Pollock v Hicks
[2015] NSWCA 122
•8 May 2015
|
New South Wales |
Case Name: | Pollock v Hicks |
Medium Neutral Citation: | [2015] NSWCA 122 |
Hearing Date(s): | 16 April 2015 |
Decision Date: | 8 May 2015 |
Before: | Macfarlan JA at [1]; |
Decision: | 1. Appeal allowed. |
Catchwords: | TRADE AND COMMERCE – Trade Practices Act 1974 (Cth) and Fair Trading Act 1987 (NSW) – false or misleading representations – unconscionable conduct – accessorial liability – whether appellant involved in a contravention – statements made by appellant’s husband – whether appellant knew representations made and of facts which made them false or misleading or unconscionable – appellant lacked requisite knowledge – appellant not involved in a contravention |
Legislation Cited: | Australian Consumer Law 2010 ss 4, 21, 29, 236 |
Cases Cited: | Australian Competition and Consumer Commission v IMB Group Pty Ltd [2003] FCAFC 17 |
Category: | Principal judgment |
Parties: | Cathy Rae Pollock (Appellant) |
Representation: | Counsel: |
File Number(s): | 2014/197805 |
Decision under appeal: | |
Court or Tribunal: | District Court |
Jurisdiction: | Civil |
Date of Decision: | 12 June 2014 |
Before: | Robison DCJ |
File Number(s): | 2010/414913 |
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
JUDGMENT
MACFARLAN JA: I agree with Gleeson JA.
EMMETT JA: This appeal arises out of a dispute concerning the engagement of the respondent, Mr Ricky Hicks, by Rosebid Pty Ltd (Rosebid) to undertake earthmoving work. The appellant, Ms Cathy Pollock, and her then husband, Mr Ronald Pollock, were the only shareholders and directors of Rosebid. Mr Hicks commenced proceedings in the District Court against Rosebid, Mr Pollock and Ms Pollock, claiming a liquidated sum for work said to have been done at the direction of Mr Pollock for which he had not been paid.
Subsequently, Mr Hicks filed an amended statement of claim seeking damages in respect of misleading representations alleged to have been made by Mr Pollock in contravention of the Australian Consumer Law (contained in Sch 2 to the Competition and Consumer Act 2010 (Cth)) and the Fair Trading Act 1987 (NSW). He alleged that Ms Pollock was “involved” in the contraventions so as to be liable for loss suffered by Mr Hicks as a consequence of the contraventions. The District Court ordered Ms Pollock to pay damages to Mr Hicks in the sum of $139,296.99 and ordered her to pay his costs of the proceedings. Ms Pollock appeared in person at the hearing without legal representation. She now appeals from the orders made by the District Court. Her complaint is that the primary judge erred in finding that she was “involved” in Mr Pollock’s conduct. She also complains that she was denied procedural fairness in the circumstances leading up to the two-day hearing.
I have had the advantage of reading in draft form the proposed reasons of Gleeson JA. I agree with the orders proposed by his Honour for the reasons given by him. In particular, I agree with his Honour’s observations concerning the duty of a court to unrepresented litigants.
GLEESON JA: This appeal concerns a dispute relating to the engagement of the respondent, Ricky Hicks, by Rosebid Pty Ltd (Rosebid) between 2005 and 2008 to undertake earthmoving work in the Holbrook region of New South Wales. The appellant, Cathy Rae Pollock, and her husband Ronald Paul Pollock, were at all relevant times the owners and the only directors of Rosebid.
Mr Hicks commenced proceedings in the District Court on 14 December 2010 against Mr Pollock, Ms Pollock and Rosebid claiming a liquidated sum of $237,556.85 for work done at the direction of Mr Pollock which it was said the defendants had not paid for.
On 6 June 2013 an amended statement of claim was filed claiming damages in respect of certain representations alleged to have been made by Mr Pollock to Mr Hicks in 2005. The critical representations were that Mr Pollock would engage Mr Hicks to carry out earthmoving works at the direction of Mr Pollock at agreed hourly rates; that the machinery to be operated by Mr Hicks would be vendor financed by Mr Pollock; and that Ms Pollock would prepare the necessary paperwork in relation to the vendor finance. The making of those representations was said to have been false and misleading in connection with the supply of goods or services, and also unconscionable conduct in contravention of various provisions of the Australian Consumer Law (ACL) (contained in Sch 2 to the Competition and Consumer Act 2010 (Cth)) and the Fair Trading Act 1987 (NSW) (FTA).
The claim against Ms Pollock was that she was “involved”, within the meaning of s 75B of the Competition and Consumer Act, in the false and misleading and unconscionable conduct of Mr Pollock.
By the time the proceedings came on for trial, Mr Pollock was an undischarged bankrupt and Rosebid was in liquidation. Accordingly Mr Hicks continued the proceedings only against Ms Pollock, who was unrepresented at the trial.
Mr Hicks’ case at trial was that contrary to the representations made by Mr Pollock, his subcontracting arrangement was with Rosebid (not Mr Pollock), operating machinery was vendor financed by Rosebid (not Mr Pollock), and that he had not been paid the full amount recorded in his timesheets which he provided to Ms Pollock to prepare his tax invoices addressed to Rosebid. Mr Hicks alleged that he was a vulnerable person by reason of certain disabilities which caused him difficulties in managing his financial affairs and that he had relied upon Mr Pollock and Ms Pollock to prepare his tax invoices to Rosebid in accordance with the amounts claimed in his timesheets. Mr Hicks claimed that his tax invoices understated the amounts claimed in his timesheets and that he had been underpaid by Rosebid approximately $110,000 over three years. He claimed this amount together with consequential losses as damages against Ms Pollock pursuant to s 236 of the ACL.
