Transpacific Standardbred Agency Pty Ltd v Westbray Seafoods (Aust) Pty Ltd

[1995] FCA 1059

IN THE FEDERAL COURT OF AUSTRALIA   )
VICTORIA DISTRICT REGISTRY         )  No. VG120 of 1992
GENERAL DIVISION                   )

BETWEEN:TRANSPACIFIC STANDARDBRED AGENCY PTY LTD

Applicant

AND: WESTBAY SEAFOODS (AUST) PTY LTD

Firstnamed Respondent

AND:     HAROLD FRANCIS LONIE

Secondnamed Respondent

AND;NATIONAL AUSTRALIA BANK LIMITED

Thirdnamed Respondent

AND:NATIONAL AUSTRALIA BANK LIMITED

Cross-Claimant

AND:TRANSPACIFIC STANDARDBRED AGENCY PTY LTD, GARY KEITH EWEN and COLLEEN CLARK

Cross-Respondents

CORAM:    Jenkinson J.

PLACE;    Melbourne

DATE:     21 December, 1995

MINUTES OF ORDER

The Court Declares That:

1. On 26 September 1988 the first-named respondent in trade or commerce engaged in conduct that was misleading or likely to mislead in contravention of sub-section 52(1) of the Trade Practices Act 1974 in that on the said date the said respondent stated by
   its agent the second-named respondent that it would do what should be necessary to procure the approval of the Maritime Services Board of the State of New South Wales of the use of the fishing vessel "Sovereign" without prohibition of the use of the said vessel's tanks for the carriage of wet bait or wet fish.

1. On 26 September 1988 the applicant and the first-named made an oral contract terms of which were that in consideration of completion by the applicant of a written contract dated 1 September 1988 for the sale of the said vessel by the first-named respondent to the applicant the first-named respondent promised to do what should be necessary to procure the approval aforesaid.

1. In breach of the said oral contract the first-named respondent failed on and before the commencement of the proceeding on the originating application against the first-named respondent to do what was necessary to procure the approval aforesaid.

The Court Orders That:

1. Further consideration of the said proceeding be adjourned to a date to be fixed.

1. There be judgment for the second-named respondent in the proceeding on the originating application against him.

1. There be judgment for the third-named respondent in the proceeding on the originating application against it.

1. The applicant's costs of the trial of the questions determined by the declarations aforesaid be paid by the first-named respondent.

1. There be no order as to the second-named respondent's costs of the proceeding on the originating application against him.

(Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.)

IN THE FEDERAL COURT OF AUSTRALIA   )
VICTORIA DISTRICT REGISTRY         )  No. VG120 of 1992
GENERAL DIVISION                   )

BETWEEN:TRANSPACIFIC STANDARDBRED AGENCY PTY LTD

Applicant

AND: WESTBAY SEAFOODS (AUST) PTY LTD

Firstnamed Respondent

AND:     HAROLD FRANCIS LONIE

Secondnamed Respondent

AND:NATIONAL AUSTRALIA BANK LIMITED

Thirdnamed Respondent

AND:NATIONAL AUSTRALIA BANK LIMITED

Cross-Claimant

AND:TRANSPACIFIC STANDARDBRED AGENCY PTY LTD, GARY KEITH EWEN and COLLEEN CLARK

Cross-Respondents

CORAM:    Jenkinson J.

PLACE;    Melbourne

DATE:     21 December, 1995

REASONS FOR JUDGMENT

On 7 February 1995 my conclusions about certain questions arising in this proceeding were stated and the reasons for those conclusions were published.  Some of those conclusions were expressed thus:

"I find that, in consideration of Transpacific's completion of the written agreement, Westbay, by Mr. Lonie, promised to do what should be necessary to procure the Board's approval of the use of the vessel without prohibition of the use of the vessel's tanks for the carriage of wet bait or wet fish.  I find that the agreement was made orally between Mr. Ewen and Mr. Lonie on the vessel on 26 September 1988, substantially in the terms of the conversation narrated by Mr. Ewen in evidence.

........ ........ ........ ........ ........ .......

Westbay's promise implied a representation that Westbay intended to perform the promise and a representation that Westbay had the ability to perform the promise. No evidence having been adduced by Westbay that it had reasonable grounds for making either representation, it is deemed not to have had reasonable grounds for making either and each representation is to be taken to have been misleading: s.51A of the Trade Practices Act 1974 and Futuretronics International Pty. Ltd. v. Gadzhis [1992] 2 V.R. 217."

Other questions, about which no conclusion was stated on 7 February 1995, are raised by the allegation in paragraph 14 of the statement of claim, that Mr. Lonie, the second respondent, was party to the contravention by Westbay of s.52 of the Trade Practices Act 1952 (Cth).

The evidence about the conversation on the vessel on 26 September 1988 was considered in the reasons published on 7 February 1995, in these terms:

"Mr. Lonie's evidence was that he had on Westbay's behalf undertaken to Transpacific that Westbay would engage and pay Mr. Brown to prepare and present to the Board a stability submission.  He denied, however, that he had agreed that Westbay would do more than that.  Mr. Ewen, on the other hand, gave evidence that on 26 September 1988, after Mr. Cropp's finding about the centre of gravity had been confirmed, this conversation between the two men occurred:

`Mr Lonie addressed the matter in a sense that he'd a great disappointment that - that it looked it - to quote as good as I can recall, "We'd stuffed up.  Looks like the sale is buggered and it doesn't look like we can proceed."

