Tyson v Brisbane Market Freight Brokers Pty Ltd

[1994] HCA 67

HIGH COURT OF AUSTRALIA

BRENNAN ACJ DAWSON TOOHEY, GAUDRON AND McHUGH JJ

ALLAN GEORGE TYSON v. BRISBANE MARKET FREIGHT BROKERS PTY. LTD.

(1994) 68 ALJR 304

24 March 1994

Orders

Appeal dismissed with costs.

Decisions

BRENNAN ACJ AND DAWSON J The respondent company had a fleet of pantechnicons which were used to transport produce to the Brisbane markets. It engaged contractors to move the pantechnicons between the source of supply and the markets. The contractors provided the prime movers to which the pantechnicons were attached for this purpose and were paid a rate per kilometre for the service. In October 1986, the respondent engaged the appellant to move one of its refrigerated pantechnicons between Bundaberg and Brisbane. On 29 January 1987, whilst the appellant's prime mover was pulling a pantechnicon, the units left the highway and collided with a tree. The pantechnicon was damaged and the respondent thereby suffered loss which was agreed in the amount of $50,000. It was admitted that the driver, an employee of the appellant, had been negligent. The respondent (hereafter the plaintiff) sued the appellant (hereafter the defendant) to recover its loss and interest thereon. Judgment was given against the defendant in the District Court for a total amount of $71,000. The defendant defended the action, basing his defence on a conversation that was found by Boyce DCJ to have taken place between the defendant and a Mr Roles, who was the managing director of the plaintiff, shortly before the defendant took delivery of the pantechnicon at the plaintiff's premises near Ipswich on 11 October 1986.

2. On 10 October, a Friday, the defendant had spoken by telephone with a Mr Gardiner, the plaintiff's transport manager. The plaintiff wanted to begin its runs from Bundaberg to Brisbane on Sunday 12 October. Accordingly, it was arranged that the defendant would pick up the pantechnicon from the plaintiff's premises at about 10 o'clock on Saturday 11 October. In that conversation, it was agreed that the defendant would be paid "the cents a kilometre that they pay everybody else". The defendant came to the plaintiff's premises on Saturday morning, gave his name and said "I have come to pick up the pan". Mr Roles was called. They had a discussion about the need for grease on the plates of the pantechnicon and about the connecting air hoses and, as Mr Roles walked away to attend to these matters, the defendant said to him "Is it insured?" and received the reply "Yes". The reply was true in the sense that the plaintiff had a policy of insurance covering its fleet of pantechnicons, but the policy did not cover the liability of contractors who were engaged to pull the pantechnicons. The defendant misunderstood the significance of the answer to his question. His understanding was that "if the van was insured, which it was, and my truck was insured, there was no further insurance to take out". Although he had an insurance broker, he did not think it was necessary to discuss the matter with him.

3. The defences based on Mr Roles' answer to the defendant's question about insurance were pleaded in a variety of ways. Unfortunately, neither party appears to have identified with any particularity the issues which the defendant had to prove to make good any of the defences based on that answer. It is unnecessary to determine whether any of those defences afforded an answer to the plaintiff's claim if the Court of Appeal was right in holding that the contract to haul the pantechnicon had been made before Mr Roles gave his answer and that that was fatal to the defence case. At the trial the controversy was focused on the question whether any conversation about insurance had taken place between the defendant and Mr Roles. Mr Roles denied that there was any such conversation; indeed, he did not remember having met the defendant. However, Boyce DCJ found that Mr Roles did tell the defendant that the pantechnicon was insured. His Honour, noting that Mr Roles' answer to the question was true, said:

"The fundamental problem is that Mr Tyson wrongly assumed that, if the plaintiff had insured the pantechnicon, then the benefit of that insurance was available to Mr Tyson. Nothing whatsoever was said by Mr Roles to induce that belief on the part of Mr Tyson."

His Honour rejected each of the several defences which were based on the answer given by Mr Roles. The defendant appealed to the Court of Appeal. Although their Honours in the Court of Appeal "might well have been disposed to accede to (the defendant's) submission" that Mr Roles' answer was likely to mislead or deceive the defendant into thinking that "the pantechnicon carried insurance that, in the event of its being damaged, would benefit the first defendant", they held that the case on which the defendant had relied in the District Court depended on the temporal sequence of the making of the representation by Mr Roles and the making of the contract for the haulage of the pantechnicon. As their Honours were of the opinion that the evidence tended to suggest that the representation was made after the contract was formed, the appeal was dismissed.

