The Builders Warehouse Group Ltd t/as Campbells Hardware and Timber v Multinail Australia Pty Ltd Multinail Australia Pty Ltd v The Builders Warehouse Group Ltd t/as Campbells Hardware and Timber
[1998] FCA 314
•2 APRIL 1998
FEDERAL COURT OF AUSTRALIA
TRADE PRACTICES - Misleading or deceptive conduct - misrepresentations - whether reliance.
EVIDENCE - Application of rule in Jones v Dunkel.
Trade Practices Act 1974 s 52
Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 - Refd
Jones v Dunkel (1959) 101 CLR 298 - Appl
Kocscardi v Elegant Tiles Pty Ltd (unreported, Cooper J, Federal Court of Australia, 20 November 1996) - Refd
O’Donnell v Reichard [1975] VR 916 - Appl
Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125 - Refd
Official Receiver in Bankruptcy v Alvaro (1996) 138 ALR 341 - Refd
Payne v Parker [1976] 1 NSWLR 191 - Refd
Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477 - Refd
Ricochet Pty Ltd v Equity Trustees Executors and Agency Company (1993) 41 FCR 229 - Refd
Clyde Industries Pty Ltd v Golden West Refining Corp Ltd (1996) ATPR Digest 14-160 - Refd
THE BUILDERS WAREHOUSE GROUP LIMITED TRADING AS CAMPBELLS HARDWARE & TIMBER v MULTINAIL AUSTRALIA PTY LIMITED
MULTINAIL AUSTRALIA PTY LIMITED v THE BUILDERS WAREHOUSE GROUP LIMITED TRADING AS CAMPBELLS HARDWARE & TIMBER
No QG 41 of 1997
SPENDER, O’LOUGHLIN AND COOPER JJ
BRISBANE
2 APRIL 1998
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QG 41 of 1997
BETWEEN:
AND:
THE BUILDERS WAREHOUSE GROUP LIMITED TRADING AS CAMPBELLS HARDWARE & TIMBER
APPELLANTMULTINAIL AUSTRALIA PTY LIMITED
RESPONDENTAND:
AND:
MULTINAIL AUSTRALIA PTY LIMITED
CROSS-APPLICANT/RESPONDENTTHE BUILDERS WAREHOUSE GROUP LIMITED TRADING AS CAMPBELLS HARDWARE & TIMBER
CROSS-RESPONDENT/APPELLANTJUDGES:
SPENDER, O'LOUGHLIN AND COOPER JJ
DATE OF ORDER:
2 APRIL 1998
WHERE MADE:
BRISBANE
THE COURT ORDERS THAT:
The appeal be dismissed.
The appellant pay the respondent’s costs of and incidental to the appeal, including reserved costs, to be taxed if not agreed.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QG 41 of 1997
BETWEEN:
AND:
THE BUILDERS WAREHOUSE GROUP LIMITED TRADING AS CAMPBELLS HARDWARE & TIMBER
AppellantMULTINAIL AUSTRALIA PTY LIMITED
RespondentAND:
AND:
MULTINAIL AUSTRALIA PTY LIMITED
Cross-Applicant/RespondentTHE BUILDERS WAREHOUSE GROUP LIMITED TRADING AS CAMPBELLS HARDWARE & TIMBER
Cross Respondent/Appellant
JUDGES:
SPENDER, O'LOUGHLIN AND COOPER JJ
DATE:
2 APRIL 1998
PLACE:
BRISBANE
REASONS FOR JUDGMENT
Spender and O’Loughlin JJ:
We agree with the reasons for judgment of Cooper J.
I certify that this page is a true copy of the Reasons for Judgment herein of the Honourable Justices Spender and O'Loughlin.
Associate:
Dated: 2 April 1998
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QG 41 of 1997
BETWEEN:
AND:
THE BUILDERS WAREHOUSE GROUP LIMITED TRADING AS CAMPBELLS HARDWARE & TIMBER
APPELLANTMULTINAIL AUSTRALIA PTY LIMITED
RESPONDENTAND:
AND:
MULTINAIL AUSTRALIA PTY LIMITED
CROSS-APPLICANT/RESPONDENTTHE BUILDERS WAREHOUSE GROUP LIMITED TRADING AS CAMPBELLS HARDWARE & TIMBER
CROSS-RESPONDENT/APPELLANT
JUDGES:
SPENDER, O'LOUGHLIN AND COOPER JJ
DATE:
2 APRIL 1998
PLACE:
BRISBANE
REASONS FOR JUDGMENT
Cooper J
In August 1992 a receiver was appointed to the McEwans group of companies which included James McEwan Limited (“McEwans”). McEwans carried on, amongst other businesses, the business of manufacturing roof trusses. Jamieson Equity Limited, a company in which a Mr Robertson was interested, purchased from the receiver the truss plants previously operated by McEwans. The appellant was incorporated to carry on the business of truss manufacturing under the business name of “Campbells Hardware and Timber”.
The respondent, at all material times, was a supplier of nail plates and ancillary connectors and bracing for use in the manufacture of roof trusses. The managing director of the respondent was a Mr Taylor. In December 1990 the respondent entered into a written agreement with McEwans for the supply by the respondent of all nail plates and connectors, computer hardware and software and training services to McEwans for a period of three years expiring on 31 December 1993 (“the first agreement”). The agreement was signed by Mr Taylor on behalf of the respondent and a Mr Marsh on behalf of McEwans.
