Dwyer v Craft Printing Pty Ltd

[2010] HCATrans 201

[2010] HCATrans 201

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S9 of 2010

B e t w e e n -

PAUL ANDREW DWYER

Applicant

and

CRAFT PRINTING PTY LTD [ACN 073 088 909]

Respondent

Application for special leave to appeal

GUMMOW J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 30 JULY 2010, AT 2.07 PM

Copyright in the High Court of Australia

MR B.A.J. COLES, QC:   May it please the Court, I appear with MR I.G.A. ARCHIBALD for the applicant.  (instructed by W Lawyers)

MR P.H. GREENWOOD, SC:   May it please the Court, I appear with MR G.P. GEORGE for the respondent.  (instructed by David R. Purvis & Co)

GUMMOW J:   Yes, Mr Coles.  You are going to tell us about Deeley v Lloyds Bank.

MR COLES:   I was going to tell your Honours first about the misleading and deceptive conduct matter, but it is our ultimate submission that the appropriation point really is not at the forefront of the matters that will concern your Honour because the conclusion below was that the appropriation in effect could be – which was admitted or acknowledged – Justice Young deals with that aspect of the matter – but the appropriation was rendered, in effect, ineffectual by reason of the existence of relevant conduct, conduct that was misleading and deceptive.  If we are right on the misleading and deceptive conduct point then we are also right on the appropriation point and it does not matter.

GUMMOW J:   If you are wrong on the misleading and deceptive point?

MR COLES:   Then it does not matter either.  I think it is the ultimate way it turns out.  Your Honours are sufficiently apprised on the matter to understand that at the forefront of the applicant’s case before the trial judge was his contention, in effect, that any matters he did not disclose were the result of inadvertence, which therefore took the matter out of the statutory definition of “conduct”.  Your Honours appreciate that although we are here dealing with the Fair Trading Act and to, in a background sense, also perhaps the ASIC Act the similar or substantially structurally identical definitions exist, for example, in the Trade Practices Act.

“Conduct” is, of course, a defined expression although one does not routinely see references to the definition set out because the particular cases do not enliven any consideration of it.  “Conduct” is of course a reference to the doing or refusing to do any act and the Act in turn provides a reference ‑ ‑ ‑

GUMMOW J:   What do you say about Mr Greenwood’s paragraph 1 on page 62?

MR COLES:   That is all well and good, your Honour, so far as the first part of – or the only thing the trial judge decided, namely that a generated lot in the language of the case law is a reasonable expectation on the part of the respondent that it will be told certain things and those facts enable the trial judge to hold, as he did I think at paragraph 33 of the judgment, that there was a reasonable expectation on the part of the respondent to be advised of the matters which were not disclosed to it, a conclusion which on those facts we do not disagree with.  Our contention is, shortly, that the identification of a reasonable – what his Honour described at paragraph 33, application book page 9 as:

a clear rational expectation of disclosure –

a conclusion that, as a result of a failure to satisfy that clear, rational expectation of disclosure resulted in the plaintiff being misled and deceived.  So much may be accepted and we do not see our learned friend’s paragraph 1, with respect, taking it much further than that. 

Our complaint – and we have two complaints – about that is that the identification of a clear, rational or reasonable expectation of disclosure is only part of the requisite inquiry.  One must then go on and find, assuming the matter is put in issue, whether the refraining, that is to say the non‑disclosure, refraining within the meaning of the statute, was or was not intentional.  It has been held, in our respectful submission correctly, that if it is shown that the – because of the words “refraining” or “refusing” otherwise than inadvertently one is in that situation looking at a situation where, in effect, there is a positive decision made to withhold information or to conceal or suppress it.

The expression, of course, “rational expectation” or “reasonable expectation” comes from a number of cases and its application is understandable in the – for example, in Justice French’s decision first instance in the Kimberley Case there was not, of course, any issue in relation to whether there was any inadvertence involved.  In the case most often cited in this area and indeed relied upon by the respondents below – the Full Court of the Federal Court’s decision in Demagogue v Ramensky, the issue did not arise either because there was a factual finding that the non‑disclosure was entirely otherwise than inadvertent.  It was wholly deliberate.

Our first point is that merely to identify a reasonable expectation of disclosure does not conclude against a defendant in proceedings the condign description of his conduct as misleading and deceptive.  It requires a further examination as to whether that which was not disclosed was not disclosed intentionally or whether its non‑disclosure or whether the silence, as it is often described, was inadvertent.  Our complaint in this first aspect of the matter is that the trial judge heard evidence about that, made no particular findings about it ‑ ‑ ‑

GUMMOW J:   From whom?  The trial judge was impressed with Mr Webster.

