Flightdeck Geelong Pty Ltd v All Options Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Flightdeck Geelong Pty Ltd v All Options Pty Ltd [2020] FCAFC 138

Appeal from: All Options Pty Ltd v Flightdeck Geelong Pty Ltd [2019] FCA 588
File number: VID 997 of 2019
Judges: MARKOVIC, DERRINGTON AND ANASTASSIOU JJ
Date of judgment: 14 August 2020
Catchwords:

CORPORATIONS – legal capacity and relations with outsiders – extend litigation procedure – appearance in court by company and representation – application by company to be represented in proceedings by non-lawyer – matters which may be considered – no evidence of company’s financial circumstances – complex case too difficult for proposed lay representative – no explanation for delay in applying for leave

PRACTICE AND PROCEDURE – self-represented litigant – duty of court to assist – extent of court’s obligations – absence of detriment flowing from any alleged lack of instruction from trial judge
Legislation:

Competition and Consumer Act 2010 (Cth), Sch 2

Corporations Act 2001 (Cth)

Evidence Act 1995 (Cth)

Federal Court of Australia Act 1976 (Cth)

Federal Court Rules 2011 (Cth), rr 4.01, 36.01

Cases cited:

AA Shi Pty Ltd v Avbar Pty Ltd (No 4) [2010] FCA 878

Abram v Bank of New Zealand [1996] FCA 635; ATPR 41-507

Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation (Cth) [1983] 1 NSWLR 1

AMF15 v Minister for Immigration and Border Protection (2016) 241 FCR 30

Applicant NAFF of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 221 CLR 1

Australian Competition and Consumer Commission v Adata (Vic) Pty Ltd (No 2) [2015] FCA 272

Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd [2004] FCA 1361

Australian Competition & Consumer Commission v Universal Sports Challenge Ltd [2002] FCA 1276

Australian Securities and Investments Commission v Cycclone Magnetic Engines Inc [2009] QSC 58

Barghouthi v Transfield Pty Ltd (2002) 122 FCR 19

Bay Marine Pty Ltd v Clayton Country Properties Pty Ltd (No 2) (1986) 8 NSWLR 104

Bhagwanani v Martin (1999) 204 LSJS 449

Browne v Dunn (1893) 6 R 67

Bulstrode v Trimble [1970] VR 840

Clark v New South Wales (No 2) [2006] NSWSC 914

Coulton v Holcombe (1986) 162 CLR 1

Cytel Pty Ltd v Peoplebank Recruitment Pty Ltd [2006] FCA 985

Dairy Farmers Co-operative Ltd v Azar (1990) 170 CLR 293

Damjanovic v Maley (2002) 55 NSWLR 149

Dietrich v R (1992) 177 CLR 292

Downes v Maxwell Richard Rhys & Co Pty Ltd (in liq) (2014) 46 VR 283

Ex parte Aala (2000) 204 CLR 82

Gambaro v Mobycom Mobile Pty Ltd (2019) 271 FCR 530

Hamod v New South Wales [2011] NSWCA 375

House v The King (1936) 55 CLR 499

HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640

Jankovic v Minister for Immigration and Ethnic Affairs (1995) 56 FCR 474

Johns v Australian Securities Commission (1993) 178 CLR 408

Jones v Dunkel (1959) 101 CLR 298

King v Delta Metallics Pty Ltd [2013] FCAFC 93

MacPherson v R (1981) 147 CLR 512

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Details
Case
[2020] FCAFC 138
Decision Date

CaseChat Overview and Summary

In the case of Flightdeck Geelong Pty Ltd v All Options Pty Ltd, the appellants, Flightdeck Geelong Pty Ltd and its director, Mr. Mathews, sought to appeal against findings of misleading and deceptive conduct made by the trial judge. These findings led to the conclusion that the appellants had induced the respondent, All Options Pty Ltd, to purchase a business at an inflated price. The primary judge found that the financial figures provided by the appellants were deliberately falsified, and no challenge was made to these findings on appeal. The primary issues for the court to decide were whether the appellants' lack of legal representation constituted an error in procedure and whether the trial judge had an obligation to further assist the appellants in understanding the proceedings.

The court considered the extent of its obligations in assisting self-represented litigants and whether any failure to provide further instruction had caused detriment to the appellants. It was noted that the appellants had not presented evidence of any financial circumstances that would have justified their request for legal aid. Additionally, the case was complex, and the proposed lay representative was deemed inadequate to handle it. The court also found that the appellants had not adequately explained the delay in applying for leave to be represented by a non-lawyer. Given the strong evidence supporting the trial judge's findings, the court concluded that no further assistance from the trial judge could have altered the outcome of the case.

The court rejected the appellants' appeal and dismissed the case. The appellants were granted leave to amend the notice of appeal, except regarding a specific ground. They were also ordered to pay the respondent's costs of the appeal. The court's decision emphasised the importance of procedural fairness but also highlighted the limitations of the court's obligations in ensuring that self-represented litigants understand the proceedings fully.

Orders

Orders of the court

1. The appellants have leave to amend the notice of appeal in the form of the proposed further amended notice of appeal filed on 30 July 2020, save in respect of ground 4.