After a hearing occupying two days, the primary Judge (Robison DCJ) gave ex tempore reasons for judgment on 12 June 2014 and found in favour of Mr Hicks. His Honour ordered Ms Pollock to pay damages to Mr Hicks in the sum of $139,296.99 together with costs. The proceedings against Mr Pollock and Rosebid were dismissed with no orders as to costs: Hicks v Pollock (District Court (NSW), Robison DCJ, 12 June 2014, unrep).
Ms Pollock now appeals to this Court. She seeks a verdict and judgment in her favour, or alternatively a new trial in respect of the whole of Mr Hicks’ claim.
The principal issue debated on the appeal was Ms Pollock’s challenge to the primary judge’s factual finding that she was “involved” in Mr Pollock’s false and misleading and unconscionable conduct. If this finding is set aside, the basis upon which damages were awarded against Ms Pollock is removed and it is unnecessary to determine the other issues raised on appeal. These issues included: a challenge to the finding against Mr Pollock of unconscionable conduct; the contention that the award of damages for loss suffered prior to 6 June 2007 was statute barred; and a complaint that Ms Pollock was not afforded procedural fairness by the primary judge such that the trial miscarried and it was appropriate to order a new trial: see Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 51.53.
For the reasons which follow, I have concluded that the appeal should be allowed because the primary judge erred in his approach to the accessorial liability issue, and his factual findings on this issue must be set aside.
An understanding of how this particular issue was dealt with at trial is assisted by an outline of the relevant facts and the way in which the proceedings were pleaded and conducted before the primary judge.
The relevant facts
Rosebid conducted an earthmoving business trading under the name “Pollock Earth Works”. Both Mr Pollock and Ms Pollock worked in the business, having been appointed directors of Rosebid in 1998. Mr Pollock managed and operated the business. He obtained the work, dealt with customers, appointed subcontractors, purchased machinery and other work supplies and arranged repairs and maintenance. Ms Pollock attended to all the paperwork and administration. She answered phone calls, prepared and sent out invoices, received claims for hours worked from subcontractors, attended to pay subcontractors and other creditors, chased up debtors, attended to banking and kept all the business records.
Mr Hicks lived in Holbrook all of his life except for a short period. He had a difficult birth which seems to have caused him a speech impediment. At about the age of 19 years he was hit on the head by his former father-in-law with a pick axe handle. This resulted in a personality change and he became a workaholic and developed a short temper.
In 1990, when he was 25 years old, Mr Hicks commenced working for Rosebid doing logging work and later earthmoving work. (At that time the directors of Rosebid were Ronald George Pollock and Wenona Mary Pollock.) Mr Hicks described himself as an employee, but the evidence is unclear as to whether he was an employee or a subcontractor at this time. Mr Hicks was engaged by Rosebid more-or-less fulltime between 1990 and 1998. Thereafter up until 2005 he was engaged less frequently by Rosebid as he established his own business and client base.
In March 2005 Mr Pollock telephoned Mr Hicks with an offer of work on a contract which Mr Pollock was attempting to secure. Mr Hicks said he did not have a dozer machine and Mr Pollock offered to help him out with vendor finance to acquire a dozer. Mr Hicks deposed in his affidavit that he said to Mr Pollock during this conversation:
We will work together, my clients will be yours and your clients will be mine. I will charge a lower rate for the work and you can put a margin on the work and make a profit.
The contract did not eventuate.
A little later, Mr Hicks suggested to Mr Pollock that he finance him into one of Mr Pollock’s own machines, a Sumitomo excavator. Mr Pollock said he would talk to Cathy (Ms Pollock). There was no evidence as to whether this conversation occurred in person or by telephone.
Mr Pollock subsequently telephoned Mr Hicks in relation to this proposal and said:
Okay, we have worked it all out. Cathy will take care of the paperwork.
Mr Pollock also said to Mr Hicks during this conversation:
Ricky, Cathy can do your books and we will use my accountants in Sydney to do your tax work.
Mr Hicks and Mr Pollock agreed on the sale price for the Sumitomo machine at $20,000 plus GST.
Mr Hicks gave unchallenged evidence of a conversation during the course of his work with Mr Pollock in which Mr Pollock said:
Ricky, use an invoice book for the jobs you do. Record the customer’s details, the date, the job, the hours, and then give it to Cathy. She will pay you for your work.
In accordance with Mr Pollock’s instructions, Mr Hicks filled out what he described as invoice books, or timesheets and provided these to Ms Pollock. Mr Hicks also signed an authority to Ms Pollock so that she could operate on his bank account and sign cheques on his behalf.
Mr Hicks gave unchallenged evidence as to the hourly rates agreed with Mr Pollock for his labour and the supply of a machine. Over time, he said he negotiated some increases in these rates and new rates when he acquired other machines.
