Italform Pty Ltd v Sangain Pty Ltd

[2009] NSWCA 427

New South Wales

Court of Appeal

CITATION:	Italform Pty Ltd & Anor v Sangain Pty Ltd [2009] NSWCA 427 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	26 November 2009
JUDGMENT DATE:	22 December 2009
JUDGMENT OF:	Hodgson JA at 1; Macfarlan JA at 2; Sackville AJA at 58
DECISION:	The appeals by Italform Pty Ltd and Antonio Foini are both dismissed with costs.
CATCHWORDS:	TRADE AND COMMERCE - misleading and deceptive conduct - effect of written contractual term inconsistent with oral assurances - whether reliance on assurances
LEGISLATION CITED:	Supreme Court Rules 1970 Trade Practices Act 1974 (Cth) Uniform Civil Procedure Rules 2005
CATEGORY:	Principal judgment
CASES CITED:	Aon Risk Services Ltd v ANU [2009] HCA 27; (2009) 83 ALJR 951 Benlist Pty Ltd v Olivetti Australia Pty Ltd (1990) ATPR 41-043 Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2003-2004) 218 CLR 592 Campbell v Back Office Investments Pty Ltd [2009] HCA 25; (2008-2009) 238 CLR 304 House v The King [1936] HCA 40, (1936) 55 CLR 499 Kizbeau Pty Ltd v W G & B Pty Ltd [1995] HCA 4; (1995) 184 CLR 281 Nine Network Pty Ltd v Kennedy Miller Television Pty Ltd [1994] NSWCA 235 Poseidon Ltd v Adelaide Petroleum NL (1992) 14 ATPR 41-164 Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 Tyson v Brisbane Market Freight Brokers Pty Ltd (1994) HCA 67; (1994) 120 ALR 1 Zheng v Cai [2009] HCA 52
PARTIES:	Italform Pty Ltd (First Appellant) Antonia Foini (Second Appellant) Sangain Pty Ltd (Respondent)
FILE NUMBER(S):	CA 40160/09
COUNSEL:	P F Liney/F F F Salama (Second Appellant) F Corsaro SC/M Pesman (Respondent)
SOLICITORS:	Marsdens Law Group (Second Appellant) Tully & Co Solicitors (Respondent)
LOWER COURT JURISDICTION:	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S):	SC 50131/07
LOWER COURT JUDICIAL OFFICER:	Rein J
LOWER COURT DATE OF DECISION:	12 February 2009
LOWER COURT MEDIUM NEUTRAL CITATION:	Sangain Pty Limited v Italform Pty Limited [2009] NSWSC 74

CA 40160/09
SC 50131/07

HODGSON JA
MACFARLAN JA
SACKVILLE AJA

Tuesday 22 December 2009

ITALFORM PTY LTD & ANOR v SANGAIN PTY LTD

Judgment

1 HODGSON JA: I agree with Macfarlan JA.

Nature of Case and Conclusions

3 In March 2006, Italform Pty Ltd (“Italform”) contracted to supply two tower cranes to the respondent (“Sangain”). Italform did not supply the cranes in the manner required by the contract. As a result, Sangain sued it and its managing director, the second appellant (“Mr Foini”) for the loss it suffered in respect of the contract, alleging (so far as is presently relevant) that it had been induced to enter into the contract by the misleading and deceptive conduct of Italform and Mr Foini. It alleged that Mr Foini, on behalf of Italform, had represented to Sangain’s managing director, Mr Sanna, that Italform was able to deliver the cranes within a period of eight weeks from the date of Sangain’s order and that there was no reasonable basis for the representation.

4 The entire proceedings were referred by Bergin J of the Equity Division of the Supreme Court to the Honourable Robert Hunter QC (the “Referee”) for inquiry and report. The Referee found that the representation alleged had been made, and as Italform and Mr Foini conceded, there was no reasonable basis for the making of such a representation. Accordingly, the Referee found that Italform had engaged in misleading and deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) and that Mr Foini was a person “involved in the contravention” within the meaning of s 82 of the Trade Practices Act. He concluded that Sangain was entitled to damages under s 82 in the amount of $1,929,204 in respect of its loss by reason of entering the contract with Italform.

5 Over the opposition of Italform and Mr Foini, Rein J decided that the Referee’s report should be adopted and that judgment should be entered for the amount found by him, together with interest.

6 Both Italform and Mr Foini appealed to this Court against the adoption of the report. However, Italform was placed into liquidation on 3 August 2009 and the liquidator advised that he did not wish to pursue the appeal. As there is an alternate basis upon which the judgment against Italform might arguably be sustained, success by Mr Foini on this appeal would not necessarily lead to success on the part of Italform. In these circumstances, the appeal filed by Italform should be dismissed without regard to the outcome of Mr Foini’s appeal.