Materiality of the temporal sequence
4. Paragraph 2 of the plaintiff's statement of claim pleaded the making of a contract for the haulage of the pantechnicon but no date was assigned to that contract. The amended defence admitted par.2 and then pleaded that the representation was made "(i)n the course of antecedent negotiations which culminated in the agreement referred to in paragraph 2 of the Plaintiff's Statement of Claim". This allegation founded a defence either that the defendant entered into that contract "on the faith of the Plaintiff's representation" or that there was a term of the contract that the defendant would be covered by a policy of insurance with respect to any damage to the pantechnicon. A further alternative defence asserted that Mr Roles' conduct "was false, misleading or deceptive conduct or conduct likely to mislead or deceive". The conduct was said to consist, inter alia, in "negotiating and entering into the agreement pleaded in paragraph 2 of the Plaintiff's Statement of Claim". A counterclaim was based on these allegations and an order was sought under s.87 of the Trade Practices Act 1974 (Cth) ("the Act") on the footing that Mr Roles' conduct was in breach of s.52 of that Act.

5. But, when the case was argued before the Court of Appeal, the defendant put forward a submission that an order could be made in his favour under s.87 of the Act on the footing that Mr Roles' conduct was in breach of s.52 even if that conduct occurred after the contract between the parties had been formed. This argument focused attention on what Davies J.A. in the course of argument had called the question of causation: what had the alleged misleading conduct induced the defendant to do or to refrain from doing? That issue had been addressed in the examination-in-chief of the defendant at the trial:

"Mr Tyson, would you have entered into this agreement with Brisbane Market Freight Brokers had you not been told that the van was insured?--If I had been told it wasn't insured I wouldn't have entered - I wouldn't have pulled it."

6. As the contract was made in October 1986 and the accident happened in January 1987, the argument was that, whether or not the alleged misleading conduct induced the defendant to enter into the contract, it induced him to pull the pantechnicon and that either of those acts afforded the link in a chain of causation between Mr Roles' answer and the liability incurred or the damage suffered by the defendant. Whatever the strength of the argument might otherwise be, when Davies J.A. put to counsel then appearing for the defendant that he had to rely on a contract formed after the representation was made, counsel accepted that "that may well be so" and subsequently affirmed that concession. The concession was properly made, for it is clear from the pleadings, the evidence and the written submissions in the District Court that the case which the defendant sought to make in that Court was that Mr Roles' statement either became a term of the contract or induced the defendant to enter into it. In this Court, the argument that relief might have been obtained under s.87 of the Act even if Mr Roles' answer had been given after the contract was formed was again advanced from time to time, although it was conceded that at the trial the defendant's contention was not that he was induced by Mr Roles' answer to haul the pantechnicon but was simply that the defendant would not have entered into the contract to haul the pantechnicon had he known that the pantechnicon was not insured to cover his liability.

7. Irrespective of the form in which the defendant cast his defence based on Mr Roles' conduct, he had to show that Mr Roles' answer was given not later than the formation of a contract which bound the defendant to haul the pantechnicon. The Court of Appeal dismissed the defendant's appeal because, in their Honours' view, the evidence showed that the contract was formed on 10 October in the telephone conversation between the defendant and Mr Gardiner; that is, on the day before the conversation with Mr Roles.

8. Nevertheless, in this Court the defendant contends that the date of the contract was never in issue at the trial. That contention is correct in the sense that no evidence was led to attribute a date to the contract, but it is incorrect in the sense that the case raised by the defendant at the trial required a finding that the contract was not formed before Mr Roles answered the question about insurance.