In his affidavit evidence, Mr Hicks said that he understood the agreement to be that:
1. Paul and I would work together on jobs and that my jobs would be his and his jobs would be mine;
2. Paul would vendor finance me into his Sumitomo excavator;
3. I would keep timesheets for each job I did and [submit] them to Cathy;
4. Cathy would prepare my invoices from my timesheets and submit them to the clients for payment; and
5. Cathy would bank the payments into my bank account and pay my expenses, including the money I owed Paul for the machine.
Notwithstanding the suggestion in his affidavit evidence of some sort of joint activity or collaboration with Mr Pollock, at trial Mr Hicks agreed in cross-examination that he was engaged as a subcontractor by Rosebid.
Ms Pollock worked in Rosebid’s office, which she described as very small. She said that she was aware of everything that Mr Pollock was doing in the office. She also said that she often overheard Mr Pollock speaking by telephone with Mr Hicks and that Mr Pollock would engage Mr Hicks on behalf of Rosebid to carrying out earthmoving work for Rosebid’s customers.
Ms Pollock described her dealings with Mr Hicks as follows. After completing each job, or at the end of each week (if the job involved more than a week’s work), Mr Hicks would come into the Rosebid office and hand his job records to her. These were described as Mr Hicks’ timesheets. Apparently Mr Hicks’ handwriting was difficult to read and Ms Pollock and Mr Hicks would sit down and work out the details of the hours that he had worked and the particular tasks he had carried out. Ms Pollock would then prepare an invoice in Mr Hicks’ name addressed to Rosebid, setting out the agreed hours of Mr Hicks’ work and the tasks he had carried out. She would show the invoice to Mr Pollock for approval to pay. If Mr Pollock agreed with the invoice and authorised payment, Ms Pollock would do so. If Mr Pollock did not approve the invoice for payment, Ms Pollock left the task of resolving the issue to Mr Pollock to deal with Mr Hicks. If the invoices were amended by Mr Pollock, Ms Pollock paid the amended invoice to Mr Hicks.
With the exception of the first 11 invoices, the invoices prepared by Ms Pollock were addressed in Mr Hicks’ name to Rosebid. The first 11 invoices were addressed directly in Mr Hicks’ name to Rosebid’s clients. When Mr Pollock became aware this was occurring he instructed Ms Pollock to address Mr Hicks’ invoices to Rosebid, as he did not want the client receiving two invoices, one from Mr Hicks for part of the work and one from Rosebid. Ms Pollock complied with this instruction.
Mr Hicks said that he never saw his invoices, bank statements or supervised the work Ms Pollock was doing for him. He said that he left everything to Mr Pollock and Ms Pollock.
Relations between Mr Hicks and Mr Pollock soured in mid-2008 and he ceased working for Rosebid at that time. Mr Hicks said that he did not know until about 2010 when he engaged Ms Locke as his bookkeeper, that Ms Pollock was not raising his invoices in accordance with his timesheets and not paying him what he was owed and had delayed payments to him. Mr Hicks claimed that he was underpaid in excess of $110,000 over the three year period.
Mr Hicks’ pleaded claim
Mr Hicks’ amended statement of claim did not embrace the suggestion in his affidavit evidence that he was engaged in some sort of joint activity or collaborative arrangement with Mr Pollock, involving a sharing of clients. Rather, his pleading, which is not a model of clarity, contained the following allegations:
In 2005 Mr Pollock entered into negotiations with Mr Hicks with a view to Mr Hicks carrying out earthmoving work, operating machinery financed by Mr Pollock (para 14).
In the course of those negotiations, Mr Pollock made certain representations to Mr Hicks (para 15). In view of the centrality of these alleged representations to the accessorial liability claim against Ms Pollock, it is appropriate to set them out in full:
15. In the course of the negotiations described in 13 hereof, the First Defendant represented to the Plaintiff that:
(i) The First Defendant would pay to the Plaintiff agreed hourly rates to carry out work provided to the Plaintiff by the First Defendant;
(ii) The First Defendant would provide vendor finance to the Plaintiff to enable the Plaintiff to purchase earthmoving equipment to carry out work as provided to the Plaintiff from time to time by the First Defendant; and
(iii) The Second Defendant would prepare the necessary paperwork for the provision of vendor finance to the Plaintiff.
Particulars of agreed hourly rates will be provided in due course.
(For convenience the representations alleged in paras 15(i), (ii) and (iii) may be referred to as the engagement representation, the vendor finance representation and the paperwork representation respectively.)
That Mr Pollock knew or ought reasonably to have known that Mr Hicks was subject to a special disability (para 16)
That Mr Pollock did not have reasonable grounds for making the representations at the time they were made because the vendor finance was to be organised through Rosebid (rather than Mr Pollock), and the payments for work done were to be made by Rosebid (rather than Mr Pollock) (para 17).
The representations being as to future matters, are to be taken to be misleading by reason of s 4(2) of the ACL (para 18).
By making the representations, Mr Pollock engaged in conduct which was “false and deceptive” in contravention of s 29 of the ACL and s 32 of the FTA (para 19). (The latter reference was clearly incorrect. Possibly the intended reference was to s 44 of the FTA.)
By making the representations, Mr Hicks engaged in conduct which was unconscionable in contravention of s 21 of the ACL and also a contravention of s 32 of the FTA (para 20). (Again the reference to s 32 of the FTA was incorrect. Presumably in the context of an allegation of unconscionable conduct, this should be understood as a reference to s 43 of the FTA.)
