the same terms as your current agreement”, and (at FASOC [26B]) Mr Chapman saying that “[i]f you sign this now I will take it back to Australia and have it executed by Securency straight away”. The particulars to [26] were also to the effect that Dr Berry did not execute the termination letter at this meeting, rather Mr Chapman told Dr Berry that he “must sign and return [the termination letter] to us. When we receive the signed termination, we will forward a signed version of the new agreement to you”. It was contended by the particulars subjoined to FASOC [26D] that one copy of the “new agreement” was given to Mr Chapman at the time of the execution by Dr Berry and the second copy was couriered to Securency in Australia shortly thereafter. It was also the FASOC that introduced (at [26E]) the notion that the “new agreement” was some form of partnership agreement, but in the following terms:
To the best recollection of [Dr Berry] the New Agreement provided for a continuation of the Agency Appointment of [Dr Berry] and the Technical Partner Appointment of [GSC] and further provided for the transfer of the technology required to manufacture the product to [Dr Berry and GSC] under license (sic) on an indefinite profit sharing basis.
Fourthly, in the 2FASOC, filed in December 2016, this allegation again changed by the deletion of reference to the “continuation of the Agency Appointment” of Dr Berry and the “Technical Partner Appointment” of GSC, and it was no longer asserted that the partnership agreement provided for the transfer of technology but the somewhat different allegation that the parties would “work towards” the transfer of technology. Given the particulars, however, the case had now developed to assert that the partnership agreement dealt with both “the transfer of technology to Nigeria and the development by Nigeria of a polymer production industry”.
Fifthly, as seen above, the oral evidence given at trial varied, and varied significantly, from the account of the meeting particularised in the 2FASOC.
The nature of the allegations, the fact the allegations were settled by lawyers, and the fact the instructions as to what occurred at the February Meeting could only come from Dr Berry, was relied upon by Securency as demonstrating the changing, imprecise and inconsistent account of Dr Berry and it was submitted that this undermined the ability of his evidence to be accepted.
The primary judge rejected this argument at J[198]-[202] and, in doing so, made the following points:
(1)that the cross-examination of Dr Berry on the inconsistencies between the SOC, the ASOC, the FASOC and the 2FASOC proceeded on a false premise, being that each pleading was “in some way an admission and that Dr Berry was the author, or had settled, or had approved, the terms of those pleadings” and that no suggestion was put that Dr Berry had ever seen any of the various versions or approved their contents, making the cross-examination on the topic purposeless;
(2)Dr Berry spoke to his in-house counsel “on a less than satisfactory Skype communication”, and his Honour was “not satisfied that Dr Berry ever saw, settled or approved any of the statements of claim on which he was cross-examined”, and that there was “no evidence that he did”;
(3)that Dr Berry did not pay close, if any, attention to documents that he understood had been drafted by persons whom he trusted, and a person such as Dr Berry would “adopt, most likely, the lawyer’s phraseology because of a natural deference to the professional’s way of doing things” without appreciating the significance of such an adoption;
(4)that unverified pleadings are not admissions, relying on the observations of Mason CJ and Brennan J in Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 85-86.
With respect to the primary judge, this response does not completely capture the point that was being made by Securency. It may be accepted that various versions of the pleadings and particulars do not amount to admissions in the strict sense, but they were, however, significantly different versions of the central event in the case, being what happened at the February Meeting, which demonstrated, it was contended, that Dr Berry’s recollection of the detail of that event was hopelessly insecure and inconsistent.
As can be seen from the reasoning summarised above, what the primary judge concluded was not that various, inconsistent accounts were not advanced, but rather that they should not be attributed to Dr Berry as reflecting his instructions from time to time. This is because there was no evidence he saw or settled them, and because the pleadings were, in effect, “lawyers’ documents”. The conclusion that the conflicting accounts advanced of the February Meeting did not reflect significantly upon the cogency of Dr Berry’s account at trial requires some examination.
It might be thought that the notion that pleaded inconsistent accounts should not be attributed to Dr Berry is a somewhat surprising conclusion. Dr Berry and GSC were represented at all times by experienced counsel, including senior counsel. As Dr Ward SC said in submissions on the appeal, although the word fraud was never expressly pleaded in any version of the pleading, “(t)here was undoubtedly always an allegation of misconduct” and senior counsel accepted that at all stages of the proceeding Dr Berry was maintaining an allegation of serious misconduct (see T161.8-19 21/02/19).
The professional conduct rules during the period spanning the evolution of the allegations made by Dr Berry were in a state of flux, but under Rules 63 and 64 of the New South Wales Barristers’ Rules of 2011 or 2014 or later under Rules 64 and 65 the Legal Profession Uniform Conduct (Barristers) Rules 2015, no allegation of fact in any court document settled by the barrister could be made unless the barrister believed on reasonable grounds that the factual material already available provided a proper basis to do so. Moreover, as to allegations amounting to serious misconduct against any person, it was necessary for the barrister to believe on reasonable grounds that: (a) available material by which the allegation could be supported provided a proper basis for it; and (b) the client wished the allegation to be made, after having been advised of the seriousness of the allegation and of the possible consequences for the client and the case if it was not made out.
