FEDERAL COURT OF AUSTRALIA

Sharp v Cossack Pearls Pty Ltd [2012] FCAFC 110

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellants pay the costs of the respondents to be taxed if not agreed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

emmett J:

1    This appeal is concerned with a breach of an agreement made on 17 December 1999 (the Fishing Agreement). The primary judge found a breach of the Fishing Agreement but concluded that no loss was caused by the breach. His Honour also rejected claims of misleading and deceptive conduct concerning the conduct of one of the parties.

2    The parties to the Fishing Agreement were the first respondent, Cossack Pearls Pty Limited (Cossack), Pearl Coast Divers Pty Limited (the Contractor) and Colin and Leanne Sharp. Mr Sharp is the appellant both in his own right and as trustee of the Sharp Family Trust.

3    The proceeding at first instance was commenced by the Contractor and Liquid Investments (WA) Pty Limited (Liquid) against Cossack, Dampier Pearling Company Limited (Dampier), Mr Lindsay Brady and Mr Paul Thomas. The Contractor made claims of breach of the Fishing Agreement and Liquid made claims of misleading and deceptive conduct. The Contractor also made claims of misleading and deceptive conduct.

4    Both the Contractor and Liquid are in liquidation. On 19 June 2008, orders were made by a judge of the Court that Mr Sharp be substituted as an applicant in place of the Contractor and that Mr Sharp as trustee of the Sharp Family Trust be substituted as an applicant in place of Liquid.

5    The other respondents to the appeal are Dampier and Messrs Brady and Thomas. All were found to have no liability to Mr Sharp, either in relation to the causes of action prosecuted on behalf of the Contractor or in relation to the causes of action prosecuted on behalf of Liquid.

6    Under clause 2.1 of the Fishing Agreement, Cossack promised, by 31 December in each year of the Term, to complete and lodge with the WA Fisheries Department:

    an annual notice of intent to transfer the Quota to the Contractor;

    Notice of Pearling or Hatchery Activity Form; and

    any other forms, applications or documents reasonably required by the Fisheries Department or any other authority;

to transfer the Tags for the Quota to the Contractor.

7    Under clause 2.2, Cossack promised to use its reasonable endeavours to obtain any approvals required pursuant to clause 2.1.

8    Clause 3 of the Fishing Agreement provided that, during the Term, the Contractor must:

    catch the Quota during the Shell Season; and

    catch not less than 5,000 shell in each month during the Term.

9    The Term is the period of 5 years commencing on 1 January 2000. The Shell Season is the period from 1 January to 31 July in each year of the Term. Tags are tags for Shell issued by the WA Fisheries Department. Shell means live pearl oyster shells. Quota means the quota of 25,000 Shell allocated to Cossack under its pearling licence, and the quota of 7,500 Shell which Cossack is entitled to catch pursuant to an agreement to catch Shell under a pearling licence granted to Dampier.

10    Clause 4.1 provided that if in any month during the Shell Season the Contractor fails to catch and deliver at least 5,000 shell, Cossack may itself, or may employ another contractor to, fish and catch that part of the Quota for the relevant month. Under clause 4.2, if the Contractor fails to catch and deliver to Cossack at least 80 per cent of the Quota by 30 June in any year of the Term then Cossack may terminate the agreement.

11    By clause 20, the Contractor irrevocably appointed Cossack to be the attorney of the Contractor on expiration or earlier termination of the Fishing Agreement to complete and lodge with the WA Fisheries Department:

    a Notice of Intent to transfer the Quota back to Cossack;

    Notice of Pearling or Hatchery Activity Form to transfer the Tags for the Quota to Cossack; and

    any other consents or documents to enable Cossack to exercise its rights under clause 20.

12    Under clause 35, each party agreed to execute and do all acts and things necessary or desirable to implement and give full effect to the provisions and purpose of the Fishing Agreement.

13    The Contractor fished under the Fishing Agreement during the 2000 season and harvested all of the Quota during that season. Towards the end of 2000, Mr Sharp and Mr Brady met to discuss operations during the 2001 season. Mr Brady provided Mr Sharp with 1,250 Tags, being sufficient Tags to cover 10,000 Shell, which was the minimum catch for 2 months.

14    The Contractor commenced fishing operations in January 2001, but those operations were impeded by a series of cyclones. As a result, the Contractor had not harvested 10,000 Shell by the end of March 2001 and the Contractor had not satisfied the requirement of clause 3(b) that he catch not less than 5,000 Shell in each month. By the end of March 2001, there was a cumulative shortfall of 6,783 Shell. During April, the Contractor harvested 4,996 Shell, four below the minimum, giving a cumulative shortfall of 6,787.

15    In the meantime, however, Cossack had reallocated the balance of the Tags for the 2001 season to another contractor. As at the end of May, the Contractor had received 2,812 Tags, covering 22,496 Shell. The remaining 1,250 Tags had been given to the other contractor.

16    On 18 June 2001, the Contractor ran out of Tags to cover that part of the Quota that had been allocated to him under the Fishing Agreement. He then arranged to obtain Tags from another allocation that enabled him to catch a further 7,500 Shell.

17    Mr Sharp accepted that at no point up until the end of May did the lack of Tags have anything to do with his not making up his Quota. He accepted that there was a shortfall on what he had caught of 7,295. Mr Sharp also accepted that, when he had 7,500 Tags on his boat from another source for the period from 18 June 2001 through to 30 June 2001, he in fact only caught 1,763 Shell.

18    Cossack contends that, even thought there may have been a breach of contract by reason of the failure to supply further Tags, that failure had no causal connection with the failure to achieve the 80 per cent of the Quota by 30 June 2001. That is to say, the Contractor caught all of the Shell that it could catch, and lack of Tags was not an impediment. Even with the additional 7,500, the Contractor still did not achieve 80 per cent of the Quota by 30 June 2001. Hence, while there was a breach of contract, there were no damages suffered by reason of the breach. Further, there was no causal connection between that breach and the failure to achieve 80 per cent of the Quota.

19    However, in the statement of claim, Mr Sharp asserts that, by reason of the breach of the Fishing Agreement occasioned by Cossack’s refusal to provide the Contractor with the balance of the Tags on 5 June 2001, the Contractor lost the profit on the income that would have been generated from catching the balance of the Quota during 2001. The Shell Season finished on 31 July 2001. Mr Sharp asserts that, had he been provided with Tags in accordance with the Fishing Agreement, he would have been able to catch sufficient Shell between 5 June 2001 and 31 July 2001 to make up the quota.

