CATCHWORDS
TRADE PRACTICES - Nature of knowledge required for purposes of s.75B.
Trade Practices Act 1974, s.75B
Richardson & Wrench (Holdings) Pty Ltd v Ligon No 174 Pty Ltd (1994) 123 ALR 681
Allstate Life Insurance Company v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26
WESTBAY SEAFOODS (AUST) PTY LTD -V- TRANSPACIFIC STANDARDBRED AGENCY PTY LTD
TRANSPACIFIC STANDARDBRED AGENCY PTY LTD -V- WESTBAY SEAFOODS (AUST) PTY LTD & ANOR
VG 60 OF 1996
Burchett, Whitlam and Sundberg JJ
Melbourne
6 June 1996
IN THE FEDERAL COURT OF AUSTRALIA )
)
VICTORIA DISTRICT REGISTRY ) VG 60 of 1996
)
GENERAL DIVISION )
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
WESTBAY SEAFOODS (AUST) PTY LTD
Appellant
AND:
TRANSPACIFIC STANDARDBRED AGENCY PTY LTD
Respondent
AND BETWEEN:
TRANSPACIFIC STANDARDBRED AGENCY PTY LTD
Cross-Appellant
AND:
WESTBAY SEAFOODS (AUST) PTY LTD and HAROLD FRANCIS LONIE
Cross-Respondents
CORAM: Burchett, Whitlam & Sundberg JJ
PLACE: Melbourne
DATE: 6 June 1996
ORDERS OF THE COURT
THE COURT ORDERS THAT:
(1) The cross-appeal be dismissed with costs.
(2) The costs order in respect of the cross-appeal and the costs order previously made in respect of the appeal not include the costs of the preparation of the appeal book, as to which there be no order.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
VICTORIA DISTRICT REGISTRY ) VG 60 of 1996
)
GENERAL DIVISION )
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
WESTBAY SEAFOODS (AUST) PTY LTD
Appellant
AND:
TRANSPACIFIC STANDARDBRED AGENCY PTY LTD
Respondent
AND BETWEEN:
TRANSPACIFIC STANDARDBRED AGENCY PTY LTD
Cross-Appellant
AND:
WESTBAY SEAFOODS (AUST) PTY LTD and HAROLD FRANCIS LONIE
Cross-Respondents
CORAM: Burchett, Whitlam & Sundberg JJ
PLACE: Melbourne
DATE: 6 June 1996
REASONS FOR JUDGMENT
THE COURT: A Judge of the Court, having upheld a claim brought against a corporation under s.52 of the Trade Practices Act 1974, went on to consider, but dismissed, an associated claim against a director brought in reliance upon section 75B of the Act. An appeal was lodged against the imposition of liability upon the corporation, and a cross-appeal followed against the refusal to impose liability upon the director. At the hearing, counsel for the appellant withdrew the appeal, which was accordingly dismissed with costs, including reserved costs. The respondent, which had prepared the appeal books when it became apparent that the appellant would not be able to do so in time for the hearing, sought also a special order in respect of the costs of their preparation. The Court reserved the question whether such an order should be made, for consideration after the hearing of the cross-appeal. The cross-appeal then proceeded.
The issue raised by the cross-appeal is a very narrow one. However, an understanding of it requires some brief outline of the facts. The cross-appellant (Transpacific) purchased a fishing trawler, "Sovereign", from the cross-respondent (Westbay). The vessel was furnished with a permit under the Commercial Vessels Act 1979 (NSW), s.8 of which required that she be "used in accordance with the authority conferred by the permit". In this case, a term of that authority imposed:
"[a]dherence to the conditions of loading in the approved stability book."
The term "stability book" would have been understood by seafarers as referring to a document setting out loading conditions. As no such book existed in respect of the vessel, the Maritime Services Board of New South Wales, the responsible authority, many months before the sale of the "Sovereign", had notified a requirement for a "stability submission", upon the basis of which the book could have issued. This submission was to have been formulated following the carrying out of certain accepted procedures, constituting what was known as an incline test, or a stability test, of the vessel. A week after the signing of the contract of sale, and well before its completion, the Board issued notice of a condition designed to prevent the ordinary use of the trawler's bait or fish stowage tanks until the matter of the stability submission should be clarified.
