| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : SIDEWIND HOLDINGS PTY LTD -v- McSWAIN [2013] WADC 91 CORAM : REGISTRAR KINGSLEY HEARD : 2 APRIL 2013 DELIVERED : 11 JUNE 2013 FILE NO/S : CIV 1992 of 2012 BETWEEN : SIDEWIND HOLDINGS PTY LTD Plaintiff
AND
CHRISTOPHER SCOTT McSWAIN
First Defendant
SONYA PETRINA BAILEY
Second Defendant
Catchwords: Practice - Order 16 Rules of the Supreme Court 1971- Misleading and deceptive conduct - Turns on own facts Legislation: Nil
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Result: Application dismissed
Representation: Counsel:
Plaintiff : Mr B Wheatley
First Defendant : No appearance
Second Defendant : Mr C Gough
Solicitors:
Plaintiff : Mossensons
First Defendant : Camm & Associates
Second Defendant : Minter Ellison
Case(s) referred to in judgment(s):
Agar v Hyde [2000] HCA 41
Alcoa of Australia Ltd v Apache Energy Ltd [2012] WASC 209
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31
Kimberley NZI Finance Ltd v Torero Pty Ltd (1989) ATPR (Digest) 46-054
Software Intergrators Pty Ltd v Roadrunner Couriers Pty Ltd (1997) 69 SASR 288
Spedley Securities Ltd (in liq) v Bank of New Zealand (1991) ATPR 41-143
Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97
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1 REGISTRAR KINGSLEY: The second defendant, (Bailey) has brought an application pursuant to O 16 Rules of the Supreme Court 1971 (RSC) seeking judgment. Her application is supported by her affidavit sworn 10 December 2012.
2 The plaintiff (Sidewind) had brought an application pursuant to O 14 RSC and that application was supported by the affidavit of Sidewind's director Gabriele Di Petro (Di Petro) sworn 17 September 2012. Bailey opposed the O 14 application and filed an affidavit sworn 20 October 2012. 3 Di Petro opposes Bailey's O 16 application and has filed an affidavit sworn 5 February 2013.
Context 4 In its first statement of claim dated 10 July 2012, Sidewind pleads it was in the business of erecting and dismantling scaffolding, whilst the first defendant (McSwain) was in the roofing industry, and Bailey was the defacto partner of McSwain. 5 Sidewind pleads that, prior to June 2011, McSwain placed orders with Sidewind for a company Air Roofing Pty Ltd (Air Roofing). At the end of June 2011, McSwain advises Di Petro that he was leaving Air Roofing and was commencing his own business called Solutions 4 Roofing (Solutions). This statement is pleaded as the first misrepresentation, because on 17 June 2011, Solutions was registered in the name of Bailey only 6 Alternatively, Sidewind pleads that McSwain placed orders with it as agent for Bailey, and by this conduct McSwain represented he was authorised to act on behalf of Bailey trading as Solutions (the second representation). 7 In reliance on the first representation, or alternatively the second representation, Sidewind provided goods and services to Solutions in the sum of $132,545.22. Sidewind goes onto plead that on or about 27 May 2012, Bailey, on behalf of Solutions, gave notice to Sidewind that the authority of McSwain to act on her behalf was revoked. 8 In an amended statement of claim dated 5 November 2012, the June 2011 statement by McSwain is now categorised as 'the representation'. The alternate pleading of the second representation that McSwain was acting as agent for and on behalf of Bailey trading as Solutions is now (Page 4)