20    While the failure to deliver Tags did not prevent the Contractor from achieving 80 per cent of the quota by 30 June 2001, there is a further question as to whether, had the Contractor received the Tags to which it was entitled, it might have caught Shell from 30 June to 31 July 2001. The Contractor caught 1,763 Shell in the period 18 June 2001 to 30 June 2001, after obtaining Tags for 7500 Shell. In those circumstances, it seems highly doubtful that, even after receiving further Tags, he would have caught more than he actually caught. That is to say, whether with Tags provided by Cossack or Tags obtained from another source, he did not lose the opportunity of deriving profit from whatever Shell he was able to catch before the end of the 2001 Shell Season. Because he had obtained Tags form an alternative source, he effectively suffered no loss.

21    I have read in draft form the joint reasons of Bennett and McKerracher JJ for concluding that the appeal should be dismissed with costs. I agree that the appeal should be dismissed for the reasons proposed by Bennett and McKerracher JJ.

Associate:

Dated:    16 August 2012

REASONS FOR JUDGMENT

BENNETT AND MCKERRACHER JJ:

INTRODUCTION

22    This appeal is from dismissal of a claim for damages and other relief arising from breach of contract and misrepresentation (Sharp v Cossack Pearls Pty Ltd [2011] FCA 1477).

23    The primary judge accepted that the first respondent (Cossack), to whom the other respondents are related, breached a contract with a company (Pearl Coast Divers Pty Ltd (in liquidation)) (PCD) formerly associated with the first appellant (Mr Sharp). Despite the breach having been found against the second respondent (Dampier), his Honour concluded that the breach was not causative of any loss and declined to award damages to the appellants. His Honour also concluded that the representations claimed by the appellants to have been made to them by Mr Lindsay Brady, Director of Cossack and Dampier, were in fact not made. The claim at first instance was dismissed with costs.

background

The business

24    The business relationship giving rise to the dispute arose in the pearling industry in Exmouth Gulf in the north-west of Western Australia. Specifically, the activity giving rise to the dispute was the ‘harvesting’ of pearl oyster shells from the ocean floor. These shells are seeded in laboratories and placed in underwater pearl farms. The pearls develop over a period of two to three years. Cossack and Dampier were involved in conducting a ‘pearl farming’ business.

25    The season for harvesting pearl shells is limited to the period between January and June in each year pursuant to regulations passed under the Pearling Act 1990 (WA) (the Pearling Act). Quotas are imposed on those to whom licences issue for the fishing of pearl shell. The holder of a licence may harvest the quota allocated under the licence in a particular area. Cossack and Dampier were licence holders.

26    To satisfy the regulatory requirements, it was necessary to display tags issued by the WA Department of Fisheries. The number of tags would be dictated by the quota allocated to the licence holder. Unless tags were displayed in the fishing boat, fishing was prohibited. When shells were placed in racks holding eight shell, a tag was to be attached to each such rack.

27    Cossack retained Mr Sharp to catch 5,000 pearl shell during the 1996 season in the Exmouth Gulf area. Following this initial engagement, the parties continued their commercial association.

The Panta Rei

28    In November 1996, PCD reached an agreement with Cossack to purchase a vessel known at the Panta Rei. Cossack agreed to accept three payments of $50,000 on 30 June 1997, 30 June 1998 and 30 June 1999 with ownership passing to PCD on making the final payment. Mr Sharp then used the Panta Rei for pearl fishing. In the year of operation following acquisition of the Panta Rei, Mr Sharp caught 30,000 pearl shell earning (after tax) an income of $77,223.

The 1997 Agreement

29    Further negotiations ensued between Mr Brady and Mr Sharp culminating in an agreement (the 1997 Agreement). Pursuant to the 1997 Agreement, PCD would catch Cossack’s pearl quota and to do so would purchase a boat named the Anzac Pearl from Cossack at a price of $400,000.

30    That purchase price was to be funded by a loan from Cossack to PCD of $400,000 interest free but requiring PCD to make repayments of $80,000 by 30 October in each year during the currency of the Agreement commencing with the first payment on 30 October 1998.

31    The loan was secured by a mortgage over the vessel with Mr Sharp and his wife guaranteeing the obligations to PCD under the mortgage. The key to the Agreement (and a key issue in the case) was the taking of sufficient shells. PCD was required to take 5,000 shell per calendar month during the fishing season. If there was shortfall in any month not exceeding 20% or 1,000 it could be carried over into the next month. However, if the shortfall exceeded 1,000 shell, Cossack was entitled to reallocate that quota to another contractor.

32    Under the 1997 Agreement PCD was to invoice Cossack for the shell fished under the contract at the end of each neap tide. Cossack in turn was obliged to pay PCD 90% of the invoice shell price within one business day of receipt of such an invoice. A further loan arrangement was entered into in order to refit the Anzac Pearl. While negotiating the 1997 Agreement, the parties also entered into a loan agreement under which Cossack advanced PCD $78,500 for that refitting of the Anzac Pearl. Under that loan agreement, PCD was to make repayments of $10,000 per neap tide to Cossack. When these arrangements were embodied in the executed 1997 Agreement, Mr Brady gave Mr Sharp the tags which were necessary to cover Cossack’s quota of shells for the forthcoming 1998 season. As will be seen, an issue also arises in the proceeding as to whether there was any contractual obligation to give all the tags for any season to Mr Sharp at the commencement of each season.

33    Performance of the 1997 Agreement proceeded relatively smoothly if not profitably in the first year of operation. In the 1997/1998 financial year the operating profit after tax and including Director’s salaries was $112,950. However, when the $78,050 repayment for the fitting of the Anzac Pearl and the $80,000 repayment became due on 30 October 1998, the business of PCD was running at a loss.

34    Around this time, at the invitation of Mr Brady, Mr Sharp provided Mr Brady with a quotation for performing work later in the year turning racks of seeded pearl shells at Cossack’s farm. The quotation provided in May 1998 was for $850 per day to perform that work. Mr Brady accepted that quotation and the work was performed between August and November 1998 following completion of the fishing season.

35    PCD owed $50,000 as the second instalment on the purchase of the Panta Rei due to be paid on 30 June 1998. As PCD anticipated that it would be unable to pay that sum, Mr Sharp duly warned Mr Brady of that prospect. As a result, on 16 June 1998, Mr Brady wrote to Mr Sharp indicating that in order to assist PCD’s cash flow, he was prepared to defer payment of that $50,000 for six months.

36    In addition, Mr Brady proposed that if PCD was unable to make the $80,000 payment on the Anzac Pearl with was due by the end of October 1998, Mr Brady could make deductions of $300 per day from the daily sum of $850 to be paid for the turning work. These proposals were not accepted and Cossack agreed to take back the Panta Rei. PCD was reimbursed the amount which it had paid by that stage in instalments on the purchase.

