Robertson Street Properties Pty Ltd v RPM Promotions Pty Ltd (In Liquidation) & Ors

[2006] HCATrans 143

[2006] HCATrans 143

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  Nos B96 and B102 of 2005

B e t w e e n -

ROBERTSON STREET PROPERTIES PTY LTD

Applicant

and

RPM PROMOTIONS PTY LTD (IN LIQUIDATION)

First Respondent

SIMON MOSLEY

Second Respondent

ARLO SELBY ALSO KNOWN AS ARLO SUN AND ALSO KNOWN AS ARLO SELVEY

Third Respondent

MARK LEONARD SEABROOK

Fourth Respondent

OSIER PTY LTD

Fifth Respondent

LESLIE GEORGE WILSON

Sixth Respondent

Applications for special leave to appeal

GUMMOW J
CRENNAN J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 10 MARCH 2006, AT 2.37 PM

Copyright in the High Court of Australia

__________________

MR K.C. FLEMING, QC:   If the Court pleases, I appear with my learned friend, MR L.A. STEPHENS, on behalf of the applicants in both of the appeals.  (instructed by Tobin King Lateef)

MR M.M. STEWART, SC:   If the Court pleases, I appear with my learned friend, MR S.S. MONKS, for the third respondent.  (instructed by John M. O’Connor & Company)

MR D.J.S. JACKSON, QC:   If the Court pleases, I appear with my learned friend, MR.I.K.A. ERSKINE, for the fourth respondent in matter B96/2005 only.  (instructed by Tucker & Cowen)

GUMMOW J:   There is no appearance for the first, second, fifth and sixth but their affidavits of service?

MR FLEMING:   Yes, there are, your Honours, and only one of the participants here today also appeared at trial.  By the time of trial the first defendant was in liquidation.  Mr Mosley was last heard of in Spain.  Mr Selby did not turn up at the trial.  Mr Seabrook defended the trial.  Osier had a counter claim which was dismissed.  Osier has now been deregistered and Mr Wilson has never put in an appearance anywhere.  The parties that we are left with now are Mr Selby and Mr Seabrook. 

GUMMOW J:   You are going to tell us what a trade dollar is first.

MR FLEMING:   Nobody could give any decent explanation of that at the trial, your Honour, it would seem and there is certainly no way of valuing a trade dollar.

GUMMOW J:   That seems to be settled.

MR FLEMING:   It is one of those things which is akin to a barter card – you barter so many value points which are equivalent to $1 but there is some discussion as to just how much the trade dollar was worth but nobody was able to reach a conclusion except that the Commissioner for Tax did say that a trade dollar was worth $1 in Australian currency unless there were reasons why that should not be the case and that is the closest I can come to tell your Honours what the trade dollar is about.

Your Honours, the Court of Appeal in this case did not disturb the learned trial judge’s findings of misleading and deceptive conduct.  What the court did was to overturn the remedy, that is damages, calculated by reference to what we say is the actual loss, namely, $500,000.  The Court of Appeal seemed to do so on two bases which may, in the end, be one and the same – their Honours expressed them differently. 

Mr Justice McPherson said in the appeal book, page 37 at line 28 that the applicant here:

failed to prove the market value of what it parted with, which was an essential element in its cause of action under the Act.

That, with respect, is what we will call the Potts v Miller test, effectively. 

Justice Keane said that after finding some loss then a court had to assess what that loss was – that is the appeal book 45, line 10. He said that the applicant had not proven that the action of the two respondents, Selby and Seabrook, had caused the loss. He categorised that as the unpaid “balance of the purchase price” – that is at appeal book 45, line 15. His Honour, when doing that, may well have been referring to the pleading - and I understand your Honours have the pleadings there. The pleading against both Selby and Seabrook was in the claim listed as $500,000 damages for contravention or involvement in the contravention of section 52 of the Trade Practices Act plus costs.  When it came to the statement of claim at paragraph 39 of the statement of claim it was alleged:

Properties was induced by the aforesaid representations to make and complete the aforesaid contract and has suffered loss and damage by that conduct within section 82 of the TP Act.

And then the particulars of that are stated to be:

The plaintiff has lost the balance of the proceeds of sale namely $500,000.00 ‑ ‑ ‑

CRENNAN J:   Was it any part of the pleading that the plaintiff was induced to part with the land for less than it was worth?

MR FLEMING:   No, your Honour.  That, we say, brings us to the very heart of the issue.  While that may, in some instances, be an appropriate starting point, and that is what this Court has said in Murphy and indeed by a seven-member Bench in Murphy, it is not necessarily the case.  We would submit that here it is not the case because the contract for the sale of the land was for a certain amount of money, the transaction was conducted.  What could not be conducted was that part of the transaction in respect of the trade dollars so that, in fact, it was the value of the trade dollars which was the subject of all of the misrepresentations as well.