On 20 May 1993 the appellant and the respondent executed a written agreement wherein the appellant agreed to purchase its total requirements for nail plates and ancillary connectors and bracing for a period expiring on 31 December 1995 (“the new agreement”).
Pryda (Aust) Pty Limited (“Pryda”) is a competitor of the respondent. In early 1994 Pryda supplied or agreed to supply the appellant with nail plates and connectors. On 31 March 1994, the respondent commenced proceedings against Pryda to restrain it from selling nail plates and accessories to the appellant until the expiry of the new agreement and for damages for inducing breach of contract.
On 18 May 1994 the appellant commenced these proceedings alleging that it was induced to enter into the new agreement in reliance on certain representations of the respondent, which it alleged were misleading or deceptive, in contravention of s 52 of the Trade Practices Act 1974 (“the Act”). The appellant sought, pursuant to s 87 of the Act that the new agreement be set aside ab initio.
The trial of certain issues, including those issues relating to the alleged prescribed conduct of the respondent, was heard by Drummond J in 1996. His Honour dismissed the appellant’s claim and entered judgment for the respondent on the appellant’s claim. His Honour also entered judgment for the respondent on its cross-claim for a declaration that the appellant was bound by the new agreement and for an enquiry as to damages. His Honour also made costs orders against the appellant in favour of the respondent.
The appellant appealed against the whole of the judgment of Drummond J.
The representations of which the appellant complains related to the nature and content of the new agreement; the technical quality of the respondents’ software used by the appellant’s staff for pricing and designing trusses and for controlling saws and jigs; the technical quality of its truss manufacturing equipment and the compatibility of the respondent’s nail plates with truss making equipment supplied by other manufacturers.
The appellant alleged that, on or about 7 May 1993, Mr Taylor, in a telephone conversation with Mr Robertson, made the following oral representations :-
(a)that the agreement [ie the new agreement] would effect an extension of the current binding contract for a further two years; apart from updating and restating the details of the respondent’s services, equipment on loan and prices.
(b)apart from the said extension, updating and reinstating there would be no commercial differences between the current binding contract and the agreement.
These representations are also alleged to have been made in writing, in a letter from Mr Taylor to Mr Robertson dated 10 May 1993, and by delivery under cover of that letter of the draft of the new agreement. The letter stated :-
“As also discussed, I have included a proposed agreement to continue the existing agreement between our companies until December, 1995.”
Recitals 2 and 5 of this proposed agreement stated :-
“2.Multinail has been supplying Campbells Truss Plants (previously known as McEwans) with Campbells total requirements for truss nail plate and ancillary connectors and bracing under a contract expiring 31 December, 1993.
.....
5.In consideration of Multinail loaning Campbells these computers on the terms set out herein, Campbells has agreed to extend the Supply Agreement until 31 December, 1995.”
The first agreement contained a right of early termination by either party on three months’ notice in writing; no such term appeared in the new agreement. Mr Robertson deposed that he would not have signed the new agreement if he had known that the new agreement did not give to the appellant a like right to termination on notice.
Mr Taylor denied making the oral representations as alleged.
As to this issue, his Honour said :-
“Whether Taylor said this is, I think, of critical importance to Campbells’ case here: statements of the kind made by Taylor in his letter of 10 May and in recital 5 of the new agreement about the parties having agreed to extend the old agreement cannot, in the context in which they were made, carry the implication that the terms of the new agreement did not materially differ from the terms of the old agreement.
Taylor denies ever making any oral representation of the kind alleged by Robertson. What Taylor says he told Robertson in this early May conversation was that he would like to get the new agreement signed as soon as possible and, in response to Robertson’s request for it, said it would be forwarded to him shortly, as happened on 10 May. He acknowledges that one reason why he wanted to ensure there would be a continuation of the supply agreement entered into with the receivers of McEwans was to offset the costs that Multinail were incurring by supplying additional computers, training and evaluating staff, and the extra engineering and support functions that Multinail were giving to Campbells free of charge.
It is apparent that both in Taylor’s letter of 10 May 1993 and in the accompanying draft agreement statements were made on behalf of Multinail to the effect that the proposed agreement would continue or extend the existing agreement to 31 December 1995. But I do not accept Robertson’s evidence that Taylor went beyond that and orally represented that there would be no material difference between the proposed new agreement and the existing one.”
The other representations complained of by the appellant were alleged to arise from a publication entitled “Campbells”, given by Mr Taylor to Mr Robertson at a meeting on 8 February 1993, an oral representation made at that meeting and repeated in a telephone conversation in mid March 1993, and a second publication entitled “Proposal to McEwans”, given by Mr Taylor to a meeting on 27 April 1993.
The alleged representations in the first publication as pleaded in paragraph 5 of the statement of claim, were :-
5(b)(v)that the respondent manufactured and was in a position to supply truss manufacturing machinery in the categories of saws, presses, jigs and materials handling which were at the leading edge of technology.
5(b)(viii)that the respondent produced and was in a position to supply relevant software that was the most efficient, up-to-date and trouble free available.
The alleged oral representations pleaded in paragraph 5 were :-
5(b)(i)that the respondent manufactured or produced and was in a position to supply to the applicant the best and the most advanced and flexible truss manufacturing equipment, computer software and nail plates available in the market.
Mr Taylor denied making this representation or that a meeting with Mr Robertson occurred in mid March 1993.
