M & E Brisby Pty Ltd v D Poole Services Pty Ltd

[2025] NSWDC 44

District Court

New South Wales

Medium Neutral Citation:

M & E Brisby Pty Ltd v D Poole Services Pty Ltd & Anor [2025] NSWDC 44

Hearing dates:

12 November 2024 – 15 November 2024, 12 December 2024

Date of orders:

07 March 2025

Decision date:

07 March 2025

Jurisdiction:

Civil

Before:

Weber SC DCJ

Decision:

(1) Judgment and verdict for the Defendants against the Plaintiff.

(2) The Plaintiff pay the Defendants’ costs.

Catchwords:

CONTRACT – Contract for sale of business – Alleged pre-contractual and post-contractual breaches of contract – Where no breaches established on the evidence – Where no warranty given as to business performance or ongoing supply arrangements with a third-party

CONSUMER LAW – Misleading and deceptive conduct claim – Alleged breaches of ACL s 18 – Where ACL (Cth) pleaded against a natural person – Failure to plead ACL (NSW) as an application law – Where representations not misleading or deceptive

Legislation Cited:

Australian Consumer Law (Cth) ss 1, 18

Australian Consumer Law (NSW)

Competition and Consumer Act 2010 (Cth) ss 131, 140

Fair Trading Act 1987 (NSW) ss 28, 32

Cases Cited:

ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640

Campbell v Tran [2024] NSWSC 204

Wormald v Maradaca Pty Ltd [2020] NSWCA 289

Xu v Lindasy Bennelong Developments Pty Ltd [2020] NSWSC 1692

Zervas v Burkitt (No 2) [2019] NSWCA 236

Category:

Principal judgment

Parties:

M & E Brisby Pty Ltd (Plaintiff)
D Poole Services Pty Ltd (First Defendant)
David Poole (Second Defendant)

Representation:

Counsel:
Mr D Eardley (Plaintiff)
Mr S Reuben (Defendants)

Solicitors:
Stacks Law Firm (Plaintiff)
Hunt & Hunt Lawyers (Defendants)

File Number(s):

2023/00168915

Publication restriction:

None

JUDGMENT

Introduction

1. These proceedings concern a contract for sale of a business known as “Sports Online”. The business involved the online retailing of sports memorabilia. The contract was in writing and is dated 6 July 2022 (the “Contract”).

2. The Plaintiff sues both in contract and pursuant to s 18 of the Australian Consumer Law (Cth).

Background

3. In August 2021, the Second Defendant, who controls the First Defendant, caused Sports Online to be advertised for sale on a sale of business website. The directors of the Plaintiff, Mathew and Emma Brisby, expressed some interest in the business and, following this expression, the Second Defendant provided to the Plaintiff a confidential business profile (“CBP”). This document was provided as representing an indication of the basis upon which the First Defendant as vendor was willing to treat for the purpose of a contract of sale of the business. The document contained an asking price for the business of $895,000 plus stock.

The Plaintiff’s Directors’ Business Background

4. At the time when the Brisbys were looking to purchase the First Defendant’s business, they were persons with considerable business experience. They had conducted three Optus retail outlets. These were franchise operations, subject to a license agreement. They understood that there were restrictions contained in their contract with Optus, which required them to buy phones through Optus (T: 25-26.10). They also understood that Optus in turn held agreements with their suppliers (T: 26.20-.25).

5. The Brisbys had also conducted an online sales business. In that business they acquired items from manufacturers in China. They did not take physical delivery of those goods however, rather they on-sold them online through Amazon (T: 28.30-.45). Regarding the suppliers and manufacturers with whom they dealt with in China, there was no formal contract guaranteeing supply. Thus, the Brisbys knew that in relation to their China business they were able to order as and when they chose, and each transaction with the manufacturer of the goods concerned was conducted on an order-by-order basis (T: 29.22-.35).

6. As such, at the time at which they were considering purchase of the Sports Online business, the Plaintiff’s directors clearly had experience of ad hoc supply arrangements relating to the purchase of merchandise which they required. This situation was in contradistinction to the formal contract arrangements that governed the operations of their Optus outlets, which included formal arrangements as to supply.

7. The Brisbys were also sufficiently sophisticated in matters of business that they could understand and analyse the financial documents provided to them for the purposes of the purchase of the Sports Online business (T: 27.40). They also understood the need to undertake due diligence before they agreed to purchase.

8. They engaged their accountant, Adam Johnson, to undertake a valuation of the business before they made the offer to purchase. Indeed, the offer to purchase explicitly stated that they had undertaken and performed due diligence and had obtained approval from their bank for finance.

9. It was against this background that the Contract came to be prepared. It is important to note at the outset that the Contract did not refer to the CBP, nor did it contain any special conditions warranting supply arrangements.

