Ge Commercial Corporation (Australia) Pty Ltd v Phillips
[2001] WADC 75
•15 MARCH 2001
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: GE COMMERCIAL CORPORATION (AUSTRALIA) PTY LTD -v- PHILLIPS [2001] WADC 75
CORAM: YEATS DCJ
HEARD: 12 FEBRUARY & 15 MARCH 2001
DELIVERED : Delivered Extemporaneously on 15 MARCH 2001 typed from tape and edited by Trial Judge
FILE NO/S: CIV 745 of 2000
BETWEEN: GE COMMERCIAL CORPORATION (AUSTRALIA) PTY LTD
Appellant (Defendant)
AND
JAMES RAYNER PHILLIPS
Respondent (Plaintiff)
Catchwords:
Appeal from Registrar - Application for summary judgment - Action for misleading and deceptive conduct, alternative estoppel in pais - Whether there was a question to be tried on the issue of reliance or on the issue of detriment - Appeal dismissed
Legislation:
Nil
Result:
Summary judgment - $39,209.91 for the plaintiff
Representation:
Counsel:
Appellant (Defendant) : T O Coyle
Respondent (Plaintiff) : C G Colvin
Solicitors:
Appellant (Defendant) : Phillips Fox
Respondent (Plaintiff) : Richard Huston & Associates
Case(s) referred to in judgment(s):
Australian Can Co Pty Ltd v Levin [1947] VR 332
Dey v Victorian Railway Commissioner (1949) 78 CLR 62
Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87
Gould v Vaggelas (1985) 157 CLR 215
Grundt & Ors v Great Boulder Proprietary Gold Mines Ltd (1937) 59 CLR 641
Hanave Pty Ltd v Lfot Pty Ltd (1999) ATPR 41‑687
Hazart Pty Ltd v Rademaker (1993) 11 WAR 26
Kabwand Pty Ltd v National Australia Bank Ltd (1989) ATPR 40-950
Leda Holdings Pty Ltd v Oraka Pty Ltd (1997) ATPR 41‑601
March v E & M H Stramare Pty Ltd (1991) 171 CLR 506
Osborne Park Co‑Operative Society Ltd v Wilden Pty Ltd (1989) 2 WAR 77
Thompson v Palmer (1933) 49 CLR 507
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514
Case(s) also cited:
Como Investments Pty Ltd (In Liq) v Yenald Nominees Pty Ltd (1997) ATPR 41-550
Marks v GIO Aust Holdings Ltd (1988) 73 ALJR 12
YEATS DCJ: This is an appeal by the appellant (defendant) from the decision of the learned Registrar entering summary judgment for the respondent (plaintiff) in the amount of $39,209.91.
The jurisdiction exercised by the learned Registrar is a delegated jurisdiction and a condition of the delegation is the provision of a complete review de novo before a Judge of the District Court. In conducting the appeal each party is entitled to rely on affidavit evidence received before the Registrar. The court on appeal need not find error on the part of the Registrar but must consider the matter afresh (Hazart Pty Ltd v Rademaker (1993) 11 WAR 26).
At the commencement of the hearing the plaintiff sought leave to amend its statement of claim as set out in a minute of proposed amended statement of claim. The defendant consented to that proposal and leave was granted. The appeal has proceeded on the amended statement of claim.
Background
The facts are pleaded in the statement of claim and further facts are found in the plaintiff's affidavit sworn on 15 May 2000 and in the affidavit of Mr Simon Line, the plaintiff's financial adviser sworn on 15 May 2000. In summary the plaintiff was the hirer of a prime mover under the terms of a hire purchase agreement with the defendant. The prime mover was totally destroyed by fire. The prime mover was insured under a policy that provided that at the election of the insured, the insurer would replace the prime mover with a new vehicle if it was totally destroyed within two years of registration. The plaintiff had to decide the basis on which he would settle his claim under the insurance policy. He was entitled to take a payout of $180,000 as market value for his prime mover or to replace the prime mover with a new vehicle and continue the hire purchase agreement for the remaining three years. In order to make that decision the plaintiff made enquiries of the defendant as to the payout figure under the hire purchase agreement. The defendant provided a payout figure of $209.011.44 which it confirmed to the insurer for the purpose of settling the claim under the insurance policy. The plaintiff then signed discharges of liability under the insurance policy. Thereafter the defendant increased the payout under the hire purchase agreement to $248,221.35 and deducted the additional amount of $39,209.91 from a security deposit which had been provided to it by the plaintiff.