37    1999 was a more successful season and Mr Sharp caught both Cossack’s and Dampier’s quotas. No transport or turning services were provided during 1999. Following the fishing of the 1999 quota, Mr Sharp called Cossack’s secretary and financial controller, Mr Paul Thomas, asking that retention monies held by Cossack be released to PCD and also asking if Cossack could lend him $50,000.

38    A meeting ensued in July 1999 between Mr Sharp and Mr Brady to discuss operations for the forthcoming 2000 season. It was also attended by Mr Stephen Gava, Mr Sharp’s accountant, and Mr Thomas. Because concerns were expressed about PCD’s financial situation, Mr Gava asked if Cossack could give any turning or transport work to PCD. This request was declined. The possibility of refinancing the loan for the purchase of the Anzac Pearl was also raised. Mr Brady indicated that Cossack was prepared to assist but first, that Mr Sharp had to prepare a budget. A budget was duly faxed to Mr Thomas. This budget optimistically made provision for turning work calculated on the basis of 60 days of such work at $2,000 per day. Mr Thomas made clear that Cossack would be doing its own turning work in 2000 and would not require the services of Mr Sharp for that work. PCD, through Mr Gava, then sought finance from another source to continue the operations. The sum sought of $300,000 to be allocated as to $240,000 in respect of debt due under the mortgage secured over the Anzac Pearl and $60,000 for payment to outstanding creditors. Budgets, cash flows and other financial documents were supplied to support the finance application. The application for finance which was supported by Cossack was successful. As a result, PCD was able to complete its payments for the purchase of the Anzac Pearl.

The 1999 Agreement

39    With these new arrangements emerging, the 1997 Agreement was renegotiated in September 1999. The replacement agreement (the 1999 Agreement) was for a term of five years, commencing on 1 January 2000. Relevantly, there were the following key terms (PCD being ‘the Contractor’):

1

…    Quota means:

(a)    the quota of 25,000 Shell allocated to Cossack under the Pearling Licence; and

(b)    the quota of 7,500 Shell which Cossack is entitled to catch pursuant to an agreement to catch Shell under a pearling licence granted to Dampier Pearling Company Pty Ltd;

…

2.1    Transfer

Subject to:

(a)    the Contractor complying with the Contractor’s Obligations; and

(b)    any necessary approvals being obtained from the Fisheries Department or any other relevant Authority,

Cossack must by 31 December:

(c)    in the year immediately preceding the Term;

(d)    with the exception of the last year of the Term,

in each year of the Term complete and lodge with the Fisheries Department;

(e)    an annual Notice of Intent to transfer the Quota to the Contractor;

(f)    Notice of Pearling or Hatchery Activity Form; and

(g)    any other forms, applications or documents reasonably required by the Fisheries Department or any other Authority,

to transfer the Tags for the Quota to the Contractor.

…

3.    Fishing of Quota

The Contractor during the Term must:

(a)    catch the Quota during the Shell Season;

(b)    in each month during the Term catch not less than 5,000 Shell;

…

(i)    in fishing the Quota comply with:

(1)    the Pearling Act;

(2)    the Pearling Licence;

(3)    the Pearl Producers Code of Practice published from time to time;

(4)    the Guidelines for Pearl Oyster Quota Management System in Western Australia published by the Fisheries Department from time to time;

(5)    all directions of the Fisheries Department pursuant to the Pearling Act or any other relevant legislation;

(6)    all reasonable directions of Cossack; and

(j)    not catch more than the Quota.

4.    Failure to fish Quota

4.1    Monthly Quota

Without derogation from the Contractor’s Obligations under this Document, if in any month during the Shell Season the Contractor fails to catch and deliver to a Holding Site at least 5,000 Shell, Cossack may itself, or may employ another contractor to, fish and catch that part of the Quota for the relevant month. (emphasis added)

4.2    annual Quota

If the Contractor fails to catch and deliver to Cossack at least 80% of the Quota by 30 June in any year of the Term, then Cossack may by giving to the Contractor not less than 30 days notice, terminate the agreement contained in this Document and the provisions of clause 18 will apply as if an Event of Default had occurred and not been remedied by the Contractor in accordance with the provisions of that clause. (emphasis added)

…

6.4    Contractor to turn Shell

Before Cossack collects the Shell from a Holding Site the Contractor must at each neap tide turn all Shell that has been caught.

…

12    Specified employee

The Contractor must at all times during the Term employ COLIN ANDREW SHARP or such other person as may be first approved by Cossack (in Cossack’s absolute discretion) to supervise the carrying out of the Contractor’s Obligations.

…

14.5    Comply with statutory requirements

The Contractor must duly and punctually comply with and observe the requirements of all legislation, Acts, orders, regulations, directions, proclamations, decrees and other lawful requirements relating to the Boat, its use or operation including but not limited to the Navigation Act 1912 (Cth), Western Australian Marine Act 1982 (WA), Admiralty Act 1988 (Cth), (WA) and Shipping Registration Act 1981 (Cth) [sic].

…

18.4    Termination of Agreement

After an event of default has occurred, and without any notice or demand, Cossack may at any time give notice to the Contractor terminating this Agreement and the Agreement will immediately terminate upon receipt of such notice by the Contractor but without:

(a)    affecting any of Cossack’s Rights under this Document; or

(b)    releasing the Contractor, the Guarantor or the Covenantor from liability in respect of the Contractor’s Obligations.

…

20    Appointment of Cossack as attorney

In consideration of Cossack granting the Contractor’s Rights under this Document, the Contractor irrevocably appoints Cossack and every officer of Cossack as defined by the Corporations Law, to be the attorney of the Contractor in the name and on behalf of the Contractor, and as the act and deed of the Contractor on expiration or earlier termination of this Agreement to complete and lodge with the Fisheries Department:

(a)    a Notice of Intent to transfer the Quota back to Cossack or such other person as Cossack may nominate; and

(b)    Notice of Pearling or Hatchery Activity Form to transfer the Tags for the Quota to Cossack or such other person as Cossack may nominate; …

…

35    Further Assurances

Each Party must execute and do all acts and things necessary or desirable to implement and give full effect to the provisions and purpose of this Document.

…

Schedule

1.    Term

A term of 5 years:

Commencing on:        1 January 2000

Expiring on:            31 December 2004

2    CPI Variation Dates

1 January 2003

1 January 2004

Progress under the 1999 Agreement

40    There was a discussion between Mr Brady and Mr Sharp towards the end of the first season concerning the quota for the forthcoming season. One aspect of this meeting which differed from that of previous years was that Mr Brady did not on this occasion give Mr Sharp sufficient tags for the full quota for the season. He provided only 1,250 tags that is sufficient for 10,000 shell (at 8 shell per tagged rack).