The alleged representations contained in the second publication, as pleaded in paragraph 5, were :-
5(b)(ii)that the respondent manufactured and was in a position to supply truss manufacturing machinery at least equivalent to any other such machinery available in the world.
5(b)(iii)that the respondent’s computerising of such machinery was leading the world.
5(b)(iv)that the respondent had designed the only known fully automatic computerised jig changing machine meaning that the respondent manufactured and was in a position to supply a jig changing machine which was fully automatic and computerised to a level not exceeded by that of any other manufacturer.
5(b)(vi)that the respondent produced and was in a position to supply the best, most versatile and most easy to use software; meaning software for the computerised design and sale of trusses; and their manufacture and supply by computerised sawing and jig setting.
5(b)(vii)that the respondent’s software enabled a detailer to achieve results (meaning towards or in the manufacturing and supply of trusses) more efficiently and faster than could be achieved by the use of any other software.
His Honour found that each of the above representations had been made and that it was more probable than not that the oral representation in 5(b)(i) above had been made at the meeting of 8 February 1993. His Honour also found that to allow the representations in paragraphs 5(b)(i), 5(b)(vi), 5(b)(vii) and 5(b)(viii) to stand without qualification after 10 May 1993, by which time the respondent was aware of the importance attached by the appellant to “networkability”, and in circumstances where the respondent’s software lacked networking capacity, amounted to misleading or deceptive conduct for the reasons expressed in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 31, 40 - 41. His Honour also found that the representations in paragraphs 5(b)(i), 5(b)(ii), 5(b)(iii) and 5(b)(v) were misleading or deceptive with respect to truss making saws, otherwise his Honour was not satisfied that the representations, as found, were misleading or deceptive.
The appellant also alleged that in a telephone conversation on or shortly prior to 20 May 1993, Mr Taylor made the following oral representation, as pleaded in paragraph 5(c) of the statement of claim :-
5(c)that the respondent’s nail plates could be used in truss manufacturing equipment available from or supplied by sources other than the respondent.
As to this representation his Honour found :-
“I have already explained why I do not regard Robertson as a source of reliable evidence. I am not prepared to find, on the basis of Robertson’s brief statement, that, prior to contract, Taylor made any representation of the kind alleged in paragraph 5(c) of the further amended statement of claim. When Robertson signed the agreement of 20 May 1993, he was, on his own evidence, ignorant of the practical difficulties of using one manufacturer’s plates with another’s software. I think it was only when he decided upon Pryda equipment and software and learned of this practical problem if Campbells were to continue to use Multinail plates, that I think he first turned his mind to the matter. I also think that it was only after Robertson became aware of these considerations that there was any discussion with Taylor, probably instigated by Robertson, about whether Multinail plates were compatible with other manufacturers’ software and equipment; this took place in late 1993, at the earliest.”
Although his Honour found that the respondent had made misleading or deceptive representations to the appellant prior to the appellant’s signing of the new agreement concerning the level of the technology of its saws and with respect to its software, his Honour was not prepared to find that Mr Robertson relied upon those misleading statements in entering into the new agreement.
In refusing to find reliance by Mr Robertson on these representations his Honour said :-
“Following receipt of Multinail’s tender for new machinery on 9 February 1994, Robertson prepared a memorandum for Marsh and Wise in which he identified the issues he considered favoured Pryda and those which favoured Multinail as the organisation to be awarded the new machinery supply contract. Favouring Pryda was, firstly, the fact that it had proven saws, jigs and presses which Campbells were interested in acquiring, whereas Multinail could not point to anywhere where the equipment the subject of its tender was actually operating and, secondly, the fact that Pryda’s nail plate prices were lower than Multinail’s. The first two points that Robertson considered favoured Multinail’s tender were :
‘1. One supplier responsible for lot - software will work.
2. Staff trained and familiar with software etc.’
His memorandum called on Marsh and Wise to discuss his points and reach a consensus promptly and advise him of their view.
By this stage, Robertson was, as he says, well aware of the deficiencies long the subject of comment to him by Wise, of the lack of networking capacity in the Multinail software. But Robertson clearly did not regard himself as having been misled by what he had been told by Multinail earlier in 1993 about the excellence of its software. Moreover, the complaint by Campbells that Multinail’s representations as to the quality of its software were false because it was not networkable only emerged late in the day. Although Robertson, in his statement of 3 May 1994, mentions passing on to Taylor Wise’s reports of 19 April and 1 May 1993 in which Wise advocated the advantages of networkability, he says nothing at all to suggest that he accepted Wise’s recommendation or that he placed any significance on Multinail’s software having the capacity to support Campbells’ computers in a network. The only mention Robertson makes of Wise’s constant criticisms of the lack of networking capacity in Multinail’s software is that these criticisms played a part in his ultimately establishing the investigation in late 1993 that resulted in Campbells deciding to acquire new equipment and nail plates from Pryda, in the course of which investigation he says he told Taylor that Multinail would have ‘to address the software issues’. Robertson nowhere says he regarded himself as having been misled at the time he signed the 20 May agreement into believing that Multinail’s software was networkable. The first statement of claim of 19 May 1994 pleads a misrepresentation that Campbells could supply the most advanced flexible truss manufacturing equipment, computer software and nail plates, a misrepresentation repeated in its amended statement of claim of 10 June 1994; Campbells’ further particulars of the allegation that this representation was false, provided in September 1994, make no mention of the lack of networking in Multinail’s software. It was not until Campbells filed its further amended statement of claim on 24 March 1995 that complaint was made, for the first time, by Campbells that Multinail had misrepresented its software because that software was not networkable.
