Rinbridge Marketing Pty Ltd v Walsh - [2000] FCA 1738

FEDERAL COURT OF AUSTRALIA
Rinbridge Marketing Pty Ltd v Walsh [2000] FCA 1738
TRADE PRACTICES – “accessory” liability – s 75B of Trade Practices Act 1974 (Cth) – requirement that person sought to be made liable as accessory knew all essential elements of contravention, including falsity of representations.
Yorke v Lucas (1985) 158 CLR 661, applied
Trade Practices Act 1974 (Cth) s 75B
RINBRIDGE MARKETING PTY LIMITED v PETER THOMAS WALSH
N 744 of 2000
LINDGREN, NORTH, HELY JJ
1 DECEMBER 2000
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 744 OF 2000

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

RINBRIDGE MARKETING PTY LIMITED (ACN 064 554 810)
APPELLANT

AND:

PETER THOMAS WALSH
RESPONDENT

JUDGES:

LINDGREN, NORTH, HELY JJ

DATE OF ORDER:

1 DECEMBER 2000

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.The appeal be dismissed.
2.The appellant pay the respondent’s costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 744 OF 2000

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

RINBRIDGE MARKETING PTY LIMITED (ACN 064 554 810)
APPELLANT

AND:

PETER THOMAS WALSH
RESPONDENT

JUDGES:

LINDGREN, NORTH, HELY JJ

DATE:

1 DECEMBER 2000

PLACE:

SYDNEY

REASONS FOR JUDGMENT
THE COURT:
INTRODUCTION

At first instance, the present appellant (“Rinbridge Marketing”) sued Rinbridge Pty Ltd (“Rinbridge”) and two of its directors, John Prosper Cullen, and the present respondent, Peter Thomas Walsh. Rinbridge Marketing pleaded that Rinbridge had made representations to it fraudulently and in contravention of s 52 of the Trade Practices Act 1974 (Cth) (“the TP Act”). In terms of s 75B of the TP Act, it pleaded that Mr Cullen and Mr Walsh aided, abetted, counselled or procured the contravention of the TP Act, or were directly or indirectly knowingly concerned in or a party to the contravention.
The action against Rinbridge was stayed because it was in the process of a creditors’ voluntary winding up. The primary Judge gave judgment for Rinbridge Marketing against Mr Cullen for $560,000.00 and costs, but gave judgment for Mr Walsh in respect of the ~~action~~ claim against him. It is in this respect that Rinbridge Marketing appeals. The grounds of appeal are that the primary Judge erred in failing to find that Mr Walsh was knowingly concerned in the contravention by Rinbridge of s 52 of the TP Act, and in ignoring Mr Walsh’s own evidence of his knowledge of the facts found to be fundamental to Rinbridge’s misleading and deceptive conduct.
BACKGROUND FACTS
On 4 October 1991, Mr Cullen obtained a patent in relation to an electric power socket known as the “Protecta Point”. The particular advantage of the product was that it was supposed to safeguard against the possibility of the electrocution of children.
By agreement of 28 April 1994, Mr Cullen granted Rinbridge an exclusive licence to import, manufacture…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2000] FCA 1738
Decision Date: 1 DECEMBER 2000

CaseChat Overview and Summary

The appeal before the court was between Rinbridge Marketing Pty Ltd and Walsh. The dispute arose from a claim that Walsh was involved in misleading and deceptive conduct by Rinbridge Marketing, in contravention of section 52 of the Trade Practices Act. The primary Judge had dismissed Rinbridge Marketing's claim against Walsh. Rinbridge Marketing appealed this decision, arguing that the primary Judge had erred in not finding that Walsh was knowingly involved in the contravention of section 52 of the Act. The appeal focused on whether the primary Judge had correctly assessed Walsh's knowledge and involvement in the misleading conduct.

The court had to determine whether the primary Judge had erred in his assessment of Walsh's knowledge and involvement in the misleading conduct by Rinbridge Marketing. The appeal hinged on whether the primary Judge should have found that Walsh was knowingly involved in the contravention of section 52 of the Trade Practices Act, given the evidence presented. The court needed to consider the evidence regarding Walsh's awareness of the Qualtest report, his reliance on Mr Cullen for technical information, and whether he acquiesced in the misleading representations made by Rinbridge Marketing.

The court found that the primary Judge's assessment of Walsh's knowledge and involvement was correct. The court noted that Walsh had clearly relied on Mr Cullen for all technical information about the product. The primary Judge had accepted Walsh as a creditworthy witness, and there was no evidence to suggest that Walsh was aware of the Qualtest report prior to a specific meeting in May 1994. Additionally, the court highlighted that there was no direct evidence suggesting that Walsh acquiesced in the misleading statements made by Mr Cullen. Based on these findings, the court concluded that the appeal grounds were not substantiated.

