Kimberley N.Z.I. Finance Ltd v Torero Pty Ltd

[1990] FCA 190

NOT !IOR GENEEWL DISTRIBUlTOEI

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JUDGMENT No ......., , . , ......,

IN THE FEDERAL COURT OF AUSTRALIA )

)

WESTERN AUSTRALIA DISTRICT REGISTRY) W.A. No. G.98 of 1989

)

GENERAL DIVISION )

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

KIMBERLEY N.Z.I. FINANCE LIMITED

Appellant

and

TORERO PTY LIMITED AND OTHERS

Respondent

COURT:	NORTHROP, WILCOX AND HILL JJ.
DATE :	2 MAY 1990
-

PLACE: PERTH

REASONS FOR JUDGMENT

THE COURT:

The events out of which this case arises are complex but we have been much assisted in our comprehension of the matter by the clear and careful findlngs of fact made by the learned trial Judge. Counsel for the appellant have taken us to much of the evidence lying behlnd those findlngs; but, in the end, they do not dispute any of the primary findings of fact made by Hls Honour. Rather, they contend that, upon the basis of those findings, Hls Honour

have held thelr client's case to be made out.

No questions of law or of principle arise. The issues on the appeal relate entlrely to the appropriate conclusions in the light of the primary flndings of fact. We see no advantage in repeating, or in attempting further to summarize, the facts of the matter. Nor do we think it useful to deal in detail with all of the matters raised by counsel for the appellant during the course of their comprehensive and helpful submissions. The problems which we have found wlth those submlsslons were well canvassed during the course of the argument. It seems to us sufficient to note in summary form the principal propositions relied upon by the appellant and our reasons for rejecting those propositions.

The flrst contention of the appellant is that the respondents lacked an underlying belief in the valldlty of the contracts which the first respondent, Torera Pty Limited, had executed wlth, first, Ermay Pty Limited and, subsequently, Trayda Pty Limited. It is sald that, by their conduct in supplying information about their financial affairs and plans for the disposition of the units to be	created by the development to the appellant, the respondent	represented to the appellant that they had a bona flde bellef
in the validity of those contracts. There may be a problem about that proposltlon in relation to the contracts with Trayda, which post-dated the supply of the lnformatlon referred to; and we have not heard counsel for the respondent upon the matter. But we are prepared to assume that the conduct referred to, allled perhaps to the execution of the contracts, did amount to a representation that the respondents had the suggested belief. Nonetheless, in our view this complaint fails because it is not shown that the respondents did not bona fide hold that belief at material times. We emphasize that it is immaterial whether or not any such belief would have been justified. The questlon is whether it was held. The flnding made by the trial judge upon this matter was expressed in thls way:-

"Assuming therefore that representations as to Torero's beliefs and intentions were implled in its execution of the contracts, I am not satisfied that it did not by its directors, Masel and Agnello, hold the bellefs or have the intentions in question at the date upon whlch the contracts were delivered to Kimberley".

Hls Honour did not specifically deal wlth belief after the date of contract but it is implicit in his Honour's findings that he took the same view about the respondent's belief at all material times.

The challenge to this finding reaches its hlghest

point when reference is made to the minute of the meeting of

the Torero board of directors of 13 August 1984. There is	there recorded a statement, presumably by 1-lasel or Agnello,
that a final set of plans had not been received and that:-

"until final agreement and acceptance of plans and

specifications was agreed to, the exlsting

contracts were not firm and may be avolded if what
was expected by the company was not achieved."

Questions arise as to what was meant in this minute by the words, "were not flrm" and "may be avoided". On one view, the view for which the appellant contends, these words ought to be read as Indicating a belle£ that until the plans were provided there was no contract creating any legal obligation. But the words are also open to the construction

- remembering that none of the directors was a lawyer - that

unless acceptable plans were delivered, Trayda would be in breach of its contract and therefore unable to enforce the contract against Torero. This latter reading of the minute 1s not inconsistent with a belief that there were in existence valid contracts.

The trial Judge was assisted in his interpretation of this minute by oral evidence given by Mr Masel. Mr Masel explained that he consistently held the belief that there were valid contracts in existence which required, first, Ermay and, subsequently, Trayda, to build in accordance with the Casella plans; but that he and Mr Agnello, on behalf of Torero, were prepared to negotiate a variation of that

obligation so as to substitute an obligation to build in

with Mr Auguste. The trlal Judge accepted that evidence, not	accordance with the Beahan plans as modlfled by agreement
suprisingly as it was supported by a considerable volume of contemporaneous documentary material. Under those circumstances, again not surprisingly, hls Honour did not regard the minute as an indication of a belief that no legally enforceable contract had come Into existence. we see no reason to take a different view.
The second principal contention for the appellant is that, contrary to the representatlon conveyed to the appellant, the respondents lacked any Intention to perform the contract. Once agaln, assumlng that such a representation was made, we entirely agree with his Honour's rejection of the claim of falsity. As his Honour pointed out, the respondents consistently took the vlew that they would be bound to complete the contracts if units were erected either in accordance with the Casella plans or agreed
modifications to the Beahan plans. Nothing has been put
before us to suggest that they would have been prepared to default in any such obligations. It is not to the point that they were not prepared to complete on the basis of unmodified Beahan plans. They never told the appellant, or anyone else, that they would. On the contrary, they vigorously resisted all attempts by Mr Auguste to impose this result upon them.
Finally, lt is suggested that the respondents were guilty of misleading conduct because they falled to dlsclose to the appellant before 22 August 1984, the date of
construct the units in accordance with plans unacceptable to settlement of the land purchase, that Trayda was proposing to
Torero; that is the unmodlfled Beahan plan.

We accept that there are circumstances under which a fallure to make a disclosure of a fact may constitute misleading conduct but it is not necessary to consider whether thls was one of them. The short answer to the

appellant's contention is that, by 22 August 1984, it was not apparent to Torero that Trayda did have the suggested ~ntentlon. Negotiations as to modifications of the Beahan plan were still continuing. They dld not flnally break down until some weeks later. So far as the evidence indicates it was not until mid October that Torero flnally abandoned hope of reaching some agreement on that matter with Trayda. It can hardly be misleading conduct for Torero to fail to pass on to someone else a factual understanding which it has not yet reached.

The ultlmate conclusions reached by hls Honour were in our oplnion plainly right. The appeal must be dismissed with costs.

I cehf'i that *is md the

I

ATTACHMENT

Title of Action:	Kimberley N. Z. I. Finance Limited v . Torero Pty. Limited and Others
File Number:	W.A. NO. G.98 of 1989
Dates of Hearing:	l & 2 May 1990
Judgment Delivered:	2 May 1990
Counsel for Appellant:	Mr C.J.L. Pullln, Q.C. and Mr B.P. Wheatley
Solicltor for Appellant:	Corser & Corser
Counsel for Respondent:	M.J. NcCusker, Q.C. and Mr #.S. MacDonald
Solicitor for Respondent:	Macdonald Rudder & Co.
Signed ........ ........ .

Dated 2 May 1990