Robinson v 470 St Kilda Road Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Robinson v 470 St Kilda Road Pty Ltd [2018] FCAFC 84

Appeal from: 470 St Kilda Road Pty Ltd v Robinson [2017] FCA 597
File number: VID 666 of 2017
Judge: MCKERRACHER, RANGIAH AND MARKOVIC JJ
Date of judgment: 1 June 2018
Catchwords:

DAMAGES – loss or damage – assessment of damages – causation – where the claim for damages was run as an “all or nothing” case – whether the primary judge erred in concluding that the consequence of the appellant’s failure to disclose its financial position was that the respondent would not have paid a sum in respect of the payment claim – where the primary judge’s conclusion at trial was open on the evidence adduced and the case as pleaded

CONSUMER LAW – misleading or deceptive conduct – loss or damage – assessment of damages – proportionate liability – application of Competition and Consumer Act 2010 (Cth) Pt VIA, Proportionate liability for misleading and deceptive conduct – “apportionable claim” – “concurrent wrongdoer” – Tesco liability – whether the director’s liability for an act should be reduced from 100% to 50% to be shared with the company
Legislation:

Competition and Consumer Act 2010 (Cth) Pt VIA

Competition and Consumer Act 2010 (Cth) Sch 2 Australian Consumer Law ss 18, 236, 237, 243

Corporations Act 2001 (Cth) s 439A(4)(a)

Trade Practices Act 1974 (Cth) ss 82, 87 and 87CB(3)

Building and Construction Industry Security of Payment Act 2002 (Vic)

Wrongs Act 1958 (Vic) Pt IVAA
Cases cited:

470 St Kilda Road Pty Ltd v Reed Constructions Australia Pty Ltd [2012] VSC 235

Australian Competition & Consumer Commission v Australian Safeway Stores Pty Ltd (2003) 129 FCR 339

Barnes v Forty Two International Pty Ltd (2014) 316 ALR 408

Blatch v Archer [1774] 1 Carp 63

Cummins Generator Technologies Germany GMBH v Johnson Controls Australia Pty Ltd (2015) 326 ALR 556

Dunn v Hanson Australasia Pty Ltd (2017) 12 ACTLR 138

Ex parte Ferguson; Re Alexander (1944) 45 SR(NSW) 64

Façade Treatment Engineering Pty Ltd (In Liq) v Brookfield Multiplex Constructions Pty Ltd (2016) 116 ACSR 493

Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1

Hadgelias Holdings Pty Ltd v Seirlis [2015] 1 Qd R 337

Hamilton v Whitehead (1988) 155 CLR 121

Henville v Walker (2001) 206 CLR 459

Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494

Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500

Murphy v OvertonInvestments Pty Limited (2004) 216 CLR 388

Nationwide News Pty Ltd v Naidu (2007) 71 NSWLR 471

Protec Pacific Pty Ltd v Steuler Services GmbH & Co KG [2014] VSCA 338

Sellars v Adelaide Petroleum NL (1994) 179 CLR 332

Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) [2018] NSWSC 412

Tesco Supermarkets Ltd v Nattrass [1972] AC 153

Tomasetti v Brailey (2012) 91 ATR 531

Williams v Pisano (2015) 90 NSWLR 342
Date of hearing: 15 and 16 November 2017
Registry:
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Details
Case
[2018] FCAFC 84
Decision Date

CaseChat Overview and Summary

The Federal Court of Australia presided over an appeal brought by Robinson, the chief operating officer of Reed Constructions Australia Pty Ltd, against the decision of 470 St Kilda Road Pty Ltd. The dispute revolved around the assessment of damages and the liability of the parties for misleading or deceptive conduct under the Competition and Consumer Act 2010 (Cth). The case primarily involved whether the primary judge correctly apportioned liability and assessed damages in the context of the statutory declaration provided by Robinson.

The legal issues before the court encompassed whether the primary judge erred in concluding that the failure to disclose Reed’s financial position would not have influenced St Kilda Road’s payment of the claim. Additionally, the court had to decide if the primary judge was correct in not reducing Robinson's liability from 100% to 50% under the proportionate liability provisions of the Competition and Consumer Act 2010 (Cth). The court had to assess whether Reed was a "concurrent wrongdoer" and if Robinson, as the directing mind and will of Reed, could be held jointly liable with the company.

The court found that the primary judge’s conclusions were correct and consistent with the evidence presented. The court noted that the statutory declarations were made under new contractual obligations not governed by the original contract terms. Consequently, the primary judge's reasoning on these points was appropriate given the manner in which the case was conducted and the issues that were argued. The court rejected the argument that Robinson’s liability should be reduced to 50%, finding that Reed, as a principal, and not just Robinson, was directly liable for the misleading conduct. The statutory provisions on proportionate liability did not apply in a manner that would reduce Robinson’s personal liability.

