Matthew Francis Rynne v Peter Bunn (No 1) - [2013] ACTMC 17

MATTHEW FRANCIS RYNNE v PETER BUNN (No 1)
[2013] ACTMC 17 (21 June 2013)

CONTRACT - TRADE PRACTICES - Fair Trading Act 1992 (ACT) s 46 - misleading and deceptive conduct - whether causal connection between conduct and loss.

Fair Trading Act 1992 (ACT)

I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41

No. CS 10686 of 2010

Magistrate: Morrison
Magistrates Court of the ACT

Date: 21 June 2013

IN THE MAGISTRATES COURT OF THE         )
  )          No. CS 10686 of 2010
AUSTRALIAN CAPITAL TERRITORY               )

BETWEEN:MATTHEW FRANCIS RYNNE
Plaintiff

AND:PETER BUNN
Defendant

DECISION

Magistrate:  Morrison
Date:   21 June 2013
Place:  Canberra

In these civil proceedings the plaintiff brings three claims against the defendant. The first is, in effect, a claim for monies owing under a loan agreement. The second is, in effect, a claim to damages consequent upon the repudiation of what is pleaded as a rental agreement. The third is a claim for damages under section 46 of the Fair Trading Act — the plaintiff asserting that the defendant engaged in misleading or deceptive conduct including misleading representations in relation to future matters.
Before turning to each of the claims I make some observations about the credibility of the plaintiff, the defendant, and the only other witness — Ms Jamie Bunn.
Much turns on my assessment of the credibility of the witnesses, at least in relation to the first and second claims. None of the witnesses was impressive and I do not wholly accept the testimony of any of them.
The plaintiff candidly admitted to having stolen from a former employer, although he was not prosecuted for that theft — having entered into an arrangement to repay what was stolen. He also frankly admitted that he had not been entirely truthful in his loan application with the Commonwealth Bank. I think it is clear that, in so far as the bank loan application was concerned, the plaintiff did what he thought was necessary in order to secure the loan. It appears that it was misleading to the bank, and that the plaintiff knew that to be the case. The areas, however, in which the application was misleading, were somewhat peripheral, given that the bank was providing an unsecured loan. The plaintiff was also cross-examined, in a manner intended to touch on his credit, about how his claim was pleaded and certain communications between his solicitors and the solicitors for the defendant which did not disclose that the original bank loan had been repaid. I got the impression that the plaintiff, understandably, left it to his lawyers to determine how his claim should be framed. Against that background, I do not regard those last two matters I have referred to as things which work against the plaintiff’s credibility. Nevertheless his admissions about the theft and of the lies told in connection with it are important matters to weigh up in assessing his credibility. He did make very candid admissions about the thieving conduct in his evidence-in-chief but he probably had little choice about that. Having made those observations, the plaintiff did not attempt to rationalise his admitted wrongdoing, was generally direct and unequivocal in his testimony and his answers were short and to the point.
The observation just made — that is about giving answers which were short and to the point — is certainly not an observation which could be made about the evidence of the defendant. There was an attack on the credibility of the defendant by way of cross-examination about him having been found in contempt of a Federal Court order and about certain allegations surrounding his conduct as the holder of a power of attorney managing the financial affairs of his disabled sister. No objection was taken, presumably because it was conceded that such evidence could substantially affect the assessment of his credibility. As to the questioning about his conduct under the power of attorney, the defendant in giving his answers prevaricated and was evasive. He accepted that adverse findings had been made against him in certain court proceedings in 2006 in connection with his conduct under the power of attorney. Under cross-examination before me, he purported to give an explanation for the transactions which took place under the power of attorney. When asked if he had given that explanation to the court in 2006, he replied by saying that he didn't because he wasn't given the opportunity to do so. His evidence about that is simply unbelievable and causes me to doubt the reliability of his testimony generally.
Oral testimony was also given in the defendant's case by his daughter Jamie Louise Bunn. In her evidence-in-chief, Ms Bunn said that she put together an amount of $10,000 by way of calling up a debt of $6000 owed to her by Matthew. She said she was going to ask her mother for the extra $4000 but that Matthew said both that he would lend it to her and apparently then that he would give it to her. She went on to give evidence about how the debt owing by Mr Rynne had come about. She referred to having made numerous loans to him although she could not remember when they were made. Her evidence did not canvass how many loans there were, or the amounts advanced on each occasion. She was able to say that the total amount was approximately $6000. Given that she was able to give evidence as to the total, I find it surprising that she did not have either some recollection as to occasions and amounts or some record of them.
I add that it had never been put to the plaintiff in cross-examination that any monies had ever been lent to him by Ms Bunn or that the payment made by him comprised, in part, repayment of any such loan. In fact what had been suggested to the plaintiff in cross-examination was that Ms Bunn had said to him that she would try to get the money to pay the school fees from somewhere and that he — the plaintiff had said that he wanted to do whatever he could to help out. (T58) It was further suggested to the plaintiff in cross-examination that the plaintiff had suggested that he would get the money to pay the fees, that Ms Bunn had said she didn’t know how she was going to pay him back and that the plaintiff had said “don’t worry about it”.
