Hampshire Assets and Services v Blackman - [2018] NSWSC 1096

Supreme Court

New South Wales

Medium Neutral Citation: Hampshire Assets and Services v Blackman [2018] NSWSC 1096
Hearing dates: 18/06/2018; 19/06/2018; 20/06/2018; 21/06/2018; 28/06/2018 and 29/06/2018
Date of orders: 18 July 2018
Decision date: 18 July 2018
Jurisdiction: Equity - Commercial List
Before: McDougall J
Decision:
Dismiss proceedings; reserve costs.

Catchwords: COMMERCE – misleading or deceptive conduct – plaintiff and related entities proposed to enter into a series of options contracts – whether representations as to associated capital gains tax liability were made – necessary to consider the alleged representations in context – where communications containing the alleged representations were expressed to be provisional and dependent on external specialist advice – no representations made as to CGT liability – whether, if made, representations would be misleading or deceptive – where subsequent external specialist advice confirmed contents of original communications – initial representations had no capacity to lead plaintiff into error – proceedings dismissed.
Legislation Cited: Civil Liability Act 2002 (NSW)
Evidence Act 1995 (NSW)
Income Tax Assessment Act 1936 (Cth)
Income Tax Assessment Act 1997 (Cth)
Professional Standards Act 1994 (NSW)
Trade Practices Act 1974 (Cth)
Cases Cited: Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592
Cam & Bear Pty Ltd v McGoldrick [2018] NSWCA 110
Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304
Christie v Purves (2007) 69 ATR 155
Dansar Pty Ltd v Byron Shire Council (2014) 89 NSWLR 1
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31
Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82
Heydon v NRMA Limited (2000) 51 NSWLR 1
Hungerfords v Walker (1989) 171 CLR 125
Ku-ring-gai Council v Chan (2017) 224 LGERA 330
Lahoud v Lahoud [2009] NSWSC 623
Leda Pty Ltd v Weerden (2007) 63 ACSR 636
MGICA (1992) Ltd v Kenny and Good Pty Ltd (1996) 140 ALR 313
Miller and Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited (2010) 241 CLR 357
Watson v Foxman (1995) 49 NSWLR 315
Category: Principal judgment
Parties: Hampshire Assets and Services Pty Ltd (Plaintiff)
Adam Paul Blackman (First Defendant)
Robert Alexander Rochlin (Second Defendant)
Germasimos Papas (Third Defendant)
Phillip Nathan Opit (Fourth Defendant)
John Bruce Wallis (Fifth Defendant)
Representation:
Counsel:
A Leopold SC / MR Cairns (Plaintiffs)
DH Mitchell / B Mostafa (Defendants)
Solicitors:
Resolve Litigation (Plaintiff)
TressCox (Defendants)

File Number(s): 2016/207393

Judgment

HIS HONOUR: The fundamental question dividing the parties in these proceedings is whether the defendants (the partnership) are liable to the plaintiff (Hampshire) for advice that the partnership, through the first defendant (Mr Blackman), is said to have given Hampshire about a capital gains tax (CGT) liability. Hampshire says that advice was given, that it was misleading or deceptive, and that Hampshire relied on the advice in entering into an agreement known as a Put and Call Option Deed (the option deed). Hampshire’s primary claim seeks damages of about $1.8 million for additional CGT payable, a shortfall interest charge (SIC), audit costs and other losses.
The partnership…

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: [2018] NSWSC 1096
Decision Date: 18 July 2018

CaseChat Overview and Summary

In the case of Hampshire Assets and Services v Blackman, the Federal Court was tasked with determining whether misleading or deceptive conduct had occurred in the context of a proposed series of options contracts. Hampshire Assets and Services, the plaintiff, alleged that certain representations made by Blackman, the defendant, regarding the associated capital gains tax liability were misleading or deceptive. The nature of the dispute centred on the interpretation and implications of these alleged representations within the communications exchanged between the parties. The court was required to consider whether these representations were misleading or deceptive, particularly given that the communications were expressed to be provisional and contingent upon external specialist advice. Furthermore, the court had to evaluate whether the representations, if indeed made, could have misled or deceived the plaintiff.

The legal issues before the court included whether any representations regarding the capital gains tax liability were actually made and, if so, whether these representations were misleading or deceptive. The court considered the context of the communications, noting that they were expressly stated to be provisional and subject to external specialist advice. The court also had to assess the impact of subsequent advice from an external specialist, which confirmed the contents of the original communications. The court concluded that no representations were made as to the capital gains tax liability and that any potential representations could not have misled or deceived the plaintiff given their conditional nature and the subsequent confirmation of the advice. The court found that the initial representations had no capacity to lead the plaintiff into error.

The court ultimately dismissed the proceedings, finding that no misleading or deceptive conduct had occurred. The reasoning was that the alleged representations were either not made or, if made, they were not misleading or deceptive given their conditional nature and the subsequent confirmation by external specialist advice. The court held that the plaintiff had not been misled or deceived by any conduct of the defendant. As a result, the proceedings were dismissed with no orders for costs.

Orders