41    Fishing operations were hampered at the beginning of January 2001 by cyclones. As a consequence of the cyclones, by the end of March 2001 Mr Sharp had not been able to harvest the 10,000 shell for which he held tags. Nevertheless, towards the end of that period Cossack provided him with a further 625 tags to cover 5,000 shell and an additional 937 tags on 19 April 2001 which covered 7,496 shell. The primary judge set out a table which the parties adopted showing the details of the tags issued and the shells taken during that period. The table is as follows:

Cossack declines to supply tags

42    On 5 June 2001, as there were still tags to be supplied for the full season’s quota, Mr Sharp attended the offices of Cossack and sought those tags. He was informed that the remaining tags covering Cossack’s quota for the 2001 season had already been reallocated to another contractor, Mr Feeney. At this stage the primary judge found there were 1,250 tags (10,004 shell) which had been given to Mr Feeney which should have been supplied to Mr Sharp pursuant to the 1999 Agreement. The primary judge concluded that this was a breach of the 1999 Agreement.

43    Almost a fortnight later, PCD ran out of tags. Mr Sharp arranged to take tags from another allocation which enabled him to catch a further 7,500 shell but they did not form part of the quota referred to in the 1999 Agreement. A few months later, in October, Mr Sharp wrote to Mr Brady concerning the forthcoming season seeking an assurance that Cossack was ‘secure enough to honour the contract it has in place with [PCD]’. Cossack, however, shortly after instructed solicitors to inform Mr Sharp that the 1999 Agreement was being terminated due to PCD’s failure to catch and deliver to Cossack at least 80% of the quota of 32,500 shell by 30 June 2001 pursuant to cl 4.2 of the 1999 Agreement. Thirty days notice of termination was given under cl 4.2 and cl 18.4 of the 1999 Agreement. On 7 December 2001, liquidators were appointed to PCD.

44    Shortly after the 2001 season commenced, unrelated to the pearling operations, but at the same time as difficulties were being encountered due to cyclones, Mr Sharp acquired four investment properties in Perth. These were acquired between March and August 2001 but purchased by Liquid Investments (WA) Pty Ltd (Liquid Investments), a company under the control of Mr Sharp and at that point trustee of the Sharp Family Trust. In the course of a meeting held on 26 March 2001, Mr Sharp informed Mr Brady that he had commenced purchasing investment properties which he proposed to ‘positively gear’.

DECISION UNDER APPEAL

45    At trial, Mr Sharp sought damages and other relief in respect of loss sustained by the contractual breach and for damage caused by his reliance upon certain misrepresentations by the respondents.

The representation arguments

46    Although some of the representations were abandoned, those on which Mr Sharp ultimately relied were rejected by the primary judge. The first, described as a purchase and refit representation, was said to be that Mr Brady had represented to Mr Sharp that the 1997 Agreement would continue at least long enough for PCD to repay Cossack the loan concerning the Anzac Pearl. In final submissions, this representation was shaped as being that Cossack would give Mr Sharp additional work including turning and transportation work to assist PCD in paying the extra costs of purchasing, refitting and operating the Anzac Pearl.

47    This, in turn, was connected with the ‘turning representation’ as it was originally described. The content of the alleged representation also changed through the course of the trial. Ultimately, as described by the primary judge (at [58]), the representation was said to be that ‘Cossack and Dampier’s financial position made it necessary for PCD to perform turning work at cost in the 1998 season and in subsequent years at market rates’.

48    Finally, there was a representation based on the entry into the 1999 Agreement in which it was contended that PCD was induced to enter into the Agreement by the failure of the respondents to inform Mr Sharp at any time until 26 October 2001 that Mr Sharp could not rely on the income of PCD under the 1999 Agreement. The loss was said to be funds needed to service the mortgages which Liquid Investments had entered into on the four investment properties which it had acquired.

49    The primary judge considered the authorities and discussed the respective key witnesses, Messrs Sharp and Brady, and the evidence they had given about conversations which had occurred over a decade earlier. His Honour noted (at [70]) that unsurprisingly their accounts differed in material respects but his Honour formed the impression that the differences were not the result of any deliberate attempt on either side to mislead the Court. ‘Rather they arose from failure of memory after such a long time and attempts being made to reconstruct what the witnesses considered it likely they would have said or done or understood in the circumstances then arising’. His Honour did note, however, that Mr Sharp’s evidence was given through the ‘prism of the failure of the commercial venture which he had entered into in the expectation of considerable financial gain’ (emphasis added).

50    In those circumstances, his Honour approached the matter by placing ‘primary emphasis on the objective factual surrounding material and the inherent commercial probabilities together with the documentation tendered in evidence’. The approach was consistent with that taken by Tamberlin J in Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (unreported, Federal Court of Australia, 29 June 1995) (at [412]) as endorsed by the High Court as being ‘orthodox and sensible’ on appeal (Effem Foods Pty Ltd (t/as Uncle Ben's of Australia) v Lake Cumberline Pty Ltd (1999) 161 ALR 599 (at 603).

51    After discussing the evidence at length, his Honour noted (at [82]) that the statements relied upon by Mr Sharp were:

pitched at a level of generality which is more consistent with an intimation by Mr Brady that Cossack and Dampier would give PCD the opportunity to tender for turning work should they have a need for such services. No binding assurance was proffered. What Mr Brady said appears to have given rise to a hope or expectation on the part of Mr Sharp that work may have been forthcoming.

52    However, his Honour noted that no version of the representation was supported by any documentary records and, in particular, there was no record of any binding agreement pursuant to which the services were to be provided. No mention was made of such services in the notes taken by the solicitor who discussed the terms of the 1997 Agreement with Mr Sharp. When Mr Sharp was provided with a draft copy of the 1999 Agreement and invited to comment he did not do so. There was no mention of the failure to include provisions relating to turning or transport services despite the fact that such services had been supplied following the conclusion of the 1999 season. Indeed, there was no reference to such services in either of the two Agreements. While there was some extrinsic perhaps peripheral support for the making of the representation including within the content of a document entitled ‘Pearling Annual Notice of Intent’ to the Western Australian regulatory authority, his Honour accepted the oral evidence of Mr Brady that a statement in this document was incorrect. His Honour concluded (at [89]), in any event, that it contained no evidence of a binding obligation to use the services of PCD or anyone else for transportation work in the 2001 season.

53    From an objective perspective, the primary judge noted (at [90]):

The extent to which turning and transport services are needed in the pearling industry in any given year is subject to a range of unpredictable circumstances. They include the vagaries of the weather … and the capacity of the licence holders to perform such work themselves.