ORDERS:
1. The appeal be dismissed.
2. The appellant pay the respondent’s costs.

Orders

Orders of the court

1. The appeal be dismissed.

2. The appellant pay the respondent’s costs.

Background

Background to the litigation

The action against Rinbridge was stayed because it was in the process of a creditors’ voluntary winding up. The primary Judge gave judgment for Rinbridge Marketing against Mr Cullen for $560,000.00 and costs, but gave judgment for Mr Walsh in respect of the action claim against him. It is in this respect that Rinbridge Marketing appeals. The grounds of appeal are that the primary Judge erred in failing to find that Mr Walsh was knowingly concerned in the contravention by Rinbridge of s 52 of the TP Act, and in ignoring Mr Walsh’s own evidence of his knowledge of the facts found to be fundamental to Rinbridge’s misleading and deceptive conduct.BACKGROUND FACTS On 4 October 1991, Mr Cullen obtained a patent in relation to an electric power socket known as the “Protecta Point”. The particular advantage of the product was that it was supposed to safeguard against the possibility of the electrocution of children. By agreement of 28 April 1994, Mr Cullen granted Rinbridge an exclusive licence to import, manufacture and distribute the product. By an agreement of 22 June 1994 Rinbridge Marketing undertook to Rinbridge to market the product. In anticipation of that agreement and subsequently, Rinbridge Marketing spent money promoting the product, in reliance on representations as to the product’s efficacy. His Honour found that Rinbridge made misleading or deceptive representations in contravention of s 52 of the TP Act, and that Mr Cullen was the author of those representations. His Honour further found that Mr Cullen knew of their falsity and was involved in the contravention. But his Honour said that Mr Walsh was “in an entirely different position” and found that he was not knowingly involved in the contravention. The following more detailed outline of the background facts is taken from his Honour’s reasons for judgment. In May 1990, Mr Cullen, who lived in Wagga Wagga, invited several people, including Mr Walsh, to a meeting to hear his proposals for the development and exploitation of his invention. Mr Walsh also attended later meetings on the same subject organised by Mr Cullen. Rinbridge was a shelf company that Mr Cullen had acquired in 1987. Mr Cullen decided to use it to exploit the patent. Capital was obtained from the issue of shares to Wagga Wagga residents. Mr Cullen was chairman and managing director of Rinbridge. Mr Walsh became a director of the company at the end of 1991. During 1992 Mr Cullen visited several Asian countries to investigate manufacture of a prototype of the invention. In January 1993, three other persons were appointed as directors of Rinbridge: Gordon Saggers, Scott Breust and Glen Seymour. Mr Cullen procured the manufacture of a prototype. On 5 November 1993 the New South Wales Government Office of Energy issued Certificate of Approval No 13553 in respect of a sample “Protecta Point”. In December 1993 Mr Cullen, on behalf of Rinbridge, ordered 20,000 sockets to be manufactured by Mai Chung Metal Works Ltd (“Mai Chung”) of Hong Kong. One of the batch delivered in response to the order was evaluated from the viewpoint of safety by Qualtest Consumer Product Testing Services (“Qualtest”), a division of Woolworths Limited. Gerard Putt, Qualtest’s senior technical officer, produced a report dated 3 February 1994. His conclusion was that the size, shape and angle of insertion of the probes able to contact live parts had been considerably restricted compared with commonly available socket outlets. The final sentence of Mr Putt’s report was as follows:“While not providing complete protection, the item does considerably reduce the possibility of a child with a probe contacting live parts in a socket outlet.”The primary Judge does not make a specific finding as to when Mr Walsh became aware of the Qualtest report. There is no evidence that he was aware of it prior to an important meeting of 2 May 1994, referred to below. No such suggestion was put to him in cross-examination. The only evidence on the point is that of Mr Walsh to the effect that he was not made aware of the report “for many months after May”.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

LINDGREN, NORTH, HELY JJ

Having regard to Mr Walsh’s clear dependence on Mr Cullen for all technical information relating to the product, the trial Judge’s acceptance of Mr Walsh as a creditworthy witness and the failure to put to him directly that he acquiesced in the making by Mr Cullen of any particular statement he knew to be false, the grounds of appeal are not made out.CONCLUSION For the above reasons the appeal will be dismissed with costs.

Ratio Decidendi

Legal Principle Established

Established by: LINDGREN, NORTH, HELY JJ

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 744 OF 2000

BETWEEN:	RINBRIDGE MARKETING PTY LIMITED (ACN 064 554 810) APPELLANT
AND:	PETER THOMAS WALSH RESPONDENT
JUDGES:	LINDGREN, NORTH, HELY JJ
DATE OF ORDER:	1 DECEMBER 2000
WHERE MADE:	SYDNEY

JUDGES:	LINDGREN, NORTH, HELY JJ
DATE:	1 DECEMBER 2000
PLACE:	SYDNEY