The plaintiff commenced proceedings on 24 March 2000 claiming:
(1)Damages for misleading and deceptive conduct pursuant to s 52 of the Trade Practices Act 1974 (C'th).
(2)Alternatively, the sum of $39,209.91 on the basis that the defendant is estopped from denying that the payout was $209,011.44 as represented.
On application to the learned Registrar judgment was entered for damages in the amount of $39,209.91 plus interest based on the claim for damages for misleading and deceptive conduct. The Registrar did not consider the claim based on estoppel.
In its appeal the defendant does not challenge the findings that it engaged in misleading and deceptive conduct but, instead, it contends that the Registrar should have found that there was a triable issue as to whether the plaintiff relied upon the misrepresentation.
The plaintiff gave notice that at the appeal he would seek to uphold the decision of the Registrar on the alternative grounds of the action based on estoppel. So far as estoppel is concerned the defendant submits that there is no evidence of any detriment to the plaintiff.
Another issue that arises in the appeal is the measure of damages for misleading and deceptive conduct. The defendant contends that to assess damages the court would need to compare the present position of the plaintiff with the position he would have been in had he known the true payout figure. The plaintiff accepts that submission and I accept that if I were to enter summary judgment for the plaintiff damages would need to be assessed.
The power to order summary judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried (Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99). The test is whether, after the matter has been explained to the court, there must be a real uncertainty without full argument or further investigation of the facts as to the plaintiff's right to judgment (Australian Can Co Pty Ltd v Levin [1947] VR 332 at 335). If there is there must be a trial. Even if the facts which are established are inconclusive, if it is not possible to say without doubt on the whole of the material that there is no question to be tried there should be leave to defend (Fancourt's case at 99). The procedure is not confined to cases which are plain and it is not fatal to an application that extensive argument is necessary, nor that there is some intricacy to the relevant transactions (Dey v Victorian Railway Commissioner (1949) 78 CLR 62 at 91). Extensive argument may be necessary to show that there is no question to be tried (Australian Can Co Pty Ltd at 334).
The two issues I need to determine on this appeal are these:
(1)Is there a triable issue as to reliance in the plaintiff's claim for damages for misleading and deceptive conduct?
(2)Is there a triable issue in the plaintiff's claim that the defendant is estopped from denying the payout figure is $209,011.44 and that the sum of $39,209.91 is due by the defendant to the plaintiff.
Reliance
The defendant contends that there is a factual uncertainty arising from the affidavits as to what would have happened "but for" the defendant's misrepresentation. The defendant relies on part of the second par 8 in the affidavit of Mr Line.
"He [the plaintiff] had previously told me that he had decided that he had had enough of truck driving and didn't want to keep on with it. I thought he wasn't fit to drive a truck, not even a car, because he was badly shaken by the fire and wanted to get out and I didn't blame him for it."
The defendant contends that it is arguable the plaintiff had already decided to leave the truck driving industry and as a consequence, his only real option under the insurance contract was to take the payout offered to him by his insurer. The defendant contends that Mr Line's evidence opens a factual dispute as to whether the plaintiff had any other option and, therefore, submits that even if the plaintiff had known the true payout figure under the hire purchase agreement he would have taken the insurance payout. The defendant contends there is, therefore, an important question to be resolved as to whether the option of taking a new prime mover and working for three years was open to the plaintiff. The defendant's contention is that this raises the prospect that the false representation had no real effect. The defendant submits the affidavit evidence creates real uncertainty as to whether the plaintiff will be able to establish reliance which is an essential element of his cause of action.
The plaintiff accepts that he may well have wanted to retire from truck driving and accepts that he told Mr Line that the decision whether or not to do so depended on financial factors. The plaintiff contends that a fair reading of both the plaintiff's affidavit and Mr Line's affidavit shows that the plaintiff was considering two options - either to take the insurance payout or to take a new prime mover and work for a further three years. The plaintiff relies on his affidavit at pars 7, 13 and 14 and on Mr Line's affidavit at pars 9, 10 and 11. The plaintiff submits that that evidence clearly shows that the plaintiff was making a financial decision based on the advice of his financial adviser, Mr Line, even though he may have preferred to retire.
