FEDERAL COURT OF AUSTRALIA
Cryeng Pty Ltd v Loyola [2011] FCA 956
Citation: Cryeng Pty Ltd v Loyola [2011] FCA 956 Parties: CRYENG PTY LTD ACN 071 997 763 v GEORGE HUMBERTO LOYOLA, PIONEER CRYOGENICS PTY LTD ACN 130 126 144, MALCOLM ALEXANDER DE SILVA and BRAMER HOLDINGS PTY LTD ACN 005 092 508 File number: NSD 1857 of 2008 Judge: STONE J Date of judgment: 23 August 2011 Catchwords: TRADE PRACTICES – misleading and deceptive conduct – s 52(1) Trade Practices Act 1974 (Cth) (TPA); s 42(1) Fair Trading Act 1987 (NSW) (FTA) – whether representations made that the applicant was ceasing business and that the second respondent was its successor – whether representations misleading and deceptive – whether representations caused loss or damage – consideration of loss or damage under s 82(1) TPA and s 68(1) FTA – causation required – contravening conduct need not be the sole cause of loss
CONTRACT – breach of contract – whether services agreement approved by board of applicant – whether agreement breached – agreement not approved in principle or otherwise – no binding agreement
EVIDENCE – failure to call material witness – whether inference should be drawn – consideration of Jones v Dunkel – application of principle depends upon the evidence in the proceeding and circumstances of the case
DAMAGES – damages for loss of reputation – s 82(1) TPA and s 68(1) FTA wide enough to include injury to reputation – consideration of amount of compensation to be awarded – difficulties in determining amount – damages for vindication of commercial reputation may be awarded – damages for loss of client contract – consideration of whether contract would have been profitable – damages awarded and interest pursuant to s 51A Federal Court of Australia Act 1976 (Cth)
Legislation: Fair Trading Act 1987 (NSW) ss 42 and 68
Federal Court of Australia Act 1976 (Cth) s 51A
Trade Practices Act 1974 (Cth) ss 52 and 82
Cases cited: Aaron’s Reefs Ltd v Twiss [1896] AC 273
Brabazon v Western Mail Ltd (1985) 8 FCR 122
De Bortoli Wines Pty Limited v HIH Insurance Limited (in liq) [2011] FCA 645
FAI General Insurance Co Ltd v RAIA Insurance Brokers Ltd (1992) 108 ALR 479
Flamingo Park Pty Ltd v Dolly Dolly Creation Pty Ltd (1986) 65 ALR 500
GEC Marconi Systems Pty Limited v BHP Information Technology Pty Limited (2003) 201 ALR 55
Henville v Walker (2001) 206 CLR 459
Hesse Blind Roller Company Pty Ltd v Hamitovski [2006] VSCA 121
Jones v Dunkel (1959) 101 CLR 298
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191
Precision Plastics Pty Limited v Demir (1975) 132 CLR 362
Reiffel v ACN 075 839 226 Ltd (2003) 132 FCR 437
Schellenberg v Tunnel Holdings Pty Ltd (2000) 200 CLR 121 at [53]
Sellars v Adelaide Petroleum NL (1994) 179 CLR 332
The Bell Group Ltd (In Liq) v Westpac Banking Corporation [No 9] [2008] WASC 239
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- Case
- [2011] FCA 956
- Decision Date
CaseChat Overview and Summary
The court considered the evidence presented and noted that Loyola did not testify, which influenced the acceptance of Cryeng's evidence. The court found that Loyola's representations were indeed misleading and deceptive, as they caused customers to question Cryeng's capabilities and affected their business. Additionally, the court concluded that Cryeng had not established the existence of a binding services agreement, thus rejecting that part of Cryeng's claim. Regarding damages, the court found that Cryeng suffered loss of reputation and awarded damages accordingly. The court also awarded damages for the loss of a client contract, considering the potential profitability of that contract.
The Federal Court awarded Cryeng damages of $140,000 plus interest from 1 July 2008 to the date of the order. The interest rate was set at 4% above the cash rate last published by the Reserve Bank of Australia before 1 July 2011. The court also ordered Loyola and the second respondent to pay Cryeng's costs of the application and dismissed the cross-claim brought by Loyola. The first and second cross-claimants were ordered to pay the cross-respondent's costs of the cross-claim.