54    His Honour concluded that it was ‘highly unlikely’ that either Cossack or Dampier would have committed themselves to providing PCD with work additional to fishing over a five year period. In doing so, they would have effectively been subsidising PCD’s business which would have made no commercial sense.

55    Finally, the primary judge addressed the argument that it would have been unlikely that Mr Sharp would have agreed to commit to the 1999 Agreement in light of his existing obligations under the 1997 Agreement without additional financial assurances. His Honour rejected that argument because it failed to take into account the financial adjustments which Cossack agreed to in the latter part of 1998 including the postponement of repayments on the Anzac Pearl and the agreement to take back the Panta Rei and to reimburse PCD for part payments already made. In any event, Cossack was not privy to the detail of PCD’s financial position but would have been entitled to assume, his Honour found, that those adjustments went a long way towards addressing PCD’s financial problems.

56    On that reasoning, the primary judge concluded that the representation in relation to the purchase and refitting of the Anzac Pearl was not made.

57    The primary judge adopted a similar analysis of the turning representation which was said to have been made after the end of the 1998 pearl oyster season. It was common ground that Mr Sharp and Mr Brady had at that time discussed the prospect of PCD performing turning work. Mr Sharp contended that he had been induced to quote a price of $850 a day to perform the work because Mr Brady had told him that Cossack and Dampier were having temporary cash flow problems but that Dampier would pay PCD at market rates for performing turning work in subsequent years.

58    Again, the primary judge discussed the evidence and cross-examination, particularly of Mr Sharp but noted (at [97]-[100]) that the case confronted a number of difficulties. The first, his Honour said, was that it assumed that the first (‘purchase and refit’) representation had been made which his Honour had rejected. The second difficulty was that it was common ground that in mid-late 1998 Cossack and Dampier were in difficult financial circumstances and not in the position to pay market rates for turning. Thirdly, as the evidence unfolded, the proposition put to Mr Brady was neither he nor his brother had told Mr Sharp that turning work and future use would be paid for at market rates but, rather, that Mr Sharp himself asserted that this would occur. It was not a representation made by Mr Brady but, rather, a statement of Mr Sharp’s expectations. Fourthly, his Honour noted that in the context of detailed commercial agreements, the absence of any reference in either of the Agreements to any rates of payment for turning work or any reference to turning work at all, was a further factor which led him to conclude that the turning representation was not made.

The inducement to contract

59    His Honour found that the claim that this representation by omission was made was untenable. No evidence was called to support any finding that Cossack did not at the time of entering the 1999 Agreement intend to perform it. Rather, the evidence established that after the end of the 2001 season Cossack considered PCD had failed to comply with certain terms of the Agreement and this provided a ground for termination. Whether that belief was correct or not, it was not a belief which emerged until well into the life of the Agreement. On that basis, his Honour rejected that representation.

60    Having rejected all of the representations, his Honour did not see that it was necessary to deal with Cossack’s further argument based on the existence of the ‘entire contract’ clauses of each of the Agreements (respectively cl 40 and cl 30). Nor was it necessary to consider the possible operation of s 51A of the Trade Practices Act 1975 (Cth) (TPA).

Breach of contract

61    The primary judge concluded that Mr Sharp should succeed in his argument that Cossack breached the contract. The contract argument was framed in terms that the respondents were not entitled to terminate the 1999 Agreement when they purportedly did so in October 2001. Cossack needed to establish that PCD failed to catch and deliver to Cossack at least 80% of the quota of the 32,500 shell before 30 June 2001. So much was common ground but the case advanced for the applicants was that the cause of the failure to provide the 80% of the quota was Cossack’s breach of cll 2.1, 2.2 and 35 of the Agreement thereby making it impossible for PCD to meet 80% of the quota in the 2001 season as Cossack failed to provide PCD with the tags which it should have supplied. The applicants contended this was a repudiation leading PCD to suffer loss and damage.

62    PCD contended that Cossack’s failure, in breach of the 1999 Agreement, meant that PCD should be regarded as having substantially performed its obligation to catch at least 80% of the quota such that the termination constituted a repudiation which had been accepted by Mr Sharp. He was entitled to damages for wrongful repudiation.

63    The primary judge rejected the argument that cl 2.1 of the 1999 Agreement obliged Cossack to furnish PCD with all tags which PCD required to catch the quota. His Honour concluded to the contrary (at [112]) that what the subclause did was to require Cossack by 31 December in each year during the operation of the Agreement to complete and lodge with the Fisheries Department an annual notice of intent to transfer quota form, notice of pearling and hatching activity form and any other regulatory documents required the relevant authorities. It did so. It provided Mr Sharp with tags to cover 10,000 shell rather than the total number needed for the full agreement, 32,500 shell. This was sufficient to allow PCD to commence fishing at the start of the 2001 season. Further tags were issued on 19 April 2001, taking the total to 22,496 with the remaining tags given to Mr Feeney in mid-April meaning that there was a shortfall. In order to allow PCD to catch 26,000 shell or 80% of the quota, 438 more tags would have been needed.

64    The actions taken of allocating the remaining tags to Mr Feeney in mid-April were justified under cl 4.1 of the Agreement. Pursuant to that clause, Cossack was entitled to arrange for another contractor to fish its quota to the extent PCD had fallen short of the 5,000 shell minimum in any given month. The extent of any shortfall, however, could not be ascertained until after the end of a particular month. It follows that alternative arrangements such as those adopted with Mr Feeney could not be made until a later month. The shortfall could not be fished until some time after the end of the month in which it occurred. There was no impediment, however, the primary judge concluded (at [114]) under cl 4.1 to the accumulation of shortfalls over successive months and adopting the reallocation provision of the total shortfall to another contractor at a later time.

65    However, his Honour did find a breach (at [115]), noting that by 5 June 2001, when Mr Sharp asked for and was refused further tags, PCD had a cumulative catch shortfall of 7,295 shell. Cossack had, by that time, already allocated its remaining tags to Mr Feeney. Those tags permitted Mr Feeney to take 10,004 shell. That allocation, his Honour concluded, was not authorised by cl 4.1 to the extent that it exceeded 7,295 shell. The excess was 2,709 shell.

66    However, this minor success did not translate to a victory at trial for PCD because his Honour concluded (at [116]) that despite the breach in Cossack having given Mr Feeney more tags than were necessary for him to catch PCD’s accumulated shortfall, this had no practical impact on PCD’s capacity to catch 80% of the quota in the 2001 season. The reason for this was that even if PCD had received the additional 339 tags it needed to catch the 2,709 shell to which it remained entitled on 5 June 2001, it still would not have caught 80% of the quota in the 2001 season and would therefore still be in breach. By that time PCD had caught 22,496 shell. A further 2,709 would not have brought its total catch for the season to 23,205. That additional amount would have represented only 77.5% of the quota.