In these circumstances, there is some force in Securency’s contention that the Court ought to proceed on the basis that the various versions pleaded and particularised reflected Dr Berry’s express instructions from time to time, particularly given that: (a) there was (and could be) no dispute that Dr Berry was the only source of instructions; and (b) there was no suggestion that counsel and the solicitors acting in the proceeding for Dr Berry and GSC did not discharge their obligations in drawing and settling the pleadings conscientiously. Put another way and more directly, Securency’s submission is that Dr Berry’s recollection of what occurred at the February Meeting must have changed very significantly, and that this conclusion must arise by commonsense inference drawn from the certification accompanying each iteration of the pleading.
Although the submission of Securency has initial attraction, on close examination, we are not satisfied error justifying intervention is demonstrated in the way the primary judge dealt with the inconsistent pleaded accounts considered in isolation. This requires consideration of some evidence not canvassed in submissions made on the appeal as to how Dr Berry gave instructions to Mr Wole Adebayo, his “in-house” counsel (T144 29/08/17). Mr Adebayo, a peripatetic figure, primarily based in Nigeria, but with residences in the United States and in the United Kingdom and a frequent traveller to Australia, appears to have played a central and somewhat unusual role in providing instructions for the pleadings.
After Dr Berry was taken to the particulars of the pleading of the Renewal Representation in the SOC, the following cross-examination (by senior counsel then appearing) occurred (T148-149 29/08/17):
Just read those words to yourself and tell his Honour whether that’s, in fact, what Chapman said on 24 February 2008?---Not – those are not exactly the same words.
Those are not the words he said?---Not exactly.
Do you know how those words came to be placed in quotation marks and in italics under those particulars?---Over a long distance call on Skype.
So you dictated them, did you, to someone on a Skype telephone call in 2013; is that right?---I don’t know if I dictated them, but this is what I said, more or less.
And when you were on this call you were giving that person your best recollection of what Chapman had said to you; is that correct?---Yes.
And there’s no doubt there was only meeting at your house in late-2007 or early-2008? [sic] It’s the one of which you’ve given evidence today; is that correct?---That’s correct.
And you were doing your best, on the occasion of this Skype call, to recollect, to the best of your recollection, what happened on that occasion; is that correct?---No. I was doing my best to be understood on the Skype call.
Were you or were you not doing your best to give your best recollection of what happened in the call?---I didn’t need to do my best to give my best recollection. I had a very clear recollection of what happened. I was doing my best to be heard on a Skype call.
Nevertheless, you now consider that what is written here is not, in fact, what Chapman said to you; is that your evidence?---In – in exact words, no.
When did it first occur to you that this is not what Chapman, in fact, said?---When I was told that I had to be absolutely accurate in every word that was being said and not – and not the principle of what was being said. I was required to now go back and think about each and every word that was said; not the principle of what was said.
And when were you told to be absolutely accurate in every word that was said?
DR WARD: I object, your Honour. We’re getting perilously close to privilege.
[COUNSEL]: When can’t be a privileged occasion, your Honour. The witness has given evidence this is what was said to him. There was no objection to that. I’m just asking him when. That’s not a privileged subject.
HIS HONOUR: I will allow that.
[COUNSEL]: When was that said to you, Dr Berry?---During the course of this – during the course of this case.
Well, can you put a year on it? This case has been going, now, for four years. What year was it?---I’m not entirely certain, but it would have been said to me by Wole Adebayo that I had to be a little more specific.
And you can’t tell his Honour when Adebayo told you that?---No – no. I can’t recall.
Not even the year?---No, I wouldn’t be able to recall the year.
Not even the year?---No.
Later, when being cross-examined about the FASOC, the following evidence was given by Dr Berry (T153 29/08/17):
[COUNSEL]: …Is it your evidence that in December 2015, when this version of your claim was produced, you knew that this event happened in February twenty – 2008? Is that true?---I knew that it had happened around the – the 24th, 25th, somewhere round then. Yes.
You will see in the particulars under this version of the representation, Dr Berry, the words have now changed. Do you see the changes? They’re marked up in this version. Some words have been struck out, and some words have been added. The added words have underlining. When did you decide to change the words which you would attribute to Mr Chapman at this discussion?---Throughout this – throughout this period, I was – I was working through Wole Adebayo, who was coming in and out of Australia. I was talking over – over Skype calls and long-distance calls. So that is – and as far as I was concerned, there was no – if – if the material of the case was not – was not being changed in any way, then the fine details were something that – that I would leave to Wole Adebayo to sort out.
So you left it to Adebayo, did you, to draft the words that you were going to attribute to Chapman? Is that your evidence?---No.
So these are your words spoken to Adebayo; do you agree? You told Adebayo what Chapman had said to you; do you agree?---Yes. I remember saying to Wole Adebayo that as far as I was concerned, what Chapman had said to me was very clear.