Under cross-examination Ms Bunn said that the amounts loaned to the plaintiff were provided in cash. She said that her bank account would not show corresponding cash withdrawals because she made the payments from a store of cash that she held at home. Her explanation for holding a store of cash and the sources of it was not believable. As I have already said it was not put to the plaintiff that any loans had ever been made. Ms Bunn was not cross-examined about what and when she had told the defendant’s lawyers about the loans to the plaintiff, but it is apparent that her evidence about the loans did not come out in circumstances which caught the defendant by surprise. In his own evidence-in-chief, the defendant said that his daughter told him that the money to pay the school fees came from the plaintiff repaying a loan. Generally I was left with the overall impression that Ms Bunn was not being truthful and that she was tailoring her evidence in a manner which she thought best supported her father's case.
I reiterate my conclusion that none of the witnesses was impressive and I do not wholly accept the testimony of any of them.
Doing the best I can against the background of my conclusions about credibility just referred to, I turn to each of the three claims made by the plaintiff.
The plaintiff says that he sought and obtained a bank loan to pay outstanding school fees which were payable by the defendant for his daughter Hacey. The plaintiff says that he did so at the request of the defendant and pursuant to an agreement with him under which the defendant would reimburse to the plaintiff the amount of the loan payments to be made by the plaintiff.
The plaintiff's testimony about the circumstances under which he sought and obtained a loan to pay the school fees is not far-fetched. The defendant was an undischarged bankrupt and unable to borrow money. The plaintiff was at the time in a serious relationship with the defendant's daughter. He looked upon the defendant as a mentor and a person who could help him to achieve his life goal of acquiring his own supermarket business. Either, or some combination of those factors, provides a readily believable motivation for the plaintiff to act as he says he did. The arrangement which the plaintiff says existed for the payments to him to be made by way of set-off against his board meant that at least when the arrangement was put in place, he would, in effect, be paid whatever the defendant’s financial circumstances, although it is apparent that the plaintiff viewed the defendant's bankruptcy as something of a temporary setback from which he would recover.
I do not believe Ms Jamie Bunn when she says she had a store of cash at home from which she made loans to the plaintiff totalling $6000. Her explanation for having it was unbelievable, and made more so against the background of the difficult financial circumstances facing the family. The only other evidence which might support the existence of a loan is the testimony of the defendant when he said that he was told by his daughter that the money for the school fees was coming from the repayment of a loan by the plaintiff. Given the conclusion I have reached about the credibility of the defendant and Ms Jamie Bunn, I do not attach any weight to that apparently supporting testimony from him. Putting aside the oral testimony of the defendant and his daughter, there is no evidence whatsoever of any loan from Ms Bunn to the plaintiff. As I have already said, it was not put to the plaintiff under cross-examination that any loan to him had ever been made. I find that no loans were made by Ms Bunn to the plaintiff in the manner asserted by Ms Bunn.
The defendant points to a letter written by the plaintiff as evidence that no agreement existed between the plaintiff and the defendant in relation to the loan. The letter to which the defendant refers is equivocal in its terms, referring both to the plaintiff and the defendant being yet to “personally discuss the matter of the personal loan” and to the loan having been taken out on the defendants behalf as well as to the previous arrangements in place to repay it. In his testimony about the letter, the plaintiff said he meant that he and the defendant had yet to discuss the matter after his departure from the house. That is a rational explanation for what appears in the letter and against that background. I do not regard the contents of the letter as weighing against the existence of an agreement as asserted by the plaintiff.
As I have said, the possible motivations of the plaintiff to assist the defendant are logical and understandable. The testimony of Ms Bunn about loans to the defendant is unbelievable. In the absence of such loans her testimony about the circumstances surrounding payment of the school fees cannot be believed. I have already referred to my doubts about the credibility of the testimony of the defendant. Against the background of all of the above, I accept the evidence of the plaintiff about his agreement with the defendant for payment of the school fees. I find that the plaintiff paid the school fees in an amount of $10,000 at the request of the defendant and pursuant to an agreement with him under which the defendant promised to make repayments to the plaintiff. I find that the defendant repudiated the agreement. I deal with damages and interest later in these reasons.
The second claim made by the plaintiff is pleaded as being for "unused rent”. I treat it as being a limited claim for damages consequent upon the defendant’s alleged repudiation of an agreement between the plaintiff and the defendant. The claim is limited to an amount representing pro rata what the plaintiff says was paid in advance for board.
It is not in dispute that the defendant's daughter, Ms Jamie Bunn leased a residence in Hawker. It is not in dispute that she planned to take in a boarder, that the plaintiff was uncomfortable with that arrangement, and that the plaintiff himself became a boarder at the premises paying board on a monthly basis. It is not in dispute that the plaintiff was asked to leave the premises by Ms Jamie Bunn.
The pleading identifying the agreement which the plaintiff asserts reads as follows:
Although he was not the registered tenant of the premises, the defendant stipulated the terms on which the plaintiff became a resident at the premises ("the Rental Agreement”).