In reliance upon the representations, Mr Hicks entered into agreements whereby he purchased machinery and performed work as directed from time-to-time by Mr Pollock and Ms Pollock; he gave an authorisation to Ms Pollock to sign cheques on his behalf; and on instructions from Ms Pollock, he issued invoices to the defendants rather than to persons or company for whom he performed earthmoving work (para 21).
That contrary to the representations made by Mr Pollock, Mr Pollock and Ms Pollock utilised Rosebid to provide the vendor finance and to make payment to Mr Hicks for work done on the instructions from Mr Pollock (para 22).
The defendants had failed to pay Mr Hicks for the work performed at the agreed rate and had issued invoices in the name of Rosebid to third parties for work carried out that did not correspond to the invoices provided by Mr Hicks to Rosebid (para 23).
That Mr Pollock acted as agent for Ms Pollock and Rosebid in making representations to Mr Hicks (para 25).
Alternatively, it was alleged that Mr Pollock and Ms Pollock aided, abetted, counselled or procured the contraventions (by Mr Pollock) referred to in paras 17, 18, 19 and 20 of the amended statement of claim; or induced the said contraventions; or was directly or indirectly knowingly concerned with and a party to the said contravention(s). Accordingly Mr Pollock and Ms Pollock were each involved in the said contravention(s) within the meaning of s 75B and s 82 of the Competition and Consumer Act and s 236 of the ACL (para 26).
In reliance upon the representations, Mr Hicks suffered loss and damage (para 27). Mr Hicks claimed damages pursuant to the Competition and Consumer Act, the FTA and interest thereon.
Notably no claim for damages was pressed at trial in relation to the vendor finance representation or the paperwork representation. The only damages claimed at trial concerned the engagement representation, in particular the alleged failure by the defendants to pay Mr Hicks the full amount claimed in accordance with his timesheets.
Applicable legislative provisions
One matter should be mentioned immediately. The reliance in the pleading on various provisions of the Competition and Consumer Act and the ACL was misconceived. The relevant provisions of the Competition and Consumer Act, including the ACL, commenced operation on 1 January 2011. Accordingly they had no application to conduct occurring prior to that date: Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth), s 2.
However, the transitional provisions with respect to the Trade Practices Act 1974 (Cth) (TPA) provided that it continued to apply, after the commencement of the ACL, in relation to acts or omissions that occurred before that commencement: Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth), Sch 7, cl 6(1).
Similar transitional provisions applied in respect of the FTA which also continued to apply to acts or omissions occurring before the commencement of the ACL on 1 January 2011: Sch 5 – Savings and Transitional Provisions, Pt 4, cl 16(1) of the FTA, introduced by the Fair Trading Amendment (Australian Consumer Law) Act 2010 (NSW).
The deficiencies in Mr Hicks’ pleading were not appreciated by his legal representative at trial, and unfortunately the applicable statutory provisions were not drawn to the attention of the primary judge. This had a number of consequences. First, Mr Hicks’ claim was determined by reference to the incorrect statutory provisions.
Secondly, if attention had been given to the applicable statutory provisions, a number of potential difficulties with Mr Hicks’ claim would have been appreciated at trial. These included:
(a)the relevant prohibitions in the TPA prohibiting false or misleading representations (s 53) and unconscionable conduct (s 51AC) did not apply directly to Mr Pollock or Mr Hicks, as they are not corporations. Such provisions could have applied to Mr Pollock as an individual by the extended application of those provisions where the relevant conduct involved the use of postal, telegraphic or telephonic services: s 6(3)(a) of the Trade Practices Act. However, reliance on this provision was not pleaded and the primary judge made no relevant findings in this regard.
In the present case, part of representations constituting Mr Pollock’s impugned conduct were made by telephone when he confirmed the proposed arrangements with Mr Hicks. However, on the face of Mr Hicks’ affidavit evidence, so far as the engagement representation related to payment to Mr Hicks at agreed hourly rates, this did not occur over the telephone so as to attract the extended application of s 51AC and s 53 of the TPA.
(b)assuming that s 43 of the FTA, which prohibits unconscionable conduct by a supplier in connection with the supply or possible supply of goods or services to a consumer (being the analogous provision to s 21 of the ACL), applied in respect of the conduct by Mr Pollock (which it is unnecessary to determine), s 68(1) of the FTA does not permit a damages remedy for contravention of s 43.
Conduct of the trial
Brief reference should be made to the way in which the proceedings were conducted before the primary judge.
First, in his oral opening at the trial, Mr Simpson, the solicitor for Mr Hicks, submitted that the nature of the relationship which the parties entered into was not a partnership or an employment relationship, rather “it was either a joint venture arrangement of some sort or it was a subcontracting arrangement”.
His Honour summarised his understanding of this submission as being that whilst Mr Hicks was a subcontractor with Rosebid, Rosebid and the two directors were all part and parcel of the same enterprise.
Secondly, in his oral closing, Mr Hicks’ primary submission was that the arrangement between the parties was a subcontracting arrangement between Mr Hicks and Rosebid and “in that event the directors by their conduct are roped in as it were by section 75B”.
Thirdly, it was not put to Ms Pollock in cross-examination that she was aware of the representations said to have been made by Mr Pollock to Mr Hicks or that she was aware of their alleged falsity or, aware of the facts that made them misleading or unconscionable.
The primary judge’s reasons
The primary judge accepted that Mr Hicks suffered from a disability and was at a special disadvantage when dealing with the defendants, including Ms Pollock.