In the mass of documentation in evidence concerning Multinail’s software, which includes correspondence between Wise and Multinail, internal Multinail memoranda and internal Campbells memoranda, there is, consistently with what Robertson had to say in his own memorandum of 11 February 1994, an absence of any suggestion of concern on the part of Robertson about the lack of networking capacity in Multinail’s software. It is plain that Wise regarded this as an important deficiency; he told Robertson so in his reports of 19 April and 1 May 1993. But I do not accept that Robertson, as early as the time he signed the agreement of 20 May 1993, shared that view at all. The absence of any such concern on his part in the contemporaneous documentation and the positive indication in his conduct in late 1993 - early 1994 that culminated in his memorandum of 11 February 1994 of lack of any such concern, coupled with the references in the material to Campbells’ detailing staff being satisfied with the existing Multinail software and the late emergence of complaint, in my opinion, prevent Campbells from being able to establish that Robertson relied on the representations made to him by Multinail as to its software, which I have found to be misleading, in deciding to commit Campbells to the 20 May 1993 agreement.
For similar reasons, I am not prepared to find that Robertson placed any reliance on Multinail’s misrepresentations as to the technologically advanced nature of its saws when he committed Campbells to the agreement of 20 May 1993.
The evidence to which I have already referred showing that Robertson insisted into early 1994 that Multinail continue to be considered as a possible supplier of the new equipment he had then decided Campbells should acquire is inconsistent with his having regarded himself as having been misled by what Multinail told him about its equipment at the time he signed the new agreement in May 1993. By late 1993, Robertson was well aware that the Auto Omni saw was much more sophisticated than anything that Multinail could supply. He acknowledged this in his memorandum of 11 February 1994, to which I have already referred; far from ruling Multinail out of consideration for the new machinery contract because it had misled him in May 1993 into thinking that its saws were the most technically advanced available, he insisted that Multinail remain a candidate for the award of the contract and that Marsh and Fittler give him their views on the entire package, comprising both new machinery and nail plates, that Robertson had then identified Campbells should acquire and whether it would be more advantageous for Campbells to contract with Pryda or with Multinail. There is also a lack of complaint, not only by Robertson in his statement of 3 May 1994, but also in the contemporaneous documentation of any concern by Campbells with what it had been told by Multinail prior to 20 May 1993 about the sophistication of Multinail’s saws that is similar to the lack of complaint in respect of what Multinail then said about its software. It was not until Campbells provided further particulars of the allegations in the first two versions of its statement of claim that Multinail had falsely represented it could supply the best and most advanced flexible truss manufacturing equipment that Campbells first indicated that Multinail’s pre-contract representations as to its saws were false because others, including Pryda, could supply saws which were downloadable from the design software.
It is very likely, in my opinion, that it was Robertson’s realisation in late 1993 or early 1994 that Campbells could not continue to use Multinail plates in the Pryda equipment he had by then decided to acquire and his determination nevertheless to proceed with the Pryda acquisitions in the full realisation that that would put Campbells in breach of its agreement with Multinail that precipitated this litigation; it was only after it became imperative to get out of the Multinail supply agreement, because of the decision not re-equip with Pryda plant, that some excuse had to be found to justify the clear breach of contract to which Robertson was then committed.
Once Multinail made it clear to Campbells, by the letter Taylor sent to Robertson immediately after the meeting of 24 March 1994, that Multinail would not release Campbells from the agreement of 20 May 1993 to the extent necessary to permit Campbells to acquire Pryda plates for use at the large plants at Oxley, Caloundra and Bundaberg which it intended re-equipping with Pryda equipment, and intended to commence proceedings against Pryda to prevent their intrusion into Multinail’s existing contractual relationship with Campbells, Robertson had to find some basis for getting out of the contract with Multinail. He focuses in his statement of 3 May 1994 on the representations he claims Taylor made with respect to the nature of the 20 May agreement and to a lesser extend on the representation as to the compatibility of Multinail plates with other makers’ equipment and software. But he has little to say in his statement about the representations concerning Multinail’s advanced machinery, including its saws and concerning its software, which I have found includes a misrepresentation as to it being fully networkable, compared with the complaints that could be expected if the position was, as Campbells now contends, that Robertson placed such significance on the latter representations that it could properly be said that he relied on them in deciding to commit Campbells to the new agreement on 20 May 1993. It seems to me Robertson was fully prepared to enter into the plate supply agreement in May 1993, when he did not at that stage envisage changing plate supply.”
The evidence of Mr Robertson was contained in a written statement by him. Mr Robertson died in January 1995 and his signed statement dated 3 May 1994 was received in evidence pursuant to the Evidence Act 1995 (Cth). The evidence of Mr Robertson was not subject to cross-examination. Nor was he able to supplement or explain it in the light of other evidence. However, his Honour found that it was detailed and responsive to the specific assertions pleaded by the respondent in its defence and cross-claim.
In rejecting the evidence of Mr Robertson, his Honour said :-
“Much of Robertson’s statement of 3 May 1994 is devoted to the issue of what Taylor said about the nature of the old agreement. My rejection of Robertson’s detailed evidence on this topic reflects adversely on the reliability of what he says on other topics. I am not prepared to accept Robertson’s evidence on any critical issue unless it is confirmed by acceptable independent evidence.”