HIS HONOUR;  Who said that?---Mr Lonie.

Yes?---I said, "We've invested too much money and too much commitment to withdraw at this point in time.  We want to proceed."  He said, "Well, what about the stability problem?"  I said, "Well I'd accept your word or your guarantee" - or words to that effect - "or something indemnifying us against the problem if you can get it ratified."  He said, "Do you think Phil Brown can get it ratified through the MSB?"  I said, "I don't know.  He's supposed to know the leading naval architect in the MSB or the boss up there, maybe he can do wonders."  It was then put to me that perhaps we could put some concrete ballast in the keel section of The Sovereign - - -

Who said that?--- - - - by Mr Lonie.

Yes?---I rejected that on the grounds that we'd lose too much free board and our payload was insignificant as it was - not sufficient as it was.  So he agree to ratify the problem - rectify the problem and we agreed to settle on the grounds that we got a letter to say that they would do that."

I am not persuaded that Mr. Lonie remembered, when he gave evidence before me in 1994, that he had on 26 September 1988 said to Mr. Ewen what I have found that he did say.  But I am persuaded that on 26 September 1988 he knew that what he was saying to Mr. Ewen amounted to a promise by Westbay to do what should be necessary to procure the Board's approval of the use of the vessel without prohibition of the use of the vessel's tanks for the carriage of wet bait or wet fish.  It follows that at that time he had knowledge of the first of the essential elements of the contravention to which he is alleged to have been a party.

The implied representations were that Westbay intended on 26 September 1988 to perform the promise and that on that date Westbay had the ability to perform the promise. If Westbay had had that intention and that ability, the representation "with respect to" the performance of its promise - the representation that it would do what should be necessary to procure the specified approval - would not have lacked reasonable grounds. Westbay not having adduced evidence that it had those reasonable grounds, sub-section 51A(2) of the Trade Practices Act 1974 so operated that Westbay was, "[f]or the purposes of the operation of sub-section (1) in relation to" the proceeding concerning the representation that it would do what should be necessary to procure the specified approval, deemed not to have had reasonable grounds for making the representation. When the question is to be determined whether Mr. Lonie had knowledge of the second essential element of the contravention to which he is alleged to have been a party, sub-section 51A(2) has in my opinion no operation by which the resolution of that question could be advanced. Its operation is confined to the determination of the question whether that second essential element exists.

The evidence does not persuade me that on 26 September 1988 Mr. Lonie believed that the directors of Westbay (of which he was one) lacked the intention that Westbay should perform the promise.  I am not persuaded by the evidence that on 26 September 1988 Mr. Lonie believed that Westbay had not the ability to perform the promise.  I am not persuaded by the evidence that on that day Mr. Lonie believed that Westbay did not have reasonable grounds for representing that it would do what should be necessary to procure the specified approval.  The evidence afforded no basis for finding that at any material time Mr. Lonie was the dominant - or even an influential - director of Westbay.  Accordingly I cannot draw from the conduct of Westbay since September 1988 an inference concerning Mr. Lonie's beliefs or intentions on 26 September 1988.  Mr. Lonie's own conduct since September 1988 - fobbing off Mr. Ewen and giving in evidence an account of his conversations with Mr. Ewen which I have found to be incorrect - does not enable me to infer his knowledge or belief on 26 September 1988 that the promise would not, or could not, be honoured by Westbay.  The passage of time and the economic pressures operating in a difficult industry are sufficient to require the conclusion that a change of mind and memory on Mr. Lonie's part is at least as probable as perseverance from 26 September 1988 until August 1994 in consciously misleading conduct.  Dr. Bleechmore submitted that Mr. Lonie's insistence in evidence that he had never promised to do more than procure and pay for a stability submission by the naval architect indicated, having regard to what I have found that he had promised, a consciousness of what he had in fact said and a determination to deny that it had been said.  But if regard is had to the conversation between Mr. Lonie and Mr. Ewen which I have quoted from the transcript of Mr. Ewen's evidence, the ease with which a man in Mr. Lonie's position could persuade himself in the course of time that the version of the conversation which he gave in evidence was correct is, as I think, apparent.

It is unnecessary that I consider the significance, in relation to civil remedies provided by Part VI of the Trade Practices Act 1974, of the observation by Dixon J. in Mallan v. Lee (1949) 80 C.L.R. 198 at 216, to which reference was made by the members of the High Court who were parties to the joint judgment in Yorke v. Lucas (1985) 158 C.L.R. 661 at 671.

Paragraph 14 of the statement of claim also alleges that Mr. Lonie engaged in misleading conduct in contravention of s.11 of the Fair Trading Act 1985. Section 4(2) of that Act provides:

"This Act extends to the engaging in conduct outside Victoria by bodies corporate incorporated or carrying on business within Victoria or by persons ordinarily resident within Victoria."

I am not aware of evidence that Mr. Lonie was at a relevant time ordinarily resident within Victoria.  I will hear any

submissions counsel desire to make upon this cause of action.

I certify that this and the 6 preceding pages are a true copy of the Reasons for Judgment of the Honourable Justice Jenkinson.

Associate

Dated:  21 December, 1995