2. The appeal is dismissed.

3. The appellants pay the respondent’s costs of the appeal.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

It must be kept in mind that the issues raised on appeal arise in the context of the respondent advancing a very strong case before the trial judge of misleading and deceptive conduct inducing the purchase of a business at well above its true value. The primary judge found that the representations made to the respondent to induce it to acquire the business were false and, in some cases, intentionally so. He found that revenue and profit figures provided by the appellants were deliberately falsified to exaggerate the business’ financial attractiveness. No challenge was made to these findings and nor was it submitted that the second appellant’s disadvantage from being without legal representation, led to them being made. Indeed, they were fully supported by the evidence. This is not to deny that, if the appellants had not been accorded procedural fairness from which detriment flowed they ought to be entitled to relief. Nevertheless, it does contextualise the issues now raised and brings into focus the question of whether any further assistance from the trial judge could have possibly altered the outcome. THE RELEVANT FACTSThe purchase of the business In November 2014, the second appellant, Mr Mathews, resolved to relocate to America and sought the assistance of a brokerage firm to sell several of his businesses. One, in particular, was an indoor trampoline business called “Airodrome Trampoline Park”, owned by the first appellant, Flightdeck Geelong Pty Ltd, a company of which he was the sole director. It operated from two locations at Altona and Geelong in Victoria. In early 2015, Mr Nicholls, who had significant experience in business and finance, became interested in purchasing a new business to supplement his cash flow. After some initial inquiries the broker handling the sale provided him with a business profile in respect of each site from which the Airodrome Trampoline Park business operated. The financial details in those profiles had been provided to the broker by Mr Mathews. Mr Nicholls used the information in the two profiles to prepare a financial model adopting the sales and profitability figures disclosed. In or around March 2015, All Options Pty Ltd, of which Mr Nicholls was the sole director, entered into negotiations with Flightdeck with a view to purchasing the Airodrome Trampoline Park business. Mr Nicholls met with Mr Mathews on several occasions and visited the business’ premises in Altona and Geelong. Email correspondence was exchanged between the parties. During the course of negotiations, Mr Mathews made numerous representations about the establishment costs of the business, its past revenue and profit, and its future profitability. Mr Nicholls updated his financial model several times on the basis of those representations. Mr Nicholls relied on the representations which had been made to him and caused All Options to purchase the business. A written agreement was executed between All Options and Flightdeck on 19 March 2015. Since that date the business has made significant losses. The claim as advanced

Evidence

Evidence Before The Court

Mr Bearman for the appellants submitted that this Court should not take Mr Mathews’ answer that he did not have any questions about what had been explained as being an indication of his having understood it. He submitted that ought to be ignored and attention should focus on Mr Mathews’ statement that he was interested in obtaining legal aid. It was submitted that this indicated that he was not really paying attention and was only waiting to raise his ability to secure legal aid. With respect, that submission should be rejected. As indicated previously, Mr Mathews was an experienced businessman who was also articulate and, as the course of the hearing subsequently discloses, he was able to stand up for himself when he considered he should. Further, when he did not understand a matter he had no compunction about asking for further information. His statement in response to the trial judge’s question should be taken for what it was; an indication that he understood the matters which the judge had taken the time to explain.Failure to advise of how evidence was admitted into evidence A major criticism of the primary judge’s initial explication of the trial process was that his Honour used legal terms without further exposition. In particular, it was said that his Honour referred to the process of tendering evidence but did not explain that merely because a document was referred to in the Court Book it would not necessarily be received into evidence. A further complaint was that the trial judge did not explain the concept of “evidence” in its technical sense. These were somewhat sterile arguments for a number of reasons. Firstly, because Mr Mathews tendered a number of documents in the course of the hearing, albeit mostly on the fourth day. His witness statement had been tendered with the assistance of the trial judge on the third day. Mr Mathews also tendered extracts from a draft report of an expert engaged by All Options as well as the expert reports on which he relied. Mr Mathews was obviously aware of his entitlement to tender documents and of how to do it. Secondly, the trial judge gave the parties the opportunity to identify which documents from the Court Book they wished to tender. Mr Bearman took the Court to a passage in the transcript of the hearing on the fifth day where the primary judge discussed with the parties how the tender of documents from the Court Book would occur. His Honour said:HIS HONOUR: Well, what I was going to do is allay to tender the whole lot, in terms of it coming into evidence, and then letting you think about which particular pages you then want me to look at.MR MATHEWS: Yes, yes. In my closing submission. It is rather axiomatic that the words “allay to tender” should be “allow you to tender”. Mr Mathews said that he understood, and provided to the Court a box of “various” documents which were accepted into evidence and given exhibit number R5. No sustainable submission could be made that Mr Mathews was not able to tender any document on which he intended to rely.

Decision

Reasons for decision

It follows that no error was shown in the trial judge’s adoption of the values given by Ms Wright in her first report. Grounds 4 and 5 must therefore also fail.CONCLUSIONS ON APPEAL On the question of leave to amend the notice of appeal, the appellants should have leave to amend in the form of the proposed further amended notice of appeal filed on 30 July 2020, save in respect of ground 4. Otherwise, none of the grounds of appeal can succeed. The appeal should be dismissed and the appellants must pay the respondent’s costs of the appeal.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.