7 On the appeal, Mr Foini contended that the Referee’s findings of misleading and deceptive conduct and of reliance by Sangain on Mr Foini’s oral assurances were not open to the Referee in light of the inconsistent provision as to delivery contained in the subsequent written quotation which was accepted by Sangain and which formed the basis of the contract for supply of the cranes to Sangain.

8 I have concluded that these contentions should be rejected, as should a further argument raised by Mr Foini as to the question of damages. As a result, the appeal against Rein J’s decision that the Report should be adopted should be dismissed.

Factual Circumstances

9 Sangain had had a business relationship with Italform for approximately nine to ten years prior to 2006. Italform was a distributor of cranes manufactured overseas, particularly in Italy, and Sangain had in the past ordered cranes for supply by Italform from Italy. In early 2006, Sangain was contemplating tendering to Karimbla Construction Services Pty Ltd (“Karimbla”) for the hire to Karimbla of two cranes for use at a construction site at Mary Street, Rhodes. Sangain intended to obtain these cranes from Italform.

10 On 21 February 2006, Italform submitted to Sangain quotations for the supply of the two cranes. Under the heading “SALES CONDITIONS”, one said “Delivery: Approx. 90-150 days from order” and the other said “Delivery: Approx. 90-120 days from order”.

11 Mr Sanna gave evidence that following receipt of these quotations two meetings were held at which he, Mr Foini and representatives of Karimbla attended. On 9 March 2006 Sangain submitted a hire quotation to Karimbla. The Referee concluded that prior to this quotation, and again prior to its acceptance by Karimbla on 16 March 2006, Mr Foini assured both Sangain and representatives of Karimbla that the two cranes would be delivered within eight weeks of order. That finding was not challenged on the application by Sangain to the primary judge for adoption of the report and was not challenged on the appeal to this Court.

12 On 22 March 2006 Italform submitted to Sangain a further quotation for the supply of the two cranes. The quotation bore a date “21/02/2006” but it was accepted on the appeal that this was a mistake for 21 March 2006. Under the heading “SALES CONDITIONS”, the following appeared: “Delivery: Approx. 90-150 days from order”. Sangain accepted this quotation by its letter of 23 March 2006.

The Reference

13 The Referee found that a concluded agreement for supply of the cranes had been reached between Italform and Sangain on 23 March 2006, as a result of Sangain’s acceptance of Italform’s quotation. He further found that Italform’s representation that the cranes would be available within eight weeks “of order”, that is, within eight weeks of the conclusion of the supply contract, did not have any contractual effect: it was not part of the supply contract because it was inconsistent with the written term as to delivery contained in the quotation which was accepted and there was no enforceable collateral contract because the oral promise as to delivery was inconsistent with the terms of the supply contract.

14 The Referee’s conclusion that Sangain was entitled to damages under the Trade Practices Act, was founded upon a conclusion that “Foini’s representations induced a belief on the part of Sanna that Italform would provide cranes suitable for the Rhodes Project within 8 weeks, being a time crucial to the obtaining of the Rhodes Craneage [that is, the hire contract between Sangain and Karimbla] contract and in turn crucial to the purchase of the cranes by Sangain” ([71]; see also [1]).

15 The following reasoning of the Referee was relevant to this conclusion as to inducement:

“5 Returning to the question of liability, resolution of the issue would have been much easier if the conduct of Sangain and Italform in relation to contract formation had borne close resemblance to the documentation relevant to this question. Part of the problem lay in the fact that Sanna and Foini had enjoyed a long-standing commercial and social relationship, exemplified by Foini being a godfather to a child of Sanna. I think that relationship fostered an informality in their dealings which departed from commercial documentation relating to them.
6 This is particularly the case with written terms as to time for payment and performance, place of delivery and responsibility for erection of the cranes. Moreover, in any documentation, be it quotation, invoice, email, facsimile or correspondence related to the formation of the contract, or for that matter the craneage contract reached with Karimbla, there is no reference to the assurances given by Foini of delivery of the cranes within a timeframe of 8 weeks: an assurance that is completely at odds with the written terms of delivery in any of the quotations or invoices submitted by Italform.
7 In most circumstances that would be enough to defeat so much of [Sangain’s] claim as rested on Foini’s assurances. However, I think the evidence is quite compelling that the assurances were given and were relied upon by Sangain in purchasing the cranes specifically for the Karimbla project and, for that matter, by Karimbla in granting the craneage contract to Sangain. Significantly, it is conceded on behalf of Italform and Foini that, if it is found that those assurances were given, there was no reasonable basis for giving them. On the evidence I think that concession was properly made”.