10. The CBP contained the following under the heading ‘Suppliers’:

A number of suppliers are used. Chief is a major wholesaler/distributor located internationally whose details must remain Commercial in Confidence until a sale is concluded since this relationship is critical to the business. This relationship has been in place for 5 years and there are no expectations that it is likely to be terminated for any reason unless professionalism is not maintained by Sports Online and its new owner/staff.

11. Prior to entering into the Contract, the Second Defendant engaged in two communications with the Plaintiff in relation to the subject of supply by the business’ major supplier, Exclusive Memorabilia Dealers (“EMD”). The first was on 31 May 2022 and the second was on 17 June 2022. In those emails, the Second Defendant made it clear that there was no minimum monthly spend which would be required by the major supplier. They also made clear that there was no exclusive supply relationship between the major supplier and the business. These matters were understood by Mr Brisby (T: 33-34).

12. I shall return to these emails later in these reasons.

The Plaintiff’s Valuation

13. The Plaintiff’s accountant valued the business on 25 May 2022. He arrived at his valuation by allowing for a working wage for the owner of $110,000 per annum, including superannuation. This adjustment was necessary as the Second Defendant was not drawing a commercial salary to operate the Sports Online business.

14. Thereafter, the accountant applied a capitalisation rate of 45% to the previous three years’ profit, and arrived at a valuation of goodwill of $690,000. Mr Johnson did not arrive at his valuation by reference to supply contracts or agreements being in place with major suppliers of the business. Indeed, he specifically suggested to the Brisbys that they should pursue enquiries in that regard.

15. It was therefore clear to Mr Brisby that the valuation of the goodwill of the business at $690,000 was not based upon the fact that there will be continuing supply from the major supplier (T: 30.30-31.40).

16. Following the receipt of the valuation, the Plaintiff made enquiries of the Defendants by way of a series of questions. These questions were raised in the Plaintiff’s emails to the Second Defendant of 27 May 2022 (CB 90). These questions, to some extent, drew derisory responses from the Second Defendant, Dr Poole. For example, in response to a question as to whether the owner was prepared to offer a warranty on the business and its performance, Dr Poole answered, “No, of course not. Are you having a lend?”.

17. Dr Poole went on to say somewhat facetiously, “Sure, pay $5 million and I’ll provide an absolute guarantee of the performance!” (CB 90).

18. Dr Poole also responded to an email of 31 May 2022 in the following terms, “I’ve spent a good deal of time resolving the supply issues that may have impacted on the business going forward. There are now no issues and there is also no minimum monthly spend from the major supplier”.

19. The Defendants sent an email clarifying the stock position at the conclusion of the exclusive supply relationship with the major supplier. In this email of 17 June 2022, Dr Poole wrote, “You’ll note that there was a loss in May. This was intentional and expected. The exclusive supply relationship with one of the major international suppliers was coming to an end so I ‘forward purchased’ a significant amount of stock. This will sell through over time and, as previously indicated, I’ve been able to maintain supply in the future without the substantial stress imposed by a minimum spend”.

20. The Brisbys ultimately made an offer to purchase the business goodwill at $700,000, and to acquire stock valued at $440,000 for a payment of $400,000 (T: 36).

21. Importantly, on 28 June 2022; that is, prior to contract, Dr Poole had informed the Brisbys, “This is consistent with my earlier message about the loss in May being due to me ordering significant amount of stock as I wasn’t sure of future supply…supply which has subsequently continued and will do so in the future”.

22. It was thus clear that the Brisbys knew that the Defendants were not proposing to make any guarantee of ongoing supply from the major supplier (T: 38.1-.20).

23. The Plaintiff’s offer to purchase the business (CB 105) was accepted by the Defendants, but this acceptance was on the basis that either party may wish to add terms to an anticipated contract, and was thus subject to the terms of any prospective contract (T: 38.20-.40).

The Contract

24. The Plaintiff’s conveyancer prepared the Contract which was eventually signed (T: 38.43-.45, T: 40.10-.30). As I have earlier indicated, the Contract contained no special conditions relating to supply of merchandise. Indeed, as I have indicated, Dr Poole had disclosed that the minimum monthly commitment expenditure arrangement previously required by the major supplier had been brought to an end and that future supply was not guaranteed. It was thus made clear to the Plaintiff that there was no longer an exclusive supply arrangement with the major supplier. It was thus obvious that there was no contract in place with the major supplier which could have been assigned to the Plaintiff, nor was there any warranty given by the Defendants in relation to supply.

25. The Plaintiff paid the balance of purchase money and settled the Contract on 1 August 2022.

The CBP is not a part of the Contract

26. The Plaintiff pleads that the Contract for Sale of 8 July 2022 was constituted by both the Contract itself, and the CBP (see Statement of Claim [7(i)]). This proposition, in my view, is simply untenable. The CBP was never mentioned in the Contract, much less was it incorporated in it.

