Hinds v Ross

Case [2006] FCA 41

FEDERAL COURT OF AUSTRALIA

Hinds v Ross [2006] FCA 41

TRADE PRACTICES – appeal – misleading or deceptive conduct – purchase of lunch bar - misrepresentation of turnover – finding that misrepresentation corrected before conclusion of sale – finding of no reliance – no inadequacy in reasons of Federal Magistrate – no error in credibility findings – no material errors in evidentiary rulings and findings – no basis for appellate court to reach a different conclusion

Trade Practices Act 1974 (Cth) s 52

Partnership Act 1895 (WA) s 7, 23

Federal Court Rules O 80 r 4

Browne v Dunn (1893) 6 R 67
Collier v Electrum Acceptance Pty Ltd (1986) 66 ALR 613
Fletcher Construction Australia Ltd v Lines MacFarlane & Marshall Pty Ltd (No 2) (2002) 6 VR 1
Fox v Percy (2003) 214 CLR 118
Halge v George [2004] WASCA 141
Holmes v QBE Insurance Ltd [2004] NSWCA 432
Jones v Dunkel (1959) 101 CLR 298
Lustre Hosiery Ltd v York (1935) 54 CLR 134
McMahon v Pomeray Pty Ltd (1991) ATPR 41-125
Mifsud v Campbell (1991) 21 NSWLR 725
Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449
Ricochet Pty Ltd v Equity Trustees Executor & Agency Company Ltd (1993) 41 FCR 229
Sun Alliance Insurance Ltd v Massoud [1989] VR 8
Warren v Coombes (1979) 142 CLR 531

PAUL MAXWELL HINDS and KAREN LYNN HINDS v DAVID ADAM ROSS and LYNN MAREE ROSS and GEOFF INGLIS & ASSOCIATES
WAD 139 of 2005

NICHOLSON J
6 FEBRUARY 2006
PERTH


IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

WAD 139 OF 2005

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN:

PAUL MAXWELL HINDS
KAREN LYNN HINDS
APPELLANTS

AND:

DAVID ADAM ROSS
LYNN MAREE ROSS
FIRST RESPONDENTS

GEOFF INGLIS & ASSOCIATES
SECOND RESPONDENT

JUDGE:

NICHOLSON J

DATE OF ORDER:

6 FEBRUARY 2006

WHERE MADE:

PERTH

THE COURT ORDERS THAT:

1.The appeal be dismissed

2.The appellants pay the respondents’ costs of the appeal including the costs and disbursements of counsel appearing for the first respondents pursuant to O 80 r 4 of the Federal Court Rules.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

WAD 139 OF 2005

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN:

PAUL MAXWELL HINDS
KAREN LYNN HINDS
APPELLANTS

AND:

DAVID ADAM ROSS
LYNN MAREE ROSS
FIRST RESPONDENTS

GEOFF INGLIS & ASSOCIATES
SECOND RESPONDENT

JUDGE:

NICHOLSON J

DATE:

6 FEBRUARY 2006

PLACE:

PERTH

REASONS FOR JUDGMENT

  1. The appellants appeal from a judgment of the Federal Magistrates Court delivered on 20 May 2005.  In his judgment, the Federal Magistrate (Walter FM) dismissed an application of the appellants brought on the ground of an alleged breach of the Trade Practices Act 1974 (Cth) as a consequence of misleading or deceptive conduct or conduct likely to mislead or deceive on the part of the first and second respondents.…

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AGLC
Hinds v Ross [2006] FCA 41
Case
[2006] FCA 41
Decision Date

CaseChat Overview and Summary

In the case of Hinds v Ross, the appellants, Mr and Mrs Hinds, challenged the decision of the Federal Magistrate, who dismissed their claim for damages against the first respondents, Mr and Mrs Ross, and their selling agent, the second respondent. The dispute arose from the appellants' purchase of a lunch bar from the respondents, where the appellants alleged that they were misled by misrepresentations regarding the business's weekly turnover, which was represented to be around $4000 but was actually much lower. The core issue in the appeal was whether the appellants relied on the misrepresentations made by the respondents, particularly during a meeting held on 8 January 2004.

