Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd
[2011] WASCA 76
•1 APRIL 2011
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: OWSTON NOMINEES NO 2 PTY LTD -v- CLAMBAKE PTY LTD [2011] WASCA 76
CORAM: McLURE P
PULLIN JA
MURPHY JA
HEARD: 19-21 OCTOBER 2010
DELIVERED : 1 APRIL 2011
FILE NO/S: CACV 34 of 2009
BETWEEN: OWSTON NOMINEES NO 2 PTY LTD
First Appellant
TIPPERARY PROJECTS PTY LTD
Second AppellantWARREN PERRY ANDERSON
Third AppellantAND
CLAMBAKE PTY LTD
First RespondentLAND CAPITAL PTY LTD
Second RespondentIVOR FREDERICK COHEN
Third Respondent
FILE NO/S :CACV 53 of 2009
BETWEEN :CLAMBAKE PTY LTD
Appellant
AND
OWSTON NOMINEES NO 2 PTY LTD
Respondent
FILE NO/S :CACV 6 of 2010
BETWEEN :CLAMBAKE PTY LTD
Appellant
AND
TIPPERARY PROJECTS PTY LTD
First RespondentWARREN PERRY ANDERSON
Second Respondent
ON APPEAL FROM:
For File No : CACV 6 of 2010
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram :EM HEENAN J
Citation :CLAMBAKE PTY LTD -v- TIPPERARY PROJECTS PTY LTD [No 7] [2009] WASC 390
File No :CIV 1707 of 2003, CIV 2093 of 2003
For File No : CACV 34 of 2009
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram :EM HEENAN J
Citation :CLAMBAKE PTY LTD -v- TIPPERARY PROJECTS PTY LTD [No 3] [2009] WASC 52
File No :CIV 1707 of 2003, CIV 2093 of 2003
For File No : CACV 53 of 2009
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram :EM HEENAN J
Citation :CLAMBAKE PTY LTD -v- TIPPERARY PROJECTS PTY LTD [No 3] [2009] WASC 52
File No :CIV 1707 of 2003, CIV 2093 of 2003
Catchwords:
Trade practices - Misleading or deceptive conduct - Role of silence - Interpretation of s 4(2) of the Trade Practices Act 1974 (Cth) - Relevance of context to the characterisation of 'conduct' - Whether conduct engaged in by the defendant was misleading or deceptive - Causation
Accessorial liability under the Trade Practices Act 1974 (Cth) - Degree of knowledge required - Whether knowledge of agent attributable to principal - Whether agent an 'agent to know'
Res judicata - Issue estoppel - Anshun estoppel
Negligence - Relevance of statutory building code to the standard of care - Whether negligent failure to warn - Turns on own facts
Legislation:
Fair Trading Act 1987 (WA), s 10
Occupiers' Liability Act 1985 (WA)
Trade Practices Act 1974 (Cth), s 4(2), s 4(2)(a), s 4(2)(c), s 4(2)(c)(i), s 52, s 75B, s 75B(1)(c), s 80, s 82, s 87
Result:
CACV 34 of 2009
Appeal dismissed
CACV 53 of 2009
Appeal allowed
CACV 6 of 2010
Appeal dismissed
Category: A
Representation:
CACV 34 of 2009
Counsel:
First Appellant : Mr M L Bennett & Mr C E Chenu
Second Appellant : No appearance
Third Appellant : No appearance
First Respondent : Mr P J Deakin QC & Mr S E McCarthy
Second Respondent : Mr C L Zelestis QC & Mr M N Solomon
Third Respondent : Mr P J Deakin QC & Mr S E McCarthy
Solicitors:
First Appellant : Lavan Legal
Second Appellant : No appearance
Third Appellant : No appearance
First Respondent : Minter Ellison
Second Respondent : Sparke Helmore
Third Respondent : Minter Ellison
CACV 53 of 2009
Counsel:
Appellant: Mr P J Deakin QC & Mr S E McCarthy
Respondent: Mr M L Bennett & Mr C E Chenu
Solicitors:
Appellant: Minter Ellison
Respondent: Lavan Legal
CACV 6 of 2010
Counsel:
Appellant: Mr P J Deakin QC & Mr S E McCarthy
First Respondent : No appearance
Second Respondent : No appearance
Solicitors:
Appellant: Minter Ellison
First Respondent : No appearance
Second Respondent : No appearance
Case(s) referred to in judgment(s):
Blair v Curran (1939) 62 CLR 464
Bradford House Pty Ltd v Leroy Fashion Group Ltd (1983) 46 ALR 305
Bryan v Maloney [1995] HCA 17; (1995) 182 CLR 609
Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592
Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304
Campomar Sociedad Limitada v Nike International Ltd [2000] HCA 12; (2000) 202 CLR 45
CCP Australian Airships Ltd v Primus Telecommunications Pty Ltd [2004] VSCA 232; (2005) ATPR 42‑042
Commonwealth Bank of Australia v Mehta (1991) 23 NSWLR 84
Compaq Computer Australia Pty Ltd v Merry (1998) 157 ALR 1
Corporation of the City of Adelaide v Adelaide City Fines Pty Ltd [2009] FCA 132; (2009) 253 ALR 417
Costa Vraca Pty Ltd v Berrigan Weed & Pest Control Pty Ltd (1998) 155 ALR 714
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31
Dissidomino v Butcher Paull & Calder (a firm) [2005] WASCA 210
Drexel London (a firm) v Gove (Blackman) [2009] WASCA 181
Edgar v Farrow Mortgage Services Pty Ltd (in liq) (1992) ATPR 46-096
Eva v Southern Motors Box Hill Pty Ltd [1977] HCA 2; (1977) 30 FLR 213
Fox v Percy [2003] HCA 22; (2003) 214 CLR 118
Fraser v NRMA Holdings Ltd (1995) 55 FCR 452
Giorgianni v The Queen [1985] HCA 29; (1985) 156 CLR 473
Henjo Investments Pty Ltd v Collins‑Marrickville Pty Ltd (1988) 39 FCR 546
Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd [1978] HCA 11; (1978) 140 CLR 216
Horrocks v Lowe [1975] AC 135
Houghton v Arms [2006] HCA 59; (2006) 225 CLR 553
Jessett Properties Ltd v UDC Finance Ltd [1992] 1 NZLR 138
Johnson Tiles Pty Ltd v Esso Australia Ltd [1999] FCA 477
Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564
Jones v Bartlett [2000] HCA 56; (2000) 205 CLR 166
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449
Maloney v Commissioner for Railways (NSW) (1978) 18 ALR 147
Micarone v Perpetual Trustees [1999] SASC 265
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357
Noor Al Houda Islamic College Pty Ltd v Bankstown Airport Ltd (2005) 215 ALR 625
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191
Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd [2002] NSWCA 211
Permanent Mortgages Pty Ltd v Vandenbergh [2010] WASC 10
Piggott v Stratton (1859) 1 De G F & J 33
Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589
Rhone‑Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 68 ALR 77
Rosenberg v Percival [2001] HCA 18; (2001) 205 CLR 434
Smits v Roach [2006] HCA 36; (2006) 227 CLR 423
Spedley Securities Ltd (In liq) v Bank of New Zealand (1991) ATPR 41‑143
Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177
Taylor v Johnson [1983] HCA 5; (1983) 151 CLR 422
Telmak Teleproducts (Australia) Pty Ltd v Coles Myer Ltd (1989) 89 ALR 48
Trawl Industries of Australia Pty Ltd (in liq) v Effem Foods Pty Ltd (1992) 36 FCR 406
Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38; (1998) 192 CLR 603
Voli v Inglewood Shire Council [1963] HCA 15; (1963) 110 CLR 74
Warner v Elders Rural Finance Ltd (1993) 113 ALR 517
Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97
Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661
McLURE P: These three appeals are from claims arising out of a fire on 22 December 2002 which destroyed a section of a commercial building on Stirling Highway, Claremont owned by Clambake Pty Ltd (the building).
Clambake had since December 1992 leased part of the building (the leased premises) to Tipperary Projects Pty Ltd, a company owned and controlled by Mr Warren Anderson. Stored in the leased premises were part of a vast collection of antiques, fine furniture, artworks and other valuable items of personal property (the collection) owned by another of Mr Anderson's companies, Owston Nominees No 2 Pty Ltd (Owston). The collection, valued at $14,625,400, was destroyed in the fire. The building did not have a fire protection system that complied with the relevant regulatory framework at the time of the fire.
The primary proceedings
After the fire, Clambake commenced proceedings in the Supreme Court (CIV 1707 of 2003) against Tipperary and Mr Anderson for arrears of rent and outgoings for the leased premises (the rent claim). A lease dated 25 August 1988 had been assigned to Tipperary by deed of assignment dated 2 December 1992 and was extended and varied by a deed of extension and variation also dated 2 December 1992 (both documents are together referred to as the 'Lease'). Mr Anderson guaranteed Tipperary's obligations under the Lease. The trial judge upheld the rent claim against both Tipperary and Mr Anderson.
The trial judge states in his reasons [9] that he ordered the rent claim to be heard together with an action by Tipperary and Owston (CIV 2093 of 2003) in relation to the loss of the collection in the fire (the fire claim). In fact, on 24 June 2004 he had ordered that the claims be consolidated. The fire claim was against Clambake, Land Capital Pty Ltd, the managing agent of the building from 1995, and Mr Ivor Cohen, a director of both Clambake and Land Capital Pty Ltd.
As against Clambake, Tipperary and Owston claimed in negligence, nuisance, breach of the Occupiers' Liability Act 1985 (WA) and for misleading or deceptive conduct under s 52 of the Trade Practices Act 1974 (Cth) (TPA) and s 10 of the Fair Trading Act 1987 (WA) (FTA) (the statutory claims). Tipperary also claimed against Clambake for breach of the Lease. The trial judge upheld Owston's misleading or deceptive conduct claim and dismissed all other claims.
Tipperary and Owston claimed against Land Capital in negligence and for misleading or deceptive conduct. Tipperary and Owston claimed that Mr Cohen was a person involved in the contravention under s 75B(1)(c) of the TPA (and its equivalent under the FTA). The trial judge dismissed all claims against Land Capital and Mr Cohen.
Clambake counterclaimed in the fire claim against Tipperary for an indemnity under cl 4.01 of the Lease for the full amount of its liability to Owston. The trial judge upheld the counterclaim.
The trial judge handed down his reasons for decision in the rent claim and the fire claim on 9 March 2009. Following delivery of the reasons, Clambake filed an amended counterclaim against Mr Anderson seeking orders to the effect that, as guarantor, Mr Anderson was also obliged to satisfy the indemnity under which Tipperary had been found liable to Clambake in the fire claim.
On 20 March 2009, the trial judge made orders in the rent claim and the fire claim giving effect to his reasons. On that date he also ordered that Mr Anderson be joined as a defendant to Clambake's counterclaim for an indemnity in the fire claim. Subsequently, Mr Anderson and Tipperary each filed a defence and crossclaim against Clambake claiming misleading or deceptive conduct by Clambake and seeking relief under s 80 and s 87 of the TPA.
After a further hearing (at which no new evidence was adduced) the trial judge upheld Mr Anderson's claim for relief under s 87 of the TPA. By orders dated 14 December 2009 the trial judge declared and ordered that by reason of the misleading and deceptive conduct of Clambake, the contractual liability of Mr Anderson under the guarantee and cl 4.01 of the Lease to indemnify Clambake for its liability to Owston shall not be enforced.
The trial judge dismissed Tipperary's counterclaim.
The appeals
Clambake brings two appeals. In the first appeal (CACV 53 of 2009) Clambake challenges the trial judge's finding that it engaged in misleading or deceptive conduct concerning the fire protection system in the building. The scope and application of s 52 of the TPA in relation to silence featured prominently in the trial judge's reasons and in the parties' submissions in the appeal.
In its second appeal (CACV 6 of 2010), Clambake challenges the trial judge's order that Mr Anderson's liability under the guarantee and the Lease to indemnify Clambake for its liability to Owston not be enforced. The primary issues in this appeal are whether Mr Anderson was, or should have been, prevented from litigating the counterclaim on the basis of res judicata, issue estoppel or Anshun estoppel. There was no appearance for the respondents (Mr Anderson or Tipperary) in this appeal.