It was not apparent to me from the pleadings whether the plaintiff's assertion was that his agreement was with the defendant or merely that the defendant exercised some power of control (or whatever else may be indicated by the use of the word “stipulated”) over the terms of that agreement. In his amended defence, the defendant pleads that he "was not a party to the terms upon which the plaintiff resided at the premises".
The plaintiff’s pleadings go on to assert that Ms Jamie Bunn told him to leave the house on 4 May 2009 and that, by implication, such conduct amounted to a repudiation of the rental agreement by the defendant and/or Ms Bunn, which repudiation was accepted by him.
Given the way in which the plaintiff’s case was conducted, I have approached this part of his claim on the basis that what the plaintiff asserts is the existence of an agreement between the plaintiff and the defendant for the plaintiff to board at the Hawker premises.
The difficulty for the plaintiff with this claim is that, even if his evidence is accepted, it falls short of proving the existence of an agreement with the defendant which was capable of being repudiated by the conduct of Ms Jamie Bunn. It is apparent that the lease with the owner of the premises was held in the name of Ms Bunn and not the defendant and that the plaintiff knew that to be the case. As Mr Jenkins points out in the defendant’s submissions, even if the plaintiff’s evidence that the defendant was the "head of the household" and was somehow able to control how much rent was paid is accepted, that evidence falls short of establishing that Ms Bunn was acting as agent or trustee for the defendant in holding the lease of the premises or that she had the authority — express, implied or ostensible — to repudiate any agreement with the plaintiff. The second claim by the plaintiff fails accordingly.
The third claim made by the plaintiff is a claim for damages under s46 of the Fair Trading Act 1992 of the Australian Capital Territory. The claim under the Trade Practices Act 1974 (Cth) based on the same facts was abandoned.
The plaintiff says that the defendant made a number of representations to him. The representations asserted are set out in paragraph 32 of the amended originating claim and, generally speaking, the testimony given by the plaintiff was to the effect that representations of that kind were made to him.
It is convenient to look at the asserted representations in 2 categories. The first nine of the asserted representations — that is those referred to in paragraphs 32(a) through to 32(i) of the pleadings — relate to representations about Franklins supermarkets establishing a supermarket at the Scullin shops and arrangements for the plaintiff and the defendant to benefit from that under what is described as a “business plan”. I refer to them as the “primary representations”.
The 10th of the asserted representations — referred to in paragraph32(j) of the pleadings — is in effect a representation that the defendant would indemnify the plaintiff against loss if the plaintiff entered into a lease of a vacant shop at the Scullin premises and for some reason the business plan did not proceed. I refer to that as the “indemnity representation”.
The plaintiff claims that the asserted conduct of the defendant amounted to a breach of section 12 of the Fair Trading Act which is in the following terms:
A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

The plaintiff's claim for damages is under section 46 of that Act which is in the following terms:
A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of part 2 may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.