16 In dealing with the contract claims, the Referee referred to evidence of Mr Sanna that he was told by Mr Foini to disregard the statement in the written quotation as to the delivery period and observed:

“74 On that evidence if it is to be accepted it may found a basis for preventing Italform from relying on the written conditions of delivery. However, that case has not been pleaded or argued and I am uncomfortable with the evidence, finding it difficult to accept that statements of that kind would have been made in respect of not one but two or three of the quotations submitted by Italform: particularly in the absence of any reference to such representations in the pleading or in the statements of evidence served pursuant to the orders of the court. Something of that kind may have been said but I would not be prepared to make a finding that such a representation was made.

17 The Referee went on to conclude that performance of the supply contract by Italform was “lamentable and inexplicable” and that “[d]elivery of parts was haphazard, protracted, intermittent and without any manifest or parts list to enable any sort of verification of its compliance with its contractual obligations” ([83]). He found that the delivered components had a salvage value of $125,000, against an invoiced price for the cranes paid by Sangain of $767,000 for one and $787,000 for the other. Financing and other costs were included in the Referee’s assessment of Sangain’s loss resulting from its entry into the supply contract with Italform. Because Sangain failed in its contract claims, no allowance was made for any loss of profit by Sangain on its contract with Karimbla. No other loss appears to have been suffered by Sangain in respect of that contract.

Principles as to Adoption of the Referee’s Report

18 The Reference in this case occurred pursuant to Rule 20.14 of the Uniform Civil Procedure Rules 2005 (“UCPR”) which provides that the court may at any stage of the proceedings “make orders for reference to a referee appointed by the court for inquiry and report by the referee on the whole of the proceedings or on any question arising in the proceedings”. As indicated above, the reference to Mr Hunter QC was of the entire proceedings.

19 Rule 20.24 of the UCPR provides that once a report has been made by a referee the court may, inter alia, “adopt, vary or reject the report in whole or in part”. As pointed out in Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549, a judge has a judicial discretion to exercise in deciding whether to adopt, vary or reject a report. In that case, Gleeson CJ (with the concurrence of Mahoney and Clarke JJA) described the nature of the discretion to be exercised under the corresponding provision of the Supreme Court Rules 1970, then in force, in the following terms:

“What is involved in an application under Pt 72, r 13 is not an appeal, whether by way of a hearing de novo or a more limited re-hearing. This is consistent with the right of the referee to conduct the reference as the referee thinks fit and unconstrained by the rules of evidence. Rather, the judge, in reviewing the report and deciding whether to adopt, vary or reject it, has a judicial discretion to exercise in a manner that is consistent both with the object and purpose of the rules and with the wider setting in which they take their place.
That wider setting is a system for the administration of justice according to law. In so far as the subject matter of dissatisfaction with a referee’s report is a question of law, or the application of legal standards to established facts, then a proper exercise of discretion would require a judge to consider and determine that matter afresh. …
Subject to what has been said, it is undesirable to attempt closely to confine the manner in which the discretion is to be exercised: cf Nicholls v Stamer [1980] VR 479 at 495 per Brooking J. The nature of the complaints made about the report, the type of litigation involved, and the length and complexity of the proceedings before the referee, may all be relevant considerations. The purpose of Pt 72 is to provide, where the interests of justice so dictate, a form of partial resolution of disputes alternative to orthodox litigation, and it would frustrate that purpose to allow the reference to be treated as some kind of warm-up for the real contest. On the other hand, if the referee’s report reveals some error of principle, some absence or excess of jurisdiction, or some patent misapprehension of the evidence, that would ordinarily be a reason for rejecting it: cf Jordan v McKenzie (1987) 26 CPC (2d) 193. So also would perversity or manifest unreasonableness in fact-finding” (at pp 563-4).

The Judgment at First Instance

20 The basis of the opposition of Italform and Mr Foini to Sangain’s application for adoption of the report was described by the primary judge as “essentially that since the Referee concluded that contractually Italform had up to 150 days to deliver the cranes, his conclusion that Sangain relied on representations made prior to the date of acceptance of the quote was quite inconsistent and was left unexplained” (Judgment [13]).