So we say that the court misconceived the nature of the loss – the nature of the loss was the $500,000, not the difference in value in respect of what they parted with.  One might do that if one was assessing misrepresentations in respect of the quality of the land or some character of the land but here that was not the case.  It was about the tradability or the value or the negotiability of the trade dollars and it was that which caused the loss, and nothing more and nothing less, so any reference back into the value of the land, we would submit, has two problems:  one, it did not properly reflect what the loss was but more importantly it reverted to a test which, we would submit, should not have been used, specifically by Justice McPherson when he said that it was an essential element of the cause of action that we should have proved the value of the land.  That, with great respect to his Honour, misconceives the nature of relief under section 82.  Your Honour, the presiding judge, said so as early as 1987 in Elna and indeed it has been said specifically and deliberately in Murphy by this Court most recently. 

We have to say that our point of special leave sounds terribly like paragraph 31 of Murphy 216 CLR 388 at 403 where your Honours talk about this style of reasoning:

Two comments about this reasoning may be made at once.  First, the difference between price and value will often be an important element in assessing the damage suffered by a person who, by a misrepresentation, has been induced to buy an item of property.  As the trial judge said, there may also be questions of consequential damage.  It would be wrong, however, to assume that in every case of misrepresentation (leave aside other forms of misleading or deceptive conduct) the only kind of damage which may be suffered, and compensated or redressed by orders under Pt VI of the Act, is any difference between price and value or any consequential losses.  In particular, care must be exercised before seeking to apply what it described as the “rule in Potts v Miller . . . a far wider range of remedies is available where contravention of the Act has caused or is likely to cause loss or damage to a party to the proceeding.

Your Honours, this case was complicated in a number of ways.  Justice Keane, when he was talking about the remedy couched it in terms of causation.  On the other hand, Justice McPherson simply said there had not been proven an element of the cause of action.  Probably they are one and the same, in the end, because when one looks at what Justice Keane did he then analysed the causes of action which might have been pleaded and finally concluded that it could have been pleaded on the basis that we were induced to part with the land for less than it was worth.

In our respectful submission, that misconceives what the case was about and we would submit that in this case it was about a loss caused as a result of representations in respect of the negotiability of the trade dollars which then became lost in an argument about the cause of action which was not entirely appropriate, in any event, under the Act.  So, in those circumstances, your Honours, we would submit that given that this case is one which rolls the measure of damages compounded by causation, compounded by contingent events, namely, the negotiation of the trade dollars, it is our submission that it is an appropriate vehicle for this Court.  This Court has indeed stated clearly many principles in Murphy and yet we ‑ ‑ ‑

GUMMOW J:   There would have to be a retrial, would there not?

MR FLEMING:   Yes, your Honour, there probably would have to be a retrial.

CRENNAN J:   Is it possible that trade dollars are sometimes worth zero?

MR FLEMING:   That may be the case but that would be a matter of submission or evidence at a retrial.  Certainly, in this case, they proved to be not capable of negotiation and worth nothing, at least the undertakings in respect of the trade dollars were worth nothing.  Whether trade dollars ever came into existence is another issue entirely.  This case demonstrates how the misrepresentation can be made and yet by reference to the old analogies has brought the action undone because the court wanted to revert to Potts v Miller style argument and, we would submit, that it committed the Potts v Miller error, it fell into the Potts v Miller trap.  Thank you, your Honour, they are our submissions.

GUMMOW J:   Yes, thank you, Mr Fleming.   Yes, Mr Jackson.

MR JACKSON:   Thank you, your Honour.

GUMMOW J:   What do you say about this submission that this case went off the rails really by a fixation upon Potts v Miller rather than the Act?

MR JACKSON:   At the level of her Honour, the case did not go off on that rail at all.  In fact, there is no analysis in her Honour’s judgment of what basis she utilised in order to come to the conclusion that the damages were $500,000.  When it came to the Court of Appeal the argument was made by Seabrook and also by then Selby, as appellants, that her Honour had erred because she had not examined the question of how much worse off the plaintiff was as a result of having parted with its land for the bundle of rights, as I think they can be fairly described, which it got under the contract.

That succeeded in the Court of Appeal in circumstances where, what was urged on their Honours in that court was that the plaintiff had lost the opportunity to sell its land elsewhere.  That is the same argument that is made still by the appellant in the summary of argument before your Honours. 

Mr Fleming seeks really to walk away from that point in the submissions which he makes orally here but it is not accurate, in our respectful submission, to suggest in the first place that the Court of Appeal regarded the case as narrowly as he has submitted to your Honours.  Could we take you to two passages to show that.  The first is in Justice McPherson’s reasons to which Mr Fleming referred at page 36 of the application book and your Honours will see in paragraph [5] that Justice McPherson, at about line 45, asked himself, in our respectful submission, two relevant questions.  The first is:

Stated in its most elementary form, the plaintiff was required to prove how much worse off it was by having acted on the defendants’ misleading conduct -

That is not confined to the language of Potts v Miller and his Honour could be, in fact, forgiven for having been accused of having plagiarised the language of the joint judgment out of Marks’ Case of which your Honours would be aware.  Then he answers that question, we would submit, perfectly accurately by reference to the facts of the case in the next sentence:

What it parted with was its land and building in return for payment of money in the form of Australian dollars totalling $4,250,000 and a fistful of Ozecard trade dollars or “vouchers” -

There was a little bit more, of course.  It got promises as to the minimum sum of money for which those Ozecard trade dollars or vouchers could be exchanged and those promises were sued upon by the plaintiff in this proceeding and it obtained judgments before her Honour in debt or for damages against some of the other defendants, not including Mr Seabrook who was not a party to the contract.