In appeal CACV 34 of 2009, Owston claims the trial judge erred in dismissing the misleading or deceptive conduct claims against Mr Cohen and Land Capital. It also claims the trial judge erred in dismissing the negligence claims against Clambake and Land Capital.
Background
The building was a large single storey structure of around 3,500 sqm. At the time of the fire it consisted of a number of tenanted showrooms, shop displays and storage areas. The building was on land bounded by Stirling Highway to the south, Loch Street to the east and Brown Street to the west. It was originally used as a motor vehicle showroom and later as a warehouse.
When purchased by the previous owner (Sectam Pty Ltd) in 1984, the warehouse was without a ceiling and had a reticulated fire sprinkler system. It appears the fire sprinkler system was not operational when Sectam purchased the building [269].
Sectam renovated the building in accordance with plans approved by the local government authority, the Town of Claremont. The Town of Claremont and the Western Australian Fire Brigades Board (WAFB) approved an alternative to the sprinkler system then installed in the building. The approved alternative included a north-south fire‑wall which divided the building into approximately two halves. The leased premises were on the western side of the fire‑wall.
However, some time prior to August 1988 when Clambake became the owner of the building, two large apertures were made in the fire‑wall and roller doors installed [266], [288]. This caused the fire protection system in the building to become non‑compliant with the terms of the Town of Claremont building approval and with the regulatory requirements, in particular the Uniform Building By-Laws (UBBLs).
The components of the inoperative fire sprinkler system, including fire sprinkler heads, remained in situ in the building after its renovation by Sectam. However, a suspended ceiling was installed in the building. The suspended ceiling was below the level of the old fire sprinkler system and had the effect of removing the fire sprinkler system above it from view. However, sprinkler heads remained on view on the underside of an internal bulkhead which travelled the length of the Stirling Highway frontage of the building. The pumps, control valves and other equipment for the disconnected fire sprinkler system were located in a plant room which was within part of the building leased to another tenant who operated a business known as 'Half Price Pine Furniture' [742]. The sprinkler system was also visible in the car park and from the mezzanine floor in another leased area referred to as 'Albertine's'.
The trial judge found that Mr Cohen accompanied Mr Anderson on his one and only inspection of the building prior to Tipperary entering into the Lease [429], [456] ‑ [460]; that in the course of that inspection Mr Anderson noticed sprinkler heads in the bulkhead at the front of the leased premises [424]; and that Mr Anderson assumed from their existence that an operational fire sprinkler system in working order existed and would be maintained [660]. The bulkhead viewed by Mr Anderson, was at the front of an area of around 210 sqm subsequently sub‑let by Tipperary to 'Jacquie McPhee Interiors'.
Mr Anderson did not see (or look for) sprinkler heads in the ceiling of the proposed leased premises [424]. If he had looked at the ceiling, he would not have seen any sprinkler heads because they were above the suspended ceiling. Further, at no material time did Mr Anderson (or anyone else on behalf of Tipperary or Owston) ask Mr Cohen or anyone else on behalf of Clambake or Land Capital about the existence or details of the fire protection system in the building [660].
After noting that Mr Anderson was well experienced in the features and requirements of commercial shopping centres and understood (incorrectly) that they were required by law to have fire sprinkler systems, the trial judge continued:
[Mr Anderson] assumed, and I am satisfied reasonably assumed, that there would be, throughout the tenancy, a fire protection system for the building which, at the least, complied with the requirements of all relevant applicable laws and regulations. Observing the presence of sprinkler heads in the bulkheads, I am satisfied it was a natural and reasonable conclusion to draw that there was an operational fire sprinkler system in the premises [430].
These matters are repeated in substance later in the reasons. The trial judge concluded:
Mr Anderson, and hence Tipperary and Owston had been left with the not unreasonable, but mistaken, impression that the sprinkler heads visible at the front of the leased premises were part of a more comprehensive system which was operational, but this impression was not directly [and I interpolate, indirectly] induced by anything said by Mr Cohen or anyone else on behalf of Clambake or Land Capital [742].
At [745] the trial judge notes that it was essentially the sight of the sprinkler heads coupled with Mr Anderson's experience in construction which induced Mr Anderson's belief that there was an operational fire sprinkler system in the building and which was responsible for the continuation of that belief at all times up until the fire. The trial judge found that Clambake was at all times unaware of Mr Anderson's mistaken impression that an operating fire sprinkler system existed throughout the building [739].
The trial judge made the following findings concerning Mr Cohen's state of knowledge and understanding which he attributed to both Clambake and Land Capital [662], [667]. At all material times, Mr Cohen was aware that the fire sprinkler system had been disconnected and was not operative [662]. He understood that a new system of fire protection consisting of fire hoses, reels and portable extinguishers had been installed to replace the fire sprinkler system [664] and that the new system had been approved [665]. Although Mr Cohen knew that the approved plan for the renovations carried out by Sectam made no provision for the two apertures in the north‑south wall, he did not attach any significance to the presence of the apertures or the steel roller doors. The trial judge was satisfied that Mr Cohen did not realise that compliance with the UBBLs was dependent upon the existence and maintenance of a continuous unbroken north‑south fire‑wall or that in its absence, the UBBLs required the installation of an operational fire sprinkler system [667].
The trial judge also found that if Mr Anderson had been made aware that there was no operating fire sprinkler system in the building he would have immediately removed the collection from the building [783] ‑ [784]. This is an important causation finding particularly when regard is had to an earlier finding that the alternative approved fire protection system, even if fully compliant with the UBBLs, would not have prevented the destruction of the collection in the fire [394]. The fire started in the roof of the building above the premises leased to Half Price Pine Furniture. That was on the western side of the fire‑wall where the leased premises were also located.
Clambake's first appeal (misleading or deceptive conduct)
The pleading
It is as well to commence with the pleading of the claim in misleading or deceptive conduct. It relevantly provides:
13Clambake (from 1992), further or alternatively Land Capital (from 1995), in trade or commerce, represented ('the representations') to Tipperary Projects and Owston, alternatively to Tipperary Projects, the representations being continuing representations operating until 22 December 2002, in effect that:
(1)the fire equipment installed at the Premises and/or the Leased Premises, including the fire sprinkler system, was and would continue to be activated, in good working order and properly maintained;
(2)adequate fire protection and fire safety infrastructure and fittings were installed and were, and would continue to be, properly maintained; and
(3)…
Particulars of making representations
(a)As to paragraphs (1) and (2);
(i)Clambake leased the Premises to Tipperary Projects under the terms of the Lease, the assignment and the variation, including the fire equipment clause;
(ii)the Leased Premises contained a fire sprinkler system the heads of which were in part visible to the occupants of the Leased Premises;
(iii)each year from 1992 Clambake, and from 1995 Clambake by Land Capital, pursuant to the terms of the Lease, charged Tipperary Projects outgoings relating to costs associated with maintaining the fire equipment;
(iv)each year from 1992 Clambake, and from 1995 Clambake by Land Capital, provided to Tipperary Projects budgets and audited accounts for outgoings charged in relation to the Leased Premises, all of which recorded fire equipment expenses as an outgoing.
…
14(1)Clambake and Land Capital did not inform Tipperary Projects or Owston that:
(a)the fire sprinkler system in the Premises was not activated, in good working order and properly maintained;
(b)adequate fire protection and fire safety infrastructure and fittings had not been installed and or were not maintained;
(c)on 31 October 2002 Clambake's insurer had requested Clambake and Land Capital to provide written confirmation that the fire sprinkler system was operational;
(d)on 31 October 2002 Clambake's insurer had recommended to Clambake and Land Capital that given the age of the Premises and the level of combustible material within the Premises, the fire sprinkler system should be made operational at all times;
(e)…
(2)In fact:
(a)the fire sprinkler system in the Premises was not activated, in good working order and properly maintained, because it had been disconnected by Clambake or Land Capital by or at the direction of Cohen, or by the previous owner of the Land to the knowledge of Clambake and Land Capital by Cohen;
(b)adequate fire protection and fire safety infrastructure and fittings had not been installed and or were not maintained because:
(i)as Clambake and Land Capital knew, or ought to have known, there was no or no adequate fire wall in the Premises;
[Particulars are given of the alleged defects in the north-south wall]
(ii)the fire sprinkler system was disconnected and was inadequate as there was no fire sprinkler system installed in the roof cavity;
[Particulars are given of the UBBLs and the Australian standards]
…
15(1).In reliance on the representations:
(a)Tipperary Projects leased the Leased Premises, held over and stored the antiques at the Leased Premises, alternatively licensed part of the Leased Premises to Owston which stored the antiques at the Leased Premises;
(b)Tipperary Projects and Owston took no action to see that:
(i)the fire equipment installed at the Premises, including the fire sprinkler system, was activated, in good working order and properly maintained;
(ii)adequate fire protection and fire safety infrastructure and fittings and fire safety systems, including a fire sprinkler system, were installed and maintained;
(iii)…
(2)But for the representations and failure to inform:
(a)Tipperary Projects would not have leased the Leased Premises, and held over;
(b)Owston or Tipperary Projects would have stored the antiques at other premises which had (i) adequate fire protection infrastructure and fire safety systems including a fire sprinkler system and which were properly maintained and (ii) …
(c)Tipperary Projects or Owston would have taken action to see that adequate fire protection and fire safety infrastructure and fittings including a fire sprinkler system were installed and maintained.
The appellant conceded at trial that Owston but not Tipperary was entitled to maintain the claim for damages under s 82 of the TPA [719].
The trial judge did not make any finding on Owston's claim that Clambake or Land Capital had made the pleaded representations. Rather he identified the relevant question in the following terms:
[T]he question upon which liability for the alleged misleading and deceptive conduct depends is whether in all the circumstances the absence of any statement or explanation at any time by Clambake or Land Capital that the old fire sprinkler system was not operational and did not form part of the fire protection system was misleading or deceptive [745].
The trial judge's analysis and findings
The trial judge said that where the mistaken impression about the existence of an operating fire sprinkler system was reached entirely by Mr Anderson without any contribution by statements by Mr Cohen, and without the subject of the nature or adequacy of fire protection at the premises to be let having come up in discussions, it was necessary:
to address the issue on the footing that there would need to be some feature of the discussions between the parties and the situation in which they occurred where a failure to advert specifically to the fact that the former sprinkler system was obsolete, was misleading or deceptive [752].
He continued:
The meeting between Mr Anderson and Mr Cohen about the proposed leasing of the Claremont premises took place in a setting where both parties tacitly accepted that there was a need for a suitable fire protection system for the building. That this was not mentioned does not mean that it was unimportant, rather it reveals that such a requirement was so obvious that it did not need express attention. Indeed, the Clambake parties have never suggested that a suitable fire protection system was not necessary because they have always asserted, and still continue to assert, that all necessary fire precaution systems were provided and operational. Consequently, that discussion and the continuing relationship between Tipperary and Clambake were based on the common assumption that all necessary fire protection systems were in place and were operational [753].
After referring to the impression and expectation which, according to the trial judge any experienced or informed observer would be likely to reach, namely that the building required an operational fire sprinkler system in order to comply with the applicable requirements ([755], [756]), he continued:
The effect, therefore, is that the very appearance of the building in the condition in which it was in 1992 and in the light of the applicable UBBLs was such as to generate an expectation that its fire protection system included an operational sprinkler system. That appearance, to any person familiar with the general nature of fire protection systems required for comparable buildings, therefore had the capacity to mislead or to deceive such an observer into believing that signs of a fire sprinkler system on the premises were actually part of an overall approved and operational fire sprinkler system.
In my view, this created an impression which called for correction by disclosure that the sprinkler heads which were part of the old system were not in operation and that other special arrangements had been made which dispensed with the need for a sprinkler system. Unless that was dispelled, the chances of a mistaken belief being reached about the nature and extent of the fire protection system were, in my view, very high [757] ‑ [758].
The trial judge did not expressly consider or make any finding on whether the appearance of the building was part of the conduct engaged in by Clambake for the purpose of s 52 of the Act. The only conduct which the trial judge expressly attributed to Clambake was its failure to inform Tipperary that the fire sprinkler was not operational [760].
