Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd

[1999] HCATrans 5

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S136 of 1997

B e t w e e n -

EFFEM FOODS PTY LIMITED trading as UNCLE BEN’S OF AUSTRALIA

Appellant

and

LAKE CUMBELINE PTY LIMITED

First Respondent

IDOBOOK PTY LIMITED

Second Respondent

PETER HORROBIN

Third Respondent

RICHARD SANDS

Fourth Respondent

RAYMOND PRIDMORE

Fifth Respondent

GLEESON CJ
GAUDRON J
KIRBY J
HAYNE J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 4 FEBRUARY 1999, AT 10.18 AM

Copyright in the High Court of Australia

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friend, MR R.M. SMITH, SC, for the appellant.  (instructed by Deacons Graham & James)

MR J.D. HEYDON, QC:   I appear with MR J. STOLJAR for the respondents.  (instructed by Blake Dawson Waldron)

__________________

GLEESON CJ:   Yes, Mr Jackson.

KIRBY J:   Mr Jackson, just before you start, I had drawn to the notice of the parties that in the dim and distant past I sat in a matter in the Court of Appeal of New South Wales in respect of an early phase of the litigation in these proceedings, and I do not feel in any way embarrassed.  The issues raised there do not appear to be in any way really germane to the issues we are going to be discussing.  I had that drawn by the Registrar to the notice of the parties and I understand there is no objection of either party to my sitting.  I will sit.

MR JACKSON:   That is so, your Honour.

GLEESON CJ:   Yes, Mr Jackson.

MR JACKSON:   Your Honours, in this case there is the appeal, the application for special leave to cross‑appeal by our learned friends and the matters raised by their notice of contention.  I propose to deal in‑chief if I may with our appeal and then proceed to deal in reply with the other matters.

The appeal is from the order, if I could take your Honours to it immediately, the order which appears in volume 2 at page 402.  As is apparent from the terms of the order, the effect of the Full Court’s decision was that the appeal succeeded in part, and in part only – that is the respondents’ appeal to that court.  Your Honours will see orders 1, 2 and 3, in particular order 2, referring to the fact that:

There be a new trial of the claims made in paragraphs 3(b), (c) and (d) of the further amended statement of claim –

and then if I could go to the top of the next page:

3.  The Appeal be otherwise dismissed.

The respects in which the appeal succeeded were in relation to three of 24 representations.  I use the term in inverted commas, and I use it, indeed, your Honours, claiming no originality in so doing, because it is the term used by the respondents in their statement of claim to indicate the nature and content of the allegations which they were making.

GAUDRON J:   It seems to me that that might be where this case started to proliferate.  What is the conduct in question in relation to the representations (b), (c) and (d)?

MR JACKSON:   If I may answer that, with respect, by saying it is very difficult to identify what that is, and I was going to say in a moment, if I may, that the Full Court said it was wider than, in effect, what was pleaded.  There was conduct involved but if one looks to see what the conduct was ‑ ‑ ‑

GAUDRON J:   It was silence, was it not?

MR JACKSON:   I suppose it was silence, but it was really the absence of anything, as it were.  If one looks at these representations they relate to the fact that there was an agreement – the W17, et cetera, agreement – which was entered into for the supply of goods on either 11 or 26 February.  The agreement was there, and that is really all that happened.  That is it.  I am sorry to be putting it in a hesitant way, but I do propose to come to this in a little more detail in a moment, but if one is seeking to say what is the difference between the representation, what is the Full Court talking about in conduct, the answer is that it is very difficult, with respect, to see, and more than that, of course, your Honours, doing nothing.

KIRBY J:   Is there something I have missed?  This is just a question, a similar question at the threshold as to the facts being quite detailed, as to what was the suggested motivation on the part of your client to puff up the position of Trawl to its advantage?  What is the suggestion that the respondents put forward as to why your client would have some business interest to make Trawl look a fatter, richer, bigger and more prosperous investment to the respondents?

MR JACKSON:   Your Honour, it could no doubt be put in various ways but perhaps one might identify two aspects of it as being more capital, in effect, than might be thought to come into Trawl because there was some subscription for greater shares, and I do not mean that as being the only source of ‑ ‑ ‑

KIRBY J:   What interest did UBA have in that?

MR JACKSON:   Your Honour, only, I suppose, to have a more stable, more reliable potential supplier.

CALLINAN J:   It was suggested at one stage that if Trawl were in business and operating then there would be more competition among suppliers and that might drive the price down.  That was suggested in one place I saw.

MR JACKSON:   Yes.  Your Honour, the very significant difficulty with that, however, so far as its consistency with the other side’s case was concerned was that a very significant part of the other side’s case was that they were to have an exclusive right in relation to supply of fish of the relevant kinds, except for fish sourced from Western Australia, I think.

KIRBY J:   I am sorry to take you off your course, but it was just a puzzle that I had in my mind as to understanding what it was suggested that was it in it Mr Lees and UBA to the misleading of investors as to the status of Trawl.

MR JACKSON:   Well, your Honour, the answer is perhaps not a lot.  I do not mean that in facetious way, but ‑ ‑ ‑

KIRBY J:   Normally people do not do things, especially business people, unless there is some interest in it for them or their companies or shareholders.  That is the whole point of business.

MR JACKSON:   Well, indeed, your Honour, and your Honours will have seen that in the primary judge’s reasons for judgment he discusses, in considerable length, what were at least the factors that on his findings motivated the respondents into entering into it.  He looked at the fact that the oral communications between Mr Lees and the respondents were at a meeting which, in effect, was a meeting by chance and took place for a short time.

CALLINAN J:   Mr Jackson, could I ask you a question that puzzled me about it and it is probably somewhere in the material.  Does the evidence disclose whether Trawl or a receiver or liquidator ever sued the respondent for damages for breach of contract or, perhaps, for misrepresentation?

MR JACKSON:   Well, there was some litigation, your Honour.  It ‑ ‑ ‑

CALLINAN J:   I saw that because witnesses were cross-examined about what they had said in the Supreme Court.

MR JACKSON:   Your Honour, the precise nature of it, I think – and I may be corrected on this – does not go to the documents which are germane to the present case but rather to events which took place in relation to, I think, a later heads of agreement.

CALLINAN J:   So, the answer to the question really is that there is no evidence that Trawl ever sued the respondent for breach of contract or any other breach of duty of any kind arising out of a failure to perform any agreement or any claim for damages, or anything of that kind, is that right?

MR JACKSON:   That is so.  I am sorry, your Honour, there is an element of complication ‑ ‑ ‑

CALLINAN J:   You might want to think about it and answer it later if it is convenient, Mr Jackson.

