Place v Sonrich Super Pty Ltd as Trustee for the Richardson Superannuation Fund
[2021] FCA 650
•16 June 2021
FEDERAL COURT OF AUSTRALIA
Place v Sonrich Super Pty Ltd as Trustee for the Richardson Superannuation Fund [2021] FCA 650
Appeal from: Application for leave to appeal: Sonrich Super Pty Ltd as Trustee for the Richardson Superannuation Fund v Place [2020] FCCA 3099 File number: WAD 274 of 2020 Judgment of: JACKSON J Date of judgment: 16 June 2021 Catchwords: APPEAL AND NEW TRIAL - application for leave to appeal from summary judgment of Federal Circuit Court of Australia - leave to appeal granted - evidence giving rise to sufficient doubt as to proper characterisation of transactions such as to warrant a trial - primary judge fell into error in holding that appellants had no reasonable prospect of defending misleading or deceptive conduct claims - appeal allowed Legislation: Competition and Consumer Act 2010 (Cth) Schedule 2 (Australian Consumer Law) s 18
Federal Circuit Court of Australia Act 1999 (Cth) s 17A
Federal Court of Australia Act 1976 (Cth) s 31A
Cases cited: Blakeley v National Australia Bank [2018] FCA 796
Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352; (2006) 236 ALR 720
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
Decor Corp Pty Ltd v Dart Industries Inc (1991) 33 FCR 397
Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited [2008] FCAFC 60; (2008) 167 FCR 372
Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9
Quach v Commissioner of Taxation [2019] FCA 1729; (2019) 168 ALD 130
Spencer v Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118
Three Rivers District Council v Bank of England (No 3) [2003] 2 AC 1
Webster v Lampard (1993) 177 CLR 598
Whitehall Holdings Pty Ltd v Custom Credit Corp Ltd (Unreported, Supreme Court of Western Australia, 19 June 1992)
Division: General Division Registry: Western Australia National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Number of paragraphs: 41 Date of hearing: 1 June 2021 Counsel for the Appellants: Ms A Pieniazek Solicitor for the Appellants: McNally & Co Counsel for the Respondent: Mr A Rumsley Solicitor for the Respondent: Alan Rumsley - Commercial Lawyer ORDERS
WAD 274 of 2020 BETWEEN: JOANNE THERESE PLACE
First Appellant
WA CRUSHING SERVICES PTY LTD
Second Appellant
BENEDICT SCOTT DIAMOND
Third Appellant
AND: SONRICH SUPER PTY LTD AS TRUSTEE FOR THE RICHARDSON SUPERANNUATION FUND
Respondent
ORDER MADE BY:
JACKSON J
DATE OF ORDER:
16 JUNE 2021
THE COURT ORDERS THAT:
1.The application for leave to appeal is allowed.
2.The appeal is allowed.
3.The orders of the primary judge made on 13 November 2020 are set aside.
4.The matter is remitted to the Federal Circuit Court.
5.The costs of the application for summary judgment in the Federal Circuit Court are costs in the cause.
6.On or before 23 June 2021, the appellants must file and serve an outline of written submissions of no more than 3 pages in length and any evidence on which they rely in relation to the costs of the appeal.
7.On or before 30 June 2021, the respondent must file and serve an outline of written submissions of no more than 3 pages in length and any evidence on which it relies in response.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
JACKSON J:
This is an application for leave to appeal and an appeal from orders consequent on summary judgment granted by the Federal Circuit Court of Australia. That judgment was granted on the basis of an alleged hire purchase contract under which the second appellant (second respondent below), WA Crushing Services Pty Ltd (WACS), hired a piece of mine processing equipment called a Kue Ken 1105 Jaw Crusher (Crusher) from the respondent (applicant below), Sonrich Super Pty Ltd as trustee for the Richardson Superannuation Fund. It was also based on allegations of misleading or deceptive conduct which Sonrich made against a former director of WACS, the first appellant Joanne Place, and Ms Place's husband, the third appellant Benedict Diamond.