Well, it was very clear in 2013, when this began; is that right?
DR WARD: I object.
THE WITNESS: Yes.
[COUNSEL]: And it’s different in 2015, two years later, when these changes are made; is that right?---The – the words that were decided by Wole Adebayo to – to represent what I was saying was different. Yes.
So these are Adebayo’s words in the particulars, not your words; is that your evidence?---Yes.
When it came to the last version of the pleading, the 2FASOC, the following evidence was given by Dr Berry in cross-examination (T159-160 29/08/17):
Now, turn to the last version of your claim… your second further amended statement of claim, dated 20 December 2016… you will see the changes that have been made between the version we have just looked at and a version which is your claim for the purposes of this case, Dr Berry…do you see that?---Yes, yes.
And then, paragraphs follow in connection with this new agreement that was supposedly handed to you on 24 February 2008. And then, if you look at paragraph 26D on page 49, you allege – you change the allegation about the copies, plural.
You say: Following execution of the new agreement by the first applicant, it was provided by the first applicant to Mr Chapman and the respondent for execution in Australia.
And the particulars have been changed again. You’ve removed the reference to the existence of two copies. You refer now only to the new agreement, one document, and that’s because you wanted to change your case back to there only ever having been one copy of this document in existence ever; correct?---I wasn’t trying to change any evidence. I was just being more specific. I had – I had found my old telephone, gone through some messages. I discussed it with Wole Adebayo and he said, look we must put this in. We were most specific on the date on which our meeting actually happened. Even though I could have worked it out on my passport and things, I had just not got down to doing that, and we were – and I remember very clearly that there was just one copy that I had signed; I would not sign two drafts and give them back. So I was asked to be more specific and say yes, there was only one copy….
That’s the same story you gave in relation to the last version of your statement of claim. So why was there a need to change these particulars?---Well, I was told by – when I sat down with Wole Adebayo and we were looking at this, and he said, “Look, just be a little bit more specific can you, please, Dr Berry?” And I said yes, sure.
So this change was made by Adebayo, was it?
DR WARD: I object.
THE WITNESS: It was made by me, but ---
DR WARD: I object, your Honour.
HIS HONOUR: Well, just a second.
DR WARD: I’ve been pretty generous, but I’m not going to allow purely privilege matters at this late stage of the preparation of the case to be led.
After this objection and a subsequent explanation of legal professional privilege given by the primary judge to Dr Berry, the cross-examination did not focus closely on what exactly was conveyed by Dr Berry to those preparing the various versions of the pleading either directly or through the involvement of Mr Adebayo; nor did it seek to pin Dr Berry down to having either seen or approved the versions of his case being put forward by his lawyers on his behalf.
Questions by the cross-examiner could have explored precisely what Dr Berry knew about what was being conveyed on his behalf at material times and as to whether the various versions reflected his considered recollection at various times. Properly framed, such an exploration could not have been resisted by a privilege claim. But this was not done, or at least done in a detailed way. It was for this reason that his Honour concluded the cross-examination on this topic was purposeless.
Although it is plain on the evidence extracted above that Dr Berry’s recollection at trial provided very considerable scope for a properly directed attack being made upon his credit, following a review of the transcript, it remains somewhat opaque as to what occurred precisely in relation to the conveyance of instructions to the Australian lawyers and the extent to which the pleadings produced by them reflected Dr Berry giving them a full and considered account of what occurred at the February Meeting. Although the apparent extent of involvement of Mr Adebayo in the particularisation process might be thought, prima facie, to be somewhat odd and the pleading of the allegations was less than adroit, there is no reasonable basis to suggest that those acting for Dr Berry and GSC did not subjectively consider that they had proper instructions to make the allegations that were made.
Although the primary judge was faced with a final pleading materially different to what had preceded it, his Honour noted Dr Berry gave evidence that he had “found my old telephone, gone through some messages. I discussed it with Wole Adebayo and he said, look we must put this in” (T160.14 29/08/17). In the course of submissions on the appeal, Dr Berry and GSC placed some reliance on this finding, noting that Dr Berry’s outline of evidence and the final version of the pleading was finalised in late 2016, after text messages had been recovered. No significance can be attached to this submission. The difficulty, to which we will return, is that there is nothing in the text messages which provides any direct corroboration of Dr Berry’s account as to the signing into the partnership agreement, and no text message is pointed to which provides any foundation for the final versions given by Dr Berry and explains why his memory was refreshed leading to an identified change in his account.
Notwithstanding this, Securency has failed to establish that it was not open for the primary judge to find that Dr Berry failed to pay close attention to documents drafted by persons whom he trusted, and that it was likely he adopted his lawyer’s phraseology because of a natural deference to the professional’s way of doing things. Once this is accepted, the existence of significantly different versions of what happened at the February Meeting does not, in and of itself, mean that Dr Berry’s recollection of the detail of that event in his oral evidence was not open to acceptance by the primary judge.
There is no doubt, however, that what occurred in relation to the evolving pleadings is disconcerting, and we will return to it at C.14 below.