The issue at the trial
9. Despite the admission in the defence of the contract pleaded in par.2 of the statement of claim, there was no unanimity between the parties on what constituted the contract. The defendant contended for an oral contract made between the defendant and representatives of the plaintiff on 10 and 11 October; the plaintiff gave particulars of the contract on which it relied, contending for a written agreement contained in a document entitled "Brisbane Market Freight Brokers Subcontractors Manual" sent to the defendant under cover of a letter dated 16 October 1986. Having regard to these contrary contentions, it was no doubt true that the plaintiff had not contended that the alleged conversation on 11 October occurred before the contract (as the plaintiff contended for) was made. But the defendant misses the point in submitting that neither party at the trial challenged that Mr Roles answered the question about insurance - an event which occurred on Saturday 11 October - before the contract was formed. It is nothing to the point that the plaintiff's evidence was directed to a denial of the conversation with Mr Roles and, until closing addresses, to supporting the proposition that the contract was made on 16 October or later. The defendant's case, as he chose to make it, required proof that the answer was given before the contract was formed. It is immaterial that the plaintiff's arguments did not advert to the temporal sequence of the answer by Mr Roles and the formation of the contract. The defendant failed to establish that the answer preceded the formation of the contract and that link in his chain of proof was not supplied by any agreement or concession, express or implied, by the plaintiff.

10. Special leave was granted in this case because, it was said, the Court of Appeal had disposed of the matter by assigning a date (namely 10 October 1986) to the formation of the contract and that date was not in issue at the trial. On analysis, that argument is wholly without foundation. The date of the contract was not in issue as such: what was in issue was the question whether the contract was formed before the conversation with Mr Roles. The Court of Appeal determined that issue as it had been invited to do. The appeal must now be dismissed.

11. It has not been necessary to consider whether the defendant would have had a good defence or counterclaim if the question of temporal sequence had been determined in his favour. The matter for determination on this appeal turns entirely on the manner in which the defendant formulated his defences at the trial, on the evidence at the trial and on the issues as they were presented for determination by the Court of Appeal.

TOOHEY AND GAUDRON JJ The genesis of this appeal lies in the way issues were presented to the trial judge for determination and the manner of their disposition by the Court of Appeal in Queensland.

2. The respondent sued the appellant to recover damages which it sustained when one of its pantechnicons, being driven by an employee of the appellant who had agreed to move it, left the road and collided with a tree. It is not in issue that the employee was negligent or that the appellant is vicariously responsible for that negligence.

3. In his defence to the respondent's action, the appellant pleaded that it was a term of the agreement between the parties that the respondent would maintain a commercial motor vehicle policy in respect of the pantechnicon van and trailer, a policy which would indemnify the appellant against any claim for loss or damage to the van or trailer arising through performance of the agreement.

4. A telephone conversation took place on Friday, 10 October 1986 between the appellant and the respondent's transport manager, Mr Gardiner. In the course of that conversation it was arranged that the appellant would pick up the pantechnicon from the respondent's premises at about 10 a.m. the following day. The appellant arrived at the respondent's premises on Saturday morning. There was a conversation between the appellant and Mr Roles, the managing director of the respondent. The conversation related mainly to technical matters about the operation of the pantechnicon but as Mr Roles walked away to attend to these matters, the appellant said: "Is it insured?" Mr Roles said: "Yes." Mr Roles denied that this conversation took place but the trial judge accepted the appellant's account of what took place.

5. The pantechnicon was insured under a general motor vehicle insurance policy covering the respondent's fleet. But the policy did not extend to persons such as the appellant who contracted to move the pantechnicons. The appellant took Mr Roles' answer to mean that "if the van was insured, which it was, and my truck was insured, there was no further insurance to take out".

6. The appellant attempted to defend the claim against him by relying upon Mr Roles' statement in various ways. They can be summed up in this way:

1. The respondent represented that the pantechnicon was insured so that the risk of damage was not the appellant's risk.

2. It was a term of the agreement for the removal of the pantechnicon that the respondent would maintain a relevant insurance policy.

3. The appellant entered into the agreement on the faith of the representation.

4. The respondent agreed to fulfil its representations as to insurance, alternatively it became the insurer of the pantechnicon. 5. The respondent was estopped from denying that the pantechnicon was insured.

6. The respondent engaged in misleading or deceptive conduct.

7. The appellant was the employee of the respondent within the Insurance Contracts Act 1984 (Cth), and hence the respondent's insurer was not entitled to maintain the action against the appellant.