MR COLES:   Understandably.  Of course the difficulty the applicant faces is that it confronts a set of facts which carry no findings of fact about the very matter in contention, namely was his non‑disclosure inadvertent because the trial judge really treated the evidence going to that as, in effect, confined to the contractual issue about which no ground of appeal is raised.  The contractual question was a straightforward one.  Let me explain to your Honours how we think the problem has arisen.

From the perspective of the respondent their position was quite straightforward.  They had received, back in 2003, I think, an application for credit in favour of a company called Comsta.  They had indicated they would only provide such credit if the indebtedness thereby arising was guaranteed.  It was their position that they were never told anything effectively to displace that circumstance.

GUMMOW J:   Did your client give evidence?

MR COLES:   Yes.  He was cross‑examined but it was not put to him that his non‑disclosures were intentional.  That was part of the pleaded case.  Your Honours will see the pleaded case set out in paragraph 27 on page 8 of the application book.  It is a summary of a much longer pleading.  The position in which the respondent found herself thus was understandable, not having effective – or the efforts by those on the applicant’s side to bring to their attention that there had been a change in the trading structure, as it is described, proved unfortunately unavailing and their evidence was accepted that they did not know and had not received any notification of that fact.

GUMMOW J:   Your problem, Mr Coles, may be apparent from page 70, paragraph 8.  You seem to be injecting a notion of common law fraud – “positive conduct” and “intentional refraining”.

MR COLES:   That is the second area of our contentions.  Just to finish, if I may, if it is convenient, your Honour, what we say about the reasonable expectation point, so much, as I have said, may be accepted from the perspective of the respondent.  From the applicant’s point of view, on the other hand – and his evidence was to this effect – that he had, two years after the trading relation started, he had incorporated a new entity; he had sent out in a fairly standardised form letters to many dozens or hundreds, perhaps, of suppliers notifying them of the change; he had changed the particulars of the business name in the relevant register; he had ceased to use the old stationery and embarked upon new; he had made payments from a different entity, albeit by electronic transfer and so forth. 

He had done business on that basis without any apparent difficulty until 2007 when Comsta went into liquidation, his assumption being – he was neither disbelieved nor contradicted on this – that he had been doing business through a company called Paul’s Retail and accordingly the fact that was the subject of the complaints, namely that Comsta went into liquidation in early 2007, that is to say some four years after the commencement of the trading relationship and some two years after the restructure of the business, was a matter of no significance subjectively or to him, he having, as I say, believed that his steps to bring that to other people’s attention had been effective.

Our short submission on this first point is that merely to find, as one was justified in finding, we would accept for present purposes, that the respondent had a rational expectation of being disclosed, or having disclosed to it Comsta’s liquidation because it still believed, correctly, as a matter of contract analysis that it was dealing with Comsta.  Mr Dwyer, Comsta’s erstwhile guarantor, or guarantor, was under an entirely different set of understandings.  What he was entitled to have decided, whether for him or against him but I would have thought, with respect, perhaps in his favour – what he was entitled at least to have considered was his defence that his non‑disclosure was inadvertent, because one does not establish conduct for the purposes of the Act merely by showing in the mind of the other party a reasonable expectation that something will be disclosed.

As I say, no authority has ever held that and the authorities which have concentrated on the element of reasonable expectation of disclosure have, at least in the illustrations we have given, been cases where there has been no issue about the question of inadvertence.  That is in the non‑disclosure.  The second aspect, which really brings me to your Honour’s reference to paragraph 8 on page 70, the other way in which we respectfully think that – although not the trial judge and Justice Young – their reasoning focused, as we would understand it, on simply the fact that conduct was made out by the existence or the establishment on the respondent’s part of the reasonable expectation of disclosure.

The other part is introduced into the matter by really in a paragraph in the judgment of Justice Macfarlan at page 27 paragraph 20.  His Honour there appears to contrast – his Honour likewise, I should say, but for a different reason came to the conclusion that it was really irrelevant to consider the applicant’s true defence, in other words, that one did not need to make any findings at all about the question of the non‑disclosure being inadvertent because he contrasted – he drew a distinction between those cases of what one might call positive conduct on the one hand with those cases of mere silence.  What his Honour appears to hold – I am reading from line 33:

His Honour thus did not regard the case as one of “mere silence”.  As a result, reliance upon the “refusal to act” limb of the definition “conduct” in s 4(4) of the Fair Trading Act is unnecessary ‑

We contest that proposition.