The Plaintiff’s Pleaded Breaches of Contract

Alleged Breach of Clause 26 and Special Condition 15 – The Alleged Failure to Introduce the Plaintiff to Suppliers or Customers

27. The Plaintiff first pleads that, on their proper construction, Clause 26 and Special Condition 15 of the Contract required the Defendants to introduce the Plaintiff to the suppliers or customers of Sports Online prior to completion of the Contract (see Statement of Claim [10]-[11]).

28. Clause 26 is in the following terms:

Training before and after completion

26.1   This clause applies only if a training period is specified in this contract.

26.2   The purchaser (or the purchaser’s nominee) can attend the premises after the contract date and before completion for up to the number of working days specified as the pre-completion training period to watch the way the business is conducted and to receive training in the business.

26.3   Attending the premises under clause 26.2 does not itself imply that the vendor has given possession to the purchaser.

26.4   The vendor (or a nominee of the vendor familiar with the business) must attend the premises after completion for the number of working days specified as the post-completion training period to train the purchaser in the running of the business and to introduce to the purchaser the clients, customers and suppliers of the business.

26.5    The party attending the premises must do so –

26.5.1      at the expense of that party; and

26.5.2    during the normal operating hours or at such other
times as are agreed

29. Special Condition 15 is in the following terms:

Post Completion Training Period

The Vendor agrees and acknowledges that they will provide all necessary post completion period to the purchaser upon request from the purchaser for a reasonable period following completion of this Contract. It is agreed and acknowledged by that [sic] parties that a reasonable period shall be not less than 28 Days after the completion of this contract.

30. I consider this contention, insofar as it relates to the introduction of the major supplier, to be untenable. The only reference to the major international supplier is in cl 26.4. That clause, however, is clearly a clause which has application after completion, not before completion as the Plaintiff pleads and submits.

31. The Plaintiff’s reliance on cl 15 in that regard is also untenable as that clause does not relate to the subject of an introduction of the overseas supplier.

Alleged Breach of Clause 26 and Special Condition 15 – The Alleged Failure to Provide Training

32. Next, the Plaintiff pleads that the First Defendant failed to provide training as required by Clause 26 and Special Clause 15 (see Statement of Claim [12]). In my view, this allegation of breach has not been established on the evidence.

33. The evidence was clear that in relation to pre-completion training, the Brisbys attended the warehouse premises of Sports Online at Kings Park (“Premises”), where training was given to them by Dr Poole. This occurred on 21 July 2022. Prior to that attendance, the Brisbys raised a series of matters which they wished to discuss at the arranged attendance at the warehouse. This was the result of Dr Poole having suggested that it would be useful if the Brisbys could send a list of the topics which they wished to cover in the training. Mrs Brisby responded with a list on 19 July 2022 (CB 148).

34. Dr Poole in his Affidavit (at [39(a)]) outlined the pre-completion training that was offered to the Brisbys. Mr Brisby confirmed that this training was in fact provided (T: 44-46).

35. This training included the Brisbys being taught how to access what was known as the “back end” of the website. This gave them information pertaining to customers and matters relating to product information (T: 45.50-46.5). This information was traversed again at the post-completion training, where the Brisbys were told that the back end of the website contained approximately 10 years of historic data relating to sales to customers. They were also told that they could obtain individual customer orders, and customer details and matters of that type which were included on every order (T: 69).

36. In relation to the July 2022 attendance for training, Mr Brisby accepted that he and his wife received sufficient answers to the questions which had been asked by them (T: 46.30-47.10).

37. As I have alluded to above, there was also post-completion training provided to the Brisbys. This occurred when they attended the Premises in the period 1 to 5 August 2022. There they received the training described by Dr Poole in his affidavit. Dr Poole was not challenged on this evidence. That adequate training was provided was indeed confirmed by Mr Brisby (T: 68-71.23). In fact, the training continued in September (CB 254-255), where Dr Poole told them that he was around if the Brisbys needed any assistance. Mrs Brisby took him up on this offer to provide information and training when she asked about where she could source UFC memorabilia.

38. It follows from the foregoing that the Plaintiff has failed to establish this breach.

Alleged Breach of Clauses 10.1.8 and 10.3 – The Alleged Failure to Notify the Plaintiff of the Major Supplier Email of 18 July 2022

39. Next, the Plaintiff pleaded (see Statement of Claim [13]):

On 18 July 2022 the First Defendant received an email (“the Major Supplier Email”) from a supplier of Online Sports, Exclusive Memorabilia Dealers (“EMD”) whereby EMD stated that it was not bound by the terms of the Contract and would not necessarily commence supplying goods to the plaintiff. In breach of clauses 10.1.8 and 10.3 of the Contract, the First Defendant failed to notify the Plaintiff of the Major Supplier Email.

40. Clause 10.1.8 of the Contract is in the following terms:

There is no current dispute or litigation relating to the business between the vendor and any other person (for example, any lessor, franchisor, supplier of goods or services to the business, current or former employee, trade union, government department or the Fair Work Ombudsman).