The trial judge found that Clambake, Land Capital and Mr Cohen did not intend to mislead or deceive by remaining silent and that they did not realise that Mr Anderson (and through him Owston) had reached the erroneous conclusion that a sprinkler system formed part of the fire protection system [771]. The trial judge did not expressly consider or make any finding on whether Clambake, Land Capital or Mr Cohen had deliberately refrained from advising Mr Anderson or his companies that the fire sprinkler system was inoperative.
The trial judge concluded:
I am satisfied that Owston has made out its allegation that there was misleading and deceptive conduct by Clambake from about June or July of 1992, commencing with the inspection of the premises by Mr Anderson prior to taking the assignment of the lease, and continuing from then on until the fire [770].
Clambake's grounds of appeal
Clambake relies on 22 grounds of appeal, a number of which overlap. Its grounds of appeal and written submissions are based on its understanding that the trial judge found that Clambake had, by reason of its silence, misled Mr Anderson (and thus Tipperary and Owston) on the subject of the fire sprinkler system.
Clambake challenges the finding that the failure to dispel Mr Anderson's erroneous assumption was misleading and deceptive (grounds 1, 2 and 6) and that the appearance of the building was misleading or deceptive (ground 4). Clambake also claims the trial judge failed to:
(a)conclude that any erroneous assumption formed by Mr Anderson was not produced by any conduct of Clambake (ground 5);
(b)recognise that in arms length commercial transactions the law did not recognise any duty of disclosure under s 52 (ground 7);
(c)determine whether the circumstances gave rise to a reasonable expectation that the non‑operational status of the fire sprinkler system would be disclosed (ground 3); and
(d)apply an objective test in determining whether any misleading or deceptive conduct occurred (ground 8).
There is also a challenge to findings made by the trial judge relating to the identity of the person who accompanied Mr Anderson on the one and only inspection of the building before entering into the Lease (grounds 9, 10, 11 and 12). The respondent seeks to uphold those findings on a procedural fairness ground.
Clambake also challenges the trial judge's findings that Mr Anderson observed sprinkler heads in the building before entering into the Lease (ground 14); that Mr Anderson's observations of sprinkler heads led him to form the impression that there was an operational sprinkler system in the premises (ground 15); that Mr Anderson would not have allowed Tipperary to take an assignment of the Lease if the non‑operational status of the sprinkler system had been known to him (ground 18); and that if the non‑operational status of the fire sprinkler system was known to Mr Anderson, he would not have allowed his collection to be placed in the building or would have moved his collection (grounds 19 ‑ 20).
There are also challenges to findings made by the trial judge relating to the respective contractual responsibilities of Tipperary and Clambake under the Lease (grounds 16 and 17). Finally, Clambake challenges the trial judge's approach to the issue of causation of loss (grounds 21 and 22).
The grounds of appeal raise issues going to the proper construction of s 52 and s 4(2) of the TPA (and their equivalents in the FTA).
Misleading or deceptive conduct and silence
Clambake contended that in order to succeed in its claim for misleading or deceptive conduct, Owston had to prove that Clambake's failure to disclose the relevant information (that the fire sprinkler system was not operational) was intentional and deliberate.
Under s 52 of the TPA, a corporation must not engage in conduct that is misleading or deceptive or is likely to mislead or deceive. The expression 'engage in conduct' is defined in s 4(2) as follows:
(a)a reference to engaging in conduct shall be read as a reference to doing or refusing to do any act …
(b)a reference to conduct, when that expression is used as a noun otherwise than as mentioned in paragraph (a), shall be read as a reference to the doing of or the refusing to do any act …
(c)a reference to refusing to do an act includes a reference to:
(i)refraining (otherwise than inadvertently) from doing that act; or
(ii)making it known that that act will not be done.
There is much case law concerning the circumstances in which silence can constitute, or contribute to, misleading or deceptive conduct. However, it is difficult to distil from the cases an entirely coherent and consistent framework of principles (which is necessary for maximising the prospect of correctly applying the law to the facts).
In many of the cases in which silence is an issue, there is no suggestion that s 4(2) has any limiting effect on the scope of s 52 of the TPA: Henjo Investments Pty Ltd v Collins‑Marrickville Pty Ltd (1988) 39 FCR 546; Fraser v NRMA Holdings Ltd (1995) 55 FCR 452; Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (2000) 104 FCR 564 (Full Court); Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97; Warner v Elders Rural Finance Ltd (1993) 113 ALR 517.
In other cases in which silence is an issue, the focus is on whether the omission is intentional and deliberate: Rhone‑Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 68 ALR 77, 84 (Bowen CJ); Costa Vraca Pty Ltd v Berrigan Weed & Pest Control Pty Ltd (1998) 155 ALR 714, 722 (Finkelstein J); Compaq Computer Australia Pty Ltd v Merry (1998) 157 ALR 1, 18 ‑ 19 (Finkelstein J); Edgar v Farrow Mortgage Services Pty Ltd (in liq) (1992) ATPR 46-096, 53,375 (Einfeld J). The focus on the defendant's mental state ordinarily occurs when the defendant's conduct is categorised as 'mere silence', a concept to which I will return.
The most recent High Court decision on silence (Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31) is silent on the scope and effect of s 4(2). In Miller's case, a borrower applied to a financier (BMW) for an insurance premium funding loan in respect of an insurance policy. The borrower retained the services of an insurance broker (Miller) in relation to the application. The policy for which the premium loan was sought was a HIH non‑cancellable insurance policy. The financier provided the loan. The borrower defaulted and BMW sued the broker for misleading or deceptive conduct. The claim was based on a memorandum and a certificate of insurance (together 'the HIH certificate') provided by Miller to BMW at its request which, it was said, conveyed the misrepresentation that the policy was cancellable. An alternative basis for the claim was that Miller had not disclosed the fact that the policy was not cancellable. The High Court concluded that the HIH certificate did not convey a representation that the policy was cancellable. At its highest, the HIH certificate was ambiguous.
In their joint judgment, French CJ and Kiefel J noted that the statutory claim for misleading or deceptive conduct requires:
[A] clear identification of the conduct said to be misleading or deceptive. Where silence or non-disclosure is relied upon, the pleading should identify whether it is alleged of itself to be, in the circumstances of the case, misleading or deceptive conduct or whether it is an element of conduct, including other acts or omissions, said to be misleading or deceptive [5].
This is a common problem in pleadings of the statutory claims and inevitably creates confusion all around.
The Chief Justice and Keifel J briefly referred to s 4(2). They said:
In determining whether there has been a contravention of s 52 of the Trade Practices Act, it is necessary to determine 'whether in the light of all relevant circumstances constituted by acts, omissions, statements or silence, there has been conduct which is or is likely to be misleading or deceptive'. The term 'conduct' is to be understood according to its definition in s 4(2)(a) and (b) of the Trade Practices Act, which includes a reference to 'refusing to do any act'. That, in turn, includes a reference to 'refraining (otherwise than inadvertently) from doing that act'.
In its non‑disclosure case, BMW claimed that in all the circumstances it had a reasonable expectation that if the policy was non‑cancellable, Miller would have so advised it. This 'reasonable expectation test' is endorsed in a number of cases including Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 and Johnson Tiles (Full Court). After referring with approval to the oft‑cited comments in Demagogue of Black CJ (silence is to be assessed as a circumstance like any other) and Gummow J (unless the circumstances are such as to give rise to the reasonable expectation that if some relevant fact exists it would be disclosed, it is difficult to see how mere silence could support the inference that the fact does not exist), French CJ and Kiefel J continued:
The language of reasonable expectation is not statutory. It indicates an approach which can be taken to the characterisation, for the purposes of s 52, of conduct consisting of, or including, non-disclosure of information. That approach may differ in its application according to whether the conduct is said to be misleading or deceptive to members of the public, or whether it arises between entities in commercial negotiations …
In commercial dealings between individuals or individual entities, characterisation of conduct will be undertaken by reference to its circumstances and context. Silence may be a circumstance to be considered. The knowledge of the person to whom the conduct is directed may be relevant. Also relevant, as in the present case, may be 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. The judgment which looks to a reasonable expectation of disclosure as an aid to characterising non-disclosure as misleading or deceptive is objective. It is a practical approach to the application of the prohibition in s 52.
To invoke the existence of a reasonable expectation that if a fact exists it will be disclosed is to do no more than direct attention to the effect or likely effect of non-disclosure unmediated by antecedent erroneous assumptions or beliefs or high moral expectations held by one person of another which exceed the requirements of the general law and the prohibition imposed by the statute [19]‑ [21].
The Chief Justice and Kiefel J confirmed that s 52 does not strike at the traditional secretiveness and obliquity of the bargaining process and continued:
[As] a general proposition, s 52 does not require a party to commercial negotiations to volunteer information which will be of assistance to the decision-making of the other party. A fortiori it does not impose on a party an obligation to volunteer information in order to avoid the consequences of the careless disregard, for its own interests, of another party of equal bargaining power and competence [22].
The Chief Justice and Kiefel J agreed with Heydon, Crennan and Bell JJ that on a close analysis of all the circumstances of the transaction, BMW could not have a reasonable expectation that Miller would not supply the HIH certificate in response to BMW's request without disclosing at that time or later that the policy was not cancellable.
The only reference to s 4(2) in the judgments in Miller is that set out above. No reference is made to any need for a deliberate omission. However, it appears the issue of unintentional or unknowing non‑disclosure was not agitated before the High Court (see footnote 25).
Much of the confusion in this area of the law is because the circumstances in which silence or non‑disclosure of information arises are many and varied. Half truths, unequivocal/unqualified statements where qualification is required and statements which are true when made but falsified by subsequent events ordinarily convey a representation (the latter by the device of relying on the continuation of the representation). Most of the leading cases on silence involve acts by the defendant in circumstances which gave rise to a representation which was falsified by the undisclosed facts: Henjo (the restaurant is licensed to seat 128 people); Demagogue (there was nothing unusual about access to the property); Fraser (we have provided all relevant and material information). In such circumstances, there is no requirement that the undisclosed facts be known to the defendant: Fraser (467); Johnson [66]. However, if that was a proposition of general application there would be no scope for a requirement that silence be intentional or deliberate. Moreover, the reasonable expectation test is predicated on an assumption that the defendant is aware of the undisclosed fact.
It has been said that the way to reconcile the authorities on silence is to confine the requirement that silence be deliberate to cases of mere silence: Noor Al Houda Islamic College Pty Ltd v Bankstown Airport Ltd (2005) 215 ALR 625 [177] ‑ [192]; Johnson Tiles Pty Ltd v Esso Australia Ltd [1999] FCA 477 [4] ‑ [5] (Merkel J).
That approach has its attractions until the task of explaining what is meant by 'mere silence' is attempted. As Black CJ said in Demagogue, 'there is in truth no such thing as "mere silence" because the significance of silence always falls to be considered in the context in which it occurs' (32). The dilemma is highlighted by posing the question whether the non‑disclosure claim in Miller is an example of 'mere silence' notwithstanding that Miller's acts were also relied on as material context.
In view of the conflict in the case law and the lack of binding authority on the scope and effect of s 4(2), I propose to fully expose the reasoning and principles that guide my answers to the questions that arise for determination in this case.
Based on the language of s 4(2) as a whole, 'refusing to do an act' requires an act or, at a minimum, refraining otherwise than inadvertently from doing an act. Thus, an omission (a failure to act) cannot itself constitute conduct for the purposes of s 52. In other words, in order for a person to engage in conduct contrary to s 52 that person must do an act or at least refrain, otherwise than inadvertently, from doing an act.
To refrain otherwise than inadvertently requires a deliberate decision to withhold information: Peninsula Balmain Pty Ltd v Abigroup Contractors Pty Ltd [2002] NSWCA 211 [58]; Rhone‑Poulenc (84); Costa Vraca (723). Thus, the defendant must advert to the question and form an intention not to disclose. That conclusion is consistent with the natural and ordinary meaning of the term 'refrain' which means to forebear or to keep oneself back.