67    On these computations the primary judge concluded (at [117]) that the contravention of the contract was not causative of any loss or damage. As his Honour stated (at [117]) ‘the failure of Cossack to provide Mr Sharp with additional tags when he asked for them on 6 June 2001 was not the cause of PCD’s failure to catch 80% of the quota in the 2001 season’ (emphasis added).

68    The primary judge explained his interpretation of the 1999 Agreement by reference to cl 35 which required Cossack to do all things necessary to give effect to the provisions of that Agreement. Reading cl 2.1 and cl 2.2 together, they required Cossack to obtain and provide PCD with sufficient tags to enable PCD to catch the quota during the 2001 season. His Honour held that had Cossack not provided PCD with any tags prior to the start of the season or if it had failed to provide PCD with sufficient tags to catch at least the 5,000 minimum shell in the first month of the season, there would have been a contravention of cl 35. However, it did not do anything prior to 5 June 2001 to impede the capacity of PCD to catch the quota.

69    The wrongful refusal to supply PCD with additional tags on 5 June 2001 preventing PCD from catching any more shells as part of the quota in the season did not prevent PCD catching at least 80% of the quota in that season as it could not do so. The breach, therefore, was not causative of PCD’s falling short of the 80% catch for the season. There was no reason, therefore, why Cossack could not terminate pursuant to cl 4.2.

70    The primary judge discussed the ‘doctrine of substantial performance’ raised by the applicants, considered the authorities but rejected its application to the facts as determined. The appellants were seeking to set up substantial performance as a defence to the exercise of Cossack’s contractual right under cl 4.2 to terminate. There was no scope for operation of the doctrine of substantial performance. The primary judge therefore rejected the case in contract as well as the misrepresentation case. No award in damages was open.

71    There was an outstanding issue concerning rectification as claimed by Cossack which the primary judge indicated would have been found in its favour but it was unnecessary to do so.

72    The application was dismissed with costs.

GROUNDS OF APPEAL

73    The following grounds of appeal are raised (footnotes omitted):

1.    The Trial Court erred in finding that “the applicants have failed to make good their pleaded case of breach of contract”, in circumstances where:

1.1    The Trial Court found “On 5 June 2001 Cossack wrongly refused to provide PCD with additional tags and thereby prevented PCD from catching any more shell as part of the quota in the 2001 season” and

1.2    The Applicants pleaded a case for breach of contract by the 5 June 2001 refusal to provide additional tags.

2.    The Trial Court erred in finding that on a proper construction of the agreement the Respondents were not obliged to furnish PCD with all tags which PCD required to catch the quota.

3.    The Trial Court erred in finding that “Cossack’s breach did not, therefore, cause PCD to fall short of the 80% catch for the season” in circumstances where:

3.1    80% of the quota under the agreement was 26,000 shell;

3.2    At 5 June 2001, when Cossack wrongly refused to provide PCD with additional tags, there were still tags for 6,731 shell available to provide to PCD;

3.3    PCD caught 29,996 shell in the 2001 season, 22,496 for tags provided under the agreement and 7,500 shell for tags that did not form part of the quota under the agreement; and

3.4    The fishing operations in 2001 were impeded by a series of cyclones.

4.    The Trial Court erred in finding that “the alleged representations relating to the purchase and refitting of the Anzac Pearl were not made”, in circumstances where the Trial Court found that:

4.1    The Applicants’ case as pleaded in evidence in chief and cross-examination was that Mr Brady represented that if PCD purchased the vessel, Cossack would provide turning and transport work;

4.2    “What Mr Brady said appears to have given rise to a hope or expectation on the part of Mr Sharp that such work would be forthcoming”; and

4.3    Mr Brady signed a declaration for the Western Australian regulatory authority, to the effect that the Anzac Pearl would be used to transport shell.

5.    The Trial Court erred in finding that “Mr Sharp claimed that PCD was induced to enter the Agreement by an omission” and “the alleged representation was not made”, in circumstances where:

5.1    The Applicants’ pleaded and relied upon conduct of the Respondents in not disclosing that the Applicants could not rely on Pearl Coast continuing to derive income under the Pearl Fishing Agreement from or about 19 December 2000, 26 March 2001, and 19 April 2001;

5.2    The intention of the Respondents at the time of entering into the agreement, is irrelevant to the impugned conduct in 2001.

74    It can be seen that there are three contract appeal points (grounds 1 to 3) and two representation appeal points (grounds 4 and 5).

Ground 1 – the Trial Court erred in finding the appellants’ did not make good their pleaded case of breach of contract where Cossack wrongly refused to provide additional tags

75    The argument for the appellants under this ground appears to completely overlook the fact that regardless of the breach, PCD was unable to meet its commitments under the 1999 Agreement. To the extent that PCD suffered loss it was not caused by any breach by any of the respondents. The reasoning in relation to this is canvassed above.

76    On the hearing of the appeal, the appellants developed the argument that Mr Sharp would have been able to reach 80% of the quota having arranged to obtain tags from another allocation which enabled him to catch a further 7,500 shell. Those shells do not form part of the quota referred to in the 1999 Agreement.

77    The primary judge concluded (at [115]) that by 5 June 2001, when Mr Sharp asked for and was refused further tags, PCD had a cumulative shortfall of 7,295 shell. As at that date, the only amount which Cossack was entitled to allocate to Mr Feeney or anyone else other than PCD were tags to cover 7,295 shell being the cumulative catch shortfall by PCD as of that date (5 June 2001). Cossack actually allocated 2,709 too many to Mr Feeney. This was the breach.

78    The question is not whether Mr Sharp could have caught 7,500 shell under tags allocated to another quota, but whether Cossack was entitled to make an allocation of tags for at least 7,295 shell as at 5 June 2001. The primary judge’s conclusion that it was so entitled was correct. Even if tags for an additional 2,709 shell were allocated to PCD which was its full entitlement under the 1999 Agreement, Cossack was permitted to give Mr Feeney or another contractor the then shortfall up to tags covering 7,295 shell. The additional 2,709 shell would not have been sufficient to enable PCD to perform its contractual obligations. The fact that it could catch 7,500 shell under some other quota is not relevant to the question for determination by the primary judge which was whether the breach by Cossack in allocating tags for 10,004 shell to Mr Feeney was the cause of the inability of PCD to satisfy the terms of the contract (catching not less than 80% of the quota). The failure to perform entitled Cossack to terminate. Once the contract enabled Cossack to re-allocate forthwith on a cumulative shortfall basis, the argument advanced for PCD must fail. It is the terms of the contract itself, being the commercial agreement fixed by the parties, which govern the situation.