The law on this issue is clear. Where the misleading conduct is constituted by a representation, the necessary causative nexus between the misleading conduct and the loss and damage claimed is established by proving acts done in reliance on the misrepresentation (Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514 at 525).
In a case under the Trade Practices Act s 82 provides for the recovery of loss or damage suffered "by conduct of another person". Those words have been considered in a number of cases in the Federal Court. In considering causation, it is clear the misrepresentation need not be the sole inducement (Gould v Vaggelas (1985) 157 CLR 215 per Wilson J at 236; Kabwand Pty Ltd v National Australia Bank Ltd (1989) ATPR 40‑950 at 50,378; also see March v E & M H Stramare Pty Ltd (1991) 171 CLR 506). The assessment depends on objective factors (Leda Holdings Pty Ltd v Oraka Pty Ltd (1997) ATPR 41‑601 per Branson and Emmett JJ at 40,516). In Hanave Pty Ltd v Lfot Pty Ltd (1999) ATPR 41‑687 Kiefel J said at [46]:
"The question of causation can sometimes be resolved not by direct evidence as to what part a misrepresentation played in the process of entry into contract, but by a Court determining what effect must be taken to have resulted. Indeed this course may sometimes be preferable to one which rested solely on evidence later given on the point. In Gould v Vaggelas Wilson J held that if material representation is calculated (which is to say, objectively likely …) to induce the representee to enter into a contract and the person, in fact, enters into a contract, a fair inference arises that the representation operated as an inducement, adding that it need not be the only cause. The latter point is now uncontroversial. It suffices for liability if a misrepresentation played some part in inducing entry into contract for the price agreed. That part of Wilson J's judgment was not stated to be an exhaustive rule, but is to be seen as a guide to a question of fact which may arise. A conclusion of inducement may then be reached when a combination of factors, including the quality of the representation itself, goes unanswered."
Reliance can be proved inferentially from all the facts and is best determined objectively. In Hanave's case at 42,785 ‑ 42,786 Wilcox J at [11] said:
"I agree with Kiefel J that causation can sometimes (perhaps best) be resolved by the Court objectively determining the likely effect of the misleading conduct. This is such a case. All the objective facts point to the conclusion that, if Mr Burke had been given information that caused him to doubt the ability of Barbara's Storehouse reliably to pay its rental over the long period of the lease to May 2003, he would have declined to proceed with the transaction on the negotiated terms."
In this case I do not consider Mr Line's evidence that the plaintiff had had enough of truck driving to be inconsistent with the plaintiff and Mr Line's evidence that they carefully considered the financial implications before making their decision. A person may well be ready to retire and want to retire but usually needs to assess financial circumstances to determine whether retirement is possible. In this case all of the objective factors, including:
(1)the payout figure;
(2)the level of the plaintiff's indebtedness;
(3)the careful consideration the plaintiff gave to the financial picture painted by Mr Line;
(4)the badly in debt position he would be in with the larger payout figure,
are consistent with his affidavit evidence that if he had known the true payout figure he would have chosen the other option. The direct evidence of the plaintiff and Mr Line establishes the necessary causative nexus that the misleading conduct played a part in inducing the plaintiff to accept the insurance payout and forego the option of continuing in business for another three years. That conclusion is supported by all the objective factors.
For these reasons I find that there is no question to be tried and summary judgment should be entered for the plaintiff in his claim for damages for false or misleading conduct. The damages would need to be assessed.
Estoppel
This is a case of estoppel by representation or in pais. Estoppel in pais operates to prevent departure from a representation by words or conduct or existing fact if the representee has acted in reliance on it (Thompson v Palmer (1933) 49 CLR 507 at 547 per Dixon J; Grundt & Ors v Great Boulder Proprietary Gold Mines Ltd (1937) 59 CLR 641 at 674 ‑ 676 per Dixon J).
In Waltons Stores (Interstate) Ltdv Maher (1988) 164 CLR 387 Brennan J discussed estoppel in pais at 413:
"The nature of an estoppel in pais is well established in this country. A party who induces another to make an assumption that a state of affairs exists, knowing or intending the other to act on that assumption, is estopped from asserting the existence of a different state of affairs as the foundation of their respective rights and liabilities if the other has acted in reliance on the assumption and would suffer detriment if the assumption were not adhered to."