The statutory prohibition in s 52, when read with s 4(2), is on conduct of (or 'by') the defendant which is misleading or deceptive (which should be taken to include 'likely to mislead or deceive'). When considering whether conduct is both 'of the defendant' and 'misleading or deceptive', the focus widens to include contextual matters. Contextual matters can have a material impact in widening the range of conduct properly attributable to the defendant. That is, the actual conduct (in its natural and ordinary meaning) of the defendant is examined in its broader context to assess the full scope of what can properly be characterised, expressly or impliedly, as conduct of the defendant. For example, a responsive nod of the head or raised thumb implies that the defendant in effect made or confirmed the correctness of the statement to which it was responding. Contextual conduct of this nature not only connects back to the defendant but also identifies what the defendant's conduct is capable of conveying or communicating to the persons to whom the conduct is directed. Ordinarily, the term 'representation' is used to capture, in words, both the defendant's contextual conduct and what it conveys or communicates to others. That is how the term representation is used in the respondents' pleading and is its intended meaning in these reasons. It has a wider than normal meaning because it focuses on the defendant's contextual conduct. The making of a representation is the doing of an act for the purposes of s 4(2).
It is not always clear in the cases that the task is to identify a defendant's contextual conduct. Often the question posed by the courts is whether the defendant's actual conduct (what it did and did not do), in the surrounding circumstances, is misleading or deceptive. That formulation of the question has two consequences. First, it may be interpreted as narrowing the scope of the defendant's conduct which must meet the statutory definition in s 4(2). The oft‑stated proposition that 'conduct' is not confined to representations is a consequence of the narrow focus on what the defendant actually did or did not do, rather than on the defendant's contextual conduct. Secondly, it gives the misleading or deceptive analysis a greater role than it would otherwise have. The identification of the contextual conduct will dictate the answer to whether it is misleading or deceptive.
Thus, the identification of the defendant's contextual conduct and what it conveys or communicates to the persons to whom it is directed must be assessed having regard to all relevant surrounding circumstances. Not all surrounding circumstances are relevant in the identification process. In particular, conduct cannot be attributed to the defendant unless it had actual or constructive knowledge of the circumstances that affect its content. In other words, contextual circumstances of which the defendant had no actual or constructive knowledge that alter the scope of what would otherwise be attributed to it, are irrelevant: see Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 [27]. This specific proposition is but an aspect of the wider and well‑established proposition that the identification of the defendant's actual conduct, the relevant surrounding circumstances and what is capable of being conveyed is to be undertaken by reference to the actual, objectively determined, circumstances. Reasonable inferences, reasonable assumptions and reasonable expectations arising from the objectively determined circumstances will be in the constructive knowledge of the parties. An objective test excludes from consideration subjective matters (knowledge, intention) not known to the parties. I leave open the question whether an objective test applies in circumstances where the only relevant conduct of the defendant is a deliberate failure to disclose.
The requirement that the defendant have actual or constructive knowledge of matters to be taken into account in determining the conduct properly attributable to it is consistent with the definition in s 4(2) which requires an act or deliberate omission. Moreover, it is not inconsistent with the well‑established principle that an intention to mislead or deceive is not an element of the statutory claim: Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216.
When identifying the defendant's contextual conduct, regard can and should be had to all the actual conduct of the defendant which encompasses acts and omissions (including silence). Ordinarily, the role of silence is negative in the sense that it confirms there is nothing to prevent a representation arising, as in Fraser, Demagogue and Henjo. If the surrounding circumstances alter what the actual conduct would otherwise convey, it is the defendant's contextual conduct that must satisfy the definition of 'engage in conduct' in s 4(2). The making of a representation is an act.
A defendant's non‑disclosure can, because of common assumptions or established practices or other relevant surrounding circumstances, give rise to an implied representation by the defendant that an undisclosed fact did (or did not, as the case may be) exist. The making of such an implied representation by the defendant is the doing of an act and is thus within s 4(2). The satisfaction of the 'reasonable expectation' test can result in the defendant doing an act.
The need to establish a deliberate omission will only arise if the defendant's actual conduct together with all the relevant surrounding circumstances are (objectively) incapable of giving rise to the misleading or deceptive contextual conduct complained of. In that event, the circumstances in which deliberate non‑disclosure may be misleading or deceptive conduct will be limited; perhaps where the defendant is aware of another's misapprehension in the type of situations where relief is available for unilateral mistake (Taylor v Johnson (1983) 151 CLR 422) or where the plaintiff's misapprehension is caused by, but is not objectively attributable to, the defendant's conduct.
There must be a causal connection between the defendant's conduct and the plaintiff's misapprehension: Campomar Sociedad Limitada v Nike International Ltd [2000] HCA 12; (2000) 202 CLR 45. The usual causation principles should apply; the defendant's conduct must cause or materially contribute to the plaintiff's misapprehension applying, inter alia, the 'but for' test of factual causation.
Grounds 1 and 2
These grounds contend in substance that it was not open as a matter of law for the trial judge to conclude that Clambake engaged in misleading or deceptive conduct. The claim is that there can be no liability unless Clambake's silence was intentional and deliberate.
The grounds rest on the assumption that the only relevant conduct of Clambake was its failure to disclose that the fire sprinkler system was not operational. The correctness of that proposition depends on, among other things, whether or not the trial judge found that Clambake had engaged in conduct in connection with the presentation or appearance of the building as and when it was inspected by Mr Anderson. The trial judge did not give any reasoned consideration to that matter or make a finding to that effect.
The respondent's approach in its written submissions in the appeal is to rely on the appearance of the building and Mr Anderson's mistaken impression arising therefrom as surrounding circumstances in which to assess whether Clambake's failure to disclose was misleading or deceptive. That is consistent with the way the trial judge identified the issues litigated at trial. If the respondent's case litigated at trial was that Clambake engaged in conduct by presenting the building with its misleading appearance to Mr Anderson for his inspection, silence would not have been an issue.
Further, the respondent did not give notice of any contention that the trial judge's decision ought be upheld on the additional ground that the presentation of the building was conduct by Clambake which was misleading or deceptive. However, even if that issue had been properly raised in the appeal, it would not have altered the outcome. I have concluded below (in grounds 4, 6 and 8) that Clambake did not make a (mis)representation that the fire sprinkler system in the building was operational.
Thus, I will deal with these grounds on the basis that the statutory claims must fail unless Clambake's failure to disclose is engaging in conduct as defined in s 4(2). Clambake's failure to disclose could not constitute 'engaging in conduct' unless it refrained, other than inadvertently, from making the disclosure.
However, the respondent contends it was no part of Clambake's case as pleaded or litigated that s 4(2)(c) applied in this case. The trial judge said:
No reliance was placed by the parties on s 4(2) of the TPA as being actually or potentially relevant to the determination of this issue. It seems that the parties were correct in not placing reliance upon s 4(2) of the TPA because there can be no question of inadvertent non-disclosure of the fact that the old sprinkler system was not operational in the present case. Because the acknowledged meaning of s 52 is that the conduct, whether positive or passive, may be misleading or deceptive when viewed objectively, I do not consider that this issue arises in the present case [749].
Clambake accepts that it made no express reference to s 4(2) in its pleading or at trial but says its case before the trial judge was that its silence could only be misleading or deceptive if the failure to disclose was intentional and deliberate. That would be sufficient to raise the application of s 4(2). A review of the trial transcript and its written submissions does not support Clambake's submission that the issue was litigated at trial. However, on my understanding of the law, proof of a deliberate omission would provide Owston with an additional potential avenue of relief not deprive it of relief to which it was otherwise entitled. As the issue was fully argued in the appeal, I propose to address it.
It was contended on behalf of Owston that the correct question for the purpose of s 4(2)(c) is whether Clambake knew that it was refraining from doing the act of making the disclosure which was satisfied by evidence that the non‑operational nature of the sprinkler system was known to Mr Cohen and not disclosed. As noted above, this contention is not supported by the statutory language or the authorities.
Mr Cohen's evidence on the subject (see ts 1716, 1719, 1720, 1821 ‑ 1822) was in effect a hindsight explanation of why he did not provide the information to Mr Anderson or his companies. It was not open on the evidence to find that Mr Cohen had at any time prior to the fire expressly adverted to the question of whether to disclose to Tipperary the fact that the fire sprinkler system was not operational and formed an intention that it not be disclosed.
As Owston failed to prove that Clambake engaged in any conduct (as defined) which was capable of being misleading or deceptive, these grounds should be upheld.
Grounds 4, 6 and 8
These grounds involve a challenge to the trial judge's finding that the very appearance of the building was misleading or deceptive. For the purpose of these grounds I will assume in the respondent's favour that the appearance of the building was an aspect of Clambake's actual conduct for the purpose of the statutory claims.
The test of whether Clambake made the pleaded misrepresentation is objective. Although evidence that the defendant's conduct led others into error is admissible, it is not determinative. However, the misapprehensions or opinions of others should be given no weight unless the relevant factual circumstances informing them are materially the same. The opinions of others in this case, including Mr Cohen (see ts 1704, 1709, 1716), were based on materially different surrounding circumstances.
Moreover, no regard can be had to the special knowledge or experience of the person to whom the conduct is directed unless the defendant had actual or constructive knowledge thereof. There is no finding that Clambake knew or ought reasonably to have known of Mr Anderson's considerable experience in the construction and leasing of large commercial buildings. However, Clambake's specific complaint (ground 8) is that the trial judge applied a subjective test of whether the building was misleading or deceptive, relying on impressions (inferences) drawn by Mr Anderson.
What the trial judge actually did was to identify all relevant matters that contributed to the formation of Mr Anderson's erroneous impression that the building had a fire sprinkler system that was operational (and maintained) and attributed them to 'any person familiar with the general nature of fire protection systems required for comparable buildings' [757]. He also attributed to such persons what the trial judge identified as Mr Anderson's (mistaken) belief that the building was legally required to have a fire sprinkler system [754], [755].
There is no finding that Clambake knew or ought reasonably to have known that Mr Anderson was familiar with the general nature of fire protection systems required for comparable buildings or that Mr Anderson had the mistaken belief that the building was legally required to have a fire sprinkler system. In the absence of a finding to that effect, those matters cannot form part of an objective assessment of whether the appearance of the building was misleading or deceptive.
I am satisfied that the practical effect of the trial judge's approach was to apply a subjective test of whether the conduct was misleading or deceptive with the consequence that he wrongly took into account Mr Anderson's special knowledge and beliefs. I would uphold ground 8.
Grounds 4 and 6 raise the issue of whether the appearance of the building was capable of conveying the misleading impression that it had a fire sprinkler system that was operational and maintained. The question is to be answered by reference to the objectively determined actual circumstances in which Mr Anderson's erroneous impression was formed.
On the facts found by the trial judge, Mr Anderson's impression was formed during the one and only pre‑lease inspection of the building on behalf of the respondent when he saw sprinkler heads in the bulkhead which traversed the front (southern end) of the leased premises. The sprinkler heads were in the narrow bulkhead along the window front in the area subsequently sub‑let to Jacquie McPhee Interiors. The building was around 3,500 sqm, of which approximately 902 sqm was leased to Tipperary. Mr Anderson inspected the leased premises. At the time of the inspection and thereafter, no sprinkler heads or other equipment associated with a fire sprinkler system were visible in or below the ceiling of, or elsewhere in, the leased premises. The impression formed during the inspection was said to have continued thereafter (without any other relevant inputs).
When considering what inferences are capable of being drawn from the appearance of the area inspected by Mr Anderson, regard must be had to the leased premises as a whole, not just the bulkhead. The appearance of the ceiling in the leased premises expressly contradicted any possible impression created solely by the bulkhead. Relevant context cannot be ignored. The inferences capable of arising from a newspaper article are not determined by the opening paragraph, even if the reader ignores the balance of the article.
The appearance of the bulkhead at the front of the leased premises was incapable of conveying an (unqualified) impression that there was an operational fire sprinkler system throughout the building, including the leased premises. That would be the case even if the objective observer is knowledgeable of and experienced in the construction and leasing of commercial premises and expected the building to have a fire protection system. Perhaps even more so.
The failure of the trial judge's primary finding as to the misleading appearance of the building undermines the derivative finding that Clambake's failure to dispel the impression was misleading or deceptive. I would uphold grounds 4, 6 and 8.
Grounds 3 and 7
Clambake contends the trial judge erred in failing to apply the test of reasonable expectation. For the reasons given earlier, I have concluded that satisfaction of the reasonable expectation test can give rise to a representation in which event the defendant's conduct will be misleading or deceptive without establishing that its silence was deliberate. If there is no representation, a necessary but not itself sufficient requirement is that the silence be deliberate.