The use in the section of the words "by conduct" indicates the necessity for a claimant to establish a causal connection between the defendants conduct and the claimant’s loss or damage. An equivalent expression appears in section 82 of the Competition and Consumer Act 2010 (Cth) and has been interpreted as meaning that the offending conduct need not be the only cause of the claimant’s loss or damage. It is sufficient if it plays a part in the claimant’s loss or damage, even if only a minor part — see I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41.
Under cross-examination, the plaintiff was directed to his assertion that the defendant had told him that if the business plan did not proceed the defendant would pay all of his losses — that is the indemnity representation. The plaintiff conceded that he knew that he could not rely on that statement because the defendant had no money to pay his losses. That answer — conceding as it does the absence of any causal connection between conduct and loss — is enough to dispose of the plaintiff's claim insofar as it relies upon the indemnity representation.
The plaintiff's case has been argued on the basis that the indemnity representation was a separate and distinct representation such that the failure of the plaintiff's claim because of non-reliance upon it does not of itself mean that the plaintiff cannot succeed on the basis of the primary representations.
As I understand the plaintiff’s case, what is described in his testimony and the pleadings as the “business plan”, required him to take a lease of a vacant shop at the Scullin site and was to lead to the defendant and him both being employed by Franklins in senior employment positions as well as being landlords, or perhaps property managers, of the premises in Scullin from which a new Franklins supermarket was to operate.
A number of things are apparent from the evidence about the proposed plan. They include the following:
a.The plaintiff accepts that the defendant was a warehouse manager for Franklins and did not occupy any formal role with the company in a position usually associated with decision-making about the location of new supermarkets.
b.The plaintiff does not claim that the defendant told him that he was in possession of particular special or inside information about the intentions of Franklins.
c.The vacant shop leased by the plaintiff was not of itself large enough to accommodate a Franklins supermarket.
d.The plaintiff accepted that achieving the outcome sought in the business plan required the cooperation and approval of at least four other persons. As I understood the evidence, this meant that the size of the site required for a Franklins supermarket was the aggregate of the area of the vacant shop leased by the plaintiff and the area of four other shops at the site. I infer from the evidence which was given, although not directly on this point, that at least some of those shops were not vacant — that is that they were the site of then operating businesses.
e.No reference was made in the evidence to the basis upon which the other persons held their interests in the other shop premises. I think I can reasonably infer that they did so as lessees from some common landlord although there is also no evidence as the terms upon which such leases were held. It is apparent that any proposal for Franklins to take a lease of the aggregate site would require any of the four other persons who were then leasing premises and operating a shop to either close their business or relocate it.
f.A meeting with two of the four other persons took place but not until after the lease was signed by the plaintiff. There was no evidence of any communication with them about what the plaintiff says was the business plan before the lease was signed and therefore no evidence of the attitude of any of them to what the plaintiff says was proposed.
g.As to the two persons who were not present at the meeting with the plaintiff and the defendant, the plaintiff said of one that the defendant thought "she would be a hurdle because she's been there for so long"; and of the other, that he and the defendant "did not get along".
h.In addition to some arrangement being necessary to accommodate or compensate the interests as lessees of the four other persons just referred to, it is likely to have been necessary for Franklins to come to some mutually acceptable agreement with whoever was the landlord of the premises.
i.The plaintiff said under cross-examination that there were discussions between him and the defendant about how profits were to be allocated between them but he did not go on to say whether any understanding had been reached about that and if so what were the terms of that understanding.
j.At the time that the representations were asserted to have been made, the plaintiff said that the defendant used a fake name — posing as the plaintiff’s uncle — “because he did not want his name involved, as if someone found out it would fail here in Canberra he said”. The plaintiff was not asked what he thought the defendant meant by those words and he did not say what he understood them to mean. It is difficult to see that the plaintiff can have understood them to convey anything other than an acknowledgement by the defendant that having his involvement in the venture known would be disadvantageous.

