Walker v Sell

[2017] HCATrans 110

[2017] HCATrans 110

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S265 of 2016

B e t w e e n -

LYLE WALKER

Applicant

and

GLEN SELL

Respondent

Application for special leave to appeal

GAGELER J
NETTLE J
EDELMAN J

TRANSCRIPT OF PROCEEDINGS

FROM CANBERRA BY VIDEO LINK TO SYDNEY

ON FRIDAY, 12 MAY 2017, AT 9.57 AM

Copyright in the High Court of Australia

MR. J.S. EMMETT:   May it please, I appear for the applicant.  (instructed by Harris & Co)

MR S.R. CHANDRASEGARAN:   If it please the Court, I appear for the respondent.  (instructed by Albury Legal Pty Ltd)

GAGELER J:   Yes, Mr Emmett.

MR EMMETT:   Your Honours, can take the Court first to the appeal grounds which are at page 70 of the application book.  Your Honours will see that there are two primary appeal grounds.  In relation to the first, that is the consumer law proceeding, the special leave point arises in ground 1a.  Ground 1b, I cannot tell the Court raises a point of general principle but, in my submission, and I hope that I will establish this in a moment, ground 1b, there are sufficient prospects of success to warrant a grant of special leave in relation to ground 1a.  Ground 2 is a separate point, relating to what one might describe as contractual orthodoxy.

Can I take the Court to page 30 of the application book where your Honours will see - this is in the decision of the appeal judge - the agreed facts and the agreed issues.  The point can be stated very briefly.  It is a dispute about the purchase of a car believed to be a particular kind of valuable 1970 Ford Falcon. 

Paragraph 2 of the agreed facts is important, that is, it was an agreed fact that a representation was made.  While open at those pages I should take the Court also to agreed issue 2.  There was an issue about whether the oral representation was only made to the best of the respondent’s knowledge and whether, if such representation was made, it will impact the respondent’s liability.

The first special leave point is whether the allegedly misleading conduct occurred in trade or commerce.  The most important point to that is agreed fact 1, that is that the parties came together because the respondent advertised the vehicle for sale on the Gumtree website and, put simply, the proposition is that an online marketplace that connects strangers to buy and sell chattels, based in the first instance on the advertised description of those chattels, is conduct in trade or commerce and the representations made in subsequent meetings from the parties should also be treated as conduct in trade or commerce. 

Now, in my submission, that is a question eminently suitable for consideration by this Court, if I can persuade this Court that it is a suitable vehicle for that.

GAGELER J:   Yes, so that is the burden of the argument that you have to make, I think.

MR EMMETT:   It is, your Honour.  Could I move to that.  The applicant in any appeal, in addition to establishing trade or commerce, will need to establish that the conduct was misleading and that Mr Walker suffered loss by that misleading conduct.

GAGELER J:   Yes.

MR EMMETT:   I have taken your Honours to agreed fact 1, the Gumtree advertisement.  Now, in my submission, that was plainly misleading.  That is not the end of it, of course, but that was plainly misleading.  That is also what first brought Mr Walker to Mr Sell.  Arguably, now there is no suggestion for a moment of anybody being, as your Honours may have seen from the judgment - both parties believed the vehicle to be genuine.  There is no suggestion of any deliberate misleading but the Act certainly does not require that.

GAGELER J:   Well, do we take it that they also, despite that belief, were concerned that it might not be genuine?  Why else would they include the term in the contract?

MR EMMETT:   Well, they were certainly, it must be accepted, they were conscious of the risk that it was not genuine.

GAGELER J:   Yes.

MR EMMETT:   But that, in my submission, is not the same thing, particularly where the issue is whether the applicant suffered loss by the misleading conduct.  In my submission, arguably ‑ we will go beyond this ‑ but arguably the Gumtree advertisement is enough.  That misleading conduct brought the parties together and led to the sale.

If Mr Sell did not do enough to dispel the misleading impression that had already been brought about in his prospective purchaser, then his purchaser suffered loss by the misleading conduct or, at the very least, there are reasonable prospects of this Court so holding.

NETTLE J:   Mr Emmett, at the end of the day, after they conferred together, did the arrangement rise any higher than that the vendor was saying, “I believe that the vehicle is genuine but I cannot warrant it.  In effect, you should make your own inquiries”?

MR EMMETT:   In my submission, yes.  The appeal judge held to the contrary.  Your Honours will see that at paragraph 114 which is on page 61 of the application book.  Your Honours will see that the appeal judge so held, noting that the trial judge did not go that far.  Can I show the Court the evidence on which the appeal judge formed the view that nothing was being conveyed other than, this is what I think to be the case.  Your Honours will see that at, I am sorry, your Honour ‑ ‑ ‑

GAGELER J:   It is very hard to see that the term of the contract - I think you accept the existence of the term of the contract at paragraph 119, do you not?  It is very hard to accept that the parties could agree on such a term, at the same time one of them being misled into thinking that it is a genuine vehicle.

MR EMMETT:   Well, the point on paragraph 119, I accept that there was a term.  Your Honour will be alive to the point on the contract issue - the dispute is that there was no basis for reading such a term as limited in any way.  The fact of a term permitting rescission does not mean there is no misleading conduct and does not mean that there is no reliance, in my submission, on the precontractual representations.  It simply means that the parties are still taking steps to allocate the risk against the possibility of that not being right.

EDELMAN J:   So, your point is essentially that precontractual representations could be misleading or deceptive conduct but the inclusion of the term in the contract did not preclude a finding of reliance upon that misleading or deceptive conduct because a person might rely in part upon the contract clause and then also in part on the representations.