MR JACKSON:   Your Honour, it is probably easier if I put it on a bit of paper because Trawl was a party to these proceedings at some point but its claim was dismissed or knocked out in one way or another because of a res judicata and there had been some earlier proceeding but the precise nature of it I, perhaps, could give to your Honour later.

CALLINAN J:   I am sorry, there is just one other question I wanted to ask you at the beginning.  How is it put that the respondent should have, in effect, alerted your client to the possibility that if it could legitimately avoid any contract or arrangements with the respondent, if the respondent was not performing, it would do so, and that that is what it should have told the respondent?  Is that what the case comes down to, in a sense?

MR JACKSON:   Well, your Honour, there are really two cases now if I can put it this way.  One case is the case that was decided in favour of the respondents in the Full Court.  The other is the case in relation to which they failed and that is the one for which they seek special leave.  So, if I can put it this way:  it is representations (b), (c) and (d), which are the subject of the appeal, and 13 which is the subject of the cross-appeal.  In relation to (b), (c) and (d) – and, your Honour, perhaps I could just indicate what they are as I speak because you will see at page 441 in volume 2 that the three representations that are the subject of the appeal are (b), (c) and (d) in paragraph – I am sorry, (b), (c) and (d), I should have said 441 – at page 441 in paragraph 3, and representation (a) was not pressed in the Full Court, so that is the case, (b), (c) and (d) so far as the appeal is concerned.

Now, your Honour, so far as the cross‑appeal, the relevant representation, is number 13 which is in paragraph 20(b) at page 452.  In relation to the first group, at page 441, now what your Honours will see in relation to that is that particulars are given, and the particulars at the bottom of page 441 are that the representations were contained or evidenced by the W contract, that is the fish supply contract.  Then so far as they are to be inferred from conduct, it is, as your Honour Justice Gaudron put to me earlier, that we knew that shareholders would show that contract to people who it was ‑ ‑ ‑

GAUDRON J:   Is knowledge conduct?  This is pleaded without any reference to the terms of the statute.

MR JACKSON:   Indeed, your Honour.

GAUDRON J:   And your side of the record apparently took no objection.

MR JACKSON:   Your Honour would appreciate, of course, that the way in which the pleading was put was a pleading that was one of fraud as well, so that the question of knowledge was germane to that, and your Honours will see the reference to fraud being in paragraph 4 at page 442.  So that your Honour might see why, in a case that did involve fraud, there perhaps was not much point to be taken in the question whether knowledge is properly described as conduct.  Of course the case on fraud failed.  I am sorry, I am not answering Justice Callinan yet – but the case on fraud failed and that is why one sees a rather more anorexic – if I can put it that way – case being presented in the Full Court because all the meat has gone from it, and what was being sought to be done was to salvage something from the remains.

CALLINAN J:   Mr Jackson, what I do not understand really, I think, follows on from what her Honour Justice Gaudron asked you.  How should the vacuum of silence have been filled?  What should the respondents have said?  To take representation (b); is it put that the respondents should have said, “We don’t intend to honour our obligations under the contract”?

MR JACKSON:   Your Honour, something along those lines.  Your Honour will see that the ‑ ‑ ‑

KIRBY J:   It is the appellant, is it not, that should have said this?

MR JACKSON:   Yes, your Honour.

CALLINAN J:   Sorry, the appellant, quite.  Thank you.

MR JACKSON:   That somehow, if we had an agreement and in relation to that agreement we said nothing.  Presumably we are supposed to say, assuming it be the fact, although there is this document which has the form of an agreement which obliges us to take this fish and pay for it at these prices, we do not really regard this as something by which we are bound.

HAYNE J:   Did not the allegation fail at the logically anterior point, that the judge found as a fact there was an intention to perform and the contract was not thought to be a sham and was not a sham?

MR JACKSON:   Indeed, your Honour.

HAYNE J:   That was a finding founded in part at least upon his assessment of the witnesses.

MR JACKSON:   Your Honour, the question – I will come to the detail of it in a moment - was put directly to Mr Lees.  He said that he did intend to honour it and he believed it to be a …..and the judge accepted that evidence.  That was oral evidence which he gave.

HAYNE J:   So there was no misrepresentation on the primary judge’s finding?

MR JACKSON:   Yes, your Honour, in a case that went for weeks and where he saw the witnesses.

HAYNE J:   A case which might be regarded as a monument to legal ingenuity rather than anything more.

MR JACKSON:   Your Honour, I used in perhaps a flippant way the expression anorexia – anorexic before - but it does describe, if I say may say so with respect, the way in which the case now presents itself to the Court.  What I mean by that is that your Honours have seen the nature of the pleading that was made.  It was a case based on the fact that we were propping up a sham or proffering a kind of sham with a view, I suppose in one way or other, to get something more into Trawl and that case was one that failed because the judge just did not accept that. 

Once one got to that position all you had – and I should also say, your Honours, once the judge disbelieved the case made against us of there having been oral misrepresentations made, the case is simply one where there are two documents, one document being the fish supply contract and the other being the heads of agreement.  In relation to the fish supply contract the judge found that we did regard it as a contract and we were bound by it.

He thought in relation to the heads of agreement that it was one where we had the view that it was not legally binding and that was a view which might reasonably have been held and, your Honour, the relevant legal obligation was simply that we would go first to them and ‑ ‑ ‑

GLEESON CJ:   Mr Jackson, to understand the allegation that has been sent back for retrial, could I just ask was it common ground in the Full Court of the Federal Court that contract W17299 was a binding contract?

MR JACKSON:   Leaving aside any view about it, your Honour, any party’s view about it ‑ ‑ ‑

CALLINAN J:   Was the case conducted in the Full Court of the Federal Court and will the retrial be conducted on the basis that contract W17299 was a binding agreement?

MR JACKSON:   Yes, your Honour.

GLEESON CJ:   Then what choice did UBA have as to whether it would honour its obligations under that contract?

MR JACKSON:   Well, your Honour, I suppose Hobson’s choice in the sense that we honoured them or would be sued for them, but we had no legal choice.

GLEESON CJ:   The alternative possibility is that the contract was a sham.  Was that put?

MR JACKSON:   Yes, your Honour.

GLEESON CJ:   And the subject of a finding adverse to that proposition by the trial judge.

MR JACKSON:   Indeed, your Honour.

GLEESON CJ:   Was it put in the Full Court of the Federal Court that the Federal Court should overturn the finding and conclude that the contract was a sham.

MR JACKSON:   Yes, that is so.  Yes, it was, your Honour.  The Full Court, of course, has not adopted that course.

KIRBY J:   And not only on the basis of the assessment of credibility by the primary judge, but the primary judge rested his conclusion also on a list of 11 factors which had a much surer foundation, namely the logic and business efficacy of the arrangements between the parties.  For example, as I understand it, in discharge or pursuit of the written contract, the fish was supplied and more fish was supplied and paid for.