The learned trial Judge held that the agreement had been entered into "on the understanding that the vessel could lawfully store its catch and bait loose in tanks filled with brine". Following the notice, arrangements were made to have an incline test carried out on 26 September 1988, a director of Westbay, Mr Lonie, the second cross-respondent, being present, together with a Mr Ewen representing Transpacific. A conversation took place between the two men. It was on that conversation that the decision of the trial Judge turned.
What his Honour held was that Mr Lonie promised, in consideration of the completion of the sale, that Westbay would do whatever should be necessary to procure approval of the use of the vessel without prohibition of the use of its tanks for the carriage of wet bait or wet fish. His Honour held further that this promise "implied a representation that Westbay intended to perform the promise and a representation that Westbay had the ability to perform the promise. No evidence having been adduced by Westbay that it had reasonable grounds for making either representation, it is deemed not to have had reasonable grounds for making either and each representation is to be taken to have been misleading: s.51A of the Trade Practices Act 1974 and Futuretronics International Pty Ltd v. Gadzhis [1992] 2 V.R. 217."
The question raised by the cross-appeal is whether the cross-appellant is entitled, in addition to judgment against Westbay pursuant to s.52, to judgment against Mr Lonie personally pursuant to s.75B on the basis that Mr Lonie was a party to Westbay's contravention. The trial Judge rejected the additional claim in the following terms:
"The evidence does not persuade me that on 26 September 1988 Mr. Lonie believed that the directors of Westbay (of which he was one) lacked the intention that Westbay should perform the promise. I am not persuaded by the evidence that on 26 September 1988 Mr. Lonie believed that Westbay had not the ability to perform the promise. I am not persuaded by the evidence that on that day Mr. Lonie believed that Westbay did not have reasonable grounds for representing that it would do what should be necessary to procure the specified approval."
If these conclusions of fact were open to the Judge, his rejection of Transpacific's case against Mr Lonie was plainly justified. That is because it is settled upon the authorities that nothing less than actual knowledge of the essential facts constituting a contravention of s.52 will suffice for a finding of liability against a person alleged to have been involved in the contravention within the meaning of s.75B. The authorities are fully discussed in Richardson & Wrench (Holdings) Pty Ltd v. Ligon No 174 Pty Ltd (1994) 123 ALR 681 at 692-695. As is there noted, the law has been stated in the unreported Full Court decision Butt v. Tingey (Davies, Neaves and Beazley JJ, 5 August 1993), as well as in several decisions at first instance. In a different context, another Full Court accepted, citing Richardson & Wrench (Holdings) Pty Ltd v. Ligon No 174 Pty Ltd, that "'reckless indifference' and 'wilful blindness' are not synonymous with 'intention' or 'knowledge'": Allstate Life Insurance Company v. Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26 at 37, per Lindgren J, with whom Lockhart and Tamberlin JJ agreed.
Counsel for the cross-appellant argued that Mr Lonie must have appreciated his own lack of authority to promise that Westbay would perform the work in question, and must have appreciated that the company, not having authorized him to make that promise, did not intend to carry it out. He was a director of the company, the fishing manager, and the manager of its day-to-day operations. He negotiated the sale of the vessel, but obtained the authority of Westbay's board of directors before concluding it, not having the right to enter into such a contract without the prior approval of the managing director or the board.
Had the learned trial Judge inferred the necessary knowledge and intentional participation in Westbay's misleading conduct, it may well be that Mr Lonie would have had difficulty in appealing against an adverse decision. But whether he actually knew is a question of fact upon which, where oral evidence is given, the credit of the witness and the judge's assessment of him are all important. This witness was seen and heard and, although in some other respects he was not accepted, the judge was unable to make a finding of knowledge against him.
Nor does it follow logically that a person who enters into an engagement in the character of an agent for another, when his authority does not extend so far, must be conscious at the time of his lack of authority. In this case, Mr Lonie was not cross-examined as to his understanding, when the promise was made, on the question of his authority to say what he said. If the case now sought to be established on appeal was intended to be pressed, cross-examination on that subject was necessary.
The cross-appeal should be dismissed with costs. That leaves the question of the preparation of the appeal book. In all the circumstances, the costs orders made in the appeal and the cross-appeal should not include the costs of the
preparation of the appeal book, which seems to have been prepared in order that the cross-appeal might proceed.
I certify that this and the preceding six (6) pages are a true copy of the Reasons for Judgment of the Court.
Associate:
Date: 6 June 1996.