8. The respondent's insurer was not subrogated to any rights of the respondent.

7. We have summarised these defences because the confusing picture they present may well have played a part in what took place at the trial and on appeal. While the trial judge accepted the appellant's account of the meeting with Mr Roles, he rejected all defences. In particular, he held that Mr Roles' answer was "truthful and accurate" and that the appellant simply misunderstood the significance of what was said regarding insurance.

8. On appeal, the Court of Appeal referred to "a persuasive argument" on behalf of the appellant that, in the circumstances, the appellant's question to Mr Roles could only have been directed at the benefit of the respondent's insurance to him. And, in response to a further submission by the appellant that the answer "Yes" was likely to mislead or deceive him, the Court of Appeal said:

" We might well have been disposed to accede to this submission ... However, even if accepted, there is another obstacle to the success of the (appellant's) claim to be indemnified. It concerns the time at which the representation was made by the (respondent), in comparison with the time at which the contract between the parties was entered into."

9. Properly to understand the Court of Appeal's references to "time", it is necessary to appreciate that in the statement of claim the respondent pleaded an agreement between the parties for the transport of the pantechnicon but that it did so without identifying any date or whether the agreement was written or oral. In response to a request for further and better particulars, the respondent identified the agreement as written and constituted by two documents. The first document was entitled "An Important Introduction"; the second was entitled "Brisbane Market Freight Brokers Sub-Contractors Manual" and dated 7 July 1986. Both documents, it was said, were sent under cover of a letter from the respondent dated 16 October 1986. The two documents are in standard form and so, it appears, is the letter of 16 October 1986 which contains the statement: "Please find enclosed your copy of our subcontractors manual. This forms a contract between you and the company." It later emerged that the appellant did not see this letter until some time in 1988. In his final address, counsel for the respondent abandoned any reliance upon this material as constituting the agreement between the parties and the case then turned on an oral agreement to be distilled from the events of 10 and 11 October 1986.

10. The trial judge made no finding as to the precise time the agreement between the parties was concluded. The Court of Appeal therefore proceeded to draw inferences of fact from the material before them. We shall not detail the Court of Appeal's analysis of the material. It is enough to say that while the appellant submitted that there was no concluded contract until he accepted delivery of the pantechnicon on 11 October, the Court of Appeal concluded: "The evidence, however, suggests that these acts (inspection, delivery, etc.) may equally well have been done in performance of an agreement already made between the parties." The Court referred to evidence pointing in that direction and said:

" In the end we are not satisfied on the material before us that the conclusion ought to be drawn that the initial statement or representation preceded rather than followed the making of the contract. The evidence as a whole tends, we think, to suggest that the agreement was entered into in the course of the Friday conversation with Gardiner."

11. It is at this point that the conduct of the trial becomes crucial. If the relationship in time between the making of the oral contract and the statement by Mr Roles had been in issue at the trial, there can be no quarrel with the way in which the Court of Appeal disposed of the appeal. However, the appellant claims that this relationship was never in issue at the trial, that relevantly the only question was whether Mr Roles made the statement attributed to him and the consequences to be attached to that statement if he did.

12. It is true of course that on the pleadings it was incumbent on the appellant to prove that the statement by Mr Roles was made before the agreement between the parties was concluded. Equally it is true that he has no finding in his favour on this aspect. But, the appellant says, so far as the oral contract was concerned, this was because it was never an issue at trial. The appellant was asked in examination-in-chief:

"Mr Tyson, would you have entered into this agreement ... had you not been told that the van was insured?"

To this he answered:

"If I had been told it wasn't insured I wouldn't have entered - I wouldn't have pulled it."

13. The Court of Appeal seems to have regarded this evidence as some sort of acknowledgment that by that time the appellant had entered into the contract but was saying that he would have refused to perform the contract if he had discovered the pantechnicon was uninsured. That is reading too much into the evidence. There is force in the appellant's submission that, had there been an issue at trial as to whether Mr Roles' statement was made before the agreement was concluded, the question asked of the appellant would have been "grossly leading and grossly objectionable". It was not objected to.