The primary judge found that Mr Hicks relied on Mr Pollock and Ms Pollock and stated:
… that the three entities in these proceedings were collectively and virtually inseparably involved in all of the arrangements with the plaintiff. The company was certainly utilised to the extent as revealed in the evidence. … But at the end of the day, I think that really matters little when it comes to the overall issues which have been raised pursuant to the statutory counts pleaded in the amended statement of claim, particularly when it comes to the personal disposition of the plaintiff and his relationship with the first and second defendants.
His Honour continued:
So clearly, the prime movers, if I can use that terminology, behind the company, that is, Rosebid, were undoubtedly the two directors each of whom has been joined in these proceedings as defendants. So they were part and parcel of the entire enterprise. The company was basically a vehicle or a corporate entity used to facilitate certain aspects of that enterprise, but there was a direct and clear cut personal responsibility and involvement of the individual defendants, the first and second defendants … .
The primary judge noted that Mr Hicks’ evidence was largely unchallenged, particularly the conversations he deposed he had with Ms Pollock.
The primary judge gave the evidence of Mr Pollock little weight.
The primary judge found that Ms Pollock was “involved” in the business to the extent that she was an indispensable person in the role she took in the business and was directly and personally involved in the entire matter.
Although the pleading alleged (in para 25) that Mr Pollock acted as agent for Ms Pollock in making the representations to Mr Hicks, the primary judge made no finding of agency and it was not suggested in this Court there was any evidence upon which such a finding could have been made against Ms Pollock. Nonetheless, the primary judge found that the alleged representations by “the defendants” were made to Mr Hicks.
His Honour found that the allegations made against Ms Pollock were made out and gave as his reasons:
I am satisfied that there were representations made as alleged against the defendants and that involves clearly to a large extent the second defendant herself who must bear responsibility for the collective misrepresentations and inducements held out to the plaintiff. The plaintiff continued to undertake work for which he was not properly paid. He did not know until years later that he was not properly paid and it was not until such time as the plaintiff engaged a bookkeeper to check all of these matters out for him.
Having set out the terms of s 75B of the Competition and Consumer Act, his Honour found that Ms Pollock was “part and parcel of the entire enterprise leading to the contravention”. The only “contravention” expressly identified by his Honour was s 21(1) of the ACL, which prohibits unconscionable conduct.
The primary judge accepted Mr Hicks’ evidence that it was not until 2010, when he engaged Ms Locke as his bookkeeper, that he understood the extent to which he had been underpaid. His Honour noted that Ms Locke’s evidence supported Mr Hicks’ claim.
The primary judge found that Mr Hicks was misled by the collective actions of all three defendants, but specifically Ms Pollock. His Honour continued:
She was part and parcel of the entire joint enterprise between all of the entities which have been joined in this litigation.
His Honour found that Mr Hicks had suffered loss which he quantified as $85,000 before adding interest and ordering judgment against Ms Pollock in the sum of $139,296.99 together with costs.
Consideration
It is convenient to address Ms Pollock’s challenge to the finding of accessorial liability upon two assumptions: first, that Mr Pollock did engage in unconscionable conduct, as the primary judge found, by making the alleged representations to Mr Hicks in 2005; and secondly, that the references in the pleading to various provisions in the Competition and Consumer Act and the ACL should be understood as references to the predecessor provisions in the TPA. It is to be noted that the first assumption is the subject of a separate challenge in the grounds of appeal, and the second assumption is consistent with Ms Pollock’s contention that both the pleader and the primary judge applied the wrong statutory provisions to Mr Hicks’ claim.
On these assumptions, the finding by the primary judge of a contravention by Mr Hicks of s 21(1) of the ACL should be taken, for the purposes of the argument, to be a finding of a contravention of s 51AC(1) of the TPA, notwithstanding that Mr Hicks is not a corporation and there was no express finding that such provision applied to him as an individual by virtue of the extended application of those provisions under s 6(3)(a) of the TPA: see [41(a)] above.
Involvement in a contravention
Section 82 of the TPA provides that a person who suffers loss or damage because of conduct of another person that was done in contravention of a provision of Pts IV, IVA, IVB or V or s 51AC, may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention.
Section 75B of the TPA relevantly provides that a reference to a person “involved in the contravention” of a provision of, Pt IVA of the Act (which includes s 51AC) is to be read as a reference to a person who:
(a)has aided, abetted, counselled or procured the contravention; or
(b)has induced, whether by threats or promises or otherwise, the contravention; or
(c)has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or
(d)has conspired with others to effect the contravention.
The effect of s 75B of the TPA is to extend remedial provisions of that Act, such as s 82, to persons who, though not themselves corporations but individuals, assist a corporation in contravening a provision of the TPA and in that way participate in the contravention: Heydon v NRMA Ltd [2000] NSWCA 374; 51 NSWLR 1 at [435] (McPherson A-JA; Ormiston A-JA agreeing).
In the present case, Mr Hicks relied upon paras (a), (b) and (c) of s 75B of the TPA.