C.9 Issues Relating to Dr Berry’s Credit
Reference has already been made to the favourable view the primary judge formed as to the general creditworthiness of Dr Berry. His Honour formed this view notwithstanding he found (at J[20]) that Dr Berry lied in his evidence about visiting Nigeria in the period between mid-2006 and mid-2010 and that he fashioned his evidence deliberately to create the false impression that a commercial and legal dispute with the Nigerian Government in which he was involved had not created any problem for him in visiting that country and performing his role as Securency’s agent.
Securency’s argument has two aspects: first, and most obviously, that this lie should have caused the primary judge to have grave suspicions about the veracity of Dr Berry and meant he should have rejected his evidence generally; and secondly, it should have caused his Honour to find that Dr Berry’s inability to travel to Nigeria provided a practical reason why acknowledging termination of the Agency Agreement was explicable and not irrational. It is convenient to deal with the second aspect of this argument in C.11 below, and focus presently on why the contention that his Honour failed to take sufficient account of the lie in forming his ultimate conclusion as to Dr Berry’s credit must be rejected.
It is not as if the primary judge was not sensible to the lie and its potential significance. Indeed, it is the first aspect of the evidence he dealt with when it came to addressing the general topic of credibility of witnesses. After noting his conclusion that in general he found Dr Berry to be an honest witness (at J[19]), his Honour turned to his “concern” relating to Dr Berry’s lie and highlighted that the lie related to an important issue (at J[20]), being Dr Berry’s capacity to act as an agent when he could not visit the principal area of his agency. Notwithstanding this, his Honour (at J[21]) did direct himself to: (a) assessing Dr Berry’s evidence and his credibility in the light of his preparedness to lie in the witness box; and (b) the importance of credit given the want of contemporaneous records, but notwithstanding these considerations made the finding that he accepted Dr Berry’s account (at J[22]).
It has been a long time since the maxim falsus in uno, falsus in omnibus (false in one thing, false in everything) was part of the common law, its broad applicability having been rejected long ago (including by no less a judge than Lord Ellenborough CJ in R v Teal (1809) 11 East 307; 103 ER 1022). It is trite that the tribunal of fact (be it a judge or jury), having seen and heard the witness, is to decide whether the evidence of the witness is worthy of acceptance and this may involve accepting or rejecting the whole of the evidence, or accepting some of the evidence and rejecting the rest: Cubillo v Commonwealth [2000] FCA 1084; (2000) 103 FCR 1 at 45-47 [118]-[123]; Flint v Lowe (1995) 22 MVR 1; and S v M (1984) 36 SASR 316. It is for this reason a jury is directed that they may accept some parts of a witness’s evidence, but not other parts: Dublin, Wicklow & Wexford Railway Co v Slattery (1878) 3 App Cas 1155. This reflects the accumulated wisdom and experience of the common law that witnesses may lie about some things and yet tell the truth about others, and the tribunal hearing the evidence is best placed to fix upon the truth. The same can be said about a tribunal of fact assessing whether the balance of the evidence of a witness should be believed, when the witness has admitted an untruth after having been caught out in a deceit. This is precisely what his Honour did: although the role confronting the primary judge in this case was a challenging one, his Honour undertook an entirely orthodox approach to the evaluation of credibility, being a task particularly within the province of the trial judge.
C.10 Lack of Corroboration and Inconsistency with Text Messages
In its written reply, Securency submitted that the respondents’ proposition that they “would have remained in place as agents in Nigeria for many years” was not supported by the evidence. It was also incongruous with the notion that Securency had been plotting and laying the groundwork to remove Dr Berry and replace him with other agents from mid-2007. The probabilities were that Securency would have exercised its right to terminate the Agency Agreement on 60 days’ notice in any event. Further, even if the respondents had somehow continued as agents beyond 2008, there was no reason to doubt that their agency appointment would have been terminated in October 2010, when every other agent of the appellant had its agency terminated. There was unchallenged evidence at trial that Securency “wrote to every agent who we had terminating their agencies … we wrote to them all in the summer [2010] and we terminated all agencies … by the end of the year 2010, all agencies had been terminated without exception”. There was no basis in the evidence to find that the respondents would have been the sole exception to the action that Securency actually took in 2010.
Securency further submitted that the respondents had not identified any authority which supported the proposition that, since Securency was found to have made fraudulent representations, it was precluded from asserting that it could and would have terminated the agency lawfully in any event.
E.2 Consideration
We agree that the date of termination would have been no later than 29 November 2010. We do not accept the respondents’ submission that there was no evidence that anybody in a decision-making role in Securency would have terminated Dr Berry and GSC were it not for the wrongful and false proposition that he wished to be released from the Agency Agreement.
To the extent, as submitted on behalf of Dr Berry and GSC, that the primary judge approached the case as being one in which the chance of Dr Berry and GSC surviving the 2010 purge was greater than the ordinary agent because of the particular relationships that they had and because Dr Berry was an honest agent and was known to be so within Securency, we disagree. We see no cogent basis for concluding that Dr Berry and GSC would have survived the worldwide agency terminations. In our opinion, the worldwide terminations would have been made, and were made, absent the contravening conduct. Contrary to the submissions on behalf of Dr Berry and GSC, we do not see a basis for placing a percentage chance on their prospects of survival of those terminations.