The principal allegations of Mr Robertson as to the circumstances giving rise to the misleading representations concerning the new agreement and to the execution of it were :-
(a)that at a meeting on 27 April 1993 Mr Taylor, at Mr Robertson’s request, agreed to send to Mr Robertson a copy of the first agreement;
(b)that despite “exhaustive enquiries” Mr Robertson’s secretary could not locate a copy of the first agreement and that in consequence Mr Robertson made a “conscious decision” to rely on what Mr Taylor had told him about it;
(c)that Mr Robertson did not mention the new agreement to anyone despite having discussions with unidentified senior staff of the appellant about “the character of Multinail”.
Mr Robertson said that a copy of the first agreement was obtained in April 1994 at one of the appellant’s offices at Maroochydore, Queensland as a result of a further search which he had then instigated. He records in his statement his surprise at being told by the appellants’ solicitor, Mr Kinneally, that there was an important difference between the two agreements in that the new agreement did not contain a termination provision of the kind contained in the first agreement.
Drummond J treated as relevant to his decision to reject the evidence of Mr Robertson that neither the secretary nor Mr Kinneally were called to give evidence corroborative of that contained in Mr Robertson’s statement. In this regard his Honour said :-
“Given the extraordinary nature of Robertson’s evidence that, although well aware of the importance of access to the old agreement before he signed the new one, he signed without checking it against the old one and without taking advice from one or other of Campbells’ senior staff, the importance, whenever possible, of calling evidence to confirm his account is obvious. Robertson suggests that his secretary’s search was abortive because many of McEwans’ files had been lost following McEwans going into receivership and following its move to a new head office. But no evidence was called from any source to confirm what Robertson had to say about instigating the search for the old agreement in May 1993. Robertson says that a copy of the old agreement was finally located in April 1994 at one of Campbells’ Maroochydore offices as a result of a further search which he then instigated. By this stage, Multinail was threatening to sue Campbells for breach of contract. He records his surprise at then being told by Mr Ross Kinneally, Campbells’ external solicitor with responsibility for the conduct of Campbells’ case, that there was an important difference between the two agreements in that the new one did not contain a termination provision of the kind contained in the old agreement. Again, no attempt was made by Campbells to lead any evidence confirming what Robertson had to say about instigating a second lot of searches or what he said Kinneally told him, even though such evidence should have been available if Robertson’s account can be believed.
It is difficult to accept Robertson’s claim that it was because of his failure to locate a copy of the old agreement that he made a conscious decision to rely on what he claims Taylor told him about it. He claims he had Taylor’s promise to send him a copy of the old agreement, yet he did not contact Taylor after his allegedly abortive search and did not make any attempt to explain why he failed to call on Taylor to keep his promise when the document in question, which he considered so important, could not, according to him, be located in McEwans’ files.”
His Honour also rejected Mr Robertson’s evidence that the did not discuss the new agreement with relevant personnel of the appellant. In this regard, his Honour said :-
“Robertson said that ‘during this whole period [ie, up to 29 March 1994] I was the only person who knew of the existence of the heads of agreement dated 20 May, 1993’. He explained keeping the new agreement to himself because he believed, on the basis of what he says Taylor told him, that it was just an extension of the earlier McEwans agreement. The new agreement is, in form, a detailed, self-contained document, not a short note extending a separate earlier agreement, its form does not suggest that it is unnecessary to bother checking it against the old agreement. Moreover, he earlier said that his secretary knew about it and that he told Marsh he had signed it, although ‘[my] advice to him was simply that I had extended the old agreement’. Wise also knew of it; he learned of it in October 1993.
I do not accept that, apart from his secretary and apart from mentioning to Marsh only that he had signed the new agreement, he kept it secret from everyone in Campbells. For Robertson to bind Campbells for two and a half years to this major commitment without first checking on the terms of the old agreement and without taking advice from senior staff such as Marsh is not only against the probabilities: it would conflict with Robertson’s own practice, remarked on by Campbells staff such as Clarke, of not making decisions without taking such advice, a practice he also follows in late 1993 when, with the assistance of Wise and Marsh, he investigated and ultimately decided three of the Campbells plants should be re-equipped with Pryda machinery and software. Contrary to what he claimed, Robertson must, in any event, have revealed some details of the new agreement to a number of Campbell’s staff. That agreement contains nail plate pricing information: Campbells could not have quoted on any work without the relevant staff knowing the costs to Campbells of the material supplied under this new agreement. It also includes in the Second Schedule an inventory of existing Multinail computer equipment installed in Campbell’s plants and the list of new computer equipment to be loaned by Multinail until 31 December 1995 to Campbells and clause 1(c) obliged Campbells to insure all this equipment, at its own cost. It is impossible to accept that Robertson kept all this information to himself.”