The appellants say that in ordering summary judgment, the primary judge failed to have regard to outstanding factual disputes and issues about the credibility of Sonrich's witnesses. They also say that the primary judge erred in ordering payment of a sum of damages against them without taking account of the fact that Sonrich is currently in possession of the Crusher and, they say, will realise some money on selling it.
The application for leave to appeal was heard at the same time as full argument on the appeal. For the reasons that follow leave to appeal will be granted and the appeal allowed.
Leave to appeal
The major considerations to be applied in determining an application for leave to appeal are whether the decision is attended with sufficient doubt to warrant it being reconsidered by the appellate court, and whether substantial injustice would result if leave were refused supposing the decision to be wrong: Decor Corp Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398‑399. As will be explained, the primary judge's conclusions about summary judgment on the misleading or deceptive conduct case were, with respect, clearly wrong. I have also concluded that there is sufficient doubt about his Honour's conclusion on the contract claim. Since there will be judgment for monetary sums against the appellants if the decision is not disturbed, substantial injustice will clearly result if the primary judge's decision is wrong. Leave to appeal will be granted.
The claim and the defences to it
Sonrich's claim against the appellants can be summarised as follows. It is alleged that in May 2017 Wayne Richardson, acting on behalf of Sonrich, met Mr Diamond to discuss a proposal for an arrangement under which Sonrich would buy equipment which WACS could use in its business and hire it to WACS on terms requiring WACS to purchase the equipment at the end of the hire term. Sonrich alleges that Mr Diamond told Mr Richardson that it was a safe investment because WACS had good contracts in place and would be in a position to cover the payments. It is said that at a subsequent meeting Mr Diamond produced a written hire purchase agreement which Mr Richardson and his wife signed on behalf of Sonrich (Agreement). Sonrich alleges that the Agreement provided that it would acquire the Crusher and hire it to WACS at a monthly rental of $1,250, with WACS to pay $100,000 to buy the Crusher from Sonrich after a year.
WACS issued an invoice dated 1 June 2017 to Sonrich for $100,000. That is because it appears that WACS owned the Crusher at the time of the initial discussions, and so was selling it to Sonrich and then hiring it back. So the arrangement may have been akin to the provision of finance by Sonrich to WACS on security of the Crusher. Ms Place was the sole director of WACS at the time and authorised the issue of the invoice. It is alleged that Sonrich paid the $100,000 on 2 June 2017.
Sonrich alleges that Mr Diamond and WACS represented that WACS was able to comply with its obligations under the Agreement and was able to make payments under the Agreement as they were due in the future (Representation). This is based in part on the alleged statement described above that it was a safe investment. But Sonrich also alleges that the terms of the Agreement constituted a representation by WACS that was consistent with the Representation. Sonrich also claims that by Ms Place authorising the issue of the invoice, the appellants confirmed the Representation.
Sonrich claims that it would not have entered into the Agreement or paid the $100,000 if the Representation had not been made. It alleges that WACS did not comply with any of the payment obligations under the Agreement and that this means that the Representation was misleading or deceptive. Each of WACS, Mr Diamond and Ms Place is thereby claimed to have contravened s 18 of the Australian Consumer Law, as found in Schedule 2 of the Competition and Consumer Act 2010 (Cth). Sonrich also claims in breach of contract against WACS.
The appellants filed a defence before the summary judgment application was heard. Mr Diamond and WACS denied that Mr Diamond said that WACS would be able to meet the payments under the proposed Agreement. The appellants further denied the making of the Representation, including by denying that the Agreement was consistent with the Representation. They allege that to the extent that the Representation was as to future matters, there were reasonable grounds to make it. They deny that Ms Place's authorisation of the invoice confirmed the Representation.
The appellants also pleaded that between 6 and 7 June 2017 WACS repaid to Sonrich at its direction $50,000 of the $100,000.