We do not accept the submission that Dr Berry was a special case in this respect. It was not put to Dr Berry that he was a special case and we see no force in the argument that Mr Beeby did not give evidence that he would have terminated Dr Berry specifically. Mr Beeby’s evidence was that a decision was made to halt the use of agents altogether and consequently all of Securency’s agents were terminated. It was not put to him that Dr Berry would not have been terminated at that time. We do not accept that Dr Berry had a chance of survival.
We also note that Dr Berry and GSC accepted, contrary to what the primary judge said about the loss of an opportunity to construct the opacification plant, that at trial Dr Berry and GSC did not ask for their loss to be assessed on that basis, that the loss of opportunity to construct and operate the opacification plant was not part of their case, and to that extent the primary judge was in error. In any event, as outlined at [179] above, the primary judge did not attempt to directly value the loss of that opportunity, proceeding instead to assess loss by reference to the presumed continuation of the Agency Agreement until 20 May 2018.
Having found that Dr Berry’s and GSC’s agency would have been terminated at the latest during the worldwide terminations, in our opinion, 29 November 2010 (being 60 days after 30 September 2010) is the latest possible end date for the assessment of compensation. We therefore consider that the primary judge erred in assessing compensation on the basis of the presumed continuation of the Agency Agreement until 20 May 2018.
However, we also agree with Securency’s submission that, given Mr Beeby’s evidence that termination letters in respect of all existing agency agreements were sent between July and September 2010, the assumed date of a letter to the respondents terminating their agency as part of the worldwide terminations should be 31 August 2010, giving a termination date of 30 October 2010.
Having rejected the submission that Dr Berry and GSC stood outside the worldwide terminations and were a special case, there is logic in making the assessment of quantum and interest by reference to the midpoint of the period during which termination letters were sent. There is no basis for concluding that a termination letter to Dr Berry and GSC sent during the worldwide terminations would have been sent on the first day of the period or on the last day of the period. That midpoint is 31 August 2010 and a termination consequent upon a letter of that date would therefore have occurred on 30 October 2010.
Having concluded that the primary judge was in error in assessing damages by reference to a presumed continuation of the Agency Agreement until 20 May 2018, and having concluded that 30 October 2010 was the latest date for termination, we now turn to consider the correct basis for the calculation of quantum and interest.
The nature of the task must be clearly kept in mind. The pleaded claim for relief was statutory, being a claim for statutory compensation by reason of misleading or deceptive conduct. Compensation is to be assessed by reference to the position the respondents would have been in, absent the offending conduct. Absent that conduct, would the Agency Agreement have been terminated without cause on 60 days’ notice in 2008? Would the Agency Agreement have been terminated with 30 days’ notice prior to its expiry or automatically renewed every two years from 2008?
Securency submitted that in circumstances in which it patently wished to terminate the Agency Agreement (in particular having regard to its attempts to do so), where Dr Berry was unable to fulfil his obligations as a result of his ongoing dispute with the Nigerian Government, and where Securency had in fact appointed other entities to act as its agents in the region, the overwhelming likelihood was that it would have exercised its unhindered right to terminate the Agency Agreement. That termination, it submitted, would have occurred either 60 days after Dr Berry had notionally refused to sign the termination letter (in the counterfactual where he was not induced by the contravening conduct), or at the absolute latest on 30 June 2008 by giving 30 days’ prior notice.
Contrary to the reasons of the primary judge at J[314], Securency submitted, there was no evidence to suggest termination of the Agency Agreement would have caused Dr Berry and the Governor to react adversely to Securency or otherwise impede its interests. The reasons at J[315] were, Securency submitted, a non sequitur, and the reasons at J[316]-[317] were contrary to the evidence and to the express finding of the primary judge at J[19] that Dr Berry lied in order to create the false impression that his evolving commercial and legal dispute with the Nigerian Government had not created any problem for him in visiting that country and dealing there with both its officials and his own business or in performing his role as Securency’s agent. Contrary to J[319]-[322], Securency submitted, there is no principle to the effect that where false representations are found to have been made, a party is precluded from making contentions on matters going to causation or damages, and the authorities cited by the primary judge did not support such a proposition.
Securency submitted that had the primary judge found that the Agency Agreement would have been terminated by 25 April 2008 (24 February 2008 plus 60 days per cl 2.6), or 30 June 2008 (per cl 3.2), no damages would arise as no commission payments would otherwise have been payable in that period. Further and in the alternative, Securency submitted, Dr Berry had never sought orders setting aside the 24 February 2008 agency termination letter or a declaration that it was void or of no effect.
Securency referred again to the evidence given by Mr Beeby.
Dr Berry and GSC relied on the reasoning of the primary judge in a submission summarised at [190]-[192] above.