It is over the page, at paragraph 7 then, where his Honour articulates the problem which was then confronted by the plaintiff, as our learned friend, Mr Fleming, related it because it failed to prove what the value of the land was, that which it parted with.  His Honour then considers whether the contract could be treated as being evidence of the value of the land at a higher sum that it received.  That point does not seem to be pressed except in the written part of the application before your Honours but, we would submit that the court adequately dealt with that in Justice McPherson’s reasons in paragraph [7] and also when one goes to Justice Keane’s reasons, with whom Justice McPherson agreed at page 45 of the application book. 

Justice Keane, we might also interpolate, your Honour, might be a bit sensitive to being accused of having only had the rule in Potts v Miller in mind.  He, of course, appeared unsuccessfully in Astonland which was the last of the cases on section 82 before this Court.  Your Honours will see, in paragraphs 45 and 46, that he looked at the potential way in which the case was presented, firstly by reference to the pleading which our learned friend, Mr Fleming, took your Honours to and it was perfectly opaque as to what was the interest said to be infringed and, secondly, he looked at, in the following paragraphs, 47 and 48, as to the way in which the case might be analysed differently.

In none of that does his Honour confine himself to, as it were, the strict analysis of a case according to Potts v Miller but what both

their Honours did, in our respectful submission, and correctly, was to identify at the outset what had been the effect of the conduct which is complained of.  The effect of the conduct was that the plaintiff, the applicant, entered into the contracts by which it parted with its land.  It is for the reasons which we have set out, we think, perhaps with a little greater clarity in the additional summary of argument that we sent to your Honours yesterday – I hope your Honours have that ‑ ‑ ‑

GUMMOW J:   Yes.

MR JACKSON:   To do that was the correct thing to do and for our learned friends to try and pick one part of the expected consideration under the transaction, being the trade dollars and the value that they anticipated to achieve for them by reason of the promises of the minimum value on exchange, to pick that part of the transaction and say, “That’s the only place where loss was suffered and that’s what should be the subject of retrial”, is to do three things.  First of all, it is to ignore the case presented at trial.  Secondly, it is to ignore the case presented to the Court of Appeal and to run yet another case here and, in our respectful submission, most importantly it, thirdly, ignores that fundamentally what the plaintiff here did was part with its land for a sum of money which it says was not what it expected to get so its land must be in the equation. 

GUMMOW J:   Yes, thank you, Mr Jackson.

MR JACKSON:   Thank you, your Honour.

GUMMOW J:   Mr Stewart, do you wish to add anything to what Mr Jackson has been putting to us?

MR STEWART:   Briefly, may it please your Honours.  The principal point advanced, in oral submissions today by our learned friends is that it was erroneous to conclude that the applicant could not recover the unpaid purchase price as damages pursuant to section 82 on the ground that Mr Selby’s misconduct had caused part of the purchase price not to be paid. 

Your Honours, it is our principal submission that this decision was not made by the Court of Appeal, it certainly was not made by her Honour, the learned trial judge.  The Court of Appeal, in our submission, rather assumed in the appellant’s favour that a claim framed in this way could be made.  The reasoning can be found at the application book at page 45, line 12, if we can take you to that, please.  There your Honours will see that Justice Keane concluded not that such a claim, that is a claim framed in the way described by our learned friends today in oral submissions, could not be made but rather that there were no findings made by the learned trial

judge nor any evidence to support the finding that the misrepresentations had caused this balance of the purchase price to remain unpaid. 

This conclusion as to the absence of findings, and the conclusion also as to the absence of any evidence, does not appear to be challenged here today.  In any event, in our submission, it is the end of the matter.  In any event this issue involves no question of law or public importance or about which there are differences of opinion.  We have dealt, in our written submissions, with the question of ‑ ‑ ‑

GUMMOW J:   We do not need to hear you any further, Mr Stewart.  Yes, Mr Fleming.

MR FLEMING:   I have nothing in reply, your Honours.

GUMMOW J:   Thank you.

We are not satisfied that any question of principle arises concerning the construction of section 82 and section 75B of the Trade Practices Act 1974 and of the authorities of this Court bearing upon those provisions, nor are we satisfied that there are sufficient prospects of success in demonstrating any error on the part of the Court of Appeal to warrant a grant of special leave. Special leave is refused with costs.

AT 3.00 PM THE MATTERS WERE CONCLUDED