deleted. The plea now provides that McSwain placed orders with Sidewind in the name of Solutions but omitted to disclose that Solutions was not registered in his name (the misrepresentation). By making this misrepresentation, Sidewind pleads that McSwain engaged in conduct which was misleading and deceptive. 9 The plea against Bailey is that in June 2011, McSwain requested Bailey to register the business of Solutions in her name. Notwithstanding the business Solutions was registered in her name, Sidewind pleads, in par 16, that Bailey was not involved in carrying on the business of Solutions, apart from assisting with some of the book keeping, nor did she receive any salary or profits from the business. At par 17 Sidewind pleads that Bailey knew that McSwain operated and controlled the business and Bailey would advise persons dealing with the business, including Sidewind of that fact or that this would be inferred by reason of the conduct of McSwain and Bailey. Sidewind goes on to plead that, on 27 May 2012, after the supply of goods and services, Bailey gave notice to Sidewind on behalf of Solutions revoking the authority of McSwain to act on her behalf. By reason of that conduct, Sidewind pleads Bailey was involved in misleading or deceptive conduct, or conduct that was likely to mislead or deceive. 10 Alternatively, Sidewind pleads that by registering Solutions in Bailey's name at the request of McSwain, and permitting and assisting McSwain to carry on business in that name without placing any limitation on the authority of McSwain, Bailey expressly or impliedly represented to persons dealing with McSwain that McSwain had authority to act on behalf of Solutions. Sidewind then goes on to plead that Bailey is estopped from denying that McSwain was authorised to act as her agent and Bailey is liable to Sidewind. 11 The statement of claim is further amended in January 2013 to plead, as against Bailey in par 16, that she was not actively involved in carrying on the business of Solutions but assisted with some of the book keeping and received salary or profits from the business and paid income tax from the amounts received. At par 25 Sidewind, as against Bailey pleads, that Bailey engaged in conduct which was misleading and deceptive or likely to mislead or deceive in breach of the Fair Trading Act 2010. 12 The evidence both from Di Petro, on behalf of Sidewind, and Bailey is that Solutions was registered by Bailey on 17 June 2011 and on 16 November 2011, Solutions was subsequently registered in the name of Long Port Holdings Pty Ltd (Long Port). Long Port is McSwain's (Page 5)
company in that he is director and company secretary as well sole shareholder. As Sidewind pleads, and as Bailey deposes (par 13, 30 October; par 12, 10 December affidavits), Bailey was never a partner of McSwain in Solutions and assisted McSwain in taking care of some of the book keeping for Solutions.
Legal principles 13 A defendant, as applicant for summary judgment bears a heavy onus. 'An application for summary judgment for a defendant … should be approached with great caution' (Alcoa of Australia Ltd v Apache Energy Ltd [2012] WASC 209, 113). Despite the various formulations of the appropriate test for summary judgment for a defendant, in the end there needs to be a high degree of certainty about the ultimate outcome of the proceedings if it were allowed to go to trial in the ordinary way (Agar v Hyde [2000] HCA 41). A court will only dismiss a claim if the defendant can establish that the case of the plaintiff is so clearly untenable that it cannot possibly succeed (General Steel Industries Inc v Commissioner for Railways (NSW)(1964) 112 CLR 125, 129).
The pleaded case 14 On Sidewinds' pleaded case there would appear to be two causes of action against Bailey: 15 In relation to the plea of misleading and deceptive conduct, the kernel of the plea is that Bailey had a duty to inform others that it was McSwain who operated and controlled Solutions. It would appear from Sidewind's pleading that it was Bailey's silence in not informing Sidewind that is the conduct amounting to misleading or deceptive conduct.