We do not agree with the approach of the primary judge at J[333] that, because the termination letter was “ineffective”, the Agency Agreement should operate according to its terms, including in respect of the rate of commission and provision for automatic renewal, for the purpose of assessing damages. In our opinion, this gives insufficient weight to the counterfactual and its inherent probabilities.
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 does not support the primary judge’s approach. The dicta relied on by Dr Berry and GSC concerned a clause of the contract which provided for an automatic avoidance of the contract on the occurrence of a specific event, the Treasurer’s consent. The High Court, at 441, said that the provision was to be construed as making the contract not void but voidable. Their Honours said:
The question of who may avoid it depends on what happens. If one party has by his default brought about the happening of the event, the other party alone has the option of avoiding the contract. If the event has happened without default on either side, then either party may avoid the contract. But neither need to do so, and, if one party having a right to avoid it does not clearly exercise that right the other party may enforce the contract against him.
This was not the appropriate perspective from which to assess loss or damage when a contract has been terminated by reason of misleading or deceptive conduct. The question is, as we have said, how much worse off is the relevant party than that party would have been had the misleading or deceptive conduct not occurred. This directs attention to what would have happened as a matter of probabilities had the offending conduct not occurred, not to the legal effect of that conduct.
Gnych v Polish Club Ltd [2015] HCA 23; (2015) 255 CLR 414 at 427-8 [45] per French CJ, Kiefel, Keane and Nettle JJ, cited by the primary judge on this point, concerned a matter of legislative construction and the likelihood of adverse consequences for the “innocent party” to a bargain having been recognised as a consideration tending against the attribution to the legislature of an intention to avoid the bargain. We do not consider that authority to be of assistance in the present task.
The primary judge referred also, at J[320], to Lazarus Estates Ltd v Beasley [1956] 1 QB 702 at 712-13; Farley (Aust) Pty Ltd v JR Alexander & Sons (Queensland) Pty Ltd (1946) 75 CLR 487 at 493 and SZFDE v Minister for Immigration and Citizenship [2007] HCA 35; (2007) 232 CLR 189 at 196 [15].
Lazarus Estates concerned whether, under the Housing Repairs and Rents Act 1954 (2 & 3 Eliz. 2, c. 53), a tenant was precluded after 28 days from challenging a declaration purporting to comply with the provisions of the Act, declaring that repair work to a particular value had been carried out in a specified period, on the ground that the declaration was fraudulent. The case turned on the effect of paragraph 5 of Schedule II which provided that where the tenant did not apply within 28 days, the service of the declaration was itself to be treated as the production of satisfactory evidence that the work specified in it had been done. It was held by the Court of Appeal, by majority, that the tenant was permitted to raise the defence of fraud. We do not regard that case, or the general observations made as to the effect of fraud on various transactions, as relevant to the assessment of loss or damage in circumstances where the court needs to assess what would have happened if the misleading or deceptive conduct, or fraud, had not occurred.
Farley concerned the registration of a trade mark procured by fraud. The High Court, in its original jurisdiction, was constituted by Williams J. The application was for the removal from the register of a trade mark registered by the respondent who claimed to be the proprietor of the mark. The notice of motion was not filed until a period of more than seven years had expired from the date of the original registration. The respondent had continuously used the mark since the date of registration. His Honour held that the word “fraud” in s 51A of the Trade Marks Act 1905 (Cth) was not limited to fraud on the Registrar but applied to registration of trade marks procured by fraud upon either the Registrar or other traders. It was held that a registration of a trade mark procured by such a fraud could be the subject of an application for rectification after seven years. Where the original registration was procured by fraud, the use to which a monopoly so obtained was subsequently put could not cure the initial invalidity. The crucial date was the date of the application for registration. The order of the Court was that the register of trade marks be rectified by expunging the trade mark. Again, we do not regard that case, or the passage cited by the primary judge, as relevant to the assessment of statutory compensation.
In SZFDE, the High Court held that the fraudulent conduct of a person who posed as a solicitor and immigration agent and who had advised the family not to attend the hearing of the Refugee Review Tribunal in response to an invitation made under s 425(1) of the Migration Act 1958 (Cth) was fraud perpetrated “on” the Tribunal as well as on the appellants with the result that, in law, the jurisdiction of the Tribunal remained unexercised. At 206 [51], the High Court said that the concomitant of Mr Hussain being fraudulent in his dealings with the appellants was the stultification of the operation of the critically important natural justice provisions made by Div 4 of Pt 7 of the Act. In short, the High Court continued, “while the Tribunal undoubtedly acted on an assumption of regularity, in truth, by reason of the fraud of Mr Hussain, it was disabled from the due discharge of its imperative statutory functions with respect to the conduct of the review.” That state of affairs merited the description of the practice of fraud “on” the Tribunal.
Although the High Court, at 196 [15], cited both Lazarus Estates and Farley, their Honours said, at 196 [16], that the vitiating effect of fraud is not universal throughout the law and, at 200-201 [29], that any application of the principle that “fraud unravels everything” required consideration first of that which was to be “unravelled”, and second of what amounted to “fraud” in the particular context. It then was necessary to identify the available curial remedy to effect the “unravelling”.