79    In any event, the evidence seems very doubtful as to whether Mr Sharp would have met the quota. Counsel for the respondents on the appeal took us to the cross-examination of Mr Sharp when he conceded that between 18 and 30 June (which is the 80% catch completion date for the purpose of each year under the 1999 Agreement), Mr Sharp had caught only 1,763 shell in consequence of which he still would not have met the quota. Tags for 7,500 shell between 18 June and 30 June would not have entitled catching of 80% of the annual seasonal quota.

80    While dealing with this topic, it is important to note that the contractual entitlement of Cossack to reallocate tags for shortfall in the catch in cl 4.1 is inconsistent, in any practical sense at the very least, with the argument advanced for the appellants in ground 2 that it is either an express or implied term of the contract that all of the tags to cover all of the quota must under the terms of the contract be provided by Cossack to PCD in advance at the commencement of the contract. Such a term would render it impractical, to say the least, for Cossack to redistribute the tags as expressly provided for under the contract in circumstances where PCD was failing on a progressive basis to reach its monthly proportion of the quota.

81    Further, the entitlement to reallocate in this sense arises in a context where cyclonic conditions which may interfere with contractual performance are notorious. To the extent that it is argued for PCD that the interference by the cyclone should be taken into account, the very fact that there were reallocation entitlements would suggest to the contrary.

Ground 2 – PCD to receive all the tags required to catch the quota

82    The appellants correctly contend that the Court ought to have regard to the objectively determined commercial purpose of the contract with ‘knowledge of the genesis of the transaction, the background, the context, the market in which the parties were operating’: Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 (at 350) per Mason J. In that regard, the appellants rely on the fact that reg 28 of the Pearling (General) Regulations 1991 (WA) to the Pearling Act prohibits a person from using a boat to take or attempt to take shell unless tags have been allocated or transferred and are on board the boat. A breach of the Regulation is a criminal offence by operation of s 60 of the Pearling Act 1990.

83    Between 1995 and 2001, PCD caught shell for the respondents. Each year, up to 2000, the respondents transferred to PCD all tags for taking shell prior to the commencement of each season. The appellants argue this is consistent with cl 2.1 of the 1999 Agreement which imposes mandatory obligations on Cossack to transfer the tags for the quota to PCD. The appellants argue the temporal requirement for compliance with the mandate read with the definition of ‘quota’ in the 1999 Agreement obliged Cossack to put PCD in possession of all of the tags on its boat at all times during the season when taking or attempting to take shell. On its proper construction of the 1999 Agreement, the appellants say, all of the tags were to be transferred prior to 31 December in each season.

84    This is supported, the appellants argue, by cl 20(b) which provides a mechanism for PCD to re-‘transfer the tags for the quota to Cossack’ or its nominee. This mechanism for a re-transfer of tags to Cossack, it is said, is consistent only with the construction of cl 2.1 requiring the transfer or handing over of all tags to PCD prior to 31 December in each relevant year of the 1999 Agreement.

85    These arguments cannot be accepted. The primary judge was entirely correct in concluding that the express terms of the 1999 Agreement contained no obligation as contended for by the appellants. The only relevant obligation on Cossack was to complete and lodge with the Fisheries Department the forms necessary to enable the transfer of the tags for the quota to PCD. Nothing in reg 28 requires handing over of all tags to a fisherman at the commencement of the season. It simply requires sufficient tags to be on board the boat for the shell at any particular time.

86    While it is conceivable that certain assumptions might have been made by PCD, from the fact that Cossack handed over the full quota of tags at the commencement of prior seasons, that does not affect the proper construction of the 1999 Agreement. The contract is quite detailed and prescriptive. Nothing in it sets out such a term. It would be inappropriate to imply the term by reference to post-contractual conduct: Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 (at [26]). Nothing in the case for the appellants at trial was based on an estoppel or mistake. Nor is that argument now advanced. The course of evidence to be advanced for the respondents may well have been quite different had it been argued that way.

87    Finally, as previously noted, the fact that the contract expressly provides that in circumstances of underperformance by PCD, Cossack can allocate tags to another contractor makes it improbable, at the least, that both parties to the 1999 Agreement intended that all of the tags must be handed over by Cossack at the outset thus rendering re-allocation, at least, problematic. There is no reason why all of the tags should be handed over at the beginning and good reason under this contract why they should not all be handed over at the commencement. Finally, the provision for re-transfer under cl 20(b) is simply consistent with PCD failing to catch the quota at any time. It says nothing about the pleaded implied term.

Ground 3 – Cossack’s breach caused PCD to fall short of the 80% catch

88    As the respondents have submitted, the position found by the primary judge, was:

(a)    The season quota for 2001 was 32,500 shell;

(b)    By 31 May 2001, PCD had been provided with tags to allow it to catch 22,496 shell in the 2001 season;

(c)    For each month from January 2001 to May 2001 PCD was to catch a minimum of 5,000 shell but it incurred a shortfall each month such, that by 31 May 2001 it had incurred a cumulative shortfall of 7,295 shell;

(d)    Cossack was therefore at that time entitled under cl 4.1 of the 1999 Agreement to reallocate the tags for the shortfall of 7,295 shell and did so (to Mr Feeney);

(e)    As at June 2001, PCD was therefore entitled to receive tags to fish for a further 2,709 shell only for the season (32,500 – 22,496 – 7,295 = 2,709);

(f)    In June 2001 Mr Sharp asked for and was refused further tags; and

(g)    Had Cossack provided PCD with tags for the further 2,709 shell, PCD would still not have been able to meet the 80% quota (22,496 + 2,709 + 25,205 = 77.5% of the quota of 32,500).

89    Therefore, the magnitude of the cumulative shortfall made the task of achieving 80% of the quota for the 2001 season mathematically impossible, with or without the additional 2,709 shell.

90    It was PCD’s previous failure, albeit attributable to a cyclone, to catch and deliver the required minimum 5,000 shell per month that triggered Cossack’s contractual entitlement to retain and reallocate tags. Once this contractual right was exercised, PCD could not fish 80% of the quota.

91    The tags for the additional 2,709 shell were provided to Mr Feeney. The primary judge held that this allocation to Mr Feeney was not authorised or supported by cl 4.1 of the 1999 Agreement to the extent that it exceeded the shortfall of 7,295.

92    Evidence that PCD caught an additional 7,500 for another company in an unspecified period after 5 June 2001 is irrelevant. The reference to cyclones is irrelevant. The risk lay with PCD. It did not contract otherwise. The appellants have identified no error of fact or law relating to ground 3.