41. Clause 10.3 is in the following terms:

If the vendor becomes aware before completion of any fact which makes a promise in Clause 10.1 incorrect or misleading, the vendor must disclose that fact to the purchaser promptly and before completion.

42. The First Defendant denies that there had been a breach of either cl 10.1.8 or 10.3. It says that there was no breach of cl 10.1.8 or 10.3 of the Contract in failing to notify the Plaintiff that the First Defendant had received the email from the major supplier, EMD, of 18 July 2022.

43. This email stated that, “We are not an asset that is part of your agreement to sell your business”. The Defendants submitted that cl 10.1.8 of the Contract had not been breached. This was so, they argued, as at the time of the Contract, there was no current dispute relating to the business between the vendor and any other person as warranted in that clause. It says that there was no basis for asserting that the Defendants became aware before completion of any fact that made a promise in cl 10.1 incorrect or misleading (Defence [9(i)]).

44. The Defendants say that the 18 July 2022 email raised for the first time (post-exchange) the possibility of interruption of supply to the Plaintiff as purchaser. Upon receipt of the email, Dr Poole took steps to clarify what could be done to protect the position of the purchaser. This led to an email exchange with David Williams of EMD on 19 July 2022, where Mr Williams said, “The only option to supply new owners until December is if they order via you. You can order with me. They pay you. You pay directly”.

45. Dr Poole responded that although he had hoped to take a complete break from the business, he had no choice but to fall in with that suggestion unless EMD reconsidered its position over the next 12 days. Mr Williams later responded on 19 July 2022 at 3.23 pm in the following terms, “All solved.” (CB 150).

46. Dr Poole sought to confirm the situation on 20 July 2022 (CB 151), and this led to him receiving a response from Mr Williams which stated, “My agreement to supply you until the end of the year is not associated with the new owners or whatever agreement you have in place to facilitate the sale of your business. I’m no part of that”.

47. These communications formed the basis of what Dr Poole communicated to the Plaintiff in the email exchanges with the Brisbys between 23 to 24 July 2022 (Ex EB-1 to Affidavit of Emma Brisby of 15 January 2024, 52-56).

48. The Defendants submitted that, accordingly, there was no dispute in existence, nor was there any matter to be notified pursuant to the provisions of either cl 10.3 or cl 10.1.8.

49. I agree with the Defendants’ submissions. In my view, for the above reasons, I find that no breach of either cl 10.1.8 or 10.3 has been established by the Plaintiff.

Alleged Breach of Clause 17.3 – The Alleged Conduct Derogations from Goodwill

50. The Plaintiff also alleged a breach of cl 17.3 of the Contract. It pleaded that (see Statement of Claim [14]):

On 18 July 2022 in breach of clause 17.3 of the Contract, the Second Defendant sent an email to an existing customer of Online Sports encouraging the customer to seek to purchase goods directly from EMD with a view to on-selling the same goods to the Plaintiff at a higher price.

51. Clause 17.3 is in the following terms:

The vendor must not during the restraint time engage in any conduct derogating from the purchaser’s right to obtain full benefit of the goodwill of the business.

52. This allegation of breach appears to relate to an email from Dr Poole to a Mr Tino Hemmingsen. This email was explained by Dr Poole in the following manner:

In order to ensure the purchasers had continuity of supply of merchandise in the event that EMD (which remained undisclosed to the plaintiff at the time) refused continuity of the supply to the business after the date of the contract as indicated in their email above, I sought an expression of interest from Tino Hemmingsen (“Tino”) which might ensure continuity of supply of merchandise to the plaintiffs in the event that EMD refused continuity of supply to the business. I sent an email to Tino on 18 July 2022 for that purpose. A copy of the email chain is contained in exhibit DP-1 at page 57.

I deny paragraph 57 of Emma’s Affidavit as I did not seek to encourage to purchase directly from EMD. My email to Tino was an enquiry as to whether Tino could become a supplier of Sports Online in the event that circumstances required it, namely if the major supplier refused continuity of supply. I did not provide Tino with the name of the supplier which was EMD.

I took no further steps to act beyond the above email being sent to Tino to further the enquiry because EMD, as referred below, had confirmed to me that they would continue with supply of merchandise.

[Paragraphs 34-36 of Poole affidavit of March 2024]

53. I accept Dr Poole’s evidence, which was not challenged in cross-examination.

54. I thus find that there has been no breach of cl 17.3 of the Contract.

Alleged Breach of Special Condition 5 – The Alleged Failure to Produce Documents Relevant to the Accuracy of Information Contained in the Contract

55. The Plaintiff next alleges a breach of Special Condition 5. That Special Condition is in the following terms:

“The Vendor agrees to furnish such documents before completion to the purchaser or the purchaser’s conveyancer or accountants (as may be requested by the purchaser) such documents and information as the purchaser may reasonably require to verify the accuracy of information in the Agreement.”