MR JACKSON:   Indeed, your Honour.  One sees that at page 160 through to page 161 in volume 1.

GLEESON CJ:   What I wanted to ask you was this:  the contract was entered into on 11 February 1987?

MR JACKSON:   Yes, your Honour. 

GLEESON CJ:   Presumably, either it was a sham on 11 February 1987, or it was not on 11 February 1987.  As at 11 February 1987, were the respondents investigating the possibility of investing in Trawl?

MR JACKSON:   Certainly as of the 26th they were.  Your Honour, my cavilling is simply this:  the contract bears the date 11th; you will see, however, a received stamp of 26 February on it.  Mr Horrobin had not come onto the scene until 9 March, so that agreement was one in being at the time when the respondents came on the scene.

GLEESON CJ:   It might be thought that a possible way of alleging misleading and deceptive conduct in this context would have been to allege that your client on 11 February entered into a sham contract with Trawl in the hope of thereby attracting potential investors.  But that does not seem to be the way it is put.

MR JACKSON:   Your Honour, one sees at the bottom of page 441 in the pleading that there is something along those lines, that is that we knew that then shareholders were going to show the contract to potential investors, and that, I think, reflects what your Honour was just putting to me.

What we would seek to say, if I can just go back for a moment to page 441, is that the Court will see pleaded there in paragraphs 3(b), (c) and (d) and 4 and 5 the exact case, as it were, an exact case that was being put against us.  If I could just say in relation to what was said by the Full Court at page 391, line 40 in volume 2 - your Honours will see at page 391 at the bottom at line 40 in the passage which goes through to page 392, line 30 - this is I think the part to which your Honour Justice Gaudron was adverting earlier - their Honours say that:

the inquiry is necessarily a wider one:  that is, whether in all the circumstances the respondent’s conduct was misleading or deceptive –

Well, your Honours, as a broad and general proposition, so be it.  One would not doubt ‑ ‑ ‑

GAUDRON J:   Why is that wider than misrepresentation?  It is a different one.

MR JACKSON:   Your Honour, I can only answer by saying that if one looks at the remainder of the passage which goes through to page 392, line 29, no answer appears.  It is impossible, with respect, to understand what the members of the Full Court were endeavouring to convey by the distinction which they sought to draw.

GLEESON CJ:   But the essence of the conduct, as I understand it, is that on 11 February 1987 UBA and Trawl entered into a sham contract which was intended as window dressing to attract investors and that conduct then had a practical consequence in relation to the respondents when, in mid‑March 1987, they began to investigate the possibility of investing.  In other words, the bait was cast when a sham contract was entered into in February and the respondents rose to the bait in March.

MR JACKSON:   Well, your Honour, yes.

GLEESON CJ:   That case may be right or wrong but, in essence, it does not sound very complicated.

MR JACKSON:   Well, your Honour, it is not.  The difficulty with it so far as the case of the respondents was concerned was this, that, as very frequently happens, a plaintiff or applicant bears the burden of establishing all the elements in a cause of action.  If one took, for example, the simple action in negligence, one would have to satisfy the court for a plaintiff on duty, breach, causation, loss and maybe one or two other things.  But if one failed on one issue, the claim failed.  A plaintiff may fail on more than one issue, and that often happens and that is what happened here.

Your Honours, it is frequently of course, as one sees, a reason why special leave is refused in this Court.  The Court says, “Well, you might have a good point on there being an error of law on this element of the cause of action” - where there was a representation, for example, in a fraud cause – “but you failed on reliance, and so no special leave.  You’ve got to get over that too”.  This is a case where there was failure on a number of elements and it is very difficult, with respect, to see – and I will come to the detail of it in just a moment ‑ ‑ ‑

GAUDRON J:   But does it not fail really right at the beginning in this sense?  Once the contract is held not to be a sham, how can it be a misrepresentation in the terms pleaded in (b), (c) and (d)?

MR JACKSON:   Well, your Honour, in our submission, it simply could not because what you had was a situation where the only representation of any kind was that there was a subsisting contract between us and Trawl Industries in the terms of W17, et cetera.

HAYNE J:   Well, is that right?  As alleged there are two kinds of representation in (b), (c), (d), are there not?  The first two about your client’s intentions.  As we have earlier discussed the judge found that your client, in fact, had the intentions that it was alleged it had represented to the other side.  But the third one, (d), is of a different kind, is it not?  It is not said to be a representation about your intentions, rather it is a representation about a party that owes you obligations under a contract and about its performance and capacity to perform its obligations.

MR JACKSON:   Well, your Honour, that is how it was sought to be put, I would accept immediately.  May I say, however, in relation to it, that if one is seeking to obtain that from the contract, and that is the relevant source of it, it is very difficult, with respect, to see, looking at the contract – I have not taken your Honours to that – that it says any more than that we have agreed to take from Trawl fish of these quantities.

HAYNE J:   That brings me at once to the questions of the kind that Justice Gaudron was asking you:  how can there be a representation of the kind alleged in paragraph (d) when all you have is the contract?

MR JACKSON:   Well, your Honour, that is what we would seek to say.  That is all there is; there is the contract.  We could enter into a contract, your Honour, if I could put it this way, with someone which had no provision for itself catching – dealing with fish at all, but someone that was planning to or someone who had access to people who would, and if the question was asked is there a contract by which we are bound to take that tonnage of fish in that time, the answer is yes.

HAYNE J:   The other side then seek to add to it the further fact,       “You knew or suspected, or believed or something, that they could not, or might not, or would not perform”, which again takes you to, well, let it be assumed for the purpose of argument that you knew, believed, suspected that they might not perform, what is the conduct on the part of your client that is then said to be misleading or deceptive?

MR JACKSON:   Your Honour, the conduct could only come from one of two sources - and I am really endeavouring to answer the other side of the question, the other side in a sense - but the conduct, one, is there is the contract.  Now one looks at the contract to see what it says.  But the other thing is by not saying to people, even though we are bound and they are bound, we think they may not be able to perform, perhaps under the current management, I suppose one might answer.

KIRBY J:   Mr Lees did say, did he not, or did concede, that he thought that the contract was not enforceable?

MR JACKSON:   Not this agreement.

GLEESON CJ:   That is the heads of agreement.

MR JACKSON:   The heads of agreement was a different thing.

KIRBY J:   Did he say anything about the contract W ‑ ‑ ‑

MR JACKSON:   Yes, your Honour.  His evidence that he believed it to be binding was accepted by the primary judge.

GLEESON CJ:   The plausibility of the case put for the applicants at first instance, whichever way you look at it, depended, did it not, on the proposition that this was a phoney contract.