21 The primary judge’s conclusion as to this contention was expressed in the following terms:

“16 The fact that a contractual remedy is denied to a plaintiff cannot be determinative of whether a remedy is available under s 52. If a person were aware that a contractual term would preclude a claim in contract that might be relevant as a matter of fact to whether he continued to rely on a previous representation but I do not think it must follow of necessity that recognition by a representee that the contract contained a promise in different terms or inconsistent with what has been stated previously necessarily undoes the effect of the prior representation. The question of whether a clause in the contract has undone the effect of a representation has been considered in a number of cases dealing with disclaimers and exclusion clauses in contracts: see Millers Annotated Trade Practices Act , 28 ^th ed (2007) Thomson Law Book at paragraph 1.5.2.75. As was said by Burchett J in Poseidon Limited & Anor v Adelaide Petroleum NL & Ors [1992] ATPR 41-164 at 40,235: ‘[w]here there is belief in the good faith of represented intentions, there may be the less concern about the letter of a contract.’
17 Sanna believed (and was accepted by the Referee as believing) that delivery would be made within eight weeks (and Karimbla, on the Referee’s finding, did as well). Whether there has been reliance on a representation and whether such reliance has caused loss is a question of fact: see Wardley Australia Limited v Western Australia (1992) 175 CLR 514 at 525 per Mason CJ referring to the discussion in March v SE and MH Stramare Pty Limited (1991) 171 CLR 506 on the common sense concept of causation. I am not persuaded that the Referee fell into error by proceeding on the basis that the representations made prior to 23 March continued to have effect when Sangain advised, on 23 March, acceptance of the quotation sent to it by Italform. In my view it [w]as open to the Referee to reach that conclusion …”.

22 An additional reason given by the primary judge for rejecting the argument of Italform and Mr Foini was that they were precluded from putting the argument because they did not contend in the course of the Reference that reliance by Sangain should not be found. His Honour observed:

“As Mr Corsaro [senior counsel for Sangain] submitted, Italform, not having advanced before the Referee such an argument, ought not be permitted to now do so, it having clearly fastened its colours to a case that the representation (and similar subsequent representations) was never made. Italform did state in its submissions to the Referee that reliance was an issue but never addressed the issue at all and did not put any argument of the kind now advanced. In my view Italform cannot legitimately attack the report for failing to deal with an issue … that was not ventilated before the Referee and the Referee’s conclusion that there was reliance in entering into the craneage contract and the crane contract bespoke no error of law or failure to consider evidence” ([17]).

23 The primary judge accordingly concluded that the report should be adopted and directed the entry of judgment for Sangain in the amount $1,929,204 plus interest.

Principles Applicable to an Appeal from a Decision that a Report be Adopted

24 The principles that are applicable to the present appeal were stated by Gleeson CJ (with the concurrence of Meagher and Handley JJA) in Nine Network Pty Ltd v Kennedy Miller Television Pty Ltd [1994] NSWCA 235 in the following terms:

It is not for this Court to review the referee’s report, if there is to be such a review. This is emphasised by the provisions of the rules relating to the evidentiary material that may or may not be available. As what has occurred in the present case shows, this Court may be ill-equipped to review the report.
In the exercise of the power of review given by the rules, the judge at first instance may fall into appealable error. If that can be demonstrated to the Court of Appeal, then ordinarily the judgment at first instance will be set aside and consequential relief granted. However, what the Court of Appeal is concerned with is error on the part of the judge. If the judge’s decision to adopt (or vary or
reject) the referee’s report in whole or in part cannot be shown to be based upon a material error on the part of the judge, then there will be no ground for attacking the judgment based on that decision. If, on the other hand, that decision can be shown to be based upon a material error on the part of the judge then a different result will follow. If the point at issue is one of law, it may not be difficult to demonstrate such error. If the judge can be shown to have made an error in the approach taken to the exercise of the discretion conferred by the rules (as was contended unsuccessfully in Super Pty Ltd v SJP Formwork) then that also may constitute a ground for setting aside the judgment. It may even, in a given case, be possible to demonstrate that the judge’s decision to adopt, or vary, or reject, the report was based upon an appealable error of fact made by the judge. An example might be a case where the judge embarked upon a consideration of new evidence, or a fresh consideration of evidence that was before the referee, and could be shown to have reached a wrong conclusion. The important point is that it is the judge at first instance who reviews what the referee did; the Court of Appeal, within the limits of the ordinary rules governing appeals, reviews what the judge did.

As will appear from the above, I do not suggest that it will only ever be possible to argue in the Court of Appeal that the judge at first instance has made an error of law, or that his or her discretion has miscarried. It is possible to imagine cases in which the judge may be shown to have made, himself or herself, an error of fact. However, if the judge, in the proper exercise of the discretion given by the rules, declines to consider afresh questions of fact that have been decided by the referee, then it is not open to the party aggrieved to invite this Court to re-visit those questions on the basis that, by virtue of the adoption of the referee’s report, the judge’s decision is vitiated by any errors in it.”