56. The breach is said by the Plaintiff to be constituted by a failure to provide requested information sought in an email from Mrs Brisby to Dr Poole of 24 July 2022.

57. It is convenient to deal with that email exchange by reference to Dr Poole’s affidavit where they are discussed (see Affidavit of David Poole of 14 March 2024 at [36(g)] and following). In his affidavit, Dr Poole says:

(g) On 24 July 2022 I received an enquiry from Mrs Brisby concerning the major supplier and I responded to Mrs Brisby’s email on 24 July 2022 at 9:25 AM with my answers written into the original enquiry:

Emma Brisby (EB): "With the major supplier situation: how often do you currently order"

David Poole (DP): "Around once a week"

EB: "how long do you anticipate would be ‘immediate future’?"

DP: "I have put to them that to give you continuity I am prepared to be the "agent" to ensure that ordering and supply occur until 30 December"

EB: "Do you anticipate any problems with our relationship with the major supplier?"

DP: "No I don't."

EB: "How long is the business’ exclusive contract with the major supplier?"

DP: There is no longer an exclusive contract. The agreed amount each month was open-ended and there was no defined conclusion date. They can now supply others in Australia but this was always the case prior to the 9 months of the exclusive contract and there were only a couple of others in Australia who bought in small quantities. I have been dealing with the supplier for 6 years and do not anticipate any particular issues arising other than those that arise in the normal ways in which business occurs. There would also be contingencies. For instance, you can buy in greater quantities as needed to ensure that you have supply for any particular period."

I continued in a later email at 9:35am on the same day that "… other options have not been needed since they continued to supply and will continue to do so for the foreseeable future. The only difference is a small one… that the owner would like to continue to deal with me in the ordering process through until the end of the year. That's the only change".

A copy of the email chain is contained in exhibit DP-1 page 63 (appearing in exhibit M[B]-1 [sic] page 136).

(h) On 24 July in an email of 9.56 AM I stated to the Brisbys "On further reflection, I think that perspective is needed. I've been able to avoid asking you to pay… the US$20,000 to the major supplier which were their requests in terms of supplying new owners with whom they have no previous knowledge or relationship." A copy of the email chain is contained in exhibit DP-1 page 61 (and appears in exhibit EB-1 page 57).

(i) The Brisbys asked me in an email of 24 July 2022 "Does the supplier have specific worries about dealing with us?" to which I responded in an email on the same day "I've no idea why the guy wants to continue to deal with me for a while but I've learned not to try to second-guess some people in business, particular [sic] if in second-guessing I may provoke them in some way!". A copy of the email chain is contained in exhibit DP-1 page 63 (and contained in exhibit EB-1 page 59).

58. Mrs Brisby was cross-examined on the content of these emails (T: 109-115). She accepted that in them, she was informed that Dr Poole had an assurance from EMD that he could order goods on the Brisbys’ behalf from that company until the end of the year (T: 110.40-.45). This was presented to Mrs Brisby as one of two options in relation to future purchasing from EMD, the second being an upfront payment to the supplier of USD $20,000.

59. Dr Poole expressed the view that, in his opinion, ordering through him for a finite period was a much better option when compared to the requirements of EMD, which could have required the Plaintiff to pay to EMD USD $20,000. This USD $20,000 payment was EMD’s alternate arrangement for supply applications for new customers of whom they had no previous knowledge. Thus, it was on this basis that the payment of USD $20,000 option was presented to Mrs Brisby as a second option (T: 111.1-.25).

60. Mrs Brisby ultimately accepted that she was being offered two options (T: 113.20-114.25). The Brisbys subsequently chose the first option, as can be seen from Mrs Brisby’s email to Dr Poole of 3 August 2022 where she said, “We are happy for you to order for us for the short term as you have suggested”.

61. It can be seen from the foregoing therefore that there was no breach of Special Condition 5 as pleaded.

Alleged Breach of Clause 20 and/or the Schedule of Assets – The Alleged Failure to Transfer Business Assets

62. The Plaintiff initially pleaded that, in breach of clause 20 of the Contract or, alternatively, its schedule of assets, the First Defendant failed to transfer various assets. At the hearing, all but one of the assets particularised were not pressed. The only asset item pressed was, “eBay Account and Login details”.

63. I must say that I found the decision to maintain this claim to be a curious one. I take this view as the uncontradicted evidence of Dr Poole was that there was no eBay account associated with the Sports Online business, rather the only eBay account was Dr Poole’s personal account which was created 10 years before he owned the business. His unchallenged evidence was that he did not use that account for memorabilia transactions at any time after completion.

64. Further, the evidence was that Mrs Brisby waived the Plaintiff’s right to have the eBay account transferred to the Plaintiff. The affidavit of Steven Coxhead, who was called by the Plaintiff, at [15], corroborates this.