MR JACKSON:   Your Honour, as a practical matter that is exactly correct and that is why one has a situation now where the case that is, in effect, found by the Full Court in their favour, and the one that is sought to be advanced, is one that is a kind of remnant of what was a larger, more substantial case.

CALLINAN J:   Mr Jackson, I have trouble in understanding how an enforceable contract can ever be a sham contract.  A party might hope, perhaps, if the other side falls into breach, of being able to take a commercial advantage of that, but an enforceable contract is going to expose the party to damages if there is a default.

MR JACKSON:   Indeed, your Honour.  Let us assume, for example, leaving aside the current parties altogether, that the Trawl Industries shareholders and directors had arrived at a situation where the shareholding of the company was sold and its control changed completely.  Let us say they sold it to one of the very large fishers and processors in Australia, one of the large West Australian ones, for example.  Now, your Honours, in those circumstances it may well be that a believed inability to perform is quite changed.

GLEESON CJ:   Mr Jackson, it would be of assistance to us if you could just state in a summary form the issue that you see as thrown up by the Full Court’s conclusion that there was some kind of fundamental misdirection of himself by the trial judge when he came to deal with the issue concerning these representations.

MR JACKSON:   Your Honour, there are several elements, of course, and may I seek to deal with them separately.  Now, there is the making of the representation on the one hand, there is the question of whether it was misleading, and the third thing is, whether there was reliance upon it.  Now, may I say, your Honours, in relation to the question of reliance on it, there were findings of fact by the judge that in respect of these matters there was not reliance.  The judge considered this at great length.  I will come to the detail of it, if necessary, later.  The judge considered that at great length and made specific findings that they did not rely on the representations.

CALLINAN J:   The respondents were commercially fairly sophisticated people.  They made all sorts of inquiries, did they not, themselves?

MR JACKSON:   Indeed, your Honour, and the judge made specific findings about the factors that did motivate them to enter into them and they were that they saw it as a fantastic opportunity.

CALLINAN J:   The lure of fabulous profits in the short term.

MR JACKSON:   Yes.

GLEESON CJ:   But it would not have been hard to conclude reliance if he had found that this was a phoney contract, would it?

MR JACKSON:   No, your Honour, I do not suggest otherwise.  So, that is one thing, if I could start at that end, reliance.  There is a finding of fact by the judge which is inevitably based on, in some respects, credibility in respect of at least 3(b) and 3(c).  Your Honour, so far as the question of misrepresentation is concerned, the judge specifically found that he did not accept the proposition and indeed accepted the reverse of the proposition that we did not intend to honour our obligations under the contract and the genuineness.  That is (b) and (c).  In respect of that he found there was no misrepresentation and indeed the evidence demonstrated that in the period up to the middle of the year we had in fact accepted all the fish they had been able to supply, in one respect there was more than what was required of a particular fish, and that they appeared to be in a situation where they were able and in fact supplying fish which complied with the terms of the contract.

So, those two aspects of the case, it is very difficult, with respect, to see now the matter to which I will now come which affected the Full Court played a part in relation to it.  What the Full Court did was to say in relation to representations that the approach taken by the primary judge was an approach in which he had said that credibility was something that one had to look at with some care because of the length of time that had gone by, and so, one needed to look, hardly surprisingly, and as, in fact, he did, at documents – contemporaneous documents – he had to look at the probabilities of the matter.

They said, however, that when it came to these representations he had somehow failed to appreciate that the representations that were being relied on in 3(b) and 3(c), for example, and 3(d), were all representations which were based on documents, and that he was in error in that.  The judge specifically did deal with the fact, did refer to the fact, that these representations ‑ ‑ ‑

GLEESON CJ:   The representations relating to allegedly sham documents.

MR JACKSON:   Yes.

HAYNE J:   And representations as to intention.

MR JACKSON:   Yes, your Honour.  Perhaps if I could take you to our written submissions where we deal with this aspect in paragraphs 27 and following.  I was just going to give your Honours two references – this is in relation to paragraph 32 – two references where the judge said specifically that these representations did not depend on oral conversations.  You will see that in volume 1 at page 159 lines 10 to 25 and your Honours will see at the top of the page, speaking of these representations, the judge says:

These four representations are said to be in writing or alternatively partly in writing and partly to be inferred from conduct.

What he is doing is to paraphrase the particulars.  It is clear from that passage that the judge understood how the representations were sought to be made.  When one goes to page 164 about line 22 you will see that his Honour says:

I do not accept this submission for the reasons set out below:

And the first reason is this:

the representation is not said to come from anything stated to any of the applicants by UBA.  It must be derived from the contract itself and silence on the part of UBA in the context of the circumstances in which it was signed and issued. 

Now, your Honours, before the Full Court, when one looks at that, the first reason the judge states, when one looks at the view taken by the Full Court, that the Full Court saying somehow the judge’s final conclusion on credit ‑ ‑ ‑

GLEESON CJ:   The passage critical to this appeal is the paragraph that appears on the top of page 395, is it not?

MR JACKSON:   Yes, your Honour.  Indeed, your Honour, the first paragraph on page 395 and what their Honours are doing there is to say - they say:

There are, in our view, difficulties with this reasoning –

“this reasoning” being that immediately referred to on the preceding page, 394.

GLEESON CJ:   In particular, 394, at lines 41 to 43.

MR JACKSON:   Yes, your Honour.  Now, they say, your Honours will see, at about line 15 on 395:

We acknowledge that such reasoning may have been appropriate in rejecting the appellants’ case so far as it was based on the alleged oral misrepresentations –

and then their Honours proceed.  But, your Honours, the two passages to which I referred a moment ago in the primary judge’s reasons make it absolutely apparent, with respect, that the judge understood exactly the task upon which he was committed.

GLEESON CJ:   But the proposition is that the claims with which we are concerned, that is the misrepresentations, (b), (c) and (d), are grounded on written material, the existence of which is not disputed.

MR JACKSON:   Indeed, your Honour.

GLEESON CJ:   But if, in essence, those are claims that a contract was a sham, that is a claim that necessarily goes beyond and can only be validated by reference to considerations outside the written material.

MR JACKSON:   Quite, your Honour.  That is in relation to whether it was a misrepresentation, so far as the making of the representation is

concerned.  If all that is said to consist of are the two things to which the judge referred and the two things particularised, namely the existence of the document, as it were, on the one hand and, on the other hand, saying nothing more about it, in the knowledge that it is to go to people who may be interested in buying.  All the case was that was where one found it.  The judge recorded that.  That is how he dealt with the case.