The absence of Mr Marsh, a senior employee of the appellant and formerly an area manager of McEwans from the witness box was also regarded by his Honour as relevant to an evaluation of the worth of Mr Robertson’s evidence in respect of the allegations concerning the execution of the new agreement. His Honour said :-
“The absence of Marsh from the witness box assumes particular importance here. It was he who actually signed the agreement of 1990 on behalf of McEwans, with Taylor signing on behalf of Multinail. He might be expected to have a copy of this important agreement or at least to know something of its actual terms. The old agreement incorporates, as I have mentioned, McEwans’ standard form purchasing agreement; not only the old agreement itself, but also this standard form was signed by Marsh. He signed this form immediately underneath clause 10, which gave McEwans the right to terminate the agreement upon notice. It is noteworthy that, while nothing in the old agreement, including the McEwans’ standard form purchasing agreement incorporated in it, expressly obliged McEwans to deal exclusively with Multinail (in contrast to clause 2 of the new agreement), the termination provision in clause 10 of the McEwans’ standard form ensured that McEwans was not locked into a long term exclusive purchase obligation with Multinail. It is likely that Marsh, as an experienced McEwans senior manager who was apparently involved in negotiating this major supply agreement, would have been well aware of this important provision incorporated in the old agreement. Marsh, moreover, worked closely with Robertson. He was one of the four people Robertson selected to sit in at a meeting of 8 February 1993. He was one of the two Campbells’ employees on whom Robertson relied heavily in making his decision to acquire new machinery in late 1993 - early 1994. He was still in Campbells’ employ at trial, but did not give evidence. There was no explanation for this. It is significant that, apart from his secretary, the only person Robertson says he told he had signed the new agreement with Multinail was Marsh, who Robertson claims he did not realise was the very person who had signed the old agreement: yet Robertson claims nothing else passed between Marsh and himself with respect to this matter. I infer that the evidence Marsh can give about whether Robertson knew of the critical difference between the two agreements when he signed the new one would not assist Campbells’ case because it would conflict with what Robertson has had to say. I do not accept that Robertson, in his state of unfamiliarity with this particular industry, did not take the advice of someone skilled on Campbells staff, such as Marsh, about whether it was appropriate for him to sign the agreement which committed Campbells for two and a half years, especially when he was looking closely at the time at re-organising Campbells’ operations to improve profitability.”
Finally, his Honour dealt with the history of the allegation of false representations as to the content and effect of the new agreement as misleading or deceptive conduct in the context of the litigation. His Honour, in this respect, said :-
“Campbells’ case, based almost entirely on what Robertson has to say in this regard, amounts to a case that Robertson was duped by Taylor into signing the new agreement, which differed materially from the old agreement in that it bound Campbell’s for two and a half years to an exclusive arrangement with Multinail and did not give Campbells the right to cancel the agreement at any time, provided only that three months’ notice was first given. Robertson refers to his surprised reaction to learning this from Campbells’ solicitor. Yet it took a long while for this complaint to emerge. The whole purpose of Campbell’s’ originating application was to obtain an order setting aside the agreement of 20 May 1993; but, in the first statement of claim filed on 19 May 1994, with the originating application in which this relief was sought on the basis of certain false representations allegedly made by Multinail prior to its execution, Campbells did not suggest that any representation touching on the similarity between the old agreement and the new agreement, of the kind now contained in paragraph 5(a)(ii) and (iii) of Campbells’ further amended statement of claim, had been made. Then, the only representation touching on either agreement was that now contained in paragraph 5(a)(i) of Campbells’ current pleading to the effect that Multinail had a contract for nail plate supply binding on McEwans until December 1995; Campbells did not seek to rely on this allegation at the trial because of Robertson’s acknowledgement that he well knew that, even though the contract may have bound McEwans, it was not binding on Campbells at the time he signed the new agreement. Robertson says he had obtained a copy of the old agreement by April 1994, ie, prior to filing the first statement of claim, and the solicitor acting for Campbells in the dispute with Multinail then drew his attention to the significant difference between its terms and those of the 20 May 1993 agreement. But it was not until Campbells’ amended statement of claim filed 10 June 1994 that Campbells alleged, for the first time, that Multinail represented to Campbells that the proposed new agreement was an extension of the old contract and included the same terms and conditions. Robertson’s statement, signed on 3 May 1994, was no doubt the source of this new allegation. It was conceded by counsel for Campbells that no complaint was ever made by Campbells of this deception until this allegation was raised in Campbells’ pleading in June 1994. If there is any truth in what Robertson has to say in his May 1994 statement about being deceived by Taylor in this regard, it is difficult to understand why complaint was not made about that matter well before mid 1994 and, in particular, why, when Multinail had, in March 1994, put Campbells on notice that it might sue if Campbells persisted in obtaining nail plate supplies from Pryda in breach of the agreement of 20 May 1993, Multinail’s threat of action did not produce the response that the agreement was void for misrepresentations immediately Robertson says he was ‘surprised’ to be told in April 1994 of this ‘significant difference’ between the two agreements.
For the reasons stated, I think it likely that Robertson was well aware of the differences between the two agreements when he signed the new one. That Robertson was content to bind Campbells to it, although he knew it differed significantly from the old agreement, is not improbable: the Multinail agreement was attractive to Robertson because of the computer equipment and training and other services Multinail was prepared to provide free of charge. At that stage, he was concerned with maximising the usefulness of the existing plant which was running on Multinail software and other makers’ machinery; he was not then considering changing from Multinail’s software and said he did not then know of the practical incompatibility of the software with other manufacturers’ nail plates and so was unlikely to have sought or been offered advice that would have flagged what was then for him a matter of no relevance.”
Having rejected Mr Robertson as a witness of truth in respect of these allegations, his Honour adopted the position referred to earlier that he would not rely on the evidence of Mr Robertson as to the software and machinery representations and his reliance on them unless his evidence was supported by other independent credible evidence.