The effect of s 75B of the TPA was considered by the High Court in Yorke v Lucas [1985] HCA 65; 158 CLR 661, where it was held (Mason ACJ, Wilson, Deane and Dawson JJ) that, for paras (a) or (c) of s 75B to apply, the individual said to have participated in the contravention must be an intentional participant, and this requires knowledge of the essential matters or elements which constitute the contravention, regardless of whether or not the individual knows that those matters amount to a contravention. The High Court also held (obiter) (at 670) that both paras (b) and (d) of s 75B also require intent based upon knowledge. At 667-668, the High Court said that in the case of involvement in a contravention constituted by misrepresentations, the element of intention would require knowledge of the falsity.
Subsequent authority establishes that in the case of a representation as to a future matter, it is necessary to demonstrate that the accessory had knowledge that there were no reasonable grounds for the statement. While s 51A assists proof in relation to a representation by a corporation with respect to a future matter by deeming lack of reasonable grounds unless the corporation adduces evidence to the contrary, the benefit of that provision does not apply in a claim against those said to be involved in the contravention: Quinlivan v Australian Competition and Consumer Commission [2004] FCAFC 175; 160 FCR 1 at [15].
Counsel for Mr Hicks accepted that the requirement of knowledge in s 75B, means actual knowledge not constructive knowledge. Wilful blindness will however suffice as actual knowledge: Australian Competition and Consumer Commission v IMB Group Pty Ltd [2003] FCAFC 17 at [135].
Primary judge applied the incorrect legal test
Unfortunately the High Court’s decision in Yorke v Lucas was not drawn to the attention of the primary judge. Had this occurred his Honour’s attention no doubt would have been focused on the need for Mr Hicks to demonstrate that Ms Pollock knew the representations were made to Mr Hicks in 2005 and the facts which made them false or misleading or unconscionable. It was unnecessary to demonstrate that Ms Pollock knew that those facts amounted to a contravention of a provision of the TPA: Yorke v Lucas at 667.
Instead, the primary judge directed himself that it was sufficient that Ms Pollock was “part and parcel” of a “joint enterprise” which had engaged the services of Mr Hicks, and that Mr Hicks had been misled by virtue of actions undertaken collectively by the three defendants including Ms Pollock. In directing himself in this manner, the primary judge misapprehended the correct legal test for the purposes of accessorial liability by virtue of s 75B of the TPA. Counsel for Mr Hicks acknowledged so much in oral argument (AT 16/4/15, 13 at line 20).
No evidence that Ms Pollock was an intentional participant in Mr Pollock’s conduct
No findings were made by the primary judge that Ms Pollock knew of the representations which his Honour found had been made by Mr Pollock to Mr Hicks in 2005, or that Ms Pollock knew of the facts that made them false or misleading or unconscionable. In particular, so far as the engagement representation related to a future matter, there was no finding that Ms Pollock knew that Mr Pollock had no reasonable grounds for making that representation. More specifically, there was no finding that Ms Pollock knew that Mr Pollock, either on his own behalf or on behalf of Rosebid, did not intend to fulfil the engagement representation made to Mr Hicks, or that he or Rosebid did not have the financial means to perform in accordance with that representation. Other than the finding that seems to have been made that Ms Pollock knew of Mr Hicks’ disability, there were no findings that Ms Pollock knew of the facts that made the engagement representation unconscionable.
It was acknowledged by counsel for Mr Hicks that there was no direct evidence that Ms Pollock was aware of the representations which his Honour found had been made by Mr Pollock to Mr Hicks in 2005.
Nonetheless, counsel for Mr Hicks sought to uphold the primary judge’s finding of accessorial liability by contending that it could be inferred that Ms Pollock was aware of the making of the representations to Mr Hicks and also knew that the instructions given to her by Mr Pollock to amend Mr Hicks’ invoices were inconsistent with the engagement representation. Counsel argued that Ms Pollock’s knowledge of the representations could be inferred from the events occurring after Mr Hicks was engaged by Rosebid in 2005, because Ms Pollock never said to Mr Hicks that he was not entitled to payment in accordance with the claims in his timesheets, but nonetheless prepared Mr Hicks’ invoices on his behalf and amended his claims as instructed by Mr Pollock. In my view, no such inference of knowledge should be drawn against Ms Pollock.
First, there is no basis for finding, based on the cross-examination of Ms Pollock, that she knew that the instructions given by Mr Pollock to amend Mr Hicks’ invoices, were inconsistent with the arrangement made between Mr Pollock and Mr Hicks. This proposition was never put directly to Ms Pollock.
Secondly, Ms Pollock gave evidence in cross-examination that the timesheets were a “guideline” and a “management record” for both Rosebid and Mr Hicks. She understood that Mr Pollock and Mr Hicks would meet together on a job and agree on a price and if it went over they would explain that to the client and hope the client would pay “extras”. If the client did not agree to pay more to Rosebid, then Mr Hicks would be paid whatever the client paid to Rosebid for his work.
Thirdly, Ms Pollock was aware that Mr Pollock approved the claims of subcontractors, including Mr Hicks. An arrangement between Mr Pollock and Mr Hicks that Mr Hicks’ claims for payment were subject to the number of hours which Rosebid could reasonably charge its clients for his work is not an unrealistic arrangement in the circumstances.
In my view, there is no basis for finding that Ms Pollock was an intentional participant in Mr Pollock’s unconscionable conduct, as found by the primary judge, let alone an intentional participant in any false or misleading conduct by Mr Pollock.
It follows that the finding of accessorial liability against Ms Pollock must be set aside.