25 Gleeson CJ’s reference to an error on the part of the judge in the exercise of his or her discretion was a reference to an error of the type referred to in the following well-known passage from the judgment of Dixon, Evatt and McTiernan JJ in House v The King [1936] HCA 40; (1936) 55 CLR 499: “[I]f the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so” (at 505). The principle enables an inference of error to be drawn where the result “is plainly unreasonable or plainly unjust” (also at 505).

Issues on the Appeal

26 The principal issues on the appeal were succinctly described by the appellants (at a time when Italform was an active appellant) in their written submissions as follows:

“13 When the circumstances of the 23 March Contract are analysed, the only available conclusion is that (a) the earlier misleading conduct was spent by the time of the 23 March Contract, (b) Sangain could not have relied upon it in entering into the 23 March Contract, and (c) any losses flowing from the 23 March Contract were therefore not caused by the earlier oral misrepresentation of an 8 week delivery period”.

27 After Italform ceased to be an active appellant, Mr Foini accepted, in his written submissions in reply, that “misleading conduct and reliance/causation are not necessarily negatived by the existence of an express contractual term which conflicts with the earlier representation”, but submitted that the finding by the Referee that Sangain relied upon the oral representation in entering into the 23 March 2006 supply contract with Italform “required at least some reference to available evidence or inferences and, in particular, some consideration of the effect of the 21 March quotation” and of evidence of Mr Sanna which was contended to have been to the effect that:

• he “had actual knowledge that the cranes would not be delivered within eight weeks” and “accepted the situation”,
• he “knew that the cranes would be late” and,
• he was aware, and accepted, “that Italform was saying that it would deliver within 90 – 150 days from order, not eight weeks as previously represented”.

28 In essence, it was put that the oral representation could not have survived the later quotation, which was said to be inconsistent as to delivery time, and that “the Referee appears to have missed the significance of Sangain’s awareness and acceptance of the 90 – 150 day delivery period”.

29 The remaining issue on the appeal related to the calculation of the damages claimed to have been suffered by Sangain.

Misleading or deceptive conduct

30 Where a contract is alleged to have been induced by misleading or deceptive conduct, everything that the party alleged to have engaged in that conduct did up until the time the contract was entered into must be taken into account (Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2003 -2004) 218 CLR 592 at [39]). Thus, where it is contended that there has been a relevant “disclaimer” prior to the contract being entered into, that disclaimer must be considered for the purpose of determining whether it has had effect “by actually modifying the conduct” (Lachlan Elder at [152]). If a disclaimer has effect it is “not by any independent force of its own” but by “erasing whatever is misleading in the conduct” (Lachlan Elder [152] per McHugh J quoting Burchett J in Benlist Pty Ltd v Olivetti Australia Pty Ltd (1990) ATPR 41-043 at 51,590).

31 In the present case, it was necessary in considering whether misleading or deceptive conduct had occurred to have regard to the written quotation, the acceptance of which gave rise to the supply contract. Whether Italform and Mr Foini’s conduct, when so considered, was misleading or deceptive was a question to be determined objectively (Campbell v Back Office Investments Pty Ltd [2009] HCA 25; (2008-2009) 238 CLR 304 at [25]). Where, as here, the object of conduct is an individual person, “it is necessary to consider the character of the particular conduct of the particular [actor] in relation to the particular [object of the conduct], bearing in mind what matters of fact each knew about the other as a result of the nature of their dealings and the conversations between them, or which each may be taken to have known” (Campbell at [27] quoting Lachlan Elder at [37]).

32 Thus, in Lachlan Elder, the plurality judgment gave detailed consideration to the personal characteristics and experience of the property purchasers (the alleged representees) on the one hand, and the alleged representor on the other. The purchasers were described as “persons who were quite wealthy, and certainly aspired to becoming wealthier, by means of complex property and financial dealings”, and as “intelligent, shrewd and self-reliant” (at [41]). On the other hand, the alleged representor was a suburban real estate agent who could not be assumed to have possessed “research skills or means of independently verifying title deeds about the properties” he sought to sell (at [42]). These, amongst other matters, were relevant to the Court’s conclusion that a reasonable person in the position of the purchasers would not have understood the agent to be doing more than passing on information supplied by another or others.

33 In the present case, the Referee referred to a “long-standing commercial and social relationship” between the companies and individuals involved. He said that this “fostered an informality in their dealings which departed from commercial documentation relating to them” ([5] quoted in [15] above). Whether there was misleading or deceptive conduct by Italform and Mr Foini was to be considered by asking whether a reasonable person in the position of Sangain, and in particular of Mr Sanna acting on behalf of Sangain, taking into account the relationship which existed between the companies and the individuals involved, would still have been likely after 22 March to have given some credence to the oral assurances. The Referee’s conclusions indicated that an affirmative answer was to be given to this question, notwithstanding what was stated in relation to delivery in the quotation supplied on 22 March. In my view they were conclusions that were well open to him.