14. As stated earlier, the abandonment by the respondent of reliance upon the written material meant that the contract had to be an oral one, to be distilled from what took place on 10 and 11 October. The statement of claim contains a cause of action in negligence as well as breach of contract and there was an admission of negligence. Whether for that reason, or because the respondent abandoned reliance on the written material, or perhaps both, the trial judge made no finding as to the making of the contract. Certainly the absence of such a finding lends support to the appellant's contention that so far as the defence was concerned, the only issues were what was said by Mr Roles and what legal consequences should be attached to his remarks. The contention gains further support from the fact that the trial judge found it unnecessary to make any express finding as to when the contract was made in relation to the conversation of 11 October, confining himself in that regard to what was said by Mr Roles and the significance of what he said.

15. That said, the fact is that the appellant's case as pleaded asserted a representation or misleading or deceptive conduct based on remarks made before the agreement between the parties was concluded. In Gould and Birbeck and Bacon v. Mount Oxide Mines Ltd. (In Liquidation) ((1) (1916) 22 CLR 490 at 517.) Isaacs and Rich JJ. said:

"But pleadings are only a means to an end, and if the parties in fighting their legal battles choose to restrict them, or to enlarge them, or to disregard them and meet each other on issues fairly fought out, it is impossible for either of them to hark back to the pleadings and treat them as governing the area of contest."

16. In view of some of the cases to which the Court was taken by counsel in argument ((2) for instance, Banque Commerciale S.A. en Liquidation v. Akhil Holdings Ltd. (1990) 169 CLR 279 and authorities referred to therein.) it must be stressed that this was not a situation in which one party sought to enlarge his or her case beyond the pleadings. It is unnecessary to resort to rubrics such as estoppel or waiver; the fact is that, so far as an oral contract was concerned, the trial was conducted on a footing in which the need for the appellant to prove a pre-contract inducement as distinct from an inducement was eliminated.

17. The question here is essentially one of fairness in the conduct of the proceedings ((3) see Water Board v. Moustakas (1988) 62 ALJR 209 at 211; 77 ALR 193 at 196.), in particular whether it was unfair to the appellant to determine the appeal by reference to a point which, at least by implication, was not regarded as an issue before the trial judge. In our view, to determine the appeal on this footing was unfair to the appellant because he had not dealt with the point at trial. Of course it may be said that the appellant was at fault for not making good an essential step in his answer to the respondent's claim. There is however a circularity in that argument because, from the way in which the case was fought and was determined by the trial judge, it is apparent that the step was not regarded as a necessary one.

18. There is another aspect which strengthens a conclusion that the Court of Appeal was in error. In decisions such as Banque Commerciale, O'Brien v. Komesaroff ((4) (1982) 150 CLR 310.) and Coulton v. Holcombe ((5) (1986) 162 CLR 1.) the intermediate appellate court determined issues that arose logically once the point in contention at trial had been resolved. In other words, the appellate court, having overturned the trial judge on a particular issue, went on to consider other issues that then arose. But here the Court of Appeal did not take that course. Rather, without overturning any finding made by the trial judge, the Court dismissed the appeal by reference to a point not truly before the trial judge and certainly not decided by him.

19. These conclusions present something of a problem since the Court of Appeal made no express finding as to the significance of Mr Roles' remarks or when the agreement was made. It may be, of course, that the Court of Appeal was not prepared to attach to Mr Roles' remarks the significance the appellant wishes to attach to them. Equally, and perhaps more likely, they would have been so prepared. At the same time, if pressed, they may have been prepared to make a finding that the agreement was made before 11 October. The situation is an unsatisfactory one but there seems no choice other than to allow the appeal and remit the matter to the Court of Appeal to be dealt with in accordance with the reasons of this Court.

McHUGH J I agree that this appeal should be dismissed.

2. To succeed in his defence, as pleaded, the appellant (hereafter the defendant) had to prove (1) a representation made by Mr Roles and (2) that the representation was false or misleading and induced the defendant to enter into the contract, or alternatively, that the representation became a term of the contract. The defence, as pleaded, did not allege that the representation was made after the contract was made. Nor does the defendant claim that, despite his pleading, his case at the trial was that the representation was made after the contract was formed. If, without objection, he had sought to prove such a claim at the trial, he could not now be held to his pleading ((6) Gould and Birkbeck and Bacon v. Mount Oxide Mines Ltd. (In Liquidation) (1916) 22 CLR 490 at 517.). However, absent any admission by the respondent (hereafter the plaintiff) that the representation, if made, was made before the contract or, alternatively, became part of the contract, the defendant bore the onus of proving one or other of those elements to make out his defence.