An additional matter
One further matter should be mentioned lest it be thought that it had been overlooked. There is debate in the authorities as to whether it is necessary to establish that the person allegedly involved in a contravention knew that the conduct was misleading or unconscionable (as the case may be), or whether it is enough to prove awareness of the matters that enable the acts constituting such conduct to be so characterised: see Medical Benefits Fund of Australia v Cassidy (2004) 205 ALR 402 at [15] where Moore J (with whom Mansfield J agreed; cf Stone J at [80]) expressed the view that all that would be necessary would be for the accessory to know of the matters that enabled the representations to be characterised as either relevantly false or misleading.
A similar approach was taken in Keller v LED Technologies Pty Ltd [2010] FCAFC 55; 185 FCR 449 at [336] where Besanko J (with whom Jessup J agreed) said:
In a case concerning representations, the essential elements of the contravention are the fact that the representation was made and that, in a case such as the present, it was misleading or deceptive, or likely to mislead or deceive (s 52) or was false (s 53(a) and (c)). To establish accessorial liability it must be established that the relevant person knew the representation was made and the facts which made it misleading or deceptive, or likely to mislead or deceive, or false. It need not be shown that the relevant person actually drew the conclusion that the representation was misleading or deceptive, or likely to mislead or deceive, or was false. [Emphasis added.]
In Coggin v Telstar Finance Company (Queensland) Pty Ltd [2006] FCA 191, a case concerning alleged involvement in unconscionable conduct, Heerey J at [73] expressed the view that it was not necessary to show that an alleged accessory properly characterised or recognised the facts constituting the contravention as unconscionable. His Honour noted that the assessment of conduct as unconscionable or not under s 51AC may involve the consideration and weighing of 13 statutory criteria, and an infinite number of other criteria which appear relevant to the Court, and it would be quite unworkable to suppose that there could be no finding of accessorial liability unless the individual, at the time of the contravention, considered the same factors, and gave them the same weight, as did the Court at the subsequent trial.
It is unnecessary to express any concluded view on this issue. It was not the subject of argument. Moreover, the difference between the two approaches is not significant here where the claim of accessorial liability must fail at the first hurdle – there was no finding, and there is no basis for finding, that Ms Pollock knew of the representations made by Mr Pollock to Mr Hicks in 2005.
Notice of contention
By notice of contention, Mr Hicks sought to uphold the primary judge’s decision on two grounds. First that Ms Pollock had engaged in misleading conduct contrary to s 42 of the FTA and secondly, and alternatively, that she was “involved” in conduct in breach of s 42 of the FTA.
Counsel for Mr Hicks accepted that the first ground was not available as no case had been pleaded or advanced at trial that Ms Pollock herself had engaged in misleading conduct (AT 16/4/15, 25 at line 47 – 26 at line 4).
In relation to the second ground, the notice of contention did no more than raise under State legislation (s 61 of the FTA, which is in similar terms to s 75B of the TPA) the same issue of accessorial liability arising under the Federal legislation. For the reasons given above, there is no basis upon which the decision could be upheld on the ground that Ms Pollock was relevantly involved, within the meaning of s 61 of the FTA, in any misleading or deceptive conduct of Mr Pollock.
Procedural fairness
Although the above conclusions are sufficient to dispose of the appeal, it is appropriate to make some brief comments in relation to Ms Pollock’s complaint that she was not afforded procedural fairness.
The substance of Ms Pollock’s argument is that the primary judge permitted Mr Hicks to advance the claims in the amended pleading when Ms Pollock was ill prepared for the hearing, having only actually received the amended statement of claim (from Mr Pollock) on the first day of the hearing (11 June 2014). It was contended his Honour should have informed Ms Pollock that she could seek an adjournment of the hearing and that such an application, if made, should have been granted.
An outline of the circumstances giving rise to this complaint is required. Up until at least August 2012, when their affidavit evidence was served, the three defendants – Mr Pollock, Ms Pollock and Rosebid – were jointly represented by the one firm of solicitors. At some point thereafter the solicitor ceased acting for them. On 10 June 2014, the day preceding the commencement of the hearing, the solicitor for Mr Hicks informed the primary judge that Mr Hicks could not proceed against Rosebid or Mr Pollock, as the company was in liquidation and Mr Pollock had been made a bankrupt, and leave to proceed had not been obtained against either the company or Mr Pollock’s bankrupt estate.
Early on the first day of the hearing the primary judge observed that Ms Pollock, who was then unrepresented, had not filed any defence to the amended statement of claim. Ms Pollock responded that she did not receive a copy, that she was not present at the directions hearing in June 2013 (when leave to amend the statement of claim was granted) and that she had not received a copy of the Court orders made at that time. She explained that she was very unwell at that time and had doctor’s certificates. The primary judge stated that “[w]e need to keep moving”.
Discussion ensured between his Honour and Ms Pollock concerning the new statutory claims. His Honour referred to the allegation in the amended statement of claim that Mr Pollock acted as agent for Ms Pollock and Rosebid in making the alleged representations to Mr Hicks. Ms Pollock responded that Mr Pollock was not her agent. His Honour noted that Ms Pollock had not pleaded that contention in any defence. Ms Pollock stated that she did not understand the law and that she did not realise that she had to plead certain things in her defence. His Honour replied that he would assume that everything was in issue.