In conclusion, the appeal was dismissed, and Robinson was ordered to pay St Kilda Road’s costs, subject to assessment if not agreed upon.

Orders

Orders of the court

1. The appeal be dismissed.

2. The appellant pay the respondent’s costs, to be assessed if not agreed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

It is necessary to describe the primary judge’s reasons in some detail before considering the parties’ submissions. BACKGROUND The following summary of the uncontroversial facts is taken largely from the reasons of the primary judge. In October 2010, Reed Constructions Australia Pty Ltd (Reed) as contractor, entered into a design and construct contract with St Kilda Road, as principal, for the redevelopment of a building at 470 St Kilda Road, Melbourne. The contract works involved converting an office building into a 14 story residential apartment building. Clause 37.1 of the contract provided for Reed to make payment claims on the 28th day of each month for “work under contract” (WUC) undertaken in that month. The parties adopted a standard practice for dealing with the monthly payment claims, which involved Reed providing the payment claim to St Kilda Road’s representative, together with a statutory declaration as to the payment of Reed’s subcontractors and suppliers. The statutory declaration was provided pursuant to cl 38.1 of the contract, which provided, relevantly:38.1 WORKERS AND SUBCONTRACTORSIf requested by the Principal or the Principal’s Representative, the Contractor shall give in respect of a payment claim, documentary evidence of the payment of moneys due and payable to:(a) workers of the Contractor and of the subcontractors; and(b) subcontractors,in respect of WUC the subject of that payment claim.If the Contractor is unable to give such documentary evidence, the Contractor shall give other documentary evidence of the moneys so due and payable to workers and subcontractors.Documentary evidence, except where the Contract otherwise provides, shall be to the Principal’s Representative’s satisfaction.… In November 2011, Reed proposed that it be permitted to make early payment claims over the Christmas period and up to February 2012, covering payment claims no. 14 (November 2011), no. 15 (December 2011), no. 16 (January 2012), and no. 17 (February 2012). The proposal was accepted by St Kilda Road. In respect of payment claim no. 15, the new arrangement was that Reed would submit its claim on 12 December 2011 for works completed up to 22 December 2011. On 12 December 2011, Reed sent payment claim no. 15 to St Kilda Road’s representative, accompanied by a statutory declaration made by Robinson. Robinson was the chief operating officer of Reed. He declared, relevantly:That to the best of my knowledge and belief having made all reasonable enquiries, at this date – ...all sub-contractors or suppliers of material who are or at any time have been engaged on the work under the Contract have been paid in full all monies which have become payable to the sub-contractor under the terms of the sub-contract or to the supplier of materials under the terms of the agreement for supply. Reed issued a tax invoice dated 22 December 2011 in the sum of $1,426,641.70, and the applicant paid it on 11 January 2011. On 31 January 2012, Reed served payment claim no. 16, supported by another statutory declaration of Robinson which was dated 31 January 2012, but was otherwise in the same terms.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The payments were made pursuant to entirely new contractual obligations, that is, not the obligations imposed by cl 38.1 and cl 38.2 of the Contract, as accepted by senior counsel for Mr Robinson on appeal. Conclusion on appeal Grounds 3 to 6 It may be accepted that the reasoning on this point was not expansive, but in our view that is more to do with the manner in which the case was conducted – that is on which issues the parties chose to argue. The primary judge was, of course, required to resolve many other issues over and above the point now ventilated on the appeal. He was not required on the pleaded case, or the case as conducted at trial, to set out a detailed analysis of what might have happened hypothetically had payment claim no. 15 been withheld. For all those reasons, on the pleaded (and further re-pleaded) case, we consider the primary judge’s reasons and conclusions were correct. In passing, we note that St Kilda Road refers to the decision of the Victorian Court of Appeal in Façade Treatment Engineering Pty Ltd (In Liq) v Brookfield Multiplex Constructions Pty Ltd (2016) 116 ACSR 493 in support of its first ground of the notice of contention on appeal. That decision has been recently questioned in a decision of the NSW Supreme Court: Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) [2018] NSWSC 412 (at [30] and [127]). While we note this divergence taken in Seymour Whyte in relation to the Building and Construction Industry Security of Payment Act 1999 (NSW), it is unnecessary to refer to any difference in approach as the primary judge was able, correctly, to reach a decision which did not require exploration of the matters raised in the notice of contention. In our view, appeal Grounds 3 to 6 cannot succeed.APPORTIONMENT We turn to the second aspect of Mr Robinson’s argument. He contends the primary judge erred in holding that no part of St Kilda Road’s claims should be apportioned. Rather, he contends that the primary judge should have held that Reed was directly and jointly liable for the damage the subject of the claim and that Mr Robinson’s liability was limited to 50% of the damages claimed. For reasons that follow, we accept that Reed was also directly liable, but it does not follow that Mr Robinson’s liability should be reduced by 50%. Reed was not a “concurrent wrongdoer”. The reasoning of the primary judge Although the argument advanced on appeal is slightly different from that before the primary judge, the contention was still made before his Honour that 50% of the responsibility rested with Reed. At trial, the issue was dealt with briefly. Although written submissions were made, they were not elaborated upon in oral submissions. The contention advanced and now maintained was that all of the claims made by Mr Robinson were apportionable. It was submitted that the misleading or deceptive conduct claim was apportionable under the provisions of Pt VIA of the Competition and Consumer Act 2018 (Cth) (CCA) and the negligent misstatement claim was apportionable under Pt IVAA of the Wrongs Act 1958 (Vic). There is no relevant distinction between those separate pieces of legislation for Mr Robinson’s argument.