Orders
Orders of the court
1. The first and second respondents pay to the applicant damages in the amount of $140,000.
2. In accordance with s 51A(1)(a) of the Federal Court of Australia Act 1976 (Cth) the first and second respondents pay to the applicant interest on the amount of damages awarded in order 1 from 1 July 2008 to the date of entry of order 1 at the rate that is 4% above the cash rate last published by the Reserve Bank of Australia before 1 July 2011.
3. The first and second respondents pay the applicant’s costs of the application.
4. The cross-claim is dismissed.
5. The first and second cross-claimants pay the cross-respondent’s costs of the cross-claim.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
At about that time Mr Gilchrist and Mr Camilleri embarked on a tour of Cryeng’s customers. They visited Supagas NSW, Supagas Victoria, Air Liquide Australia’s headquarters in Melbourne and Cryoquip. Mr Gilchrist also referred to a conversation he had with Mr Chris Day of Coregas in which Mr Day said that Coregas was unsure about Cryeng’s capabilities. Mr Gilchrist took Mr Day to Cryeng’s workshop in Sydney to show him the ongoing manufacture of cryogenic vessels.The Representations - consideration In this case material aspects of the evidence brought on behalf of Cryeng were not challenged. Where that evidence is not inherently improbable, or there is no other reason to doubt its credibility, then it should be accepted Precision Plastics Pty Limited v Demir (1975) 132 CLR 362 at 370-1 per Gibbs J. The failure of Mr Loyola to give evidence is perhaps the most striking aspect of the comparative absence of challenge to Cryeng’s evidence. As counsel for Cryeng put it:Mr Loyola, notwithstanding he has been in this hearing room for every minute of this case, has not walked the eight metres into the witness box. As Mr Loyola was intimately involved in all aspects of the circumstance on which Cryeng bases its application for relief and its defence to the cross-claim it is reasonable to expect that he would have information and explanations material to the issues in this proceeding. In the absence of his evidence it was difficult for the respondents to challenge much of the evidence brought by Cryeng. The evidence concerning the services agreement is discussed below in connection with the cross-claim. In relation to the application brought by Cryeng there was little if any challenge to the evidence of Mr Day, Mr Martin, Mr Greg Johnston, Mr Coghlan and Mr Camilleri. Mr Gilchrist’s evidence was also largely unchallenged and to the extent that it was challenged, it was not shaken. I find that, when considered in context, the evidence of these witnesses is not inherently improbable and there is no reason why I should not accept it. The written submissions for Loyola and Pioneer accepted that the content of Counsel’s observation about Mr Loyola’s failure to give evidence is correct but submitted that the inference is not correct. They submit that because Cryeng agreed not to press the pleaded cases in relation to Mr Loyola’s various duties as an employee and the need for Mr Loyola to explain or contradict anything evaporated. In the light of the evidence about Mr Loyola’s activities during April 2008, that submission cannot be accepted. Submissions were also made about the failure to give evidence of other persons who might be expected to have information relevant to the claims made by Cryeng. I shall return to that submission later. It is with Mr Loyola that I am presently concerned. As mentioned earlier, in a proceeding whether there is any inference that can derive support by the application the principle of Jones v Dunkel depends on the evidence in the proceeding and the circumstances of the case. At this point, given Mr Loyola’s failure to give evidence, it is necessary to discuss, with some particularity, the application of the principles in Jones v Dunkel in this proceeding. Counsel for Cryeng evinced no doubt that in this case there were inferences to be drawn from the evidence that were unfavourable to Mr Loyola and which, because of his failure to give evidence, should be more readily accepted. In considering this possibility I am conscious of the distinction to which Windeyer J adverted in Jones v Dunkel between rational inference and mere conjecture: (1959) 101 CLR 298 at 319-320; Schellenberg v Tunnel Holdings Pty Ltd (2000) 200 CLR 121 at [53]; Hesse Blind Roller Company Pty Ltd v Hamitovski [2006] VSCA 121.