The application for summary judgment
Sonrich applied for summary judgment against all of the appellants. It sought $280,000 plus interest against WACS, although counsel for Sonrich conceded before the primary judge that this was an error and the claim should have been $115,000. Sonrich also sought $100,000 against Ms Place and Mr Diamond. The amounts sought were to be reduced by the net sale proceeds of the Crusher.
Sonrich filed one affidavit in support of the application, sworn by Neville Kendrick, who said he was a financial adviser to Sonrich. The affidavit said that Mr Kendrick verified the facts set out in the statement of claim, acknowledging that he was not at the alleged meetings between Mr Richardson and Mr Diamond and so was verifying them on the basis of hearsay from Mr Richardson. The affidavit annexed a few documents including the Agreement, the invoice, and a bank payment authority for the $100,000 paid to WACS. The affidavit said that Mr Kendrick believed that there was no defence to the claim.
In response, the appellants filed affidavits of Mr Diamond and Ms Place. Mr Diamond's affidavit recounted his history of doing business with Mr Richardson and a company associated with him, Cape Range Electrical Contractors Pty Ltd. The evidence is to the effect that Mr Richardson was unreliable and possibly dishonest in dealings involving Mr Diamond, leaving Cape Range owing WACS in the order of $200,000, which was unrecoverable because Cape Range went into administration, and later, liquidation. Mr Diamond's affidavit deposed to WACS's purchase of the Crusher in 2014 and Mr Diamond's belief that it could be sold privately for $150,000 to $180,000, or at auction for slightly less.
Mr Diamond's affidavit deposes to the truth of the appellants' defence as to what was said (and not said) at the meetings in May 2017. Mr Diamond's evidence is that as at 1 June 2017 the proposed arrangement was on terms different to the Agreement, which was not produced until later. The terms as at 1 June 2017, allegedly reflected in an email of that date, were that WACS would sell the Crusher to Sonrich for $100,000 'with a 5% return over the next 12 months' and, at the conclusion of that 12 months, WACS would have an option to purchase back the unit at the price of $100,000.
Mr Diamond claims that the written Agreement was not produced until around 20 June 2017 and that he signed it on or about that date. There is email correspondence in evidence which tends to support that. Mr Diamond claims that in the meantime, WACS had 'repaid' a total of $50,000. There are items of email correspondence and bank transfer receipts showing payment of sums totalling that amount, although the majority of the money appears to have been paid to Mr Richardson's daughter, Amy Richardson, not Sonrich. Mr Diamond claims that the money was, however, paid at Mr Richardson's direction.
Ms Place's affidavit merely annexes the documents that are referred to in Mr Diamond's affidavit, adding nothing by way of direct evidence from her about relevant events.
The primary judgment
In a brief ex tempore judgment, the primary judge said he had taken into account the principles as to summary judgment identified in Spencer v Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118 and Webster v Lampard (1993) 177 CLR 598. His Honour referred to the Agreement and said that, given that Sonrich paid the $100,000 to WACS, he was satisfied that there was no reasonable argument other than that WACS was a party to the Agreement and that it was apparent that WACS had failed to repay the amount.
As for the alleged repayment of $50,000, the primary judge said (at [7]‑[8]):
The respondents submitted that there was a loan transaction between individuals having a relationship to the superannuation trust by reason of which it was alleged that there had been a payment of $50,000 that should be brought to account.
On no view was that a payment of $50,000 to the applicant by the second respondent. Further, as the solicitor for the applicant has pointed out, payment that purports to be a loan transaction does not give rise to any basis to reduce the amount currently sought to be recovered by the applicant in contract from the second respondent, which is the $100,000 plus the $15,000.
The primary judge thus determined that Sonrich was entitled to a declaration that it is the owner of the Crusher and entitled to summary judgment against WACS in an amount to be determined following the sale of the Crusher.