34 The reasoning of the Referee needs to be considered in light of the issues which were presented to him for decision. The written submissions of Italform and Mr Foini lodged with the Referee contended that he should find that no oral representation to the effect of that referred to in [11] above had been made. Under the heading “The Misleading or Deceptive Conduct Claim”, the submission otherwise stated only (as had been asserted earlier in relation to the contract claim) that “the alleged representation as to the timing of delivery is wholly contradicted by the contemporaneous written record found in the terms of the quotations themselves”. It was not suggested in this Court that the oral submissions to the Referee on this point had been any more expansive.

35 In these circumstances, it is not surprising that the Referee’s reasoning on the point was succinct. In my view, his reference to the pre-existing relationship fostering an informality in dealings sufficiently indicated why he did not consider the terms of the written quotations to supersede the oral representations or, to borrow language used by McHugh J in Lachlan Elder (at [160]), “to obliterate the effect of” Italform and Mr Foini’s earlier misleading or deceptive conduct. It is relevant in this context to note also that the provision as to delivery in the 21 March quotation mirrored similar provisions in the quotations which preceded the oral representations. All of these provisions were capable of being regarded by the Referee as standard form provisions having less significance than earnestly given oral assurances.

36 Mr Foini submitted that the Referee rejected Mr Sanna’s evidence that Mr Foini told him not to worry about the provision as to delivery in the quotations (see [74] quoted in [16] above). In my view, this is overstating the effect of what the Referee did. The Referee was dealing with a contention that he should find that Italform had, in effect, represented that it would not rely upon the written term as to delivery. The Referee was not prepared to make a positive finding to that effect but nevertheless said that “something of that kind may have been said”. In any event, the Referee’s views as to that evidence do not detract from the thrust of his finding on this topic, namely, that, in light of the pre-existing relationship between the parties, more credence was reasonably given by Mr Sanna to the oral than the written communications.

37 It follows from what I have said that the primary judge did not err in concluding that the appellants’ argument on this point did not provide a reason to reject the Referee’s report. His Honour rightly said that “[t]he fact that a contractual remedy is denied to a plaintiff cannot be determinative of whether a remedy is available under s 52” (at [16]). As Burchett J said in Poseidon Ltd v Adelaide Petroleum NL (1992) 14 ATPR 41-164 at 40,235, in a passage quoted by the primary judge, “[w]here there is belief in the good faith of represented intentions, there may be the less concern about the letter of a contract”.

Reliance by Sangain on the Oral Representations

38 I turn then to consider the question of reliance on the misleading or deceptive conduct.

39 Mr Foini submitted on the appeal that a finding of reliance was not “available on the evidence” and that the finding of reliance that was made “involved perversity or manifest unreasonableness in fact-finding”.

40 He correctly conceded that the issue of reliance was not to be determined objectively but, rather, involved determining the subjective question of whether as a matter of fact Mr Sanna, on behalf of Sangain, relied upon the oral representations in causing Sangain to enter into the supply contract with Italform.

41 As pointed out by French CJ in Campbell, there may be “practical overlaps” in the resolution of the “logically distinct questions” of whether there has been misleading or deceptive conduct and whether a person has suffered loss or damage thereby for the purposes of legislation such as s 52 of the Trade Practices Act (at [24]). As his Honour further pointed out, a contractual disclaimer of reliance will in many cases not “be taken to evidence a break in the causal link between misleading or deceptive conduct and loss” (at [31]). Despite such a provision the representee may “nevertheless be found to have been actuated by the misrepresentations into entering the contract. The question is not one of law, but of fact” (at [31]). Thus, in the present case, the subsequent written statement as to delivery time did not necessarily preclude a finding of reliance by Mr Sanna on the earlier oral representations.

42 To recover damages for contravention of s 52 it is necessary to show that loss was caused “by” the contravention. In many cases, this will be shown by proving that the conduct was relied upon in the taking of some action, often, as here, by the entry into a contract. In other cases, particularly when the misleading or deceptive conduct is constituted by a failure to speak or advise, the notion of “reliance” is less useful as one of the “tools of analysis” to be utilised for the purpose of determining whether there is “a causal connection (denoted by the word ‘by’) between [misleading or deceptive] conduct and the loss and damage allegedly suffered” (Campbell at [102] and [143]).

