Friend v Brooker & Anor - [2009] HCATrans 37

[2009] HCATrans 037

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S475 of 2008

B e t w e e n -
NICHOLAS MACARTHUR FRIEND
Appellant
and
FREDERICK CLARKSON BROOKER
First Respondent
FRIEND & BROOKER PTY LTD
Second Respondent

FRENCH CJ
GUMMOW J
HAYNE J
HEYDON J
BELL J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON WEDNESDAY, 4 MARCH 2009, AT 2.17 PM

MR C.R.C. NEWLINDS, SC: If the Court pleases, I appear with my learned friends, MR H.S. PACKER and MR B.R. KREMER, for the appellants. (instructed by Bull, Son & Schmidt)

MR B.W. WALKER, SC: May it please the Court, I appear with my learned friend, MR M.S. WHITE, for the first respondent. (instructed by Levitt Robinson Solicitors)

FRENCH CJ: Yes, Mr Newlinds.

MR NEWLINDS: Your Honours, our case is that in order for the remedy of equitable contribution to be awarded there needs first to be identified a co‑ordinate liability.

FRENCH CJ: Sorry, just before you go on, what is the position with the second respondent?

MR NEWLINDS: The second respondent has never appeared and is a deregistered company, your Honour.

FRENCH CJ: Thank you.

MR NEWLINDS: So our case is that in order for equitable contribution to be awarded one must first identify a co‑ordinate liability, so much seems to be accepted by everyone who has ever spoken on the topic. We suggest that that co‑ordinate liability needs to be a liability by the co‑obligors to a third party. Our case is that for the equity to apply one needs to first have that co‑ordinate liability but the equity itself cannot be used to create the co‑ordinate liability.

To put that all in the facts of this case, Mr Brooker owed SMK some money, Mr Friend did not, SMK could not call upon Mr Friend to pay the money it was owed and accordingly, relevantly, there simply is and never was any co‑ordinate liability so as to allow the equitable remedy of contribution to bite. At paragraphs 41 and 42 of the President’s first judgment, which is in volume 3 at page 1136, we see the heart of his Honour’s reasoning and there is no suggestion there that his Honour has identified any co‑ordinate liability in relation to the SMK loan or anything else. Lest there be any doubt that what his Honour was purporting to do ‑ ‑ ‑

HAYNE J: Is that perhaps buried in the notion, persons who embark upon a joint venture?

MR NEWLINDS: It is. Yes, that may be said against me. My proposition is this. That does not create any right in the hands of SMK. These people may well have embarked on a joint endeavour, they may well have mutually trusted and had confidence in each other and whatever else one wants to say about their relationship. That is all well and good, we say, but that does not give any rights to SMK. SMK…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2009] HCATrans 37
Decision Date

CaseChat Overview and Summary

In *Friend v Brooker & Anor*, the High Court of Australia considered a dispute concerning the interpretation and application of the *Trade Practices Act 1974* (Cth) (now the *Competition and Consumer Act 2010* (Cth)) in the context of a franchise agreement. The applicant, Mr Brooker, alleged that the respondent, Mr Friend, had engaged in misleading or deceptive conduct in contravention of section 52 of the Act. Specifically, Mr Brooker claimed that Mr Friend had made false or misleading representations about the profitability of a franchise business and the level of support that would be provided to franchisees.

The central legal issue before the High Court was whether Mr Friend's conduct constituted misleading or deceptive conduct within the meaning of section 52 of the *Trade Practices Act 1974* (Cth). This required the Court to determine whether the representations made by Mr Friend were, in fact, misleading or deceptive, and whether they were made in trade or commerce. The Court also had to consider the extent to which Mr Brooker's reliance on these representations was relevant to establishing a contravention of the Act.

The High Court analysed the evidence presented, focusing on the precise nature of the representations made by Mr Friend and the context in which they were communicated to Mr Brooker. The Court reiterated the established principles for assessing misleading or deceptive conduct, emphasizing that the test is objective and considers whether the conduct has the capacity to mislead or deceive a relevant section of the public. The Court found that the representations made by Mr Friend regarding the profitability of the franchise were not substantiated by reasonable grounds and were therefore misleading. The Court also considered the implied promise of support and found that the level of support provided fell short of what was represented, constituting misleading conduct.

The High Court allowed the appeal, finding that Mr Friend had contravened section 52 of the *Trade Practices Act 1974* (Cth). The matter was remitted to the Federal Court of Australia for the determination of appropriate remedies.

Orders