Taylor v Crossman (No 2)

Case [2012] FCAFC 11


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, 82
Cases 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 514

Date 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
Appellant

AND:

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
Decision Date

CaseChat Overview and Summary

Taylor v Crossman (No 2) involved a dispute between the plaintiff and the defendant regarding misleading and deceptive conduct in relation to a marina business venture. The matter was heard in the Federal Court of Australia. The plaintiff alleged that the defendant made oral representations which induced her to enter into the venture, including a promise that both parties would contribute equally to the funding of the business. The plaintiff claimed that she made a substantially greater financial contribution than the defendant.

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

Full text does not contain this section.

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.