As for the misleading or deceptive conduct claim, the primary judge said (at [11]):
The Court’s attention has been drawn to the communications that suggest the agreement came into formal execution after the payment was made on 2 June 2017. The Court is satisfied, however, that it is patent that a representation was made to the effect of paragraph 14 of the statement of claim that the second respondent [WACS] was able to repay its obligations under the agreement. It is also patent, given the invoice that was issued, that the first respondent [Ms Place] a director of the second respondent and that the first respondent was a party to that representation. That representation was clearly misleading in the circumstances where no such payments or repayments have been made. It is also clear that the misleading conduct has caused the applicant loss and damage being the payment made by the applicant to the second respondent.
At [12] the primary judge said it was apparent from the evidence that Mr Diamond engaged in the making of the relevant representation.
The primary judge concluded that there was no reasonably arguable defence in respect of the misleading or deceptive conduct case and was satisfied that by reason of that conduct, Sonrich suffered loss and damage. His Honour held that by reason of the misleading conduct, Sonrich was entitled to summary judgment against Ms Place and Mr Diamond in the sum of $100,000. The judgment so entered contemplated that the damages payable by WACS would be reduced by the sum realised on the sale of the Crusher, but made no similar provision for reduction of the sum awarded against Ms Place and Mr Diamond. Counsel for Sonrich properly conceded that it should have, but given the outcome of the appeal it is not necessary to give effect to that concession at this stage of the proceeding.
Grounds of appeal
The grounds in the notice of appeal are as follows:
1.The primary judge failed to consider whether the applicants had no reasonable prospect of successfully defending the respondent's claims, as required pursuant to s.17A of the Federal Circuit Court of Australia Act 1999 (Cth).
2.The primary judge erred in concluding that the respondent's case for misleading and deceptive conduct was on the face of the material 'powerful'.
3.Having regard to the matters set out in paragraphs 1 and 2 above, the primary judge erred in law in finding that summary judgment ought to be granted in favour of the respondent under s.17A of the Federal Circuit Court of Australia Act 1999 (Cth).
4.Further and in the alternative, the primary judge erred in his assessment of the award of damages, which is out of proportion to the damage suffered by the respondent.
Principles
The primary judge proceeded under s 17A(1) of the Federal Circuit Court of Australia Act 1999 (Cth), which provides:
The Federal Circuit Court of Australia may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a)the first party is prosecuting the proceeding or that part of the proceeding; and
(b)the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.
Section 17A(3) provides:
For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:
(a) hopeless; or
(b) bound to fail;
for it to have no reasonable prospect of success.
That is in materially identical terms to s 31A of the Federal Court of Australia Act 1976 (Cth). In Quach v Commissioner of Taxation [2019] FCA 1729; (2019) 168 ALD 130 at [12] I summarised the principles applicable under s 31A as follows:
(1)It is the applicant for summary judgment who bears the onus of persuading the court that the proceedings should be determined summarily: Australian Securities and Investments Commission v Cassimatis [2013] FCA 641; (2013) 220 FCR 256 at [45].
(2)It may be doubted that it is useful to adopt any gloss, paraphrase or lexicon as to the criterion of no reasonable prospect of success: Spencer v Commonwealth of Australia [2010] HCA 28; (2010) 241 CLR 118 at [58]; see also at [22].
(3)As the combined effect of s 31A(2) and 31A(3) makes clear, the inquiry is whether the prosecution of the relevant part of the proceeding has no reasonable prospect of success, not whether that defence is hopeless or bound to fail: Spencer at [52].
(4)The test is a departure from earlier provisions authorising summary judgment to be ordered: Spencer at [53]. Section 31A has lowered the bar and softened the test: Cassimatis at [46].
(5)Nevertheless, the power to dismiss an action summarily must be exercised with caution and is not to be exercised lightly: Spencer at [24] and [60].
(6)Section 31A(1) provides that when the court is satisfied that the respondent to an application for summary judgment has no reasonable prospect of successfully prosecuting or defending the proceeding or that part of the proceeding, then the court 'may' give judgment. The assessment required by s 31A of whether a proceeding has no reasonable prospects of success necessitates the making of value judgments in the absence of a full and complete factual matrix and argument, with the result that the provision vests a discretion in the court: Kowalski v MMAL Staff Superannuation Fund Pty Ltd [2009] FCAFC 117; (2009) 178 FCR 401 at [28].