GLEESON CJ:   But was the judge’s reasoning in relation to these three misrepresentations:  one, there was no representation one way or the other made by UBA to the investors about the genuineness of this contract; two, in any event it was genuine contract; and three, in any event, there was no reliance by the investors upon any conduct on the part of UBA in relation to this contract?

MR JACKSON:   Your Honour, certainly 2 and 3 of what your Honour put to me.  The judge said that he found that there was no misrepresentation.  It seems open that he was finding also that there was no relevant representation.

GLEESON CJ:   Yes, to say that there was no misrepresentation is a compendious expression.

MR JACKSON:   Indeed, your Honour.

GLEESON CJ:   It could mean either there was no representation or it could mean the representation was not false, or it could mean both.

MR JACKSON:   Yes.  Your Honour, the point we would seek to make about it is that if it be that the representation is, as pleaded, to be contained from the two sources to which I referred, it is plain that the judge understood that to be the position and, with respect, the view taken by the Full Court ascribes to him a course of reasoning which he did not, in fact, adopt.

GLEESON CJ:   We think that we would be assisted by hearing from Mr Heydon at this stage.  Yes, Mr Heydon?

MR HEYDON:   Your Honours, in view of some of the questions which have been addressed to Mr Jackson, particularly in relation to the question of what the conduct was and in relation to Justice Kirby’s and the inquiries of other Justices about the motivation alleged, it might be convenient to put orally in short form what we have put in our notice of contention written submissions to indicate, as it were, the background to events at the time in mid‑March when the W contract came into the hands of the present respondents.  At that time Trawl had been in business for a couple of years.  It had entered a number of contracts with UBA.  It had only succeeded up to the beginning of February 1987 in producing 400 tonnes of fish against a very much larger contractual obligations to produce and Mr Lees accepted that they had performed very poorly.

The W contract, the date of which has variously been said to be 11 February or 26 February is, in truth, to be dated 26 February because that is when Mr Lees finally issued it.  He had negotiated various aspects of it early in February as to both tonnage and price and though it is stamped 11 February it did not, in fact, come into the hands of the other side until the 26th.  It was never signed by the other side but the parties acted on it and accordingly it came into contractual force.  Six thousand two hundred and fifty tonnes are to be supplied under that contract which was a figure 15 times greater than the total tonnage that had ever been supplied before February.

GLEESON CJ:   Was that the amount or the maximum amount?

MR HEYDON:   It was the amount to be supplied.  Uncle Ben’s ordered a total of 6,250 made up in various categories for different types of fish, so it was both the maximum and the actual.  The other agreement to which reference has been made was the heads of agreement.  There had been earlier heads of agreement and one was in force, the third one, from September 1986.  Between the heads of agreement with which we are concerned which was eventually executed on 26 March and the W contract was a close relationship, many of the terms of supply, many of the duties of the seller of the goods under W17299 and the buyer were found not in it but in the heads of agreement.

That W contract was treated by the parties as being the first in a series of six monthly W contracts to be issued under the heads.  I will for other purposes perhaps go to the details of those contracts later.  I will just flag if I may for the moment the fact that there was considerable emphasis and detail in both documents on the need for that which was supplied under the W contract to comply with specifications.  The relevant specifications are essentially specifications for different types of fish to be frozen to specific temperatures in a specific number of hours.

Your Honours have been raising some questions about, as it were, the gap between the issuance of the W contract on 26 February and the fact that the investors did not come onto the scene until the middle of March.  The position in a nutshell was this:  though Mr Lees did not know about these investors until the middle of March and perhaps until he actually met them on 18 March, it was known to Mr Lees that investors generally were being sought to be interested in taking up shares in Trawl.  On 19 January Mr Lees knew that Trawl was trying to buy a lease, a 56‑year lease, or enter into a 56‑year lease, of its blast freezer and cold store which up to that point it had no rights to use.

The position up to that point was that such fish as it was processing was brought there, gutted and headed, if the fish had to be, in a room which Trawl had some sort of lease or licence to use, and thereafter the fish were handed over to the Port of Geelong Authority and the Port of Geelong Authority, as it were, in their own right would do the blast freezing and the cold storage.  The contemplation was on 19 January that Trawl would get a lease and in effect become a more integrated operation.  The problem was it was going to cost 1.5 million to enter that transaction.  Mr Lees was also aware around this time that Trawl had plans to try and improve and refurbish the plant.

Mr Lees in his evidence in‑chief, his witness statement, accepted that on 28 February he had a conversation with the gentlemen who were then running Trawl, the people who were the shareholders in Atasco, its then proprietor, pointing out that they wanted to raise additional funding, they wanted to refurbish the plant, they wanted a long‑term arrangement with Uncle Ben’s.  Mr Lees said he would give them a letter of intent or heads of agreement “which you can show to prospective investors or lenders to establish UBA’s bona fide long‑term commitment” and that ‑ ‑ ‑

KIRBY J:   Just pause there.  There was no corporate relationship between Trawl and the appellant?  There was no common shareholding or common offices?

MR HEYDON:   No, the relationship was purely contractual.

KIRBY J:   They were at arm’s length.  One was, as I understand it, the Australian branch of a large multinational corporation with huge resources and one of the biggest of its kind in this part of the world and the other is a relatively small‑time fishing operation.

MR HEYDON:   That is so.  There was no shareholding relationship or other structural relationship between them.  Their only relationship was this series of contractual relationships and heads of agreement relationships.

KIRBY J:   So just why would Mr Lees go about, quite apart from the judge’s findings on this, puffing up Trawl to deceive investors who he did not know, against whom he had no animus?  What is in it for the appellant or Mr Lees?

MR HEYDON:   The argument put to the trial judge was this:  Mr Lees and UBA - and Mr Lees is the relevant executive for all purposes.  He was the senior wet raw materials buyer.  UBA’s policy was to increase the number of suppliers to it by the end of 1987, in other words the end of the year, the beginning of which we are examining events.  A further aspect of its policy was to reduce dependence on imports.  Mr Lees said in uncontroverted evidence that he told Horrobin and Pridmore that Uncle Ben’s were concerned about the long supply lines from places like Thailand.  He was concerned with problems of the Australian dollar fluctuating, this is 1987 shortly after Mr Keating spoke of the Banana Republic.  The local supplier, accordingly, was much more attractive than imported supply.  He agreed in evidence that he was seeking to develop local supply as an alternative to Asian supply.  Another officer, Mr Armstrong, who was Mr Lee’s superior, agreed that that was their policy.

Jack Mackerel was, according to Mr Lees who would know, a type of fish particularly suitable for pet food and was the largest resource of fish suitable for pet food in Australian waters.  It had only one competing use and that was to make fishmeal.  Jack Mackerel is fished in the only proven Mackerel grounds off the coast of Tasmania.  Uncle Ben’s had their pet food factory in Wodonga on the Victorian border.  The Trawl plant, if you could call it their plant, as at January to March 1987, was at Geelong and the fish was off the coast of Tasmania.  So Trawl, as it were, was geographically were located.