The appellant attacks the finding of the trial judge that Mr Taylor did not make the representations as to the nature and effect of the new agreement, by attacking the inference drawn by his Honour that Mr Robertson had seen a copy of the first agreement on or before 20 May 1993 when he executed the new agreement. The substance of the attack was that the only evidence on the issue was that of Mr Robertson and that there was no other evidence which would support the inference which his Honour drew. It was submitted that his Honour’s use of the failure to call Mr Robertson’s solicitor, his secretary or Mr Marsh to more easily draw the inference was a misapplication of the principle in Jones v Dunkel (1959) 101 CLR 298.
It is correct that the principle or rule in Jones v Dunkel does not allow the Court to speculate or hypothecate on what may or did occur or to fill in gaps in the evidence. In Kocscardi v Elegant Tiles Pty Ltd (unreported, Cooper J, Federal Court of Australia, 20 November 1996) at page 41 I said :-
“The principle in Jones v Dunkel is not directed to overcoming any deficiency in the evidence tendered by a party (Jones v Dunkel at 305, 308, 312, 319). Its purpose is to allow the finder of fact more confidently to draw any inference from the facts proved by direct evidence when a person presumably able to put the true complexion on the facts relied on as the ground for the inference has not been called as a witness and the evidence provides no sufficient explanation of the absence (at 308). The absence of the person who may have proved the contrary had he or she chosen to give evidence is a circumstance to be taken into account in favour of drawing the adverse inference (at 312, 320 - 321). The principle is facilitative, not mandatory, in its operation to allow the inference to be drawn.”
I adhere to that view.
A more fuller explanation was given by the Full Court of Victoria in O’Donnell v Reichard [1975] VR 916 at 929 :-
“... the law may be stated to be that where a party without explanation fails to call as a witness a person whom he might reasonably be expected to call, if that person’s evidence would be favourable to him, then, although the jury may not treat as evidence what they may as a matter of speculation think that person would have said if he had been called as a witness, nevertheless it is open to a jury to infer that that person’s evidence would not have helped that party’s case; if the jury draw that inference, then they may properly take it into account against the party in question [their Honours’ emphasis] for two purposes, namely:
(a)in deciding whether to accept any particular evidence, which has in fact been given, either for or against that party, and which relates to a matter with respect to which the person not called as a witness could have spoken; and
(b)in deciding whether to draw inferences of fact, which are open to them upon evidence which has been given, again in relation to matters with respect to which the person not called as a witness could have spoken.”
See also Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125 at 131 - 132, 138 - 139, 142 - 143; Official Receiver in Bankruptcy v Alvaro (1996) 138 ALR 341 at 386.
In the instant case the evidence of Mr Taylor was that he did not make the oral representation at the meeting on 7 May 1993 and in this he was corroborated by a Mr Dew, who was also present at the meeting. His Honour accepted this evidence and there is no appeal against this finding. His Honour also found that as a matter of construction the letter of 10 May 1993 does not carry the representation alleged by the appellant. Again there is no appeal against this finding.
The other evidence before his Honour was that the pricing information necessary to carry on the business of the appellant was annexed to the new agreement and that as the business was in fact carried on the price information was conveyed from some source to those in the appellant’s organisation who needed to be aware of it. On the evidence the likely source of the new pricing information was the schedule to the new agreement. The evidence of Mr Robertson was that he was the sole repository of the agreement after its execution of 20 May 1993 and for a considerable period of time thereafter.
The other evidence before the trial judge was that of the previous business practices and habits of Mr Robertson; his lack of knowledge of the truss manufacturing industry; and his conduct in allegedly signing the new agreement without having sighted a copy of the first agreement in circumstances where there remained an outstanding and unsatisfied request of Mr Taylor that he provide a copy of the first agreement so that Mr Robertson could satisfy himself as to the contents and operation of each.
The conduct of Mr Robertson in signing the new agreement the ability of the appellant to conduct its business satisfactorily and the failure of Mr Robertson to make any timely complaint as to the alleged misrepresentation allows the inference to be drawn that Mr Robertson had a copy of the first agreement. It is a reasonable and rational inference to draw and it explains what, on the evidence of Mr Robertson’s prior business habits, would otherwise be an inexplicable departure from his normal business behaviour.
The other competing inference, that the misrepresentation was made and that Mr Robertson was induced to act upon it without sighting the first agreement in circumstances where Mr Robertson stressed the importance of the previous agreement and the contents of the new agreement to his decision to sign, and having regard to Mr Robertson’s previous careful work habits, was an improbable one absent some credible explanation of the conduct of Mr Robertson signing in those circumstances. The absence of the witnesses who could have given evidence as to the facts and circumstances which Mr Robertson put forward as the credible explanation for his conduct, without explanation on the part of the appellant as to their absence, allowed the trial judge to more easily reject the drawing of the improbable inference and to more easily draw the inference which he did.
In those circumstances, and having regard to the fact that each of those persons could have given evidence relevant to the issue of reliance by Mr Robertson on what he said Mr Taylor told him about the two agreements, it was open for his Honour to apply the principle in Jones v Dunkel in the way in which he did to assist him in drawing the inference that Mr Robertson knew of the differences between the two agreements when signing the new agreement on behalf of the appellant on 20 May 1993.