MR EMMETT:   That is right.  Now, that position would be harder to take if I were right about my contract point, that is, that there was a simple term that the vehicle was genuine rather than a term that it was genuine but you had only had a right to rescind until delivery of the car.

GAGELER J:   The primary judge made a finding at page 10 about line 40:

I find that the applicant relied upon his own erroneous assessment as to the genuineness of the vehicle.

Now, that appears to me like a fairly robust and open finding of primary fact.  What do you say about that?

MR EMMETT:   It is a finding of primary fact.  It is robust, in my submission.  It was not open in the circumstances.  One point that the primary judge appeared to misunderstand, and your Honours will see this on application book page 9 at paragraph 6, is reliance already on:

a friend who was an expert –

It is not clear whether he was proceeding on the basis there that there had already been some involvement of this expert who was to come along in the future.  There was evidence of some discussion in relation to how to recognise such a car before the parties met but it did not rise to the level of an expert inspection but the more ‑ ‑ ‑

EDELMAN J:   There was an expert inspection, was there not, but that came afterwards?

MR EMMETT:   There were in fact two.  There was an expert inspection some years earlier which affirmed that the vehicle was genuine.  The same expert, in the context of these proceedings, then looked closer and said, no, it is not.  Your Honours will see that at application book 35, about line 10, paragraph (4), where the two reports by the same expert are described by the appeal judge. 

But to come back to your Honour Justice Gageler’s point, absolutely, this Court would need to be satisfied that there are reasonable prospects of disturbing that finding and, in my submission, there are.  If the conduct was misleading, and if everybody knew that - because everybody agrees that there was some term in relation to the genuineness of the vehicle, if the contractual term falls anything short of a strict condition that the vehicle is genuine, in my submission there must have been some reliance on the representation and there was certainly reliance on the advertisement – I do not use this word in a derogatory sense ‑ to lure the applicant into the purchase in the first place.

But your Honours are quite right, that is the big issue, I accept, on the first appeal point.  On the second point, that is the express term of the contract, the primary issue is straying from the repeated injunction when dealing with express terms to focus on the interpretation of the language used by the parties.  The appeal judge, with the greatest respect, appears to have been led astray by his Honour’s consideration of the alternative argument, based on a sale by description.

The relevant contract’s term is very brief.  Your Honours will see it on page 34 at about line 38.  As the appeal judge correctly identified, the question for this express term, or these words, was whether those words in the contract recorded a term that the vehicle met that written description or alternatively, were simply for the purpose of identifying the specific vehicle being talked about. 

GAGELER J:   Where do we find this other term about rescission?  Where is that most clearly stated?

MR EMMETT:   The evidence about it is by no means very clearly stated. The description of the term is most stated clearly in paragraph 119 and it is repeated in paragraph 123.

GAGELER J:   All right, so when we read what is at page 34, line 38, do we need to read it in the context of this other term?

MR EMMETT:   Your Honours need to read it in the context of the evidence that is the oral agreement that an inspection would take place ‑ ‑ ‑

GAGELER J:   Yes.

MR EMMETT:   ‑ ‑ ‑ and as your Honour Justice Gageler identified and as the appeal judge identified, the only sensible reason for such an understanding is that there will be a right to rescind if the inspection indicated that the vehicle was not genuine.  The point at which, with the greatest respect to the appeal judge, the error crept in was by starting with that implied term, or that oral agreement and eliciting from it an implied term with an end date, that is, the point of delivery, rather than focusing on the first duty of the court which is to construe the words of the parties, especially the written words.

Can I take your Honour to where I say the error crept in?  It is at application book page 59, paragraph 106.  At paragraphs 106 and 107, the appeal judge addresses the sale by description question and concludes that, at about line 40:

It must be “within the reasonable contemplation of the parties that the buyer is relying on the description” –

That is what his Honour later describes as objective reliance.  That makes a lot of sense in the context of whether or not something is a sale by description, for the purposes of the Act, but it does not answer the question as a matter of construction because it ignores what happens all the time, that is, there may be no reliance one way or another but an allocation of risk as to the genuineness.

Here, where the judge had a clear context in which everybody agreed - everybody agrees there was a right to rescind for non‑genuineness.  There must have been a term to that effect and the starting position, rather than looking around for an implied term that feels to a particular judge like it makes more business sense, is to look at the words of the parties and construe it and the ‑ ‑ ‑

GAGELER J:   What do you say the term should have been?

MR EMMETT:   It was a condition that it was a genuine vehicle.  It is that simple.  The words of the written contract will certainly admit that:  The words are unclear.  They could be read either as a condition that the vehicle is genuine or as a descriptor to identify the chattel in front of them.  The context supported the latter argument and the error of focusing on the implied term first is that it creates too significant a risk of – I do not want to use the word “idiosyncratic” – but judgments about reasonableness or judgments about what makes the most business sense and what a reasonable person might have expected which is a matter about which reasonable minds and reasonable judicial minds may be expected to differ instead of maintaining the focus in the first instance on the words of the parties and how they should be construed in the context.  Unless there is anything further I can assist with, those are my submissions.

GAGELER J:   Yes, thank you.

MR CHANDRASEGARAN:   Your Honour, my learned friend has set out ‑ ‑ ‑

GAGELER J:   Just a moment, please.

MR CHANDRASEGARAN:   Sorry, your Honour.

GAGELER J:   We do not need to hear from you, thank you.

We are of the opinion that the prospects of success in disturbing the findings of absence of misleading conduct make this a poor vehicle for examining the question of trade or commerce.  In those circumstances special leave will be refused with costs.

AT 10.14 AM THE MATTER WAS CONCLUDED