Ratio Decidendi

Legal Principle Established

Mr Robinson says it is not clear from the reasoning of the primary judge as to whether his Honour accepted Reed was jointly liable for the statement, but declined to apportion any liability to it, or whether he did not accept that Reed was jointly liable for the statement. The former, Mr Robinson argues, would be quite an extreme position, failing to recognise the commercial circumstances in which the declaration was made. The latter position, it is contended, would be wrong at law where Mr Robinson is the directing mind and will of Reed. For Mr Robinson, it is said that once it is accepted that Reed was a concurrent wrongdoer, then both Reed and Mr Robinson were equally responsible for the declaration and are both equally responsible for the loss and damage suffered in the sense discussed by Emmett JA in Williams (at [92]-[93]). There was no question of vicarious liability. Reed is directly and fully liable as Mr Robinson was its acting mind and will. Statutory considerations Part VIA of the CCA relevantly provides:Part VIA - Proportionate liability for misleading and deceptive conduct87CB Application of Part(1)This Part applies to a claim (an apportionable claim) if the claim is a claim for damages made under section 236 of the Australian Consumer Law for:(a)economic loss; or(b)damage to property;caused by conduct that was done in a contravention of section 18 of the Australian Consumer Law.(2)For the purposes of this Part, there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action (whether or not of the same or a different kind).(3)In this Part, a concurrent wrongdoer, in relation to a claim, is a person who is one of 2 or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim.(4)For the purposes of this Part, apportionable claims are limited to those claims specified in subsection (1).(5)For the purposes of this Part, it does not matter that a concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or died.87CC Certain concurrent wrongdoers not to have benefit of apportionment(1)Nothing in this Part operates to exclude the liability of a concurrent wrongdoer (an excluded concurrent wrongdoer) in proceedings involving an apportionable claim if:(a)the concurrent wrongdoer intended to cause the economic loss or damage to property that is the subject of the claim; or(b)the concurrent wrongdoer fraudulently caused the economic loss or damage to property that is the subject of the claim.(2)The liability of an excluded concurrent wrongdoer is to be determined in accordance with the legal rules (if any) that (apart from this Part) are relevant.(3)The liability of any other concurrent wrongdoer who is not an excluded concurrent wrongdoer is to be determined in accordance with the provisions of this Part.87CD Proportionate liability for apportionable claims(1) In any proceedings involving an apportionable claim:(a)the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant’s responsibility for the damage or loss; and(b)the court may give judgment against the defendant for not more than that amount.…(3) In apportioning responsibility between defendants in the proceedings:(a)the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law; and(b)the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings.(4)This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings.(5)A reference in this Part to a defendant in proceedings includes any person joined as a defendant or other party in the proceedings (except as a plaintiff) whether joined under this Part, under rules of court or otherwise.…87CF Contribution not recoverable from defendantA defendant against whom judgment is given under this Part as a concurrent wrongdoer in relation to an apportionable claim:(a)cannot be required to contribute to any damages or contribution recovered from another concurrent wrongdoer in respect of the apportionable claim (whether or not the damages or contribution are recovered in the same proceedings in which judgment is given against the defendant); and(b)cannot be required to indemnify any such wrongdoer.87CG Subsequent actions(1)In relation to an apportionable claim, nothing in this Part or any other law prevents a plaintiff who has previously recovered judgment against a concurrent wrongdoer for an apportionable part of any damage or loss from bringing another action against any other concurrent wrongdoer for that damage or loss.(2)However, in any proceedings in respect of any such action, the plaintiff cannot recover an amount of damages that, having regard to any damages previously recovered by the plaintiff in respect of the damage or loss, would result in the plaintiff receiving compensation for damage or loss that is greater than the damage or loss actually sustained by the plaintiff.…(Emphasis added.)Consideration