The purpose of the analysis just undertaken is to demonstrate that it was obvious to the plaintiff that a great many things were necessary to bring the asserted business plan to fruition. The failure or absence of any one of them would doom the plan to failure. It was equally obvious to the plaintiff that many of the necessary prerequisites were beyond the control of either the plaintiff or the defendant. At least some of them — and I refer here, for example, to negotiations with the two persons who did not attend the Dickson cafe meeting — were probably beyond any influence of the defendant. Further the plaintiff knew that any influence of the defendant was to be assessed against the defendant’s own acknowledgement of the likelihood of failure if his — that is the defendant’s — name was involved with the venture.
All of the factors just mentioned are to be viewed against the background that the plaintiff knew that the defendant had recently failed in a business venture, and the plaintiff’s concession that he knew and understood that he could not rely upon the defendant’s representation that he would be indemnified against loss because the defendant was bankrupt.
The plaintiff is a relatively young man but he has experience in the retail industry which goes beyond mere serving behind a counter. On his own evidence he had long held and pursued an interest in managing his own supermarket business.
In accordance with the decision in I & L Securities referred to earlier, I accept that any representation made by the defendant need not be the sole or even a material cause of the loss suffered by the plaintiff, but there must be some causal connection between the two.
It may be that the plaintiff and the defendant spoke about the possibility of a Franklins supermarket in Scullin. It may be that the defendant spoke in enthusiastic and even unconditional terms. But even if I accept the plaintiff's evidence as to the making of the representations asserted, the plaintiff knew that in reality it was just that — a mere possibility. He knew that there remained a long list of essential things without which that possibility would never come to fruition. He knew that the defendant had no control over them and indeed no influence in relation to most of them. He knew the circumstances of the defendant’s bankruptcy and what the defendant himself felt about likely reaction by others to the defendant being involved in any business plan.
Against that background, I do not accept the plaintiff’s evidence when he says he relied upon any such representations in making his decision to lease the vacant shop. To do so would have demonstrated extraordinary naiveté on the part of the plaintiff and I do not believe him to be so naive. I think it is more likely that the plaintiff leased the vacant shop in the speculative hope that a deal with Franklins might be struck, but knowing and accepting there was a significant risk that such a deal could not be struck because he well knew he could not rely upon any representations made to him by the defendant.
I have considered whether the making of the indemnity representation, if it was made, could have somehow operated to give the plaintiff greater cause to rely upon the primary representations, if they were made, but when the plaintiff himself has conceded that he knew the indemnity representation was worthless it cannot rationally have operated in that manner.
It follows that the third claim by the plaintiff also fails.
I turn to the assessment of damages in relation to the plaintiff’s first claim — that is based on the loan agreement for the school fees.
The plaintiff borrowed $10,000.00 from the bank. His claim for damages as pleaded is in an amount of $9415.00 for the outstanding loan amount and $135 for bank fees. He claims interest pursuant to rule 1616. No detailed calculation of the total amount claimed by the plaintiff to the date of hearing was put before me. Rule 1616 permits me to order that interest be included in the amount for which judgement is given at a rate the Court considers appropriate. I treat the agreement between the plaintiff and the defendant as having been repudiated by the defendant as and from 13 August 2009 when the defendant failed to respond to the plaintiff’s demand to reinstate payments. The material before me indicates the plaintiff paid what is described as the standard variable interest which was 14.9% per annum at commencement of the loan. Whilst I do not appear to have sworn evidence before me about rate changes, I note that the pleadings refer to a much reduced claim for interest — down to 6.96% from June 2010 — presumably as part of some refinancing of the loan. In all the circumstances, I allow interest on the amount of $9550 at the rate of 14% per annum flat for the period from 13 August 2009 to 30 June 2010 and at the rate of 6% per annum flat from 1 July 2010 to today’s date. The figures work out as follows:
a.Loan balance and fees  $9550.00
b.Interest from 13 August 2009 to 30 June 2010
(321 days at $3.66 per day)  $1174.86
c.Interest from 1 July 2011 to 21 June 2013
(721 days at $1.57 per day)  $1131.97
TOTAL           $11856.83

I give judgement for the plaintiff against the defendant in an amount of $11856.83.
I will hear the parties as to costs.
I certify that the preceding forty-five (45) paragraphs are a true copy of the Reasons for Decision of his Honour, Magistrate Morrison.
Associate: Gary Khoo
Date: 21 June 2013

Counsel for the Plaintiff:   Mr S Whybrow
Solicitor for the Plaintiff:                      Colquhoun Murphy Solicitors
Counsel for the Defendant:                   Mr D Jenkins
Solicitor for the Defendant:                   Howes Kaye Halpin Solicitors
Date of hearing:   26 October 2012 and 24 April 2013
Date of decision:   21 June 2013