The trial judge expressly stated that the question whether Clambake's silence was misleading or deceptive should not be resolved by attempting to determine whether or not there was some form of legal duty to speak out and referred to the reasonable expectation test as explained in Winterton Constructions and Fraser [751]. However, in my view, the trial judge misapplied the test by taking into account irrelevant considerations and unduly narrowing the relevant circumstances to be taken into account. In essence, the trial judge confined the relevant circumstances to the fact that there was a common assumption of the parties that the building had a compliant fire protection system, Mr Anderson's mistaken (and uncommunicated) assumption that the regulatory requirements required a sprinkler system and the existence of sprinkler heads in the bulkhead at the front of the leased premises. The mistaken assumption about the requirement for a sprinkler system must be ignored. The common assumption about a compliant fire protection system is too general to support the misapprehension about a sprinkler system. I note for the record that there was no challenge to the reasonableness of an assumption that the defendant has complied with all relevant regulatory requirements.
Other relevant circumstances include:
(1)Clambake was the owner of the building and had actual or constructive notice of the areas where components of the fire sprinkler system were visible to persons in the building;
(2)Clambake facilitated Mr Anderson's inspection of the leased premises to enable him to assess their suitability for storing his valuables;
(3)if there was a fire sprinkler system in the leased premises, it is reasonably to be expected that sprinkler heads would be visible in or below the ceiling at regular intervals throughout the 902 sqm comprising the leased premises;
(4)the only visible sign of a fire sprinkler system in the leased premises were the sprinkler heads in a narrow bulkhead at the front of the leased premises;
(5)shortly after the inspection, the parties negotiated for and entered into the Lease;
(6)both parties were at all times represented by experienced businessmen in the making of an arms length commercial transaction;
(7)at no time before, during or at any time in the more than 10 years after the inspection, did Mr Anderson, Tipperary or Owston ever seek any relevant information from Clambake or Land Capital concerning the type of fire protection system in the leased premises or the building;
(8)any erroneous impressions held by Mr Anderson were never expressly or impliedly communicated to Clambake;
(9)nothing was ever communicated to Clambake or Land Capital by or on behalf of Mr Anderson, Tipperary or Owston to give even a hint of any interest in the type of fire protection system in the building;
(10)Clambake did not make a deliberate decision to refrain from informing Clambake that the fire sprinkler system was not operational.
Having regard to all the relevant matters, it was not open to conclude that the circumstances were such as to give rise to a reasonable expectation that if the fire sprinkler system was not operational, that fact would have been disclosed by Clambake. I would uphold these grounds.
Ground 5
Clambake claims the trial judge erred in failing to conclude that any erroneous assumption formed by Mr Anderson as to the fire sprinkler system was not produced by any conduct of the appellant. If the appearance or presentation of the building as and when it was inspected by Mr Anderson was not part of the conduct engaged in by Clambake, there is no necessary causal connection between Clambake's conduct (silence) and the misleading or deceptive impression claimed to arise. Any misapprehension was fully formed prior to any conduct engaged in by Clambake. There is no evidence that Clambake knew or ought to have known that Mr Anderson or Owston had a mistaken belief that the fire sprinkler system was operational or that Clambake's silence was deliberate. Thus, Clambake's silence did not cause or materially contribute to the pleaded representation. I would uphold ground 5.
Grounds 9 ‑ 12
Clambake contends the trial judge erred in finding that (1) Mr Anderson's inspection of the building did not occur in the company of Mr Anderson's friend and real estate agent, Mr Davies [455]; (2) Mr Cohen showed Mr Anderson through the building [458]; (3) there were further discussions between Mr Anderson and Mr Cohen along the same lines as the discussion between Mr Aldo Gianotti and Mr Anderson [460]. Clambake also claims the trial judge erred in failing to draw a Jones v Dunkel inference from the respondent's failure to call Mr Bert Gianotti (Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298.
The trial judge accepted that there was a meeting between Mr Anderson and Mr Aldo Gianotti at a café and that the meeting occurred as stated by Mr Gianotti [458].
Mr Anderson's evidence was that he inspected the leased premises with Mr Cohen and did not meet with Mr A Gianotti [428], [457]. Mr Cohen consistently denied that he had ever attended the premises with Mr Anderson prior to the execution of the Lease. Clambake called Mr Davies who gave evidence, corroborated by a contemporaneous letter, that he had shown Mr Anderson through the building.
Clambake's counsel conceded that these grounds of appeal were only relevant to ground of appeal 13 which claims the trial judge erred in generally accepting Mr Anderson's evidence in light of the credit issues raised and proved against him.
I do not propose to determine grounds 9 ‑ 12 or the associated notice of contention. Their outcome can have no impact on the outcome of the appeal. It is not suggested that the inspection itself or anything said or done on behalf of Clambake at the inspection in any way impacted upon any material element of the statutory claims, including the nature and content of the representation. Any rejection of Mr Anderson's evidence on these matters could only impact on his reliability not truthfulness.
Ground 13
The trial judge found that Mr Anderson was a credible witness whose evidence was reliable. He said:
I reject all these attacks on Mr Anderson's credit and observe that, subject to some human defects in recollection, having regard to the time which had passed (for example, the assertion that Jacquie McPhee had paid no rent) which were promptly and readily corrected, Mr Anderson was a credible witness whose evidence is reliable. I am satisfied that he was conscientiously setting out to give a truthful account of events. Impressively, he did not seek in any way to embroider or embellish the terms of his recollection of his original discussion with Mr Cohen at the inspection of the premises and he quite readily acknowledged that there had been no discussion nor inquiry, nor any comment made, about the fire precaution system then or on any other occasion [781].
The appellant has a very difficult task in seeking to challenge a general credibility finding. It is difficult enough to overturn a credibility based factual finding where it is necessary to demonstrate that the evidence which was accepted was inconsistent with established facts or glaringly improbable: Fox v Percy (2003) 214 CLR 118; Drexel London (a firm) v Gove (Blackman) [2009] WASCA 181 [114] ‑ [116].
Clambake relies on the following matters to undermine the trial judge's general credibility finding:
(i)Mr Anderson denied any pre‑lease meeting with Mr Aldo Gianotti. The trial judge found that such a meeting occurred;
(ii)the trial judge erred in failing to find that Mr Anderson inspected the premises with Mr Davies not Mr Cohen;
(iii)Mr Anderson gave inconsistent evidence on whether Ms McPhee had paid rent;
(iv)Tipperary failed to pay rent for the leased premises notwithstanding, according to Mr Anderson, that it had the capacity to do so;
(v)at no stage prior to the commencement of the trial had Mr Anderson made any reference to the fact that he had stored valuable items from his collection at premises he leased from Mr Romano at Osborne Park;
(vi)it was only after he became aware that Mr Romano was going to give evidence that he belatedly disclosed the relevant facts;
(vii)he had at various times described the items stored in Mr Romano's premises inconsistently.
This court is also referred to Clambake's criticisms of Mr Anderson appearing in its written submissions at first instance. Assuming for present purposes the correctness of items (i) and (ii) above, the matters relied on by Clambake fall a long way short of entitling this court to overturn the trial judge's general credibility finding concerning Mr Anderson. This ground has no merit.
Ground 14
Clambake contends the trial judge erred in finding that Mr Anderson observed sprinkler heads in the premises before agreeing to enter into the Lease [424], [425]. In compliance with Practice Direction 7.4, Clambake provided a schedule of relevant evidence relating to its challenges to the findings of fact. I have examined the evidence relied on for and against the finding, which is clearly credibility‑based. The finding is neither inconsistent with established facts nor glaringly improbable. This ground is without merit.
Ground 15
Clambake challenges the trial judge's finding that Mr Anderson's observations of the sprinkler heads led him to form the impression that there was an operational sprinkler system in the premises [426], [429]. It is apparent from the context of the finding that the trial judge uses the terms 'building' and 'premises' interchangeably to mean the building rather than the leased premises.
Mr Anderson's evidence‑in‑chief on the subject was as follows:
I noticed during my inspection of the showroom that there were sprinkler heads along a bulkhead as I walked into the showroom. When Mr Cohen and I walked into the showroom we entered from the only entrance which could be used which faced Stirling Highway. Along the whole Stirling Highway front of the building was a low bulkhead, not far from head height.
I was not specifically looking for sprinkler heads as I walked in but due to the low bulkhead I saw the sprinkler heads. I saw nothing which indicated to me that the sprinkler system was not operating. I did not comment on or ask about the sprinkler system. I was not looking for the system as I expected that a commercial building used for retail shops would have an operating fire sprinkler system (ts 793 ‑ 794).
The relevant cross‑examination of Mr Anderson is as follows:
You actually told his Honour you weren't looking for sprinkler heads. Correct? That's what you said?‑‑‑In the main area I wasn't looking for sprinkler heads. I just walked in, saw the sprinkler heads, I wasn't particularly interested in ‑ I didn't take it any further. It was the responsibility of the owner to supply sprinklers or adequate fire protection and the owner did not do that (ts 915).
Mr Anderson, were you looking for sprinkler heads or not when you inspected these premises?‑‑‑I wasn't looking for sprinkler heads, no.
And notwithstanding the fact that you weren't looking for sprinkler heads you say you have got a clear recollection of in fact seeing them. Is that right?‑‑‑I absolutely, definitely saw them as I walked in the door. They were right there.
But you never intended, did you, to lease the front part of these premises because you didn't want your furniture visible from the street?‑‑‑That's correct.
…
So you knew that the area in which you say you saw these sprinklers was going to be an area of the premises that wasn't going to be storing your furniture, didn't you?‑‑‑At the time not a lot of this occurred to me. I was …
…
HEENAN J: There are a number of matters that have arisen. You were in the process of answering another question when Mr Deakin seized on your answer that that didn't occur to you. I think I should ask you to finish your original answer and then deal with the question about what did occur to you?---I didn't take it any further than walking through the door. It's the owner's responsibility. I expected a fire protection system to be supplied.
But, Mr Anderson, you either were focused on what sprinkler systems were there or you weren't, do you see?‑‑‑I wasn't focused on sprinkler systems.
You accept, do you not, now at any rate that there were no sprinkler heads visible anywhere in the suspended ceiling of the premises you leased?‑‑‑Now I do, yes.
Yes. And you accept that that was the situation at the commencement of your lease, correct?‑‑‑I didn't go around looking at the ceilings.
You didn't pay any attention to sprinkler heads at all, did you?‑‑‑Yes, I did.
Because if you had paid any attention to sprinkler heads and you had made the observations of the sprinkler heads you say you saw in the bulkhead you would have observed that there were no sprinkler heads visible in the area of the premises in which you were going to store your furniture, wouldn't you?‑‑‑I didn't pay attention to the sprinkler heads. I saw the sprinkler heads and that's what I've said in my statement when I walked in the door.
But, Mr Anderson, you say to his Honour you were concerned about fire safety at these premises, don't you?‑‑‑I expected fire safety to be there because every landlord and every developer supplies adequate fire protection (ts 916 ‑ 917).
…
Is this what you are saying to his Honour, Mr Anderson: you did not rely on anything that you observed as far as sprinkler heads were concerned in instructing Mr Gianotti to prepare the lease documents? Is that what you are saying?‑‑‑I'm saying I observed the sprinkler heads on the bulkhead when I went in there. I didn't take it any further than that because I expected as part of the lease, when you lease a premises, that the owner supplies adequate fire protection systems (ts 918).
It is apparent from Mr Anderson's evidence that the existence or type of fire protection system in the building was not within the purposes for which he was inspecting the leased premises. He was not looking for sprinkler heads. He noticed sprinkler heads in a very limited part of the leased premises but that did not causes him to raise the topic with Mr Cohen or look at the ceiling to see the extent of the sprinkler system. He was not particularly interested in what he saw. He was content to rely on his own expectation that the building would have a compliant fire protection system.