The legal issues before the court included whether the Federal Magistrate erred in preferring Mr Ross's evidence over Mr Featherston's regarding the turnover figures and whether the appellants had established reliance on the misrepresentations. The court also had to determine whether the appellants had discharged the onus of proof and whether their conduct severed the causation link between the alleged misrepresentation and their damages. The fundamental issue, as formulated by the appellants' counsel, was whether Mr Ross corrected the misrepresentation during the meeting or presented false figures consistent with the represented gross takings.

The court found that Mr Ross did not show falsified figures at the meeting and had, in fact, corrected the earlier errors or misrepresentations concerning the gross weekly takings. The court further held that the appellants did not rely on the representations made either in an internet advertisement or during the meeting. The court concluded that the appellants had not proven reliance, and thus, the element of causation between the alleged misrepresentation and their damages was severed by the appellants' own conduct. The court's findings were consistent with the principles stated by the High Court in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd and Ricochet Pty Ltd v Equity Trustees Executor & Agency Company Ltd. Given the findings and conclusions, the appeal was dismissed, and the appellants were ordered to pay the respondents' costs, including those of counsel appearing pro bono for the first respondents.

Orders

Orders of the court

1. The appeal be dismissed

2. The appellants pay the respondents’ costs of the appeal including the costs and disbursements of counsel appearing for the first respondents pursuant to O 80 r 4 of the Federal Court Rules.

Background

Background to the litigation

By direction of the Chief Justice dated 1 August 2005, the appeal was assigned to be heard by a single judge.BACKGROUND CIRCUMSTANCES The issues in dispute arose as the consequence of the purchase by the appellants of a lunch bar (‘the business’) from the first respondents. The second respondent was the first respondents’ selling agent. The second respondent’s consultant Mr Featherston had the responsibility for the relevant dealings for it with the appellants. There was no issue before the Federal Magistrate that on 7 August 2003 the first named first respondent (‘Mr Ross’) told the second respondent that the average weekly turnover of the business was ‘approximately $4000’ and the second respondent had represented to the appellants, via an internet advertisement, that the weekly turnover was ‘around $4000’. There was no issue that the actual turnover was in the order of $2000 to $2500 per week; that is, 50 to 62.5 per cent of the represented turnover. A meeting took place between the appellants, the first respondents and Mr Featherston on 8 January 2004 (‘the Meeting’). The issue in the hearing of the application was whether, at the Meeting, Mr Ross falsely perpetuated the initial misrepresentation as to the turnover figure, or whether he corrected it in such a way as to remove the misleading or deceptive effect of the earlier misrepresentation. His Honour made the following findings of fact:(i)Mr Ross did not show the first named appellant (‘Mr Hinds’) or the appellants jointly falsified figures at the Meeting;(ii) Mr Ross showed Mr Hinds documents identified in Mr Hinds’ affidavit;(iii)Mr Ross did correct the earlier errors or misrepresentations in relation to the gross weekly takings of the business at the Meeting;(iv)the appellants did not rely on the representations in either an internet advertisement or a sales brochure given by Mr Featherston to Mr Hinds at the Meeting;(v) the appellants did not rely on any of the representations made by Mr Featherston. On 10 January 2004 Mr Featherston on behalf of the first respondents negotiated the purchase price of $51 000 with the appellants. This was contained in an Agreement for Sale of Business (‘Sale Agreement’) concluded in writing on that date. It is not in dispute that neither the first respondents or the second respondent did anything to document the correction of the turnover figure given on 8 January 2004. It was not noted on the Sale Agreement. The appellants’ case at trial was essentially that at the Meeting Mr Ross had given them handwritten figures that showed a daily turnover of between $750 and $800. Mr Ross retained those papers. The appellants were satisfied that those figures substantially confirmed the represented turnover of $4000 per week. The first respondents, who were self-represented, claimed that on or about the day before the Meeting, Mr Ross had discovered for the first time that the represented turnover figure was wrong and that the true turnover was only in the order of $2000 to $2500 per week. Mr Ross’s evidence was that at the Meeting he had shown Mr Hinds some handwritten figures informing him of the true turnover.

