Ce McDonald (Aust) Pty Limited v McGrath (No. 2)

[2001] FCA 970

FEDERAL COURT OF AUSTRALIA

CE McDonald (Aust) Pty Limited v McGrath (No. 2) [2001] FCA 970

Fair Trading Act 1992 (ACT) s 12(1)
Fair Trading Act 1987 (NSW) s 42(1)

CE McDONALD (AUST) PTY LIMITED (ACN 001 584 603), AUSTRALIAN CANOPIES (MOTOR TRADE) PTY LIMITED (ACN 001 789 644), TOM KOKSAL and GARRY MORTON v COLIN McGRATH (No. 2)
ACT G29 of 1997

BRANSON J
SYDNEY
1 AUGUST 2001

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	ACT G 29 of 1997

BETWEEN:

CE McDONALD (AUST) PTY LIMITED (ACN 001 584 603)
FIRST CROSS-CLAIMANT

AUSTRALIAN CANOPIES (MOTOR TRADE) PTY LIMITED (ACN 001 789 644)
SECOND CROSS-CLAIMANT

TOM KOKSAL
THIRD CROSS-CLAIMANT

GARRY MORTON
FOURTH CROSS-CLAIMANT

AND:

COLIN McGRATH
CROSS-RESPONDENT

JUDGE:

BRANSON J

DATE OF ORDER:

1 AUGUST 2001

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.There be judgment for the first cross-claimant against the cross-respondent in the sum of $247,500.00 plus interest in the sum of $25,410.82.

2.There be judgment for the fourth cross-claimant against the cross-respondent in the sum of $27,500.00 plus interest in the sum of $2,823.42

3.The cross-respondent pay the costs of the first and fourth cross-claimants subject to the exception that such costs are not to include costs incurred after 4 October 2000 other than the costs of the hearing on 28 June 2001.

4.The cross-claim be otherwise dismissed.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	ACT G 29 of 1997

BETWEEN:

CE McDONALD (AUST) PTY LIMITED (ACN 001 584 603)
FIRST CROSS-CLAIMANT

AUSTRALIAN CANOPIES (MOTOR TRADE) PTY LIMITED (ACN 001 789 644)
SECOND CROSS-CLAIMANT

TOM KOKSAL
THIRD CROSS-CLAIMANT

GARRY MORTON
FOURTH CROSS-CLAIMANT

AND:

COLIN McGRATH
CROSS-RESPONDENT

JUDGE:	BRANSON J
DATE:	1 AUGUST 2001
PLACE:	SYDNEY

REASONS FOR JUDGMENT

INTRODUCTION

1. On 11 May 2001 I published reasons for judgment in this matter.  Those reasons should be read together with these.  They set out the background to this cross-claim and its history, refer to the pleadings and set out the relevant statutory provisions.  I concluded in my reasons of 11 May 2001 that unless a successful application were made on behalf of the cross-claimants to re-open their case against Mr McGrath, the cross-claim would have to be dismissed.

2. The cross-claimants have now applied for and been granted leave to re-open their case against Mr McGrath.  Again this leave was granted in the absence of Mr McGrath.  Again the cross-claimants attempted to give notice to Mr McGrath of their intended application and of additional affidavit evidence upon which they proposed to rely should they be granted leave to re-open their case.  Again delivery of the material to Mr McGrath’s last known address could not be achieved.  Again, having regard to the total history of this matter, I granted the cross-claimants leave to proceed in the absence of Mr McGrath.

3. As I identified in my reasons for judgment of 11 May 2001, the first basis upon which the cross-claimants seek relief against Mr McGrath is that he made representations to the cross-claimants, upon which they relied in engaging in contractual negotiations with Spyglass, and that by doing so he engaged in conduct which was misleading or deceptive within the meaning of s 12 of the Fair Trading Act 1992 (ACT) (“the FTA (ACT)”) or alternatively within the meaning of s 42 of the Fair Trading Act 1987 (NSW) (“the FTA (NSW)”).

4. In the claim brought by Spyglass which gave rise to this cross-claim, Spyglass had alleged that, in reliance on representations made to it by the corporate respondents it entered into a contract with Soothcast, or alternatively, Soothcast and Australian Canopies. Spyglass had further alleged that the individual respondents were knowingly concerned in the making by the corporate respondents of the representations. For the reasons set out in my earlier reasons for judgment I am satisfied that Mr McGrath is to be taken to have contravened s 42(1) of the FTA (NSW) and s 12(1) of the FTA (ACT) or one of those subsections by the making of the Representations.

5. For the reasons set out in my earlier reasons for judgment, I am also satisfied that Australian Canopies relied on the Representations in entering into the agreement with Spyglass, and, I infer, whilst engaging in the preceding contractual negotiations.  Having regard to the further evidence now placed before me, I am now satisfied that in addition McDonald relied on the Representation in engaging in contractual negotiations with Spyglass and that Mr Morton also relied on them as a person involved in the conduct of the corporate respondents, or one or more of them, which was misleading or deceptive.

6. As I indicated in my earlier reasons for judgment, I am satisfied that the cross-claimants acted reasonably in setting Spyglass’s claim against them on the terms outlined in an undated Deed of Release annexed to an affidavit of Mr Orlizki, which Deed provided the basis of consent orders made on 6 December 1999.  The terms of the consent orders are set out in my earlier reasons for judgment.

7. I find that McDonald and Mr Morton have suffered loss or damage by reason of the conduct of Mr McGrath in the amounts paid by them respectively under the consent orders of 6 December 1999.

8. In the circumstances there is no reason to give further consideration to the case of the cross-claimants made in reliance on s 52 of the Trade Practices Act 1974 (Cth).

9. There will be judgment for McDonald in the sum of $247,500.00 plus interest in the sum of $25,410.82.

10. There will be judgment for Mr Morton in the sum of $27,500 plus interest in the sum of $2,823.42.

11. The cross-respondent should pay the reasonable costs of McDonald and Mr Morton.  I conclude that an order that Mr McGrath pay the costs of McDonald and Mr Morton incurred earlier than 5 October 2000 (the first occasion on which the hearing was adjourned at the request of the cross-claimants) and in addition the costs of the hearing on 28 June 2001 would be reasonable in all of the circumstances.

I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson.

Associate:

Dated:  1 August 2001

Counsel for the Cross-Claimants:	Mr GM Gregg
Solicitor for the Cross-Claimants:	Selby Anderson
No appearance for the Cross-Respondent
Date of Hearing:	28 June 2001
Date of Judgment:	1 August 2001