43 Contrary to the submission of Mr Foini, the finding of reliance by Sangain (and therefore, in this case, of causation of loss) was available on the evidence. Determination of the factual question of reliance was a matter for the Referee (and in a limited sense also for the primary judge: see [18] – [19] above). Mr Foini’s submission must be rejected if it is concluded, as I do conclude, that there was evidence capable of supporting the Referee’s conclusion that Sangain was induced by the oral representations to enter into the supply contract with Italform. Examples of evidence of this character given by Mr Sanna are as follows:

• “Q. Eight weeks, if it had been discussed between you and the people at Meriton [a reference to Karimbla], was not considered anything more than an estimate as to when the cranes would arrive; correct?
A. No, it’s very important. Eight weeks is the important time.
Q. Why, then, is eight weeks not mentioned in your quote to Meriton?
A. I don’t need. Been talking verbally. This what he’s verbally – with everybody there. I not see the reason to write that. I still never believe can happen what’s happened – never believed that. I believe the cranes will arrive in Australia in eight weeks. Always I believed that”.
• “Q. I want to suggest to you that whatever you might have thought about eight weeks back in February, you didn’t believe it any more come 22 March?
A. No, I believe always”.

• “Q. Well, you had been told either just before or just after 21 February that the cranes would be in Australia, erected in eight weeks?
  A. I believe always, yes”.
• “Q. So come 22 March, which is the date of this quote, you had not signed a contract with Mr Foini, but you had signed a contract with Meriton, so you say?
  A. I signed – I not take this contract with Meriton. Mr Foini assured Meriton, assured Meriton and me, in eight weeks the crane is here. From the time I taking Mr Foini there, in the Meriton office, I’ve been counting that.
Q. So that’s from way back around 21 February?
A. Yes.
Q. So come 22 March, four weeks of the eight weeks has ticked by?
A. Yes.
Q. And Mr Foini provides you with a further quote?
A. Yes.
Q. And it still says that he’s expecting delivery between 90 and 150 days --
A. Yes.
Q. -- from the time of order?
A. Yes.
Q. Now, that is completely out of step with what you thought?
A. I know that. The situation, I accepted the situation. I believed in Mr Foini, the cranes are late”.

44 In seeking to prove that there was no reliance, Mr Foini pointed to the presence in the last answer of the phrase “the cranes are late”, but the meaning of that was, at its most favourable from his point of view, ambiguous. In the context in which it appeared, the phrase was quite capable of being understood, not as a reference to Mr Sanna’s understanding on 22 March 2006, but as a reference to what had in fact transpired, namely, that the cranes were late in delivery. This is a point which he had made in the passage first quoted in [43] above. In any event, it remained the case that there was evidence capable of founding the Referee’s finding of reliance. Moreover, that evidence was such, particularly when taken with the Referee’s finding as to the nature of the pre-existing relationship between the companies and the managing directors (see [33] above), that the Referee’s finding of reliance was neither perverse nor unreasonable as asserted by Mr Foini.

45 The succinct fashion in which the Referee dealt with this issue was fully justified by the manner in which Italform and Mr Foini conducted their cases during the Reference. In this respect I have referred earlier to the limited written submissions made in relation to the misleading or deceptive claim (see [34] above) and the fact that it was not suggested on the appeal that the oral submissions to the Referee were relevantly any different to the written submissions.

46 In addition to the passages to which I have referred in [34] above, the written submissions listed, amongst the issues to which the case was said to “boil down”, the issue that “if the representations were made, were they relied upon by [Italform]?” The same issue was identified in the Commercial List Statement annexed to the Summons filed by Sangain commencing the present proceedings. Further, in that Statement, Sangain alleged that it relied upon the relevant oral representations in entering into the purchase contract with Italform. In his affidavit which was in evidence before the Referee, Mr Sanna said that he relied upon Mr Foini’s representations as to delivery. That proposition was challenged in the cross-examination of Mr Sanna (see for example the passages quoted in [43] above).

47 In addition, Sangain’s Statement of Facts and Issues, put before the Referee, alleged that the oral representations induced Sangain to enter into the purchase contract with Italform. The Statement of Facts and Issues of Italform and Mr Foini, in response, said that there were some pre-contractual discussions concerning timing of delivery “but such discussions were superseded by the express terms of the contract”.

48 In these circumstances my view is that, although hardly at the forefront of the issues at the Reference, the question of reliance was in issue before the Referee and that Italform and Mr Foini were entitled to put to the primary judge the arguments that they did put concerning reliance. I thus respectfully disagree with the contrary view expressed by the primary judge (see [22] above).