65. Finally, the curiosity of this claim being maintained is capped by the fact that the Plaintiff in its Schedule of Damages filed 8 November 2024 claimed no damages for the alleged failure to transfer the eBay account and for any purported loss of use (Defendant Submissions [8]).

66. I find that no breach of cl 20 nor cl 10.3 has been established by the Plaintiff.

Conclusion on Contract Claim

67. For the above reasons, the Plaintiff’s claim in contract must fail.

Australian Consumer Law Claim

68. The Plaintiff pleaded 5 alleged contraventions of s 18 of the Australian Consumer Law (Cth). Representation 3 was not pressed in final submissions.

69. The principles applicable to misleading and deceptive conduct pursuant to s 18 were not in dispute.

70. In Wormald v Maradaca Pty Ltd [2020] NSWCA 289, the Court of Appeal helpfully set out certain of these principles. The Court of Appeal stated at [107] and [111]:

[107] In Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 at 467 (Fraser v NRMA), the Full Court of the Federal Court said in the context of s.52 of the Trade Practices Act 1974 (Cth), that:

‘Where the contravention of s.52 alleged involves failure to make full and fair disclosure of information, the applicant carries the onus of establishing how or in what manner that which was said involved error or how that which was left unsaid had the potential to mislead or deceive.’

…

[111]   Key propositions to emerge from the High Court’s important decision in Miller [Miller v BMW Aust (2010) 241 CLR 357] include the following:

● the language of reasonable expectation [found in cases such as Demagogue] is not statutory: at [19];

● in commercial dealings between individuals or individual entities, characterisation of conduct will be undertaken by reference to its circumstances and context: at [20]; close analysis of all of the circumstances of a transaction embraces a consideration of the sophistication of the parties and their experience in their fields: at [91];

● the knowledge of the person to whom the conduct is directed may be relevant: at [20]. See also Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at 319; [2009] HCA 25 at [26];

● the existence of common assumptions and practices established between the parties or prevailing in the particular profession, trade or industry in which they carry on business may also be relevant: at [20];

● the analysis is objective: at [20];

● the analysis is to be “unmediated by” high moral expectations exceeding the requirements of the general law: at [21];

● the statutory prohibition on misleading or deceptive conduct does not require a party to commercial negotiations to volunteer information which will be of assistance to the decision-making of the other party: at [22]; and

● the failure to make reasonable inquiries, whilst not automatically defeating a statutory claim for damages for misleading or deceptive conduct, is a circumstance that is relevant to a consideration as to whether a failure to make disclosure is correctly characterised as misleading: at [91].

71. Irrespective of whether conduct is likely to produce confusion, it cannot be categorised as misleading unless, in all the circumstances, it leads the applicant into error; ACCC v TPG Internet Pty Ltd (2013) 250 CLR 640, where French CJ, Crennan, Bell and Keane JJ explained at 651, [39]:

“Conduct is misleading or deceptive, or likely to mislead or deceive, if it has a tendency to lead into error. That is to say there must be a sufficient causal link between the conduct and error on the part of persons exposed to it. It is in that sense that it can be said that the prohibitions in SBJV.52 and 18 were not enacted for the benefit of people who failed to take reasonable care of their own interests.”

72. In Xu v Lindasy Bennelong Developments Pty Ltd [2020] NSWSC 1692, Ward CJ in Eq (as her Honour then was) said at [404]:

[404] The relevant time for assessment of the representation (both for present and future matters) is at the time of the making of the representation (see Global Sportsman v Mirror Newspapers at 88 per the Court; Redmond Family Holdings v CG Access at [52] per Black J). A representation concerning a future matter will not be false, misleading or deceptive where a promise, or prediction, or opinion does not eventuate, provided that at the time of their making, the maker had reasonable grounds for so expressing the promise, prediction or opinion (see, for example, Bill Acceptance Corp v GWA at 178-179 per Lockhart J; and SPAR Licensing Pty Ltd v MIS QLD Pty Ltd [2014] FCAFC 50 at [18]-[21] per Buchanan J).

73. The Plaintiff’s ACL claim is curious insofar as it is only pleaded against the Second Defendant, a natural person, and not pleaded against the incorporated First Defendant. Thus, the case against Dr Poole is one pleaded against him as a primary contravenor, and not as being a person who is accessorially liable for the acts and omissions of the First Defendant. This manner of pleading, as I will attempt to explain, in my view, is fatal to the ACL claim.

74. The Plaintiff seeks to overcome the manner in which the ACL claim is pleaded by arguing that the claim is also advanced against the First Defendant as they are listed in the dramatis personae. This proposition only needs to be stated to be rejected. Next, the Plaintiff submitted that the First Defendant is vicariously liable for the actions and omissions of the Second Defendant (SOC [4]). This pleading reliant on vicarious liability cannot assist the Plaintiff as if the Second Defendant has no liability there can be no liability vicariously imposed on the First Defendant.