There is a very wide gap between what Mr Anderson saw in passing on a subject which was of no active interest to him on which he had firm expectations and a mistaken belief as to what was required and the detail and scope of the 'impression' (inference) said to have been drawn at the time of the inspection. Having regard to Mr Anderson's evidence as a whole, the finding that Mr Anderson's observations of the sprinkler heads in the bulkhead caused him to form the impression that there was an operational sprinkler system in the building is against the clear weight of the evidence. The 'but for' test of factual causation is not satisfied. I would uphold ground 15.
Grounds 16 and 17
Clambake challenges the trial judge's conclusions that it was not part of Tipperary's responsibility to provide and maintain a compliant sprinkler system [526] and that the installation and maintenance of the fire sprinkler system was something for which Clambake would have been responsible [713].
The findings complained of were not made in connection with the respondent's statutory claims. They relate to the common law and occupiers' liability claims.
None of the terms of the Lease were relied upon by Clambake as having any bearing on matters which could legitimately impact on the statutory claims in circumstances where, as a matter of fact, Clambake had assumed responsibility for maintaining the fire protection system in the building. There is no proper basis to conclude that Tipperary was responsible for establishing or maintaining a compliant fire sprinkler system for the building for the reasons given by the trial judge at [525]. In any event, I am not persuaded that the trial judge erred in his construction of the relevant provisions of the Lease. Grounds 16 and 17 should be dismissed.
Ground 18
The trial judge accepted evidence that he attributed to Mr Anderson to the effect that Mr Anderson would not have allowed Tipperary to take an assignment of the Lease or take the Lease if the non‑operational status of the fire sprinkler system had been disclosed to him [776], [779]. However, Mr Anderson did not give evidence in the terms or to the effect stated by the trial judge.
Mr Anderson gave evidence‑in‑chief in the following terms:
Had I been aware that [the building] did not have a proper and functional fire protection system, I would not have moved the [collection] into the showroom or allowed them to remain there (ts 798).
That evidence falls short of what the trial judge attributed to Mr Anderson because it does not correlate with the representation which was confined to the existence of an operational fire sprinkler system.
I would uphold this ground. However, it does not impact the primary causation finding which was that if Mr Anderson had discovered that there was no operating fire sprinkler system in the building, he would have become exceedingly angry and removed the collection. That finding is challenged in grounds 19 and 20.
Grounds 19 and 20
Clambake relies on the matters in support of grounds 14 and 15. It also relies on Mr Anderson's evidence that at no stage in all the years he owned the collection had it ever been stored in an area covered by an operational fire sprinkler system. Clambake claims it should be inferred that any disclosure of the lack of an operational sprinkler system would not have caused him to remove the collection from the leased premises.
Mr Anderson explained that previously he had stored the collection at different locations which were mostly private homes, apartments or small individual storerooms or warehouses not forming part of a large commercial complex, where fire sprinkler systems were unusual and unexpected [779]. The trial judge accepted Mr Anderson's evidence and said not only were Mr Anderson's explanations cogent but he was also satisfied that Mr Anderson was a person with a clear appreciation of the value of the collection, very attached to it and anxious to ensure that all proper precautions were made for its preservation [780]. The trial judge's finding concerning the general credibility of Mr Anderson was made in the specific context of Clambake's submissions on causation. Although the evidence gives cause for hesitation, it cannot be said that the finding is glaringly improbable.
The successful challenge in ground 15 to the trial judge's finding that Mr Anderson formed the impression from his inspection of the building that there was an operational sprinkler system in the premises does not assist Clambake. There was no challenge to the trial judge's finding that Mr Anderson was under the impression that a sprinkler system was required.
Grounds 21 and 22
It is difficult to distil the essence of these grounds which also challenge the finding of causation. Much of the material is a restatement of the matters relied on in grounds 14, 15, 18 and 19. The only obviously new claim is that assuming the correctness of the trial judge's other findings, there is no 'but for' causal nexus between the impugned conduct (silence) and the entry into the Lease.
According to the trial judge, Clambake's breach was in remaining silent when it should not have done so. On that basis, the relevant 'but for' question is what Owston would have done if it was made aware that there was no operative fire sprinkler system in the building. The trial judge answered that very question. The representation was held to be continuing and the trial judge found that, but for the breach, the respondent would have removed the collection from the premises. This is not a case where the entry into the contract is the necessary trigger from which all loss flows. A cause of the loss was the continuing presence of the collection in the leased premises. I would dismiss grounds 21 and 22.
Conclusion
I would uphold grounds of appeal 1, 2, 3, 4, 5, 6, 7, 8, 15 and 18 and dismiss the remaining grounds. I would uphold Clambake's first appeal and set aside the orders made by the trial judge therein.
Clambake's second appeal
The issue in the second appeal is whether Mr Anderson was prevented from litigating his 'crossclaim' to Clambake's amended counterclaim in the fire claim by the doctrines of res judicata, issue estoppel or Anshun estoppel.
Res judicata applies where the very right or cause of action claimed or put in suit in legal proceedings has passed into a final judgment on the merits, so it has merged and no longer has an independent existence. In issue estoppel, a party cannot allege or deny a statement of fact or law, the existence of which is a matter necessarily decided by a prior final judgment on the merits; nothing but what is legally indispensible to the conclusion is finally closed or precluded: Blair v Curran (1939) 62 CLR 464, 532 (Dixon J).
Res judicata and issue estoppel bind only the parties to the proceedings or their 'privies'. However, there can be no relevant finality unless the cause of action (for res judicata) or the finding of fact or law (for issue estoppel) is determined as between the parties to the relevant claim in the proceedings or their privies. Privity usually arises when the party claims under or through a party to the proceedings. The focus is on legal not economic indicia: Trawl Industries of Australia Pty Ltd (in liq) v Effem Foods Pty Ltd (1992) 36 FCR 406, 413 ‑ 414; Dissidomino v Butcher Paull & Calder (a firm) [2005] WASCA 210. In some circumstances a non‑party may participate so actively in proceedings as to assume de facto status as a party: Trawl Industries (417 ‑ 418).
Parties to litigation are required to bring forward their whole case and may be estopped from raising a matter which could and should have been litigated in prior proceedings. The principle, commonly referred to as Anshun estoppel, will not apply unless the matter subsequently relied upon was so relevant to the subject matter of the determined action that it would have been unreasonable not to rely on it: Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, 603 ‑ 604. The purpose of the principle is to avoid the possibility of inconsistent decisions and promote the efficient use of court resources and time.
After delivery of the trial judge's reasons (which disclosed that Clambake's counterclaim in the fire claim against Tipperary for an indemnity under cl 4.01 of the Lease was successful), Clambake filed an amended counterclaim against Mr Anderson for the same relief.
On 20 March 2009, the trial judge made orders in the rent claim and the fire claim giving effect to his reasons. If he had deferred making the orders until after the determination of Clambake's new counterclaim and Mr Anderson's defence and crossclaim, no question of res judicata or issue estoppel could have arisen. However, that course was not taken.
As previously noted, the rent claim and the fire claim proceedings had been consolidated. However, the trial judge had not made the usual orders to reflect the fact that all were parties to a single action and final orders were made as if there were separate actions. I assume the trial judge ordered that Mr Anderson be joined as a defendant to Clambake's counterclaim for an indemnity in the fire claim because of his belief that he had ordered the actions to be heard together (see [9]). However, the disposition of this appeal is not affected by whether or not the actions were in fact consolidated. I will for the purpose of these reasons use the term 'party' to refer to persons against whom relief was sought and judgment entered on 20 March 2009.
There is no arguable claim of res judicata. The only final judgment between Clambake and Mr Anderson is for the causes of action the subject of the rent claim. Mr Anderson accepted that his liability for the rent and outgoings was governed by the terms of the Lease and guarantee. The causes of action litigated in the rent claim are completely separate and distinct from those the subject of Mr Anderson's crossclaim in the fire claim. Further, Mr Anderson was not the privy of Tipperary in the fire claim; the material elements of the cause of action for an indemnity against Mr Anderson are not co‑extensive with the indemnity claim against Tipperary.
There is also no issue estoppel. Mr Anderson did not seek to re‑litigate any finding of fact or law already decided against him in the rent claim. The relief sought by Mr Anderson against Clambake in his counterclaim in the fire claim was for an injunction or order preventing Clambake from enforcing its liability to Owston against him or modifying the terms of the contract of guarantee in order to relieve him from any such potential liability.
The decision of Smithers J in Bradford House Pty Ltd v Leroy Fashion Group Ltd (1983) 46 ALR 305 provides an illustration of circumstances involving silence, in a leasing context, in which there was held to be no contravention of s 52. There, the applicant leased premises from the respondent for use in its business as a printer. The respondent was informed, prior to the grant, of the nature of the applicant's business and that it included the movement of paper by forklift trucks. In the course of conducting its business, the floor of the premises proved incapable of withstanding the weight imposed by the laden forklifts. Smithers J said (312), with respect to the applicant's claim that the respondent had engaged in misleading and deceptive conduct, inter alia:
It appears to me that the highest the applicant company's case that the respondent engaged in misleading or deceptive conduct can be put is that the respondent ... continued to offer to the applicant company a tenancy of the premises after it had been given an outline of the way in which the applicant carried on and would carry on its business, including an intimation that the use of a forklift to convey substantial loads of otherwise unspecified weight would be involved. But this is entirely consistent with the applicant company being left to decide for itself, and deciding for itself, whether it should regard the premises, including the floor, as satisfactory for its purposes. The applicant company was the only party with precise knowledge of the weight to be carried and the manner of carrying it. The essence of the matter, in my opinion, is that [the applicant] inferred from his own observation and from the fact that the premises were commercial in character and were presented as such, that they, and in particular the floor, were suitable for his purposes. But none of this involved any conduct of a misleading or deceptive nature on the part of ... the respondent. For all that appears they may well have believed like [the applicant] that the floor would be sufficiently strong for the purposes in hand.
Disposition of Clambake's first appeal
Grounds 1 to 8 of Clambake's grounds of appeal allege that the judge erred in finding that Clambake had engaged in misleading or deceptive conduct in contravention of s 52 of the Trade Practices Act. As I understand them, in substance, they allege that the judge erred in finding that Clambake had engaged in misleading or deceptive conduct because:
(a)objectively, Clambake's conduct did not convey a representation to Mr Anderson (and thus to Tipperary/Owston) to the effect that the building had a fire protection system which included an operative fire sprinkler system throughout; and
(b)Mr Anderson's subjective belief as to the existence of an operative sprinkler system throughout the building could not, in the circumstances, provide any support for the judge's conclusion that Clambake had engaged in misleading and deceptive conduct.
These two matters are not unrelated. It is relevant, in considering whether Clambake engaged in misleading or deceptive conduct, to consider whether Clambake knew or intended, or must be taken to have known or intended, that Tipperary would draw a particular meaning or conclusion from Clambake's words or conduct (see [218], [221] above).
Here, the judge did not find that Clambake, including by its managing agents, knew or intended, or must be taken to have known or intended, that Mr Anderson would form the erroneous subjective belief which he did. There was no notice of contention to the effect that the judge ought to have made such a finding. Having regard to the judge's other findings as to Clambake's knowledge, a notice of contention to that effect could not have succeeded in any event.
Accordingly, Mr Anderson's subjective belief could not, in the circumstances of this case, influence, let alone determine, the outcome of the objective question of whether Clambake represented to Tipperary that there was an operative fire sprinkler system throughout the building. Once Mr Anderson's subjective belief is removed from consideration, there is no basis for concluding that by making the premises available for inspection in the circumstances found by the judge, Clambake made the representation relied upon by the judge to support the finding of a contravention of s 52.
The foundation for liability in this case falls away for reasons similar to those in Bradford v Leroy. This is not a case where Clambake's conduct could be characterised as conveying a misleading half‑truth.
A large portion of the ceiling in the premises shown to Mr Anderson, covering a very substantial area, did not have sprinklers. The presentation of the premises with the appearance that, for most of the proposed leased area, there was no sprinkler system in situ, could not objectively convey the impression that all of the proposed leased premises, or the whole of the building, was protected by an operative sprinkler system.