49 Sangain derived some support on this point from the decision of the High Court in Tyson v Brisbane Market Freight Brokers Pty Ltd (1994) HCA 67; (1994) 120 ALR 1, where it was contended that the Court of Appeal had erred in considering whether there had been reliance upon a representation because that matter had not been at issue at the trial. The majority did not regard the absence of submissions upon the point as determinative. McHugh J observed that, absent any admission as to the relevant matter, the moving party bore the onus of proving the elements of its case, which included the element of reliance. His Honour went on to say:

“As often happens in litigious contests, the opposing party (in this case the plaintiff) concentrated its forensic fire on a particular issue in the pleadings. That issue was whether the representation was made at all. If the plaintiff could succeed on that issue, the defence failed. But that forensic tactic did not constitute an admission by the plaintiff that the representation, if made, was made before, or became part of, the contract. Nor did it constitute a concession that the time of making the representation was not an issue in the case. …
A party does not make an admission about one of the issues in the other party’s pleadings simply because he or she calls no evidence on, or makes no submission about, that issue” (at 10; see also the other members of the majority at 5).

50 I would add that the circumstances of particular litigation may be such that the absence of a submission on a point may give rise to an implied admission. In light of the High Court’s emphasis in Aon Risk Services Ltd v ANU [2009] HCA 27; (2009) 83 ALJR 951 on the efficient and timely disposal of litigation it may be that courts will be more ready in the future to make such an implication than they might have been in the past. In the present case however the point was kept open, although barely so, in the written submissions which were lodged. These were to be read in the context of the documents which defined the issues in the proceedings and in the Reference and of the cross-examination of Mr Sanna. Italform and Mr Foini’s lack of focus upon the point in their submissions provided ample reason for it to be dealt with in the brief fashion in which the Referee dealt with it.

51 My conclusion in relation to Mr Foini’s submissions concerning the misleading or deceptive conduct claim is that whilst it was open to him to put the submissions that he, and Italform, put before the primary judge, the submissions did not demonstrate that the findings of the Referee were not open to him or were unreasonable, or that the Referee made some error of law. In these circumstances, no question arises of interference by this Court in the exercise by the primary judge of his discretion to adopt the Report.

Whether Sangain’s Loss on the Crane Purchase Contract was caused by the Misleading and Deceptive Conduct

52 Mr Foini’s alternative argument on the appeal was that Sangain’s loss in connection with its purchase contract with Italform flowed from Italform’s defective performance of that contract and not from Sangain’s entry into that contract. He submitted that the present was a case of “the straightforward purchase of an asset for economic use” and that “[i]n the case of the purchase of property induced by misleading statements, the correct measure of damages (apart from consequential losses) is obtained by deducting the true value of the property at the date of the purchase from the purchase price”. He then contended that, upon this basis, Sangain suffered no loss by reason of its entry into the agreement because the amount of $1.554m which it paid for the two cranes approximated the “value of the cranes, if functional, [which] was agreed by the experts at between $1.4m and $1.7m excl GST”. He thus submitted that Sangain’s loss in respect of the contract was “solely caused by the entirely supervening event of Italform’s defective delivery of the cranes that had been purchased”.

53 In my view, this argument fails at the outset because it assumes that what Sangain obtained in return for its money was two functional cranes. This was not the case. Sangain in fact obtained, not functional cranes, but a contractual right to require Italform to supply the cranes. This right had the potential to be worth very much less than the two functional cranes which were contemplated to be supplied. Indeed, subsequent events, in particular the fact that Italform’s performance of the contract was grossly defective and that Italform was put into liquidation earlier this year and has no assets, suggest that this was probably the case. Evidence of such subsequent events is of relevance where it sheds light on the value of the property at the earlier point of time, as distinct from reflecting the effect of supervening events (Kizbeau Pty Ltd v W G & B Pty Ltd [1995] HCA 4; (1995) 184 CLR 281 at 291).

54 In any event, valuation of Sangain’s contractual right would be an essential step in Mr Foini progressing this submission. As the argument presently under consideration was not raised by Mr Foini (or by Italform) before the Referee, the Referee did not make any finding as to the value of the contractual right.

55 Although the application to the primary judge for adoption of the Report was not an appeal (see [19] above), the principles as to when new points may be raised upon appeal would have been relevant for the primary judge to consider in deciding whether he would permit the point to be raised.

56 As permitting the raising of the point would have led to the litigation of a new issue, almost inevitably involving the calling of further evidence, it is unlikely that he would have sanctioned that course. The basis for declining to permit the point to be raised in this Court is all the greater in light of the limited nature of the appeal which is available (see [24] – [25] above). As this Court would not permit the calling of evidence on the valuation question, Sangain has been prejudiced and Mr Foini should be bound by the case he conducted before the Referee and the primary judge (see Zheng v Cai [2009] HCA 52 at [16]).

Orders

57 I propose that the appeals by Italform Pty Ltd and Antonio Foini both be dismissed with costs.

I agree with Macfarlan JA.

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01/02/2010 - Correction of error - Paragraph(s) [4]