(7)A practical judgment as to the case at hand is required, by reference to the stage it has reached: Spencer at [25]; Cassimatis at [46].
In Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352; (2006) 236 ALR 720 at [45], in a passage which has been cited frequently in subsequent cases, Rares J said:
I am of opinion that in assessing what reasonable prospects of success are for the purposes of s 31A, the Court must be very cautious not to do a party an injustice by summarily dismissing the proceedings where, in accordance with the principles in Hocking v Bell (1947) 75 CLR 125, contested evidence might reasonably be believed one way or the other so as to enable one side or the other to succeed. As soon as the evidence may have such an ambivalent character prior to a final determination, I am of opinion that then, as a matter of law, at that point there are reasonable prospects of success within the meaning of s 31A. Unless only one conclusion can be said to be reasonable, the moving party will not have discharged its onus to enliven the discretion to authorize a summary termination of the proceedings which s 31A envisages.
The same may be said of the converse situation where, as here, the question is whether respondents (in the proceeding below) had no reasonable prospect of successfully defending the proceeding. Nevertheless, it is not enough for a party resisting summary judgment to raise a point that can be put only barely. An assertion by a party that there is a real question to be decided must be examined with a critical eye: Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited [2008] FCAFC 60; (2008) 167 FCR 372 at [23]. Once the moving party has established a prima facie case that the opponent has no reasonable prospect of success, generalised denials or merely putting the applicant for summary judgment to proof will not be enough; the opponent will need to 'to identify specific factual or evidentiary disputes to make a trial necessary': Blakeley v National Australia Bank [2018] FCA 796 at [31] (McKerracher J); and see Jefferson Ford at [127] (Gordon J).
Consideration
I will commence by considering the contract claim against WACS. The evidence adduced by the appellants does give rise to an arguable case that, by at least 6 June 2017, there was a contract between Sonrich and WACS with different provisions to the Agreement, which was formed or evidenced by a combination of the email of 1 June 2017, the issuing of the Invoice, and the payment by Sonrich of the $100,000. But on the appellants' own chronology of events, the Agreement was executed after that, or at least the schedule which referred to the specific terms concerning the sale, hire and re‑purchase of the Crusher (Schedule) was. That Schedule, apparently executed on behalf of Sonrich and WACS and containing an agreement apparently complete in its terms, appears to confirm that WACS did agree to pay $100,000 to purchase the Crusher from Sonrich at the expiry of one year from 31 May 2017, and that it did agree to pay a total of $15,000 in rent for the Crusher in the meantime. There was no real dispute that those amounts were never paid in full, and that the Crusher remains the property of Sonrich. That does establish a prima facie case that Sonrich is entitled to summary judgment against WACS for breach of the Agreement. In those circumstances, it was incumbent on WACS to provide specific evidence to persuade the court that a trial is necessary.
WACS raised two defences to the contract claim. In the result it is only necessary to discuss one of them, namely the defence that relies on the payments totalling $50,000 which appear to have been made in early June 2017. Mr Diamond's affidavit descends to specifics in relation to this. He claims that in around May 2017, Mr Richardson offered to lend him $100,000 from his and his wife's superannuation trust, that is, from Sonrich. Mr Diamond says that shortly after that, he told Mr Richardson he was nervous about borrowing that much, and that $50,000 would be enough. Mr Richardson is said to have replied that he had made arrangements for the $100,000 and Mr Diamond decided that it would be fine because he had some cars he could sell to cover the $50,000. Then, later in the affidavit he says that the two lots of $25,000 were 'repaid as directed by Wayne' and 'repaid to Sonrich as directed by Wayne'.