KIEFEL J:   Is that because the primary judge’s view was that the circumstances gave rise to a positive obligation to disclose?

MR COLES:   Yes; that is right.

KIEFEL J:   It is not really a “mere silence” case at all.

MR COLES:   Yes; that is right, but because the positive obligation to disclose arose from no more than the necessarily uncommunicated and unappreciated and necessarily subjective deception on the part of the respondent that he ought to have been told something and on its view of the contract so it should have.

KIEFEL J:   But the tension then as between a positive obligation to disclose given rise by the facts and circumstances prevailing and how inadvertence can connect with that, I mean that is the difficulty with your argument, is it not?

MR COLES:   It is indeed.  That is one of the important questions.  This Court has in many cases, and it is hardly a novel or difficult proposition – Campbell v Backoffice of course emphasises, correctly, I understand, undisputedly, that one must when considering conduct consider conduct as a whole.  That is rather seen, as we perceive the outcome of the decisions below, as really an invitation to ignore any question at all as to inadvertence if that is in issue.

KIEFEL J:   But the way you posit it is, if the obligation itself can satisfy the description of “conduct” the way in which you approach it might be to raise a defence not set out in the statute of inadvertence.

MR COLES:   Yes.

KIEFEL J:   That is really having two separate questions rather than the first question which is whether or not, in all the circumstances, there was conduct which misled.

MR COLES:   I can only respond to your Honour by reference to the facts and issues in the present case but, as indeed the trial judge thought, the relevant conduct was the non‑disclosure.  That of course is a species of conduct which does attract, we would respectfully think as a matter of reasonable interpretation of the word “refraining” ‑ ‑ ‑

KIEFEL J:   Non‑disclosure when there was an obligation to disclose.

MR COLES:   Yes, but again the obligation to disclose is not an abstract thing.  It depends upon all of the circumstances.

KIEFEL J:   But it is a conclusion that is arrived at without reference to state of mind.

MR COLES:   I can accept that.  The difficulty in the present case of course is that one usually has a fairly close degree of propinquity between the recipients of the information minus the disclosed facts, and the supplier of the information minus the disclosed facts, which makes it hardly necessary to inquire about questions of inadvertence at all.  Here of course there is necessarily a time lapse where the original relations between the parties proceeded four years before the events in question; the change in business structure two years and then two years later the relevant company goes into liquidation.

So there is not – indeed from the perspective of the party that the obligation is supposed to disclose, he would ask himself – his answer to that is “I had no reason to disclose it because these people had long ceased to be regarded in my books as creditors other than of Paul’s Retail”.  Comsta had stopped trading; Comsta had its own creditors; they were summoned to the relevant meetings; there was no point; there was nothing to disclose.

So the question of obligation to disclose does not, in our respectful submission, divorce itself from the question of refraining, but usually the issue of advertence does not arise because of the close connection in point of time between the particular relations between the parties.  Here anomalously the communications or relations between the parties are at points removed from the events which might ordinarily have inspired or enlivened an obligation to disclose. 

In short, what we say is that while it is really an accepted state of affairs that one must consider conduct as a whole, one must consider conduct in accordance with the definition in the statute.  If that conduct involves factually a refraining, then one has to take into account in the conception of conduct as a whole that some conduct does and some conduct does not – or some factual features do and other factual features do not amount to conduct proscribed or within the proscriptions of the Act.

What we say, your Honours, is the applicant was entitled to a finding of fact one way or the other as to the proposition he put forward as to his

understanding of what he ought to have been disclosed in his state of mind and an analysis, hardly a difficult one, as to whether the position was one of inadvertence or its opposite, namely, one of intentional concealment, which was part of what was alleged.  The trial judge did not do that.  He simply judged the matter only on the existence of a reasonable expectation on the respondent’s part and the objective fact of there being no disclosure to fulfil that expectation.  In our respectful submission, the courts below have not addressed the commands of the statute.

I need not labour to your Honour the importance of ensuring that in the daily run of routine cases of this kind an understanding of the position of concepts of where reasonable expectation leads, a refutation of any proposition that of itself it is sufficient to stigmatise conduct as misleading and deceptive and a need to deny that the statute’s definition is restricted only to those cases of mere silence, they are matters of some general importance in our submission.

GUMMOW J:   Thank you, Mr Coles.  We do not need to call on you, Mr Greenwood.

The question whether the conduct in question was, in the circumstances, misleading turns on the facts of the case.  There are insufficient prospects of success to warrant a grant of special leave.  Special leave is refused with costs.

AT 2.27 PM THE MATTER WAS CONCLUDED