The Geelong complex, whatever its deficiencies and whatever the need to expand it, was regarded by Uncle Ben’s has having a substantial cold store.  The common ground in the evidence is that it was 1,500 tonnes capacity, and Mr Lees regarded cold storage as very hard to get, particularly for fish.

Mr Lees told the investors in uncontroversial evidence, that “Trawl is attractive to us because it is in the right place, it has a large cold storage and blast freezing capacity”.

KIRBY J:   Now, all of this is business sense.

MR HEYDON:   Yes.

KIRBY J:   It does not explain why hard-nosed businessmen like Mr Lees would take that extra step and move from something which is generally to its commercial advantage to, what is essentially, a fraudulent misrepresentation about ‑ ‑ ‑

MR HEYDON:   The motivational picture is not quite complete, yet, but nearly completed.  Despite the perceived advantages of Trawl it had disadvantages at this time.  Disadvantage number one was that while the last freezer and cold store were run by the Port of Geelong Authority it was subject to operational constraints, namely, it only worked a nine‑day fortnight and, secondly, it only worked for about eight hours a day, from 7.45 in the morning until 4.30 at night.  When large quantities of fish are caught it is necessary to have, as it were, 24‑hour freezing to try and get them frozen, according to specification, in the best volumes possible.  If it were possible to get the Port of Geelong Authority out by reason of them only becoming a landlord, and Trawl in there as lessee, both those problems would go away, there would be no operational constraints and no working to rule.  So, it would be advantageous if Trawl somehow or other could acquire the 56 year lease and somehow or other could carry out whatever refurbishment was necessary. 

Now, the Full Court said that at this time Trawl was in a difficult financial position, and I will not weary the Court with it but there are a number of items of evidence to indicate that.  It may be a matter of legitimate debate as to how acute their problems were, but they were in a difficult financial position and they unquestionably - the gentleman running the company wanted to get investors in to fund the company more fully in order to carry out the improvements and acquire the lease.

The case put to the trial judge was that Mr Lees wanted to ensure that investment came in because it was to Uncle Ben’s advantage that that investment come in but Mr Lees knew, one, that the tonnage called for under the W contract was, to start with, considerably greater than the then existing W contract and, secondly, 15 times greater than whatever had been produced before; two, there had been at least four dramatic incidents indicating an inability on the part of the blast freezer at the Port of Geelong Authority to freeze to specification.  Accordingly, the case was put that his motive was to try and induce the investment in to provide an improved heads of agreement and issue the W contract in order to help that investment come in. 

He could not have had any genuine expectation that 6,250 tonnes would actually be produced but that did not matter very much to him because he had more than enough fish ordered with other suppliers.  He was happy to take whatever fish Trawl would produce because it was in the long term interests of Uncle Ben’s to get Trawl up as a reasonably competent and a reasonably – a supplier capable of supplying in adequate volume in the future.  Accordingly, Mr Lees was not motivated by any sort of independent malignancy towards the investors. 

Your Honour, the Chief Justice – if I can just clarify this – has been using expressions like “sham” and “phoney” and Justice Callinan observed that if you have a contract a contract is a contract and it is enforceable.  The case abandoned, on appeal, which is the representation (a) or (i) case, was that it was a sham in what I will call the Snook’s sense or the Sharman sense, namely, it was either a transaction of absolutely no legal force whatever or it cloaked some other real bargain.  That was not in issue in the Full Court.  What was in issue in the Full Court, flowing on from controversy at the trial, was that although it was a perfectly valid contract, it was not genuine from Uncle Ben’s point of view in that they knew that the likelihood of it being fully performed was not great.

GLEESON CJ:   If a contract is not genuine from the point of view of one of the contracting parties, it is a sham unless it is genuine from the point of view of the other contracting party.  Are you suggesting that it was genuine from the point of view of Trawl but not genuine from the point of view of Uncle Ben’s?

MR HEYDON:   The evidence does not reveal what Trawl’s attitude was, but let us assume that Trawl regarded it as a perfectly valid contract which they were going to try to perform.  Uncle Ben’s, too, regarded it as a valid contract, which, if they had been sued on it for breach, they would have to take the consequences.

HAYNE J:   And upon which they could sue for breach.

MR HEYDON:   On which they could sue for breach if Trawl was worth suing for anything.

GLEESON CJ:   But that was your case.  Your case was that Uncle Ben’s regarded it as a contract which they would enforce if necessary.

MR HEYDON:   Uncle Ben’s regarded it as a contract which they would perform if they thought it necessary, but they would regard their own self‑interests if they did not want to perform it.  They were prepared to accept Trawl’s performance, and if Trawl could supply reasonable volumes of fish at good quality, that would suit Uncle Ben’s.  It would get Trawl going for the future.

GLEESON CJ:   I am just trying to understand the meaning of representation (c) on page 441.  The alleged representation is:

that the contract was a genuine one intended to be fulfilled by the parties to it –

What was the true fact alleged?

MR HEYDON:   The true fact alleged which, as it were, contradicted that, was that Uncle Ben’s intended only to fulfil it should its self‑interest from month to month make that appropriate.

CALLINAN J:   But, Mr Heydon, you said a little while ago, and I took this to be your complaint, that Uncle Ben’s knew that Trawl would not be able to perform the contract, and that that was the fact that should have been disclosed.

MR HEYDON:   I may not have used those words, but your Honour has, I think, grasped the point of one aspect of our arguments, yes.

CALLINAN J:   So that one party to a contract, with whom another party may be dealing, has to give an assessment.

KIRBY J:   A little bit of financial advice.

CALLINAN J:   But to make an assessment of the capacity of a party with whom it is dealing.  Has to make an honest and accurate assessment to somebody else who might be affected if the contracting party cannot perform its contract.

MR HEYDON:   In some circumstances, yes, and in some circumstances, no.

CALLINAN J:   That is a fairly far‑reaching commercial proposition, is it not?

MR HEYDON:   It depends on the circumstances.  We would submit, no.

GLEESON CJ:   But bearing in mind that this is a case of fraud ‑ ‑ ‑

MR HEYDON:   As to two of the representations, yes.

GLEESON CJ:   Well, as to the ones we are now asking you about.  We need to be clear in our own minds as to the precise nature of the fraud that is alleged.  We start off with the existence as from 26 February 1987 of a contract for the supply and acceptance of fish – contract number W17299.  Then investors arrive on the scene and one party to the contract, with the knowledge and approval of the other party to the contract, shows it to the investors in a context where the investors are likely to be encouraged by the existence of the contract.

