FEDERAL COURT OF AUSTRALIA
Taylor v Crossman (No 2) [2012] FCAFC 11
Citation: Taylor v Crossman (No 2) [2012] FCAFC 11 Appeal from: Crossman v Taylor (No 3) [2011] FCA 734 Parties: BRENDAN TAYLOR v LYNETTE MARIE CROSSMAN File number: SAD 169 of 2011 Judges: LANDER, COWDROY & FLICK JJ Date of judgment: 24 February 2012 Catchwords: TRADE PRACTICES — Action for misleading or deceptive conduct in contravention of s 56 of the Fair Trading Act 1987 (SA) (‘the Act’) — where respondent and appellant formed second defendant company for purpose of acquisition and operation of marina business —respondent and appellant in personal relationship —appellant said to have made oral representations which induced respondent to enter into the venture including representation that both parties would contribute equally to funding of business — where respondent made substantially greater financial contribution to the company — where respondent seeks damages or compensation pursuant to ss 84 and 85 of the Act — whether representations were in trade or commerce Legislation: Fair Trading Act1987 (NSW), s 42
Fair Trading Act 1987 (SA), s 56
Trade Practices Act 1974 (Cth), ss 52, 82Cases cited: Banque Financière de la Cité S.A. v Westgate Insurance Co Ltd [1991] 2 AC 249
Bevanere Pty Ltd v Lubidineuse (1985) 7 FCR 325
Concrete Constructions (N.S.W.) Pty Limited v Nelson (1990) 169 CLR 594
Coyne v Calabro (No 5) [2010] NSWSC 694
Dataflow Computer Services Pty Ltd v Goodman (1999) 168 ALR 169
Hearn v O’Rourke (2003) 129 FCR 64
Houghton v Arms (2006) 225 CLR 553
I & L Securities Pty Limited v HTW Valuers (Brisbane) Pty Limited (2002) 210 CLR 109
Kenny & Good Pty Limited and Another v MGICA (1992) Limited (1999) 199 CLR 413
Kowalczuk v Accom Finance (2008) 77 NSWLR 205
Marks v GIO Australia Holdings Limited (1998) 196 CLR 494
Murphy v Overton Investments Pty Limited (2004) 216 CLR 388
O’Brien v Smolomogov (1983) 53 ALR 107
Plimer v Roberts (1997) 80 FCR 303
Re Ku-ring-gai Co-Operative Building Society (No 12) Ltd (1978) 22 ALR 621
Wardley Australia Limited v The State of Western Australia (1992) 175 CLR 514Date of hearing: 21 November 2011 Place: Adelaide Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 67 Counsel for the Appellant: Mr M Hoile Solicitor for the Appellant: Starke Lawyers Counsel for the Respondent: Mr R Whitington QC with Mr B Doyle Solicitor for the Respondent: Sykes Bidstrup
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
SAD 169 of 2011
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: BRENDAN TAYLOR
AppellantAND: LYNETTE MARIE CROSSMAN
Respondent
JUDGES:
LANDER, COWDROY & FLICK JJ
DATE OF ORDER:
24 FEBRUARY 2012
WHERE MADE:
ADELAIDE
THE COURT ORDERS THAT:
1.The appeal be dismissed.
2.The appellant pay the costs of the respondent.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
SAD 169 of 2011
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- Taylor v Crossman (No 2) [2012] FCAFC 11
- Case
- [2012] FCAFC 11
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CaseChat Overview and Summary
The primary legal issue the court had to decide was whether the representations made by the defendant were in trade or commerce, as required by section 56 of the Fair Trading Act 1987 (SA). The court considered whether the representations were made in the context of a business transaction and whether they were of a commercial character. The court also considered whether it was determinative that the company had not been incorporated at the time the representations were made.
The court found that the representations were made by one of the parties proposing to enter a business venture and concerned the establishment and operation of the proposed venture. The representations related to investment in the marina business and were part of other statements and discussions of a commercial character, including the payment of interest on loans, joint management, and payment of commissions in respect of hiring of the houseboats. The court held that the fact that the company had not been established at the time of the representations did not detract from the requisite character of the statements being ‘in trade or commerce’ for the purposes of the Fair Trading Act.
The appeal was dismissed, and the defendant was ordered to pay the costs of the respondent. The court's decision was based on the fact that the representations were made in the context of a business transaction and were of a commercial character, regardless of whether the company had been incorporated at the time. The court also considered the observations of the High Court in Houghton v Arms and Concrete Constructions, which clarified that statements made by a person not engaged in trade or commerce may still be considered 'in trade or commerce' if they are designed to encourage others to invest in a particular trading entity.
Orders
Orders of the court
1. The appeal be dismissed.
2. The appellant pay the costs of the respondent.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
The appellant submits that based upon the observations in Concrete Constructions it is not sufficient merely to assert that the representations relied upon related to or were preparatory to an anticipated business transaction and that the activity must be ‘in’ trade or commerce. Similar concepts to those referred to in Concrete Constructions were discussed in Plimer v Roberts (1997) 80 FCR 303 by Lindgren J at 324-326 where his Honour considered whether s 42 of the Fair TradingAct 1987 (NSW) should have been given a different interpretation to that of s 52 of the TPA.Consideration Whether the representations were made in trade or commerce as required by s 56 of the Fair Trading Act will depend upon the context in which the representations were made and the nature of such representations. The primary judge found that the representations were made by one of the two parties proposing to enter a business venture and that such representations concerned the establishment and operation of such proposed venture. The representations related to investment in the marina business and were part of other statements and discussions of a commercial character which included the payment of interest on loans, joint management and payment of commissions in respect of hiring of the houseboats. (a) Is it determinative that the company was not incorporated at the time of the representations? The primary judge found that whilst the company had not been established when the representations were made, this fact did not detract from such statements possessing the requisite character of being ‘in trade or commerce’ for the purposes of the Fair Trading Act. His Honour referred to the decision of the High Court in Houghton v Arms (2006) 225 CLR 553 wherein the High Court considered whether employees of a corporation were personally liable for representations made by them even though those employees were not engaged in such activity themselves. Significantly, his Honour referred to the findings of the High Court at [34]: Moreover, in his judgment in Concrete Constructions, Toohey J emphasised that, while in most cases, the focus would be on the nature of the business of the party making the representation, s 52 was not so limited; in particular, the section did not, in terms, refer to the trade or commerce of any particular corporation. Accordingly, statements made by a person not himself or herself engaged in trade or commerce may answer the statutory expression if, for example, they are designed to encourage others to invest, or to continue investments, in a particular trading entity. [Footnotes omitted] The test to be applied in respect of the phrase ‘in trade or commerce’ in s 52 of the TPA was definitively stated by the High Court in Concrete Constructions. Paragraph [34] of Houghton v Arms serves to refine the observations of the High Court regarding statements that will properly answer the description of being ‘in trade or commerce’. Such decision reinforces the fact that the statement, in order to be actionable, need not be made by one who is engaged in trade or commerce. The decision serves to illuminate the very issue upon which the appellant relies upon in this appeal.