93    This ground must fail together with ground 1 and ground 2.

Ground 4 – the representation relating to the purchase and refit of the Anzac Pearl

94    This ground is ambitious. From the outset it is to be noted that ground 4 misstates the finding. The conclusion his Honour actually reached (at [82]) relying on the whole paragraph is:

… What Mr Brady said appears to have given rise to a hope or expectation on the part of Mr Sharp that such work may have been forthcoming. (emphasis added)

95    It is beyond doubt that his Honour was entitled to conclude and gave good reason for concluding that there was no actionable representation.

96    The appellants’ written submissions contend that Mr Brady engaged in ‘representational conduct’ to the effect that if PCD purchased the Anzac Pearl, Cossack would provide turning and transport work to PCD.

97    The appellants, nevertheless, acknowledge that the primary judge concluded that no binding assurance was proffered, there was no documentary record confirming such and what arose from the exchanges were expectations rather than contractual rights. The appellants argue that a representation can include a term that is embodied in a contractual arrangement. So much may be so but the express finding here was that there was no representation, however characterised. The hope or expectation was simply a subjective state of mind.

98    The subjective viewpoint was no doubt what led his Honour to conclude (at [70]) that the evidence of Mr Sharp was given ‘through the prism of the failure of a commercial venture’. The evidence for Mr Brady was very much to the contrary. While his Honour did not conclude that Mr Sharp was deliberately giving false evidence, he had the benefit of observing the witnesses and preferred the account of Mr Brady, taking into account a significant body of extrinsic factors as outlined above. For convenience some of those are repeated: Cossack had no reason for such work (at [81]), the boats used by PCD were not suitable for transport (at [81]), PCD’s failure to complain that it did not receive such work (at [79]), the generality of Mr Sharp’s evidence (at [82]), the failure to mention turning and transport work when negotiating and settling the terms of the 1999 Agreement (at [85]), the lack of provision for such work in the 1999 Agreement (at [86]), the express terms of both Agreements providing that Cossack would transport shell to the farm (at [86]) and the lack of commercial sense in Cossack committing to provide such work (at [90]).

99    Ground 4 also fails.

Ground 5 – PCD was induced to enter the Agreement by an omission

100    The omission contended for by the appellants is the lack of disclosure that they could not rely on PCD continuing to derive income under the 1999 Agreement. In the outline of the submissions for the appellants, it is argued that the relevant conduct was a failure to inform not any ‘representational conduct’. This submission is surprising. The only circumstances in which a failure to inform a party of some material fact may be actionable is if the silence constituted by the failure to inform is, in all the circumstances, properly construed as being a misrepresentation about the relevant issue: Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 and Roxborough v Rothmans of Pall Mall Australia Ltd (1999) 161 ALR 253.

101    The appellants argue that the relevant time to test the failure to inform was from about December 2000 in relation to the properties purchased from March 2001 to August 2001. This, it is said, should be construed against a background when the respondents decided for the first time not to provide all of the tags in advance. But this submission turns upon a misconstruction of the 1999 Agreement. It relies upon an implied term that there was such an obligation. There was not.

102    As the primary judge noted, the appellants’ framing of this representation and the pleading of it shifted through the course of the trial.

103    Ultimately it appears to rely upon an argument that the respondents, and in particular Cossack by Mr Brady, decided that it would not perform the 1999 Agreement at some time during its term but then failed to inform PCD of this fact. This cannot possibly constitute a representation to induce entry into the contract as PCD was already bound by the 1999 Agreement.

104    Ground 5 must fail for that reason alone.

105    Even if this were not so, the appellants have pointed to no evidence that the respondents intended to repudiate the 1999 Agreement during its term so as to cease making payments to PCD. The appellants have pointed to no evidence that the respondents intended to terminate the 1999 Agreement at any time prior to the acquisition of the investment properties. There was no evidence other than mere assertion that Mr Sharp and certainly no finding that the respondents or any of them knew that Mr Sharp intended to make available the profits from the 1999 Agreement to the second appellant to enable it to acquire or to service the acquisition of investment properties. No evidence has been pointed to by the appellants which was capable of supporting a conclusion that Cossack’s decision to terminate the 1999 Agreement was for any reason other than PCD’s failure to meet its obligation to catch the minimum quotas. Whether this reasoning was correct or otherwise, the inference that this was the true reason to terminate was open to the primary judge and quite properly drawn by him. This is particularly so in light of the evidence of Mr Brady that whilst he had been considering his options in relation to 1999 Agreement, it was only on receipt of the correspondence from Mr Sharp of 9 October 2011, that he decided to act on the breach and terminate the Agreement. By this stage, the last of the four properties had been acquired.

106    It was nothing more than a common commercial gamble that property prices would increase supporting the negative gearing. The fact that Mr Sharp may have mentioned to Mr Brady that the second appellant proposed making some investments of this nature could not possibly have supported the pleaded cause of action. This ground of appeal must also be dismissed.

notice of contention and consideration

107    In those circumstances it is unnecessary to consider the notice of contention in respect of which late notice was given but no objection taken by the appellants. For completeness it is discussed briefly.

108    The respondents raised a notice of contention as follows:

Notice of Contention

…

3.    The Respondents contend that his Honour should have also dismissed the Second Formulation claim and on the following grounds:

a.    His Honour ought to have accepted the evidence of Mr Brady and found that Cossack, by Mr Brady, did not make the decision to terminate the 1999 Agreement until after the relevant properties were acquired by the Second Appellant;

b.    There was no evidence that Cossack intended to repudiate the 1999 Agreement during its term or forgo its contractual entitlement to terminate;

c.    There was insufficient evidence to support any finding that Mr Sharp informed Cossack that the Second Appellant intended to purchase real property for investment purposes in reliance on receipt of income by the First Appellant from the 1999 Agreement;

d.    There was insufficient evidence to support any finding that the Second Appellant relied upon any conduct on the part of the Respondents in its decision to purchase the investment properties; indeed the evidence was that the Second Appellant chose to purchase those properties at a time when the First Appellant had failed to meet its quota under the 1999 Fishing Agreement;

e.    The alleged ‘inducement to contract’ conduct was not in any event made in trade or commerce; and

f.    There was no loss caused by conduct on the part of the Respondents.

109    It is doubtful whether the notice of contention is necessary. The grounds advanced are more explicit than, but certainly encompassed within, the process of reasoning of the primary judge on the complete absence of evidence which could be capable of supporting the inducement to contract point. It is unnecessary to say more than that.

conclusion

110    For the foregoing reasons the appeal is dismissed. The following orders are made:

1.    The appeal be dismissed.

2.    The appellants pay the costs of the respondents to be taxed if not agreed.

Associate:

Dated:    16 August 2012