There was nothing that Clambake did which, viewed as a whole, had a tendency to lead into error. Mr Anderson had not signified any interest in, or raised any queries concerning, either the sprinklers on the bulkhead in particular, or the nature and operation of the fire protection system throughout the building in general. It was known that Mr Anderson was an experienced businessman and it could not have been expected that he would assume the presence of an operative sprinkler system throughout the building when the large portion of the building in which he was interested appeared not to be protected by sprinklers. There were no circumstances giving rise to a reasonable expectation that Clambake would not make the leased premises available to Mr Anderson for inspection without disclosing at that time, or subsequently, that the building's fire protection system was not a sprinkler system, but one which involved the use of a firewall and fire hoses, and portable fire extinguishers. As in other areas of the law, Clambake's conduct is not to be judged in light of hindsight and the significance which, 10 years later, came to be attached to an operative sprinkler system as opposed to another fire protection system: cf Maloney v Commissioner for Railways (NSW) (1978) 18 ALR 147, 148; Rosenberg v Percival [2001] HCA 18; (2001) 205 CLR 434 [16] (Gleeson CJ), [68] (Gummow J); Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38; (1998) 192 CLR 603 [68].
For these reasons, the first substantive error identified by Clambake in grounds 1 to 8 is made out.
As to the second matter raised by Clambake, its relevance for present purposes is principally in connection with the first proposition on which, I have found, Clambake has succeeded. Bearing in mind that the case was not fought on the basis that Clambake had refrained, other than inadvertently, from disclosing to Tipperary that the sprinkler system was not operative throughout the building, and given that in any event the judge found, in effect, that that there had been no advertent non‑disclosure of that fact, it is clear that on its own, Mr Anderson's subjective belief could not support a finding of misleading conduct. Whilst counsel for Tipperary/Owston suggested in argument that there was evidence from Mr Cohen which showed that he advertently refrained from telling Mr Anderson that there was not an operative sprinkler system throughout the building, that submission is incorrect. Mr Cohen's evidence, as McLure P has observed, was a hindsight explanation. It explained why it had not occurred to Mr Cohen to provide the information to Mr Anderson. Even if I have misconstrued the sense of the judge's reasons in [749], the proper inference from the evidence is that there was no advertent non‑disclosure by Mr Cohen.
For these reasons, in relation to grounds 1 to 8, the judge erred in finding that Clambake had engaged in misleading or deceptive conduct in contravention of s 52 of the Trade Practices Act.
In relation to grounds 9 to 22 of Clambake's first appeal, I agree with McLure P's reasons.
Accordingly, I would uphold Clambake's first appeal and set aside the orders made by the primary judge.
Clambake's second appeal
I also agree with McLure P that Clambake's second appeal should be dismissed for the reasons she gives.
Owston's appeal
In relation to Owston's appeal, grounds 1 to 4 allege that the judge erred in finding that there was no basis upon which Mr Cohen could be found to be an accessory pursuant to s 75B of the Trade Practices Act in relation to Clambake's contravention of s 52 of the Act. As I have found that there has been no contravention by Clambake, there is no potential for accessorial liability on behalf of Mr Cohen. The appeal accordingly fails in respect of grounds 1 to 4.
Grounds 5 and 6 allege, in effect, that from August 1995, Land Capital contravened s 52 of the Trade Practices Act. It is alleged that the matters which give rise to a contravention by Clambake are the same ones which give rise to a contravention by Land Capital. It is alleged that Land Capital had 'a duty or obligation [to Tipperary/Owston], no less than that of Clambake, to dispel the misleading or deceptive impression created by the appearances of the building'. There can be no substance in these grounds once it is accepted that Clambake itself did not engage in misleading or deceptive conduct.
Furthermore, and in any event, Land Capital had not been a party to making the premises available for inspection by Mr Anderson. Owston's allegation is, in effect, that Land Capital engaged in misleading or deceptive conduct from August 1995 by not informing Tipperary that it should not assume that there was an operating sprinkler system throughout the leased premises and the building. That contention has no merit.
Land Capital was the agent of Clambake and owed a duty of loyalty to Clambake, not to Tipperary. There was no duty to disclose. Moreover, as the judge found, and the finding is unchallenged, Land Capital did not know of Tipperary's assumption (reasons [771]). Having not known of the assumption, or created the assumption, or encouraged the maintenance of the assumption, it could not be said that Land Capital engaged in misleading or deceptive conduct by not telling Tipperary not to make the assumption on the off‑chance that it might have made it. That is so even if it be assumed that Land Capital, from 1995, knew of matters relating to the premises in consequence of Mr Cohen's knowledge of such matters arising from other capacities in which he had acted prior to and as at 1992.
Two other matters require mention in relation to grounds 5 and 6. One is that I also agree with McLure P's reasons concerning Owston's submission with respect to Houghton v Arms [2006] HCA 59; (2006) 225 CLR 553. The second concerns Land Capital's notice of contention that the judge erred in finding that Mr Cohen's knowledge of events prior to and as at 1992, arising from conduct not undertaken by Land Capital and prior to Land Capital taking over the role of managing agent, was attributable to Land Capital. In light of the conclusion which I have reached above, there is no real context in which the question of attribution of knowledge could arise: cf Smits v Roach [2006] HCA 36; (2006) 227 CLR 423 [47]. It is, accordingly, inappropriate and unnecessary to determine the notice of contention.
In relation to Owston's grounds of appeal concerning negligence, I agree, for the reasons given by McLure P, that these grounds must be dismissed. I also agree with her Honour's reasons insofar as they deal with Land Capital's notice of contention in that regard. I would only add that the observations of Heydon, Crennan and Bell JJ in Miller & Associates v BMW Australia [99] are equally pertinent to Owston's claims in negligence in this case:
… Proof of the statutory claim will almost invariably be less onerous for a plaintiff than proof of negligence on the same facts. Liability for misleading conduct under the statute is strict and it follows that a corporation may act reasonably and yet engage in conduct that is misleading or deceptive. The conclusion that [the alleged contravenor's] conduct was not misleading or deceptive does not sit with the conclusion that it was nonetheless negligent.
Accordingly, I would dismiss Owston's appeal.
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: OWSTON NOMINEES NO 2 PTY LTD -v- CLAMBAKE PTY LTD [2011] WASCA 76 (S)
CORAM: McLURE P
PULLIN JA
MURPHY JA
HEARD: 19-21 OCTOBER 2010 & ON THE PAPERS
DELIVERED : 1 APRIL 2011
SUPPLEMENTARY
DECISION :1 JUNE 2011
FILE NO/S: CACV 34 of 2009
BETWEEN: OWSTON NOMINEES NO 2 PTY LTD
First Appellant
TIPPERARY PROJECTS PTY LTD
Second AppellantWARREN PERRY ANDERSON
Third AppellantAND
CLAMBAKE PTY LTD
First RespondentLAND CAPITAL PTY LTD
Second RespondentIVOR FREDERICK COHEN
Third Respondent
FILE NO/S :CACV 53 of 2009
BETWEEN :CLAMBAKE PTY LTD
Appellant
AND
OWSTON NOMINEES NO 2 PTY LTD
Respondent
FILE NO/S :CACV 6 of 2010
BETWEEN :CLAMBAKE PTY LTD
Appellant
AND
TIPPERARY PROJECTS PTY LTD
First RespondentWARREN PERRY ANDERSON
Second Respondent
ON APPEAL FROM:
For File No : CACV 6 of 2010
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram :EM HEENAN J
Citation :CLAMBAKE PTY LTD -v- TIPPERARY PROJECTS PTY LTD [No 7] [2009] WASC 390
File No :CIV 1707 of 2003, CIV 2093 of 2003
For File No : CACV 34 of 2009
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram :EM HEENAN J
Citation :CLAMBAKE PTY LTD -v- TIPPERARY PROJECTS PTY LTD [No 3] [2009] WASC 52
File No :CIV 1707 of 2003, CIV 2093 of 2003
For File No : CACV 53 of 2009
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram :EM HEENAN J
Citation :CLAMBAKE PTY LTD -v- TIPPERARY PROJECTS PTY LTD [No 3] [2009] WASC 52
File No :CIV 1707 of 2003, CIV 2093 of 2003
Catchwords:
Costs - Calderbank offer - Where litigation conducted by receiver - Whether appropriate to order costs against non-party secured creditor who appointed the receiver
Practice and procedure - Where appellant failed to challenge factual finding on which outcome of appeal depended - Whether appropriate to correct error by upholding appeal under the 'slip' rule
Legislation:
Corporations Act 2001 (Cth), s 419, s 471B
Supreme Court Act 1935 (WA), s 37
Result:
CACV 34 of 2009
Leave to proceed in the appeal granted
First appellant's appeal dismissed
First appellant and first appellant's receiver to pay first, second and third respondents' costs of the appeal
First and second appellants to pay the first, second and third respondents' costs of action CIV 2093 of 2003
CACV 53 of 2009
Leave to proceed in the appeal granted
Appeal upheld
Appellant to pay the respondent's costs of the appeal
Remaining matters as to costs or otherwise in action CIV 2093 of 2003 remitted to trial judge
CACV 6 of 2010
Appeal dismissed
Category: B
Representation:
CACV 34 of 2009
Counsel:
First Appellant : No appearance (On the papers)
Second Appellant : No appearance (On the papers)
Third Appellant : No appearance (On the papers)
First Respondent : No appearance (On the papers)
Second Respondent : No appearance (On the papers)
Third Respondent : No appearance (On the papers)
Solicitors:
First Appellant : Lavan Legal
Second Appellant : No appearance
Third Appellant : No appearance
First Respondent : Minter Ellison
Second Respondent : Sparke Helmore
Third Respondent : Minter Ellison
CACV 53 of 2009
Counsel:
Appellant: No appearance (On the papers)
Respondent: No appearance (On the papers)
Solicitors:
Appellant: Minter Ellison
Respondent: Lavan Legal
CACV 6 of 2010
Counsel:
Appellant: No appearance (On the papers)
First Respondent : No appearance (On the papers)
Second Respondent : No appearance (On the papers)
Solicitors:
Appellant: Minter Ellison
First Respondent : No appearance
Second Respondent : No appearance
Case(s) referred to in judgment(s):
Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 3] [2009] WASC 52
Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 5] [2009] WASC 141
Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 7] [2009] WASC 390
Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115
Knight v FP Special Assets Ltd [1992] HCA 28; (1992) 174 CLR 178
Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd [2011] WASCA 76
JUDGMENT OF THE COURT: On 1 April 2011 the court delivered its reasons for judgment in these three appeals: Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd [2011] WASCA 76. The parties who participated in the appeals have filed written submissions as to the orders that should be made to give effect to the reasons.
On 12 November 2010 the Federal Court ordered that Owston Nominees No 2 Pty Ltd (Owston) be wound up and that Jeffrey Laurence Herbert be appointed the liquidator. Under s 471B of the Corporations Act 2001 (Cth), a litigant cannot proceed with a proceeding against a company in liquidation or in relation to its property except by leave of the court. Clambake Pty Ltd (Clambake) seeks leave under that section to proceed with the appeal in CACV 53 of 2009. Clambake, Land Capital Pty Ltd (Land Capital) and Mr Cohen seek leave to proceed with appeal CACV 34 of 2009. The liquidator of Owston does not oppose the grant of leave. No party who participated in the appeals opposes the grant of leave. If leave is not given the court will be unable to make orders disposing of the appeals which are the culmination of over eight years of contested litigation. The appropriate course is to make orders in both appeals granting leave to proceed under s 471B of the Corporations Act.
Appeal CACV 53 of 2009 (the first appeal)
Clambake filed a minute of proposed orders, three out of 10 of which are opposed. They are as follows:
6.The Respondent pay the Appellant's costs of action CIV 2093 of 2003, including all counterclaims and other cross-claims:
6.1up to 13 October 2008, including any costs reserved and the costs of administering and answering interrogatories, as agreed or taxed on a party/party basis without regard to the applicable scale limits; and
6.2incurred subsequent to 13 October 2008, including any costs reserved, as agreed or taxed on an indemnity basis and, if appropriate, without regard to the applicable scale limits.
Proposed order 6 provides two other alternatives in relation to indemnity costs. The first alternative provides for party/party costs up to 23 October 2008 and indemnity costs thereafter. The second alternative is for party/party costs up to 20 March 2009 and indemnity costs thereafter.
The other opposed orders are:
7.The Respondent pay the Appellant's costs of its counterclaim against Warren Anderson, the Defendant to Counterclaim in CIV 2093 of 2003 for an indemnity pursuant to the guarantee.