MR HEYDON:   Yes, your Honour.

GLEESON CJ:   Those facts are simple and clear enough.  Now, what is the nature of the fraud that was practised on those investors in relation to that contract?

MR HEYDON:   The conscious non-disclosure of the fact that while the contract is saying, “Six thousand two hundred and fifty tonnes will be delivered and $4 million will be paid for them and that will cover your cash flow investors”, the truth was otherwise because Uncle Ben’s knew that the chances of anything like 6,250 being delivered were low, and the chances of any of it being delivered to specification were, on one view, zero, unless large sums were spent on blast freezing.

GAUDRON J:   Well now, what is the conduct?

MR HEYDON:   Can I answer that question by drawing a distinction?  Assume that you just have the contract worked out between Uncle Ben’s and Trawl and assume that it is a perfectly valid contract that either side can sue on if they wish and ‑ ‑ ‑

GAUDRON J:   It is.

MR HEYDON:   Yes, it is.

GAUDRON J:   The findings are that it is.

MR HEYDON:   And it is not in controversy.  At that point there is no representation to any third party at all, but when the circumstances which constitute the conduct are:  one, that ‑ ‑ ‑

GAUDRON J:   Circumstances do not constitute conduct.  What is the conduct?

MR HEYDON:   The conducts is ‑ ‑ ‑

GAUDRON J:   Conduct may take its character from the circumstances but conduct is doing something?

MR HEYDON:   The conducting is permitting Trawl to show the contract ‑ ‑ ‑

GAUDRON J:   Permitting?

MR HEYDON:   Yes.

HAYNE J:   How?

GAUDRON J:   But how?

HAYNE J:   What did they do?

KIRBY J:   Could I just ‑ ‑ ‑

GAUDRON J:   I mean, permitting is not necessarily conduct.

MR HEYDON:   Permitting is a piece of behaviour.  Conduct is behaviour, it is a general word ‑ ‑ ‑

HAYNE J:   How did they permit?Why was their permission necessary?  What did they do?

MR HEYDON:   They acceded to requests from those who were running Trawl to increase the tonnages and increase the prices, knowing that the contracting question was going to be used for that purpose.  They ‑ ‑ ‑

HAYNE J:   No, I am sorry, your proposition as I understood it was that they permitted Trawl to show the contract.  Have I misunderstood the proposition?

MR HEYDON:   No, that is right.

HAYNE J:   What is the permitting involved?  What did they do that constituted permitting Trawl to show?

MR HEYDON:   Handing it over and knowing, in the light of what had happened in the months of January and February, that it was then going to be handed over to investors.

HAYNE J:   That is to say, making the contract knowing that it would be shown.  Is that the proposition?

MR HEYDON:   Yes.

KIRBY J:   Shown to investors such as the respondents?

MR HEYDON:   Yes.

KIRBY J:   What is the state of authority on the Act?  Does it contemplate misrepresentation or conduct that is, or includes, omission?

MR HEYDON:   It does.

KIRBY J:   That is to say, a failure to do something.  Is there a positive duty on a business person, following up Justice Callinan’s questions ‑ ‑ ‑

MR HEYDON:   Section 52 speaks of ‑ ‑ ‑

HAYNE J:   If I might add to that, if you would be good enough to relate that authority to the facts of the case so that you might tell us how that authority reveals the misleading conduct?

MR HEYDON:   Can I start with one provision in the Act and then go to, in brief, the authority?  Section 52, as we all know, deals with conduct.  Conduct receives a form of definition in section 4(2) of the Trade Practices Act.

KIRBY J:   Mr Heydon, I am missing some of your submissions.  You have a mellifluous and deep voice and it may be the microphone and we will have a look at that at lunchtime, but I do not want to miss a word, especially now.

MR HEYDON:   If your Honour just indicate when you cannot hear, I will ‑ ‑ ‑

KIRBY J:   You had gone from facts on to law.

MR HEYDON:   Section 4(2), does your Honour have that to hand, of the Trade Practices Act?  It says that:

a reference to engaging in conduct shall be read as a reference to doing or refusing to do any act –

and then there are various inclusory integers which are not really relevant to section 52 but are to section 45 for example –

(b)  a reference to conduct…..shall be read as a reference to the doing of or the refusing to do any act, including –

and then various other things that are more relevant to 45 than 52 –

(c)  a reference to refusing to do an act includes a reference to:

(i)  refraining (otherwise than inadvertently) from doing that act;  or

(ii)  making it know that that act will not be done.

Then, paragraph (d) I do not think bears on the present problem.  Now, his Honour ‑ ‑ ‑

GAUDRON J:   But does it mean that absolutely?  How has that been construed?  At the present moment I am refraining from having lunch in a well-known restaurant.  So what?  Refraining, surely, only constitutes relevant conduct in a context in which you know or ought to know something, is that right?

MR HEYDON:   Well, probably, no.  I have not caught a question, though I think someone wants to ask one.

GAUDRON J:   When do you say refraining takes on a relevant character to constitute conduct?

MR HEYDON:   In the circumstances of this case, for example?

GAUDRON J:   No, as a general proposition, as a principle of law.

MR HEYDON:   Section 52 depends on there being some trade and commerce involved.  In so far as what might be called pure silence is concerned, refraining involves advertently not disclosing something in that trading or commercial activity.

GAUDRON J:   Advertently.

MR HEYDON:   I say that because of ‑ ‑ ‑

GAUDRON J:   Inadvertent - yes.

MR HEYDON:   As your Honour follows.  But you have now ‑ ‑ ‑

GAUDRON J:   Advertently.  That is to say you have to turn your mind to the question, does it mean that?

MR HEYDON:   Yes.  That is what the words would appear to mean.

GAUDRON J:   So can you establish it – is there evidence that these people turned their minds to the question of telling the investors?

KIRBY J:   You say it is an inference from the whole circumstances, I suppose.

MR HEYDON:   Yes.

KIRBY J:   There are no admissions, I imagine, from Mr Lees on that point, or were there?

MR HEYDON:   I do not think there are any admissions from Mr Lees on the point as to the W contract.  He accepted that the heads would be shown to investors to induce investment.  The head ‑ ‑ ‑

KIRBY J:   But as was accepted earlier, that is not really relevant to the contract.

MR HEYDON:   It is, your honour, for this reason.  As I said just tangentially earlier, the heads and the W contract are closely interlinked documents.  The W contract, though earlier in date, was issued as an addendum to the heads, was expressed to be subordinated to the heads and was the first in the series of W contracts that, over the long term of the 26 March heads of agreement, would be successively made, and most of the trading obligations involved in the performance of the W contract, except the payment of price and the actual supply of the quantities of fish, were to be found in the heads.  They were interlinked.  One was a sort of umbrella contract beneath which a series of more specific sale of goods contracts proceeded.