Evidence

Evidence Before The Court

As his Honour said, Mrs Ross could not have given direct evidence concerning the discussions at the Meeting and so could not have assisted in determining the fundamental issue before the Court. No material adverse inference arises from the fact that she was not called.GROUND 12: PREFERENCE OF MR ROSS’ EVIDENCE Ground 12 asserts his Honour erred in fact and in law in preferring Mr Ross’ evidence to Mr Featherston’s as to the existence of other potential purchasers to whom Mr Ross showed figures of the business. At [93] his Honour stated that the existence of the ‘other potential purchasers’ referred to by Mr Featherston and to whom Mr Ross allegedly showed figures, was not put to Mr Ross. He preferred Mr Ross’ evidence in relation to this issue to that of Mr Featherston. Again the issue raised by the ground is not one which can touch the basic issue of whether the appellants relied on a representation concerning turnover. THE FUNDAMENTAL ISSUE: NON-RELIANCE Reference has been made throughout these reasons to the fundamental issue which was before the Court, namely the issue of reliance. Although each of the grounds of appeal has been addressed in detail, some of them, even if made out, could not assist the appellants because they do not assist in disclosing error in the fundamental findings relating to reliance. The fundamental issue as formulated to his Honour by counsel for the appellants was whether Mr Ross corrected the misrepresentation at the Meeting or whether he presented false figures consistent with the represented gross takings. At the risk of undue repetition, it was the finding of his Honour that on the balance of probabilities Mr Ross did not show Mr Hinds or the appellants jointly falsified figures at the Meeting. He further found that at the Meeting Mr Ross showed Mr Hinds certain documents and did correct the earlier errors or misrepresentations in relation to the gross weekly takings of the business. Not only did he find that the appellants had not discharged the onus of proof but he also found that the appellants conduct in all the circumstances revealed a failure by them to take reasonable care of their own interests such that the element of causation between the alleged misrepresentation and damage was severed by the intervention of the conduct of the appellants. In finding that there was not relevant nexus between the conduct complained of and the alleged loss or damage suffered and in finding that there was no relevant reliance by the appellants, his Honour proceeded in accordance with the principles stated by the High Court in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449. He made the findings fully cognisant of the causative threshold necessary to attach liability for misleading and deceptive conduct under s 52 of the Trade Practices Act: Ricochet Pty Ltd v Equity Trustees Executor & Agency Company Ltd (1993) 41 FCR 229 at 235. Examining the reasons of his Honour therefore in the light of both the particularity of the grounds of appeal and the fundamental issue which permeates many of the grounds and the reasons, I do not consider that reading the reasons in the context of the findings and conclusions involving elements of fact, degree, opinion and judgment, an appellate court would be warranted in reaching a different opinion from the court at first instance.CONCLUSION

Decision

Reasons for decision

NICHOLSON J
Examining the reasons of his Honour therefore in the light of both the particularity of the grounds of appeal and the fundamental issue which permeates many of the grounds and the reasons, I do not consider that reading the reasons in the context of the findings and conclusions involving elements of fact, degree, opinion and judgment, an appellate court would be warranted in reaching a different opinion from the court at first instance.CONCLUSION For the above reasons I consider the appeal must be dismissed. There should be as against the appellants an order to pay the respondents’ costs. The first respondents were represented as the consequence of the issue of a certificate under O 80 r 4 of the Federal Court Rules. I consider that this is an appropriate case in which the costs order should expressly cover the costs and disbursements of counsel appearing pro bono pursuant to that Order.

Ratio Decidendi

Legal Principle Established

Established by: NICHOLSON J

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