There is no question to be tried in this case that the representation was made. That has been admitted. The circumstances are such that there is no question and it is not suggested that there is a question that the defendant knew that the plaintiff would act on the representation. I have already found in looking at the question of misrepresentation that there is no question to be tried on the issue of reliance. The only issue remaining is that of detriment. The plaintiff must establish that it has acted in reliance on the representation and will suffer detriment if that assumption is not adhered to (Osborne Park Co‑Operative Society Ltd v Wilden Pty Ltd (1989) 2 WAR 77 per Franklyn J at 101; Waltons Stores at 413; Grundt v Great Boulder at 674 ‑ 675).
The defendant contends that even if there had been reliance there is a triable issue as to whether the lost opportunity had any value, given that it comprised two distinct elements: - that is, the value of a new prime mover and the prospect of making a profit from remaining in the industry. The defendant contends that if there were a trading loss and no profit, any benefit from that alternative course could have been cancelled out in full. In those circumstances, the defendant submits that there is real factual uncertainty in regard to detriment and relies on what was said about factual uncertainty in Fancourt's case. The defendant submits that the uncertainty is elemental in this case; that the loss of the contractual right is not necessarily a detriment because there is factual uncertainty as to the real value of the contractual rights.
In this case I accept the plaintiff's submissions about detriment. The defendant's submissions miss the point of the plaintiff's case based on estoppel. A claim based on estoppel does not require the plaintiff to quantify a detriment in monetary terms. It does require the plaintiff to show that because of his reliance on the representation of the defendant the plaintiff has irretrievably altered his position. In Grundt's case at 674 ‑ 675 Dixon J discussed the issue of detriment. He said:
"The principle upon which estoppel in pais is founded is that the law should not permit an unjust departure by a party from an assumption of fact which he has caused another party to adopt or accept for the purpose of their legal relations. This is, of course, a very general statement. But it is the basis of the rules governing estoppel. Those rules work out the more precise grounds upon which the law holds a party disentitled to depart from an assumption in the assertion of rights against another. One condition appears always to be indispensable. That other must have so acted or abstained from acting upon the footing of the state of affairs assumed that he would suffer a detriment if the opposite party were afterwards allowed to set up rights against him inconsistent with the assumption. In stating this essential condition, particularly where the estoppel flows from representation, it is often said simply that the party asserting the estoppel must have been induced to act to his detriment. Although substantially such a statement is correct and leads to no misunderstanding, it does not bring out clearly the basal purpose of the doctrine. That purpose is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it. So long as the assumption is adhered to, the party who altered his situation upon the faith of it cannot complain. His complaint is that when afterwards the other party makes a different state of affairs the basis of an assertion of right against him then, if it is allowed, his own original change of position will operate as a detriment. His action or inaction must be such that, if the assumption upon which he proceeded were shown to be wrong and an inconsistent state of affairs were accepted as the foundation of the rights and duties of himself and the opposite party, the consequence would be to make his original act or failure to act a source of prejudice."
Therefore, whereas here the plaintiff has irretrievably altered his position in reliance on the defendant's representation and has lost the opportunity to take a prime mover and to trade for three years that is sufficient detriment. The plaintiff altered his position irretrievably in reliance on the representation as to the payout amount under the hire purchase contract. Having done that he could not retrieve the situation when he learned the true payout figure.
The defendant has further submitted that the plaintiff could take the payout money and purchase a new prime mover but I do not think that is realistic and it fails to take into account the real value of the other option that the plaintiff had, the option he has irretrievably lost. That was an option to take a new prime mover and to be able to continue paying under the old hire purchase contract for a further three years to pay out the new prime mover. That option is no longer open to him. In these circumstances there are no questions to be tried. It seems to me that it is beyond any doubt that the plaintiff has suffered a detriment. In such circumstances I believe it would be unconscionable for the defendant to retain the $39,209.91.
For these reasons I find that there is no question of fact to be tried and I order summary judgment be entered for the plaintiff in his action based on estoppel in the amount of $39,209.91.
My rulings enable the plaintiff to choose which of his alternative claims he wishes summary judgment entered in.
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