3. As often happens in litigious contests, the opposing party (in this case the plaintiff) concentrated its forensic fire on a particular issue in the pleadings. That issue was whether the representation was made at all. If the plaintiff could succeed on that issue, the defence failed. But that forensic tactic did not constitute an admission by the plaintiff that the representation, if made, was made before, or became part of, the contract. Nor did it constitute a concession that the time of making the representation was not an issue in the case. Furthermore, the defendant's case is not advanced by the concession before the Court of Appeal by the plaintiff's counsel "that the date upon which the contract was made was not really an issue at the trial". It was not the date of the contract which was central to the defence. What was central to the defence was whether the representation had been made and, if it had, whether it had been made before, or became part of, the contract.

4. A party does not make an admission about one of the issues in the other party's pleading simply because he or she calls no evidence on, or makes no submission about, that issue. Thus, at common law, a defendant could allege before the court in banc that there was no evidence to support the plaintiff's case even though the point had not been taken at the trial ((7) Hampton Court Ltd. v. Crooks (1957) 97 CLR 367.). Failure to take the point at the trial was not seen as an admission or an abandonment of the issue. It was merely a factor, albeit an important one, in determining whether the court should allow the point to be taken after verdict ((8) ibid at 372 per Dixon J). Similarly, a party has always been able to insist that a trial judge direct the jury in accordance with the law governing the legal issues pleaded even though that party has fought the case on a specific factual issue without addressing the jury on the legal issues involved ((9) Placer Exploration Ltd. v. Misiorowski (1969) 43 ALJR 376.).

5. At the trial of the present case, counsel for the plaintiff was entitled in his final address to contend that the contract was made before the representation even though he had not cross-examined or led evidence on that point and had maintained that no representation was ever made. Before the Court of Appeal he also had the right to raise that contention unless "evidence could have been given (at the trial) which ... could have prevented the point from succeeding" ((10) Suttor v. Gundowda Pty. Ltd. (1950) 81 CLR 418 at 438.). The defendant was not in a position to call evidence to prove that the representation was post-contractual. It would have been contrary to his whole case to do so. Indeed, counsel for the defendant asserted in his written submissions to this Court:

"Although the parties were contending for different dates upon which the contract was made, it was common ground that any discussion with Roles was pre-contractual. The pleadings reflected that fact. The trial was conducted by both parties upon that basis."

6. It is the defendant, not the plaintiff, who is seeking to enlarge the issues which were set down for determination by the trial judge. The defendant seeks to argue that, whether the representation was made before or after the contract, the representation was misleading and induced him to haul the pantechnicon. That is to say, the defendant now wishes to treat his pleaded defence as irrelevant. It is not a case of raising a new point covered by the pleadings. Here the defendant wishes to raise a case inconsistent with the issue which he tendered for determination at the trial. Except in the case where the parties have mutually abandoned the pleadings at the trial, the public interest in the finality of litigation requires that, unless some exceptional circumstance exists, a party must be refused leave to make a case on appeal which is inconsistent with his or her pleadings ((11) Banque Commerciale S.A., en Liquidation v. Akhil Holdings Ltd. (1990) 169 CLR 279 at 284.). As the majority of this Court in Coulton v. Holcombe ((12) (1986) 162 CLR 1 at 11.) pointed out, no court finds any satisfaction in refusing to allow a party to raise a point which might enable it to succeed in the litigation. But, as the Court went on to say, the principles which govern the raising of new points "have stood the test of time because they have been found to serve effectively the public interest in the fairness and expedition of the administration of justice". We live in an era where the cost of litigation is beyond the means of ordinary citizens and where awards of party and party - and even indemnity - costs cannot fully compensate a party for the cost and worry of litigation. Because that is so, it is as important as ever that the established principles concerning the raising of new points be strictly applied and that the parties be kept to the issues which, by their pleadings, they raised for determination at the trial.

7. The defendant has failed to give any sufficient reason why he should be allowed to depart from the case that he pleaded at the trial. It follows that the appeal must be dismissed.