8.Orders 6 and 8 of the Honourable Justice EM Heenan of 14 December [2009] be set aside and in lieu thereof there be an order that 'The Respondent pay the costs of Warren Anderson, the Defendant to Counterclaim in CIV 2093 of 2003 in relation to the counterclaim for an indemnity pursuant to the guarantee'.
Owston objects to so much of proposed order 6 that requires it to pay the costs of all counterclaims and cross‑claims in CIV 2093 of 2003 and to the claim for indemnity costs.
It can be inferred that the costs referred to in proposed orders 7 and 8 are not intended to be the subject of proposed order 6. The only other relevant counterclaim (or cross‑claim) in the fire claim affecting Clambake was its counterclaim for an indemnity against Tipperary Projects Pty Ltd (Tipperary) for the full amount that Clambake owed Owston. The trial judge had previously ordered that Tipperary pay Clambake's costs of Tipperary's application for relief preventing Clambake from enforcing its judgment against Tipperary on Clambake's counterclaim. There is no application for that order to be set aside.
Owston's claim against Clambake in the fire claim had the inevitable consequence that Clambake would claim against Tipperary for an indemnity under the lease. In the circumstances, it is appropriate that Owston pay the costs of Clambake's counterclaim against Tipperary. Proposed order 6 should be amended to read 'including all counterclaims and other cross‑claims against the respondent and Tipperary'.
The principles governing an award of indemnity costs on the basis of a Calderbank offer are set out in Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115 [16] ‑ [32]. In summary, they are:
•a Calderbank offer will not justify an award of indemnity costs unless its rejection was unreasonable;
•all the relevant facts and circumstances must be considered in determining whether a party's rejection of a Calderbank offer was unreasonable;
•the mere fact that the recipient of a Calderbank offer is ultimately worse off than he or she would have been had the offer been accepted, does not mean its rejection was unreasonable;
•relevant circumstances in assessing reasonableness include:
(a)the stage of the proceeding at which the offer was received;
(b)the time allowed to the offeree to consider the offer;
(c)the extent of the compromise offered;
(d)the offeree's prospects of success, assessed as at the date of the offer;
(e)the clarity with which the terms of the offer were expressed; and
(f)whether the offer foreshadowed an application for indemnity costs in the event of it being rejected.
Clambake made its first offer in a letter dated 10 October 2008 (the first offer). The first offer was made on the Friday before the commencement of the trial on the following Monday. Clambake offered to pay the sum of $2 million inclusive of costs and disbursements in full and final settlement of the claims made by Tipperary, Owston and Warren Anderson in the fire claim. The first offer remained open for acceptance until 10.00 am on Monday 13 October 2008.
By letter dated 20 October 2008, Clambake offered to settle the fire claim for $1,250,000 plus costs and disbursements (the second offer). The second offer remained open for acceptance until 10.00 am on Thursday 23 October 2008.
By letter dated 19 March 2009, Clambake offered to settle the fire claim for the sum of $1 million inclusive of costs and disbursements (the third offer). The third offer remained open for acceptance until 10.00 am Friday 20 March 2009. The reasons for judgment were published on 9 March 2009 and the offer was made the day before the orders were to be made. The offer was for slightly less than the judgment sum.
The timing of the offers, the amount of the offers compared with the amount in issue or awarded in the fire claim, the significant legal costs that would already have been incurred, the fact that the offers were confined to the fire claim and the very short periods for which the offers remained open, rather suggests that the offers were made primarily with costs in mind rather than as genuine attempts to settle one part of the litigation between the parties. However, it is unnecessary to determine what was Clambake's purpose in making the offers.
The appellant has not discharged its onus of establishing that Owston acted unreasonably in the circumstances in rejecting the offers. The fact that Owston was successful at first instance supports the proposition that it was not unreasonable for it to predict that it and the other plaintiffs may be successful in the fire claim. A very large sum was at stake (Owston was awarded more than $20 million). The other factors listed above also weigh against a conclusion that the rejection of the offers was unreasonable. Indemnity costs should be refused.
Proposed orders 7 and 8 relate to orders made by the trial judge on 14 December 2009 (the December orders) which were the subject of Clambake's appeal in CACV 6 of 2010. By order 5 of the December orders, the trial judge dismissed Clambake's claim against Mr Anderson under the guarantee for him to indemnify Clambake in relation to Clambake's liability to Owston. Order 6 of the December orders provides that Clambake pay Mr Anderson's costs of and incidental to the claim the subject of order 5. Order 7 of the December orders provides:
On Mr Anderson's cross‑claim against Clambake for relief under s 87 of the Trade Practices Act it is declared and ordered that by reason of the misleading and deceptive conduct of Clambake, the contractual liability which Mr Anderson otherwise had under the guarantee and clause 4.01 of the lease to indemnify Clambake for its liability to Owston as adjudged by the judgments of 20 March 2009 and 20 May 2009 totalling $20,102,111.43 shall not be enforced.
Order 8 of the December orders provides that Clambake pay Mr Anderson's costs of and incidental to the claim the subject of order 7.
Clambake's counterclaim against Mr Anderson and Mr Anderson's responsive cross‑claim (the post judgment claims) were made after the trial judge had handed down his reasons for decision on 9 March 2009 in Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 3] [2009] WASC 52. The trial judge delivered his reasons for decision on the post judgment claims in December 2009: Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 7] [2009] WASC 390. Owston was separately represented and took no part in the post judgment proceedings. The post judgment claims could and should have been litigated with all of the other claims, with little if any increase in costs. Clambake was responsible for that failure. Moreover, it is apparent from the trial judge's reasons that Clambake's unsuccessful reliance on res judicata, issue estoppel and Anshun estoppel figured prominently in the post trial proceedings. Against that background, we would not in the exercise of the costs discretion require Owston to pay Clambake's costs of the post judgment claims between Clambake and Mr Anderson.
The appellant in the first appeal and the respondents in appeal CACV 34 of 2009 seek general costs orders for action CIV 2093 of 2009. To avoid confusion there should be only one order. As Clambake is also a respondent in CACV 34 of 2009, the costs order will be made in that appeal.
Accordingly, we hereby make the following orders in CACV 53 of 2009:
1.Leave be granted to the appellant to proceed in this appeal pursuant to s 471B of the Corporations Act.
2.The appeal is upheld.
3.The judgment in favour of the respondent in action CIV 2093 of 2003 in the sum of $20,102,111.43 be set aside and in lieu thereof, judgment be entered in favour of the appellant.
4.The sum of $10 million paid by the appellant pursuant to the orders of EM Heenan J made on 18 November 2009 be repaid to the appellant together with any accrued interest.
5.The respondent pay the appellant's costs of the appeal, including any reserved costs, as agreed or taxed without regard to the applicable scale limits.
6.All remaining outstanding matters as to costs or otherwise in action CIV 2093 of 2003 be remitted to EM Heenan J for determination on a date to be fixed.
7.The parties have liberty to apply on seven days' notice in relation to these orders.
Appeal CACV 6 of 2010 (the second appeal)
Clambake was unsuccessful in its second appeal. The court foreshadowed its intention to order that the appeal be dismissed. However, Clambake seeks orders in the following terms:
1.Appeal upheld.
2.Judgment of the court below given on 14 December 2009 in favour of the second respondent (Mr Anderson) set aside.
3.Declaration and orders in favour of Mr Anderson made by EM Heenan J on 14 December 2009 set aside, in lieu thereof judgment in favour of the appellant.
4.The second respondent to pay the appellant's costs in the court below from 20 March 2009.
The basis for the orders sought by Clambake is this court's conclusion in the first appeal that Clambake did not engage in misleading or deceptive conduct. The respondents in the second appeal, Tipperary and Mr Anderson, were not parties to the first appeal.
Clambake did not in the second appeal challenge the trial judge's finding in the post judgment proceedings that Clambake engaged in misleading or deceptive conduct. As noted by the trial judge, the misleading or deceptive conduct relied on by Mr Anderson in entering into the guarantee was the same conduct relied on by Owston in the fire claim.
The respondents did not participate in the second appeal. Clambake contends this court should make its proposed orders either under the slip rule or in its inherent jurisdiction, relying on the inadvertence or mistake of Clambake's legal advisers. Such a course is inappropriate. Before this court can consider making the orders now sought, Clambake would need to apply for leave to amend its grounds in the second appeal to challenge the finding of misleading or deceptive conduct, personally serve that application on the respondents and the court would be obliged to provide the respondents with an opportunity to be heard, if they so required. No such application has been made.
Clambake is in a strikingly similar position to that in which it found itself after the trial judge handed down his reasons for judgment on 9 March 2009. Clambake does not point to, or rely on, any prejudice to it arising from orders 5 and 7 of the December orders. None is obvious. Moreover, setting aside those orders would not alter the position in relation to proposed orders 7 and 8 in the first appeal. For the same reasons, we would not be disposed to order that Mr Anderson pay Clambake's costs of the trial from 20 March 2009. Having regard to the long history of the litigation, significant weight should be attached to the need for finality. We hereby order that the second appeal be dismissed.
Appeal no CACV 34 of 2009 (the third appeal)
The third appeal was commenced on behalf of Owston, Tipperary and Mr Anderson by appeal notice dated 27 March 2009. The appeal notice was prepared and filed by Solomon Bros who had the conduct of the rent and fire claims for those parties.
Around May 2009 Owston appointed its present solicitors, Lavan Legal, to act on its behalf in the fire claim. The change of solicitors resulted from a secured creditor of Owston, Balanced Securities Ltd, having appointed a receiver. The receiver appointed by Balanced Securities was appointed only in respect of Owston's interest in the judgment it had obtained against Clambake in the fire claim and in respect of all associated interests which Owston had or may have in those proceedings including interests arising from any appeal or appeals: Clambake Pty Ltd v Tipperary Projects Pty Ltd [No 5] [2009] WASC 141 [89].
The decision‑making process and the financial interests of Owston became different to those of Tipperary and Anderson as from the appointment of the receiver. On 16 September 2009, Lavan Legal filed a notice of change of solicitor and assumed the conduct of the third appeal on behalf of Owston.
Clambake, Land Capital and Mr Cohen seek an order that Owston, Owston's receiver, Mr Kim Wallman of HLB Mann Judd and Balanced Securities, jointly and severally pay their costs of the appeal. There is no opposition to the order sought in respect of the receiver, Mr Wallman. However, the order against Balanced Securities is opposed.
Section 37 of the Supreme Court Act 1935 (WA) empowers the court to make an order for costs against a person who is not a party to the action. It is in the interests of justice in this case that the costs order extend to the receiver: see Knight v FP Special Assets Ltd (1992) 174 CLR 178, 192 ‑ 193. There is nothing in the material before the court to suggest that the interests of justice will not be fully protected by the costs order against the receiver. In particular, there is no suggestion that Clambake will be disadvantaged if the scope of the order is not broadened to also include the secured creditor who appointed the receiver. To limit the order to the receiver who had the conduct of the appeal on behalf of Owston is consistent with the approach in s 419 of the Corporations Act which makes a receiver liable for the debts incurred in the course of the receivership rather than the creditor appointing the receiver. We would decline to make a costs order against Balanced Securities.
Proposed order 4 is in substantially the same terms as proposed order 6 in the first appeal. For the same reasons, we would confine the counterclaims to those against Owston and Tipperary and decline to make an order for indemnity costs. We hereby make the following orders in the third appeal:
1.Leave be granted to the first, second and third respondents to proceed in this appeal pursuant to s 471B of the Corporations Act.
2.The first appellant's appeal is dismissed.
3.The first appellant and the first appellant's receiver, Mr Kim Wallman of HLB Mann Judd, jointly and severally pay the first, second and third respondents' costs of the appeal, including any costs reserved, to be taxed without regard to the applicable scale limits.
4.The first and second appellants (Owston and Tipperary respectively) jointly and severally pay the first, second and third respondents' (Clambake, Land Capital and Mr Cohen respectively) costs of action CIV 2093 of 2003, including all counterclaims and cross‑claims against Owston and Tipperary, any reserved costs and the costs of administering and answering interrogatories, as agreed or taxed without regard to the applicable scale limits.
5.There be liberty to apply on seven days' notice in relation to these orders.
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