GLEESON CJ:   Mr Heydon, I understand from what you are telling us that there was a significant change in the nature of the case that was being made out on behalf of your clients in the Full Court of the Federal Court, that, at first instance, the allegation was that this W contract was a sham whereas, in the Full Court, the finding of the trial judge that it was not a sham was not challenged.

MR HEYDON:   Yes, it was a change in this sense, your Honour:  at trial all 24 representations were put, I suppose, additionally and alternatively.  So that at trial allegation No 1 was it was a sham, a non‑contract, but, 2, if it was, it was not genuine in the sense I have been describing.  The change was in this respect, to abandon the contentions in relation to the first representation.  So it was a change by reduction rather than transformation.

GLEESON CJ:   But that carries this problem, does it not?  I do not have any difficulty in understanding how you could relate to section 52 of the Act the following situation:  suppose a person was contemplating investing money in a company that manufactured glass bottles and a brewery which had a commercial interest in encouraging investment in the glass company entered into a long‑term supply contract for glass bottles with the glass manufacturing company which it knew and intended would be shown to potential investors and which contract was a sham.  I do not have any difficulty there identifying conduct which is misleading and deceptive on the part of the brewery. 

But the position becomes much more subtle once you accept that the contract was not a sham.  When you then come to identify conduct that is misleading and deceptive, you have to say there is something about the behaviour of the brewery in relation to a valid and binding contract that constitutes conduct in contravention of section 52.  Then you have the issue that brings us to this Court, that is to say a conclusion by the Full Court that in dealing with that question the trial judge misdirected himself in a fundamental manner by what he said.  That is repeated in the passage to which attention was earlier directed.

MR HEYDON:   Yes.

GLEESON CJ:   So the two questions that we have to consider are:  first of all, granted that the contract was a valid and binding contract and not a sham, what is the alleged misleading and deceptive conduct?  Second, in the light of the answer to question one, where is the error in the approach that the trial judge took to the resolution of the issue?

MR HEYDON:   I hope in due course to deal with both of those, not immediately.  Can I just say this:  in relation to your Honour’s example, a contract for the long‑term supply of beer bottles, attractive to an investor in the bottling company, which was a sham would be capable of causing very considerable injury to that investor.  A contract which, though not a sham and perfectly binding, was regarded by one side as one which it would not perform if it did not want to and would not accept contractual performance if it did not want to, which piece of information was not disclosed to the investor in the bottling company, would also be capable of causing that investor a great deal of harm.

GAUDRON J:   That just…..with of the whole nature of the law of contract.  I mean, true it is that harm can come about in all sorts of ways for all sorts of reasons, but a contract is a contract.  You do not perform your side of the bargain, you are liable in damages.  The measure of damages in contract is that measure of damages which is intended to put you in the position you would have been if the contract had been performed.

MR HEYDON:   Your Honour, what your Honour says is perfectly correct, but it, with respect - at least it does not torpedo the point I was just making.  For Trawl to sue ‑ ‑ ‑

GAUDRON J:   It certainly makes it more difficult to see.

MR HEYDON:   For Trawl to enjoy the benefits of its rights under the law of contract against Uncle Ben’s is not necessarily an easy thing to do.  People like Uncle Ben’s have to be ‑ ‑ ‑

GAUDRON J:   You are trying to turn a contract into a lifelong marriage relationship.

MR HEYDON:   No, your Honour.  To say to Uncle Ben’s, “You have just rejected some of our fish with no reason”.  And Uncle Ben’s say, “Well, we are big and we can push you around”.  We will receive the retort, “Yes, I am afraid you are big, and so I have to be polite to you”.  There is no point in Trawl whose only real customer – at least in early ’87 – was Uncle Ben’s, and who was obviously an extremely attractive customer because of its size and needs - there would be no point in an organisation like Trawl standing its ground on contractual rights and seeking to get summary judgment from a court.  That would be suicide.

It lists the amount involved, $1.8 million in the next paragraph.  Your Honours will see in the last paragraph on page 160, he refers to the fact that there was never any suggestion by us that we were not prepared to take any of the fish contracted for and which they were able to supply, and he refers to the tonnage at the top of the next page.  There is one typographical error, your Honours, in line 14, that is kilograms rather than tonnes.

GLEESON CJ:   Yes, thank you, Mr Jackson.

MR JACKSON:   The budget point, your Honour, is page 75 in his Honours reasons, about line 24.  I am not certain that is the passage your Honour was referring to as this is a letter to the ANZ Bank in April 1987 which spoke of the refurbishment and so on.  It commences at page 74 line 40.

GLEESON CJ:   Yes, thank you.  Yes, Mr Heydon.

MR HEYDON:   If I may just deal with a couple of matters arising from what Mr Jackson has said in relation to the special leave application on the cross‑appeal.  He submitted that because there was pleaded an oral representation that there would be exclusivity, that that was inconsistent with reliance on representation (xiii), or what was found by his Honour in that area, also for a narrower form of exclusivity.  We submit there is no inconsistency between contending that one rely both on an oral representation to a certain effect, and asking a court to infer from circumstances that there was reliance on another narrower representation which the court found.

Justice Callinan, if I can go to another point, asked a question about whether there was any finding as to whether or not the appellant, Uncle Ben’s, attempted to negotiate.  I think the answer to the question is there was no finding one way or the other.  We would just point out, without going to the detail of it, that on the bottom of page 16 and most of page 17 of our written argument in support of the cross‑appeal, a number of incidents in the evidence appear in which Mr Pridmore, in particular, complained to Mr Lees, as the months wore on from August and September 1987 into the next year, about occasions where other people appeared to be taking fish.  That is evidence, at least, of a perception on the part of Mr Pridmore that this exclusive right of negotiation was not being adhered to.  There are also, incidentally, occasions on which Mr Lees did not tell the facts about his position on that matter.

The final matter is this.  Mr Jackson pointed out or submitted that no damages could have been obtained, in the circumstances, for breach of the promise in the heads of agreement which corresponds to this representation and drew attention to a finding on page 220 that in the events which had happened no damages could have been recovered.  That may very well be so.  It does not, however, alter the fact that if the representation were made, and if it were relied upon, it induced the investors into a contract in respect of which they can claim damages under section 82.  In other words, the investor’s case is not damages for breach of the contract, it is damages caused by being led into a large investment which turned out very unprofitably.  Those are the only points I wish to make in answer.

GLEESON CJ:   We will reserve our decision in this matter and we will adjourn until 10.15 on Tuesday next.

AT 4.08 PM THE MATTER WAS ADJOURNED