A little later the transcript records that Ms Pollock informed the primary judge that she had only received the paperwork relating to the matter from her husband the previous day (10 June 2014). The unchallenged evidence of Mr Pollock was that he had intercepted Ms Pollock’s mail during 2013 while she was in hospital and did not provide her with the documents relating to the proceedings until 10 June 2014.
The Court's duty to unrepresented litigants
Ms Pollock’s complaint raises the issue of the role of the Court in ensuring a fair hearing. The Court's duty to unrepresented litigants was examined by this Court in Hamod v State of New South Wales [2011] NSWCA 375 at [309]-[316] by Beazley JA (as her Honour then was) where the authorities are collected. In Bauskis v Liew [2013] NSWCA 297 at [67]-[70] (Gleeson JA; Beazley P and Barrett JA agreeing), the following propositions which emerge from those authorities were identified.
First, the Court's obligation in the case of a self-represented litigant is to give sufficient information as to the practice and procedure of the Court to ensure that there is a fair trial to both parties. The application of this principle will vary depending upon the circumstances of the case: see Jae Kyung Lee v Bob Chae-Sang Cha [2008] NSWCA 13 per Basten JA at [48]; Abram v Bank of New Zealand (1996) ATPR 41-507, 43,341, 43,347; Microsoft Corporation v Ezy Loans Pty Ltd [2004] FCA 1135; (2004) 63 IPR 54; Pezos v Police [2005] SASC 500; (2005) 94 SASR 154.
Secondly, the Court's duty is not solely to the unrepresented litigant. The obligation is to ensure a fair trial for all parties. This is why the duty is usually stated in terms that require that the impartial function of the judge is preserved, whilst also requiring the judge to intervene where necessary to ensure the trial is fair and just: see Tomasevic v Travaglini [2007] VSC 337; (2007) 17 VR 100 at [95]; Barghouthi v Transfield Pty Ltd [2002] FCA 666; (2002) 122 FCR 19 at 23; NAGA v Minister for Immigration & Multicultural & Indigenous Affairs [2002] FCA 944 at [11]; Nagy v Ryan [2003] SASC 37 at [52]-[53].
Thirdly, the duty of a trial judge to assist an unrepresented litigant does not extend to advising the litigant as to how his or her rights should be exercised. That is, it is not the function of the court to give judicial advice to, or conduct the case on behalf of, the unrepresented litigant: see Bhagwanani v Martin [1999] SASC 406; (1999) 2004 LSJS 449; Clark v State of New South Wales (No 2) [2006] NSWSC 914.
Fourthly, the trial judge must remain at all times the impartial adjudicator of the matter, measured against the touchstone of fairness. In this regard, an unrepresented party is as much subject to the rules as any other litigant: Rajski v Scitec Corporation Pty Ltd (Court of Appeal, 16 June 1986, unreported) per Samuels JA at 14.
In the present case, Ms Pollock was unrepresented, she had not personally received the amended pleading until the first day of the hearing, she had not filed a defence, and she was unaware of the new case which Mr Hicks sought to advance based on the statutory claims. In my view, fairness required that the primary judge ascertain if Ms Pollock was asking for an adjournment by her responses including that she was unaware of what was required of her by way of asserting her defence. As explained by Allsop P (Macfarlan JA agreeing) in Jeray v Blue Mountains City Council (No 2) [2010] NSWCA 367 (Jeray) at [6]:
At the root of procedural fairness is the provision of a fair hearing to a litigant and the basal notion that the litigant has understood the proceedings before him or her and has had an adequate opportunity given to him or her, considering his or her attributes, qualities and deficiencies which render the litigant more or less able to vindicate his or her rights in court.
It may be accepted, as Allsop P observed in Jeray (at [10]), that the balance of fairness, procedural rigor and wise and practical indulgence in managing litigation by a judge is no simple task. Here the primary judge was dealing with the present proceeding as just one of a list of matters fixed for hearing during the Albury sittings of the District Court. It should also be accepted that the balance can be a fine one involving an evaluative assessment about which minds can differ: Jeray at [11].
However, what occurred in the present case calls for comment. His Honour seems to have taken the view that the difficulties confronting Ms Pollock could be met by requiring Mr Hicks to strictly prove his case, notwithstanding that Ms Pollock did not actually receive the amended pleading until the first day of the hearing and no defence had been filed to the amended pleading. That course however did not address the difficulty that Ms Pollock faced as an unrepresented litigant. She had not had an adequate opportunity, given her lack of notice of the amended pleading, to assess what defences were available to her in relation to the amended pleading. Having regard to the circumstances which unfolded at the beginning of the hearing, in my view, fairness required that the primary judge ascertain if Ms Pollock was asking for an adjournment.
It is unnecessary to say whether an adjournment, if sought, should have been granted by the primary judge. It is sufficient to observe that on the materials available in this Court, a strong case for an adjournment could have been made out. It was through no fault of Ms Pollock that the amended pleading had not come to her attention until the first day of the hearing.
Conclusion and orders
I propose the following orders:
(1)Appeal allowed.
(2)Set aside orders 1 and 2 made by Robison DCJ on 12 June 2014.
(3)In lieu thereof order:
(a)judgment for the second defendant against the plaintiff;
(b)the plaintiff to pay the second defendant’s costs as agreed or assessed.
(4)Respondent to pay the appellant’s costs in this Court.
(5)The respondent to have a certificate under the Suitors’ Fund Act 1951 (NSW) if otherwise qualified.
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