Silence 16 It is well settled that silence or nondisclosure can constitute misleading and deceptive conduct within the meaning of the Competition and Consumer Act 2010. However, silence or non-disclosure without more will not amount to misleading and deceptive conduct. 17 Silence and non-disclosure by themselves are not misleading and deceptive conduct. Mere silence or non-disclosure cannot cause a person (Page 6)
to be misled or deceived. It is not sufficient to show that a person was labouring under an erroneous belief but a plaintiff must prove their belief was caused by the defendants conduct. Further, in cases of silence, the defendants conduct must fall within the concept of 'engaging in conduct' (see Software Intergrators Pty Ltd v Roadrunner Couriers Pty Ltd (1997) 69 SASR 288). Conduct in this context has been interpreted as including an omission to disclose information where that omission is deliberate (see Spedley Securities Ltd (in liq) v Bank of New Zealand (1991) ATPR 41-143). 18 Despite the above silence, or non-disclosure, can be misleading when combined with other factors such as the provision of incomplete information or half-truths or the failure to correct a representation that has become false. The authorities approach the question from the perspective of whether the circumstances are such that they give rise to a reasonable expectation that if a relevant fact exists it will be disclosed (see Kimberley NZI Finance Ltd v Torero Pty Ltd (1989) ATPR (Digest) 46-054). 19 The test, as stated by French J Torero's case [53,195] is that unless the circumstances are such as to give rise to the reasonable expectation that if some relevant fact exists it would be disclosed, it is difficult to see how mere silence could support the inference that the fact does not exist. This test was endorsed by the Full Court of the Federal Court in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 where the court said: … consistently with regard to the natural meaning of the terms of section 52 the question is whether in the light of all relevant circumstances constituted by acts, omissions, statement or silence there has been conduct which is likely to be misleading or deceptive. 20 The Chief Justice, in Demagogue, commented that although mere silence is a convenient way of describing some fact situations, there is in truth no such thing as mere silence. The significance of silence falls to be considered in the context in which it occurs. That context may or may not include facts giving rise to a reasonable expectation in the circumstances of the case that if particular matters exist they will be disclosed. 21 Similarly, in Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97, 114 Hill J explained: However , if circumstances are such that a person is entitled to believe that a relevant matter affecting him or her would, if it existed, be communicated, then the failure to communicate it may constitute conduct which is misleading or deceptive because the person who (Page 7)
ultimately may act to his or her detriment is entitled to infer from the silence that no danger or detriment existed.
Discussion 22 The essence of the plea in pars 17 and 21 of the final amended statement of claim is that Bailey had a duty of disclosure. Bailey knew that it was McSwain that controlled Solutions. Sidewind had assumed a particular state of affairs was the true state of affairs: that it was McSwain who was the owner of Solutions. 23 Thus the issue for determination is whether, in the context of this action, was there a reasonable expectation that Bailey would disclose the true state of ownership of Solutions to Sidewind. The contextual circumstances surrounding the period 17 June 2011 to 16 November 2011 need to be examined. Those circumstances may show there was a reasonable expectation a relevant fact be disclosed. 24 I have significant issues with the way the claim is pleaded out against Bailey. There is no plea that links Bailey's conduct as pleaded with Sidewind's misapprehension. Authorities such as Campomar Sociedad Limitada v Nike International Ltd (2000) 202 CLR 45 and Owston Nominees (No 2) Pty Ltd v Clambake Pty Ltd (2011) WASCA 76 are authorities for the proposition that the conduct said to be misleading and deceptive must materially contribute to the plaintiff's misapprehension. There is no plea of any causal connection between the alleged conduct of Bailey and the Sidewind misapprehension. 25 In fact having regard to Di Petro's evidence that he simply continued to deal with McSwain in the same manner as before, but with Solutions named on the quote (Di Petro affidavit sworn 17 September 2012, par 13), I have difficulty understanding how that plea could be maintained. The answer may lie in the contextual examination of the circumstances. 26 Whilst I have reservations, having regard to the authorities on O 16 RSC application I will dismiss the application.
Delay 27 Sidewind has, rightly, raised the issue of delay. Bailey filed an appearance in July 2012 and pursuant to the rules the application for summary judgment by Bailey should have been filed in August 2012. 28 A late affidavit sworn 28 March 2013 by David Joseph O'Dea does not explain the delay. O'Dea's affidavit merely refers to the fact that there (Page 8)
have been a number of amendments to the statement of claim. However, rather than rely on the inadequacy of the affidavit I have considered the merits of the application.
Conclusion 29 The defendant's application is dismissed. I will hear counsel on the question of costs, and more particularly, the adequacy of the statement of claim against Bailey.
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