In the present case, the “fraud” sufficed to invalidate the termination notice but it did not, in our opinion, obviate the need, in the assessment of statutory compensation under s 82 of the TPA, to consider, on the balance of probabilities, what the appellant would otherwise have done if the wrongful conduct had not occurred, that is, in the counterfactual.
We do not accept Securency’s contention that the appropriate finding was that notice of termination would have been given on 24 February 2008 and thus that the Agency Agreement would have been terminated by 25 April 2008 as per cl 2.6. We think there is no error in the conclusion of the primary judge that if that had been Securency’s intention then there would have been no need to engage in what the primary judge found was the misleading or deceptive conduct at the February Meeting on the same date.
Next to be considered is the suggested date of termination of 26 May 2008 in consequence of a suggested termination notice issued on 26 March 2008 with a 60 day notice period as per cl 2.6. We do not accept this contention, for the same reason. If the appellant should be taken to have been intending to issue a termination notice on 26 March 2008, only four weeks after the meeting on 24 February 2008, there would have been no need to engage in the misleading and deceptive conduct.
Next to be considered is the suggested date of termination of 22 June 2008 in consequence of a suggested termination notice issued on 22 April 2008 with a 60 day notice period as per cl 2.6. Again, in our opinion, a termination notice intended to be issued only eight weeks after the February Meeting would have meant that there was no need for Securency to engage in the contravening conduct.
We next turn to the suggested date of termination of 30 June 2008 in consequence of a (notional) termination notice issued on 1 June 2008 with a 30 day notice period as per cl 3.2.
In our opinion, the starting point must be the terms of the Agency Agreement. By virtue of the terms of cl 3.2, the agreement did not provide security for either party on a “rollover”. Further, Dr Berry was always subject to a 60 day written notice terminating his appointment which notice could be given at any time under cl 2.6.
Next to be considered is that it is clear that Securency wanted to end its agency with Dr Berry. As we have said, it was entitled to do so for good reason or for no reason. Senior Counsel for Dr Berry and GSC accepted that Securency could have terminated the agency if it thought that it could make more money without Dr Berry.
In our opinion, once the lack of internal logic has been exhausted with reference to the misleading or deceptive conduct, which we have considered in the immediately preceding paragraphs, there is no reason to assume in the counterfactual that Securency would not have acted to terminate the Agency Agreement at the time when that agreement would otherwise have been automatically renewed for a further term of two years.
As we have said, if Securency wanted to engage another agent it was free to do so and it is clear that in the first half of 2008, it did want to do so. We note, for example, that, on the findings of the primary judge at J[174]-[178], on 5 or 6 February 2008, JH Marketing (Africa 2000) Ltd executed an agency agreement for the territory of Nigeria and the ECWAS which was, by 14 February 2008, countersigned by Securency. As recorded at J[222] and J[255], on about 6 August 2008, Securency terminated the agency agreement with JH Marketing (Africa 2000) Ltd and entered into a replacement agency agreement with JHM Global (FZC).We do not see it as significant whether or not Dr Berry was in any relationship with JHM whereby he would be doing work for them. As we noted at [110] above, one of the practical consequences of the contravening conduct was to bring Dr Berry’s agency to an end without unnecessarily alienating him, which allowed Securency to continue to make some limited use of Dr Berry possibly including a meeting between Mr Chapman and Dr Berry as late as November 2008 (although, as the primary judge noted at J[271], there was no evidence of what transpired at that meeting).
Although the primary judge said that Dr Berry’s texts with Mr Chapman and his requests for information and meetings was a demonstration that he was not acting as if his agency had been terminated and Mr Chapman was not treating Dr Berry as if it had, in our opinion the text messages themselves record no more than logistical details of setting up a meeting, and pleasantries. What is evident is that any post February Meeting involvement of Dr Berry was limited and although the misleading conduct of Securency made that limited involvement possible, in the counterfactual, absent the misleading conduct, the factors that motivated the replacement of Dr Berry would have ensured that his agency would have been brought to an end. Ultimately, without evidence of positive and substantive involvement of Dr Berry in Securency’s business, we consider no more should be made of evidence such as Dr Berry’s texts and his requests for information and meetings, in terms of proving that in the counterfactual Dr Berry would have continued to act as Securency’s agent.
We therefore find, for the purpose of assessing quantum that, absent the contravening conduct, the Agency Agreement would have terminated on 30 June 2008.
Last to be considered, in the alternative, is the suggested date of termination of 30 June 2010 in consequence of a suggested termination notice issued on 1 June 2010 with a 30 days’ notice period as per cl 3.2. Our reasoning in relation to the 30 June 2008 date of termination applies a fortiori. Further, events occurred after 1 June 2008, such as commission payments to SPT, which, if we are wrong as to termination on 30 June 2008, would lead us to the same conclusion for termination on 30 June 2010.