75. The Defendants relied upon s 131(1) of the Competition and Consumer Act 2010 (Cth) (“CCA”), which provides that the ACL only applies as to the conduct of corporations, not individuals. It was submitted that the ACL thus can have no application to Dr Poole as a primary contravenor. I consider this proposition to be correct.

76. The Plaintiff relied upon s 28 of the Fair Trading Act 1987 (NSW) (“FTA”). I do not consider that this section provides an answer to what is an issue of jurisdiction. Section 28 of the FTA does not amend s 131(1) of the CCA to make it apply to individuals, rather it simply applies the CCA as a law of NSW. The section, in my view, is not an operative provision that expands the ambit of the ACL beyond its application to corporations, to individuals as primary contravenors.

77. In considering this issue, I have been generally assisted by the judgment of Meek J in Campbell v Tran [2024] NSWSC 204. His Honour in that judgment explains that the ACL (Cth) applies Schedule 2 as provided by Part XI of the CCA or as “an application law” (s 1 ACL). An “application law” is in turn defined in s 140 of the CCA as follows:

(a) a law of a participating jurisdiction that applies the applied Australian Consumer Law, either with or without modifications, as a law of the participating jurisdiction; or

(b) any regulations or other legislative instrument made under a law described in paragraph (a); or

(c) the applied Australian Consumer Law, applying as a law of the participating jurisdiction, either with or without modifications.

78. In NSW, the relevant “application law” is s 28(1) of the FTA, which provides:

1)  The Australian Consumer Law text, as in force from time to time—

(a)  applies as a law of this jurisdiction, and

(b)  as so applying may be referred to as the Australian Consumer Law (NSW), and

(c)  as so applying is a part of this Act.

79. Section 32 of the FTA in turn provides:

(1)  The Australian Consumer Law (NSW) applies to and in relation to—

(a)  persons carrying on business within this jurisdiction, or

(b)  bodies corporate incorporated or registered under the law of this jurisdiction, or

(c)  persons ordinarily resident in this jurisdiction, or

(d)  persons otherwise connected with this jurisdiction.

(2)  Subject to subsection (1), the Australian Consumer Law (NSW) extends to conduct, and other acts, matters and things, occurring or existing outside or partly outside this jurisdiction (whether within or outside Australia).

80. Thus, the application law for the purposes of the New South Wales jurisdiction is described as the Australian Consumer Law (NSW)(“ACL (NSW)”).

81. Accordingly, it can be seen that individuals can become liable under the ACL (NSW) if they can be brought within s 32 of the FTA. In the present case, however, reliance on the ACL (NSW) has not been pleaded. Instead, the Plaintiff makes explicit the fact that the pleaded cause of action is pleaded under “The Australian Consumer Law being schedule 2 to the Competition and Consumer Act (Cth)” (my emphasis). The ACL, as a law of the Commonwealth, does not relevantly apply to the Second Defendant as an individual (Zervas v Burkitt (No 2) [2019] NSWCA 236, [57]).

82. This jurisdictional point is fatal to the Plaintiff’s ACL case and, as such, it is strictly unnecessary for me to express an opinion as to the underlying merit of the Plaintiff’s assertions of misrepresentation. It may be helpful, however, if I express my conclusions as to the pleaded misrepresentations, albeit in a summary manner.

The First and Second Representations

83. The first and second representations can be conveniently dealt with together. They are pleaded as follows (see Statement of Claim [23] and [24]):

On 17 May 2022 the Second Defendant represented to the Plaintiff that "there are no expectations that" the relationship between Sports Online and EMD is likely to be terminated ("First Representation") at page 12 of the [CBP].

On 31 May 2022 the Second Defendant represented to Plaintiff, prior to entering into the Agreement, that he had resolved "Supply issues that may have impacted the business moving forward" and that "there are now no issues and there is also no minimum monthly spend from the major supplier", that supplier being EMD ("Second Representation") in an email dated 31 May 2022 from Second Defendant to Plaintiff.

84. As to the alleged first representation (SOC [23]), being the words contained in the CBP at page 12 that “there are no expectations that” the relationship between Sports Online and its major supplier was likely to be terminated, the Second Defendant submitted that:

1. The plaintiff has not established this statement to be false, misleading or deceptive. On the contrary, the statement was true at the time it was made T:160.25-.35; T164.27-.50;

2. Prior to the contract being prepared and executed on 6 July 2022, the First Defendant advised the Plaintiff that there would be no minimum monthly spend as previously required by the major supplier (by email of 31 May 2022) and that the First Defendant’s exclusive supply relationship in Australia with the major supplier had come to an end (by email of 17 June 2022);

3. There is no basis to suggest that there was a representation, which was continuing, that there was any form of contract in place with the major supplier (although not pleaded as a continuing representation), and in view of (ii) above, it could not have been continuing to induce the purchaser to enter into the Contract.