This evidence raises questions. Why Mr Richardson could not change the payment of $100,000 to $50,000, and why WACS would need to sell cars to repay it in such a short space of time, rather than just not spend all of the $100,000 in the first place, are not explained. Further, the documentation of the payments which WACS puts forward suggests that the payments were not repayments to Sonrich of any money advanced under the Agreement. That documentation consisted of bank withdrawal records showing that WACS paid almost all of the $50,000 by way of loan to Amy Richardson, not Sonrich. There was also a document which Ms Place apparently prepared to record the purpose of the payments, headed 'Loan Agreement between WA Crushing Services Pty Ltd "Lender" and Wayne Richardson "Borrower"', which shows the funds having been 'loaded [sic loaned] to Wayne Richardson' and lists apparent dates and amounts for repayments. If that evidence, adduced by the appellants, is what it appears on its face to be, it does not establish that the sums were repayments of the amount advanced by Sonrich in respect of the Crusher and also would not establish any set off as between Sonrich and WACS, as any liability appears to be that of Mr Richardson.
Nevertheless, on balance I consider that there is enough doubt about the true character of the payments totalling $50,000 to mean that the issue should go to trial. Mr Diamond's affidavit deposes that he and Mr Richardson were friends and relates an extensive history of dealings between them. Both of them have been made bankrupt on different occasions. Sonrich appears to be the trustee of the Richardson family's self-managed superannuation fund. There is a suggestion in Mr Diamond's affidavit that Mr Richardson intended to use $25,000 to pay school fees. The timing of the payments of $50,000 suggests some relationship to the payment of the $100,000 by Sonrich to WACS which may have immediately preceded it. It was open to Mr Richardson to direct WACS to discharge a liability to Sonrich by payment to a third party such as Amy Richardson. It is not necessary to traverse all the background evidence in detail; it is enough to convince me that there is a reasonable prospect that arrangements between the two men, which on their face appear odd and attended by contradiction, are in fact explicable in the way that Mr Diamond says they are, and so included repayment of part of the $100,000 which Sonrich appears to have advanced to WACS in early June. In Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 20, Dixon CJ said, 'Experience of forensic contests should confirm the truth of the common saying that one story is good until another is told.' This is a case where the court should not conduct a 'mini-trial' on limited documents where full discovery and comprehensive evidence from witnesses, including under cross-examination, may put a different complexion on those documents: see Three Rivers District Council v Bank of England (No 3) [2003] 2 AC 1 at [95] (Lord Hope of Craighead).
For those reasons, I do not consider that Sonrich established before the primary judge that only one conclusion was reasonable, and so discharged its onus to enliven the discretion to authorise the summary termination of the proceedings which s 17A of the Federal Circuit Court Act envisages. While his Honour referred at [8] to the same reasons as I have outlined for considering that the $50,000 was not a repayment to Sonrich, he does not appear to have considered the explanation given in Mr Diamond's affidavit, or the context of the dealing between him and Mr Richardson. I respectfully consider that his Honour fell into error in concluding that WACS had no reasonable prospect of defending the contract claim.
While that only concerns repayment of part of the sum which appears to have been payable on the face of the Schedule, nevertheless, the fact that there are reasonable prospects of establishing a defence as to the alleged repayment of $50,000 means that the whole summary judgment in respect of the contract claim should be set aside. That is because Mr Diamond also deposes to his belief that the Crusher was and is worth more than $100,000. Together with the possible repayment of $50,000, making allowance for that value could be enough to eliminate the contractual damages claimed. The parties and the primary judge appear to have contemplated a process by which damages would be assessed, the Crusher would be sold and then the damages payable would be reduced by the net sale proceeds. But another possibility would be to reduce the damages by the value of the Crusher (whether sold or not) assessed in the usual way. That could conceivably reduce the contractual damages to nil. I therefore do not consider that Sonrich has established that WACS has no reasonable prospect of successfully defending the contractual claim in its entirety.
If I am wrong about that, I would still need to re-exercise the discretion in light of the primary judge's error in failing to find that there was a reasonable prospect that WACS may establish repayment of the $50,000. I would exercise that discretion against awarding summary judgment on any part of the contract claim. That is because the issue as to the $50,000, and the issues as to the misleading and deceptive conduct, are so entwined with the overall course of dealings between the parties that there would be no utility in awarding summary judgment as to an amount which could be small and in any event would be uncertain, given that it would depend on the amount for which the Crusher might be sold.