It is no answer to submit that these witnesses were available to the respondent to call on the trial and that, having failed to call them, no adverse inference could be drawn against the appellant. The witnesses were, as the phrase is understood in the authorities, in the appellant’s camp and it was unrealistic for the respondent to call them or any of them as part of its case: Payne v Parker [1976] 1 NSWLR 191 at 201 - 202; O’Donnell v Reichard at 920.
The appellant’s grounds of appeal which relate to the representation as to form, content and operation of the two agreements, fail.
The other grounds of appeal relate to his Honour’s findings that Mr Robertson did not rely upon the representations as to software and machinery notwithstanding the finding that the representations were made and that some of them were misleading or deceptive.
Mr Lennon QC for the appellant submitted that the trial judge erred in finding that whether there had been reliance on the misrepresentations depended on whether Mr Robertson’s evidence to that effect was acceptable. He also submitted his Honour erred in finding that Mr Robertson had not relied upon the misrepresentations because, in so finding, his Honour failed to give weight to a finding that the misrepresentations were made in circumstances where it was intended by the maker that they be acted upon by the misrepresentee. In support of this submission he relied upon the decisions in Rhone-Poulenc Agrochimie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477 at 488 and Ricochet Pty Ltd v Equity Trustees Executors and Agency Company (1993) 41 FCR 229 at 235. Mr Lennon also relied upon the evidence of the engagement of Mr Wise, a management consultant to the manufacturing industry, by the appellant and the forwarding by Mr Robertson to Mr Taylor of Mr Wise’s two interim reports, the delay in signing the new agreement until 20 May 1993 and the various discussions involving Mr Robertson, Mr Taylor and Mr Wise prior to 20 May 1993 as supporting the evidence of Mr Robertson as to his reliance upon the representations in executing the new agreement on 20 May 1993.
In Ricochet a Full Court of this Court (Lockhart, Gummow and French JJ) said (at 235) :-
“A finding that a misrepresentation might have induced a decision will not of itself establish as a matter of probability that it did. Consistently with that finding, it may be that, on the balance of probabilities, a party was induced to make a decision by a combination of factors including the misrepresentation. Assuming a non-trivial contribution to the causative process by the misrepresentation, then it may be actionable.
Ultimately, the ‘causative threshold’ beyond which liability attaches to a misrepresentation which is one of a number of factors inducing a decision that produces loss, will be a question of judgment. This is a familiar process adverted to in various related contexts by Mason C in March v E & M H Stramare Pty Ltd (supra) and in this Court in Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (No 2) (1987) 16 FCR 410 at 418 - 419 and Pavich v Bobra Nominees Pty Ltd [1988] ATPR 49,949. (See also Munchies Management Pty Ltd v Belperio (1988) 84 ALR 600 at 712). But the mere possibility that a misrepresentation might have induced a course of action by the representee can never of itself attach liability under s 82 to the making of it.”
See also Clyde Industries Pty Ltd v Golden West Refining Corp Ltd (1996) ATPR Digest 14-160 at 53,379, 53,383.
The trial judge’s finding that the representations were made intending that the appellant rely upon them is not, of itself, sufficient to establish reliance. It is for the tribunal of fact, in this case the trial judge, to determine having received all the evidence, “whether the misrepresentation in question contributes to the decision to enter the contract” (Ricochet v Equity Trustees at 234).
The other bases upon which the rejection of the evidence of Mr Robertson as to reliance was attacked, by counsel for the appellant, in argument, were that his Honour gave too much or too little weight to specific parts of the evidence and to the conduct of Mr Robertson in relation to the carrying on of the business after execution of the agreement and to his dealings with Mr Wise and Mr Taylor in the context of Mr Wise’s interim reports. It was also submitted that no or no sufficient weight was given to the fact that Mr Taylor and Mr Dew gave evidence inconsistent with other independent witnesses.
I have considered each of the submissions of the appellant in this regard and I do not intend to set them out in detail. It is sufficient to say that I am satisfied that it was open to his Honour to make the findings which he did and that the weight that his Honour gave to the relevant evidence was a matter for his Honour. It was not incumbent upon his Honour to make findings adverse to the credibility of Mr Taylor or Mr Dew and to give weight to such adverse findings where their evidence was in conflict with that of Mr Robertson.
The trial judge determined, by reference for the most part to the contemporaneous documentation, that the representations as to software and saws were not relied upon by the appellant in entering into the new agreement. A finding in those terms was open to his Honour. That there was a different conclusion pointed to on one view of the evidence does not assist the appellant. The trial judge rejected that competing view. There was ample evidence, which is summarised in the passages from his reasons quoted above, to support his Honour’s conclusion. Indeed, it would, in my view, have been difficult for his Honour to conclude otherwise. I am not persuaded that the trial judge erred in this respect.
With respect to the question of reliance on the misrepresentations as to the respondent’s software and saws, I am also of the view that the appeal must fail.
The appeal should be dismissed with costs.
I certify that this and the preceding eighteen (18) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Cooper
Associate:
Dated: 2 April 1998
Counsel for the Appellant/Cross-Respondent: E J Lennon QC Solicitor for the Appellant/Cross-Respondent: Kinneally Mahoney Counsel for the Respondent/Cross-Applicant: G Egan Solicitor for the Respondent/Cross-Applicant: Hill & Taylor Date of Hearing: 4 August 1998 Date of Judgment: 2 April 1998 Place of Judgment: Brisbane
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