Our conclusions do not depend on the evidence of Mr Brown. Strictly therefore it is unnecessary to address the reasons of the primary judge at J[314]-[323] that he did not believe Mr Brown’s assertion that had Dr Berry not signed the termination letter, Securency would have exercised one of its powers to terminate the Agency Agreement. For completeness however, we note that the fact that Securency did not issue another written notice until 2018 suggests that it regarded the wrongful termination as effective, rather than supporting an inference that Securency would not have terminated the Agency Agreement. Also, we note that Securency, through Mr Chapman, continued to make use of Dr Berry after the February Meeting, including by having him meet with the Governor in London on 24 March 2008, which was still some months before the date of 30 June 2008, being the date we have found for the purpose of assessing quantum that, absent the contravening conduct, the Agency Agreement would have terminated. As to the factor that a unilateral termination would have converted Dr Berry into a person who would be likely to impede Securency’s interests rather than advance them, in our view, this is a neutral consideration since the wrongful termination would also have had that effect. Lastly, we also regard the factor of Securency recently extending its territory to include the ECWAS states as neutral, as the clear inference is that Securency did not want Dr Berry to continue in that role: the Agency Agreement would not have been terminated, fraudulently or otherwise, if Securency wanted Dr Berry to continue that role.
The parties were able to agree on the sums yielded by the various permutations. They filed calculations, by leave after the conclusion of argument, as follows:
Quantum and interest calculations (AUD)
Date of Termination Principal (AUD) Interest (AUD) up to 17 August 2018 Total (AUD) 1 25 April 20081 - - - 2 26 May 20082 - - - 3 22 June 20083 611,546 293,898 905,444.00 4 30 June 20084 1,205,579 575,279 1,780,858.00 5 30 June 20105 20,727,171 8,455,411 29,182,582.00 6 31 October 20106 27,078,507 10,690,504 37,769,011 7 29 November 20107 27,078,507 10,690,504 37,769,011 8 30 June 20128 30,656,623 11,756,061 42,412,684 9 30 June 20149 39,218,356 13,657,091 52,875,447 10 30 June 201610 45,792,181 14,563,527 60,355,708 11 20 May 201811 49,995,119 14,814,108 64,809,227 1Termination notice issued on 24 February 2008 with 60 days’ notice period (clause 2.6; Appellant’s submissions [85])
2Termination notice issued on 26 March 2008 with 60 days’ notice period (clause 2.6)
3Termination notice issued on 22 April 2008 with 60 days’ notice period (clause 2.6)
4Termination notice issued on 1 June 2008 with 30 days’ notice period (clause 3.2; Appellant’s submissions [85])
5 Termination notice issued on 1 June 2010 with 30 days’ notice period
6Termination notice issued on 31 August 2010 with 60 days’ notice period (clause 2.6; Appellant’s submissions [91])
7Termination notice issued on 30 September 2010 with 60 days’ notice (clause 2.6; Appellant’s submissions [91])
8 Termination notice issued on 1 June 2012 with 30 days’ notice period
9 Termination notice issued on 1 June 2014 with 30 days’ notice period
10 Termination notice issued on 1 June 2016 with 30 days’ notice period
11Per judgment of Rares J dated 17 August 2018 (Berry v CCL Secure Pty Ltd (No 2) [2018] FCA 1351 at [4])
It is therefore not in issue that the quantum of loss suffered by Dr Berry was $1,205,579 (plus $575,279 for pre-judgment interest) on the assumption that, absent the misleading and deceptive conduct, the Agency Agreement would have terminated on 30 June 2008. As we have found that agreement would have terminated on that date, this is the appropriate amount to award by way of statutory compensation pursuant to s 82 of the TPA.
F ORDERS
The parties should bring in short minutes of orders to reflect these reasons within seven days. Given the quantum of the judgment against Securency will need to be varied, it is necessary to set aside Order 2 made by the primary judge on 17 August 2018. No error has been demonstrated in relation to the declaration made the same day, to the effect that the termination letter is of no effect having been procured by fraud, and this declaration should be left undisturbed. A possible consequence of the variation of the judgment sum is that costs orders made by the primary judge may need to be revisited because of the existence of without prejudice communications as to costs (admissible on any costs argument pursuant to s 131(2)(h) of the EA). Issues also arise as to the appropriate costs order in relation to this appeal. In this regard, although Securency has been largely successful in relation to the damages aspect of the appeal, it was unsuccessful in its attempts to have the primary judge’s findings on liability reversed and the prolix and unnecessarily complex notice of appeal has increased the time taken to hear and dispose of the appeal.
If orders reflecting these reasons can be agreed, then they should be provided to the Court within seven days. If not, then competing minutes of orders should be filed within seven days together with any evidence relating to costs and any submission (limited to two pages) setting out the reasons why the orders for which the party contends should be made. Subject to any application, following receipt of material from the parties, the present intention of the Court is to make orders on the papers.
I certify that the preceding two hundred and thirty-four (234) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices McKerracher, Robertson and Lee. Associate:
Dated: 24 May 2019
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