Turning to the misleading or deceptive conduct case, the outcome there is clearer cut. With respect, the primary judge's decision that summary judgment was available in relation to those allegations was unsupportable.
The Representation relied on is an alleged representation that WACS was able to comply with its obligations under the Agreement, was able to make the payments of rent and would be able to make the payments under the Agreement as they were due in the future. The conduct relied on is threefold. First, it is alleged that Mr Diamond said to Mr Richardson that WACS was able to comply with its obligations under the Agreement and was able to make payments under the Agreement as they were due in the future. Mr Diamond's evidence is that he did not say that. It is elementary that this gives rise to a dispute between witnesses which can only be resolved after a trial.
Second, there is the contents of the Agreement. Certainly, misleading representations can be embodied in a contract: see Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 at [35] (French CJ). But Sonrich could point to nothing in the Agreement which clearly and expressly contains a representation that WACS was capable of complying with the Agreement, and would be so capable in the future. And it did not rely on warranties, or documents annexed to the Agreement, which can sometimes make or incorporate statements of fact: cf. Campbell. Sonrich's counsel pointed instead to the turn of phrase in the Schedule that at the end of 12 months WACS 'will' purchase the equipment back from Sonrich. But that is a common way of expressing a promissory obligation. Whether, in this case, it also contained a factual representation about present and future matters would require examination of the impugned conduct as a whole in light of the relevant surrounding facts and circumstances: see Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 at [102], [109] (McHugh J, in dissent but not on this point - see Gleeson CJ, Hayne and Heydon JJ at [39]). That is, obviously, only something that can be done after a trial.
Third, there is the invoice of 1 June 2017 and Ms Place's authorisation of it. But that invoice contains no statement to the effect of the Representation. It is relied on by Sonrich as confirmation by Ms Place of the Representation as found in the conduct of Mr Diamond and WACS. If summary judgment is not available in relation to that conduct, nor is it available in respect of the invoice. Once again, what Ms Place's conduct in authorising or issuing the invoice in fact conveyed must be assessed in light of all the circumstances, after a trial.
Counsel for Sonrich suggested that the grounds of appeal did not raise these matters concerning misleading or deceptive conduct. It is true that ground 1 is put in terms of the primary judge failing to consider certain things, rather than stating, squarely, that his Honour erred in finding that the appellants had no reasonable prospect of successfully defending the misleading conduct claims made in the proceeding. But ground 1(a) refers to the factual dispute between Mr Diamond and Mr Richardson about what was said in May 2017, ground 1(e) raises the question of Mr Richardson's and Mr Neville's credibility, ground 2 picks these up in a more general assertion of error in the primary judge concluding that the misleading conduct case was 'powerful', and ground 3 relies on all of that to make a contention that his Honour erred in law in finding that summary judgment ought to be granted in favour of Sonrich. These grounds encompass the contention that in light of the factual issues I have raised, his Honour should not have concluded that Ms Place and Mr Diamond had no reasonable prospect of defending the misleading or deceptive conduct part of the proceeding. For reasons I have given, that contention is made out.
Disposition and costs
Grounds 1(a), 1(d), 2 and 3 are upheld. It is unnecessary to deal with the other grounds. The primary judge's orders of 13 November 2020 must be set aside. The matter will be remitted to the Federal Circuit Court.
The usual order as to costs when an application as to summary judgment is dismissed is that the costs of the application are in the cause, so that the party successful at the trial recovers them: Whitehall Holdings Pty Ltd v Custom Credit Corp Ltd (Unreported, Supreme Court of Western Australia, 19 June 1992) at 2 (Ipp J). The usual order as to the costs of the appeal is that the unsuccessful party should pay those costs: ibid at 4. I will invite brief submissions from the parties as to whether there is any reason to depart from those usual orders in this case.
I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackson. Associate:
Dated: 16 June 2021
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