85. I agree with these contentions. The Plaintiff’s case in relation to the first representation is not sustainable.

86. The alleged second representation (SOC [24]), namely that the Second Defendant represented that he had resolved “supply issues that may have impacted the business moving forward” and “that there were now no issues and there was also no minimum monthly spend from the major supplier” appear to concern email exchanges between the parties commencing on 31 May 2022 to the date of entry into the contract.

87. The Second Defendant submitted that:

1. The plaintiff had not established this representation to be false, misleading or deceptive;

2. Prior to the Contract being prepared and entered into on 6 July 2022, the Defendants advised the Plaintiff that there would be no minimum monthly spend as previously required by the major supplier, and that the First Defendant’s exclusive supply relationship in Australia with the major supplier had come to an end.

88. I again agree with the Second Defendant’s submissions. Indeed, far from being misleading and deceptive, what is relied upon as misleading was in fact true. The Plaintiff’s case is not, in my view, available on the evidence.

The Third Representation

89. As I have indicated, the third representation was not pressed.

The Fourth Representation

90. The Plaintiff pleads the fourth representation as follows:

On 17 June 2022 the Second Defendant represented to the Plaintiff that the First Defendant had maintained a supply relationship with a "major international supplier" (that being EMD) without being required to make a minimum spending amount ("Fourth Representation").

Particulars

i) Email dated 17 June 2022 from Second Defendant to Plaintiff.

91. The alleged fourth representation (SOC [29]) as particularised arises out of an email of 17 June 2022, which I have extracted at [19] herein.

92. The Second Defendant submitted that:

1. The representation has not been shown to be false, misleading or deceptive;

2. Prior to the Contract being prepared, the Defendants advised the Plaintiff that there would be no minimum monthly spend as previously required by the supplier and that the First Defendant’s exclusive supply relationship in Australia with the major supplier had come to an end (Defence [9]).

93. I agree with those submissions. Again, in my view, the representation was in fact true. The fourth representation has not been made out.

The Fifth Representation

94. The Plaintiff pleads the fifth representation in the following terms:

On 23 July 2022 the Second Defendant represented to the Plaintiff that the major supplier (that being EMD) would not charge a fee for transferring the supply relationship from the First and/or Second Defendants to the Plaintiff ("Fifth Representation").

Particulars

i) Email dated 23 July 2022 from the Second Defendant to the Plaintiff.

95. As to the alleged fifth representation, it is important to note at the outset that the alleged fifth representation was post-contractual. In my view, the email of 23 July 2022 (upon which the fifth representation is based) and the emails which followed it are quite inconsistent with the pleaded fifth representation.

96. In the 23 July email, Dr Poole advised “At this stage the major supplier has said that he would like me to remain the ‘ordering’ person in the immediate future so that the transition occurs smoothly. Much of the business is based on trust so I’m happy to do this going forward (no additional cost above the cost of the items and shipping) in the short-term, at least with the major supplier. I’d strongly recommend it.” (CB 156).

97. This email constituted the commencement of discussion via email relating to the major supplier. Those emails included questions from the purchaser on 24 July 2022 in which the Second Defendant stated, “I am prepared to be the ‘agent’ to ensure that ordering and supply occur until 30 December” (CB 58-59). There were further responses on 24 July 2022.

98. The Second Defendant submitted that:

1. The alleged fifth representation as pleaded, was not made.

2. The email pleaded represented the commencement of a discussion about future prospects of supply from EMD. The email put on the table for discussion ordering options from the major supplier which, should the Plaintiff have taken it up, would have ensured continuity of supply to end December 2022 (without the major supplier charging the Plaintiff a facilitation fee of US $20,000);

3. On 24 July 2022 an email was sent to Mrs Brisby by Dr Poole, stating, “On further reflection, I think that perspective is needed. I have been able to avoid asking you to pay the $15,000 to the AMA and the US $20,000 to the major supplier which were their requests in terms of supplying new owners with whom they have no previous knowledge or relationship. My ordering for a finite period is a pretty insignificant ask in comparison to these onerous financial requests, I think. I know which I’d prefer! There will always be swings and roundabouts.” (CB 161).

4. On 3 August 2022, Mrs Brisby wrote, “We are happy for you to order for us for the short term as you have suggested”. (CB 187);

5. There was no misleading or deceptive conduct.

99. I agree with those submissions. The fifth representation cannot be maintained.

Conclusion

100. It follows from the foregoing that the Plaintiff’s claims must fail. Costs should follow the event.

Orders

101. Accordingly, I make the following Orders:

1. Judgment and verdict for the Defendants against the Plaintiff.

2. The Plaintiff pay the Defendants’ costs.

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Decision last updated: 07 March 2025