Igaki Australia Pty Ltd and ANOR v Coastmine Pty Ltd and ORS B16/1996 [1997] HCATrans 112 (4 April 1997)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Brisbane No B16 of 1996

B e t w e e n -

IGAKI AUSTRALIA PTY LTD

First Applicant

R.I. GAYKUEN

Second Applicant

and

COASTMINE PTY LTD

First Respondent

ROBERT JAMES BURGESS

Second Respondent

NICHOLAS CASSAR KARLOS

Third Respondent

PAUL GERRARD STEER

Fourth Respondent

Application for special leave to appeal

BRENNAN CJ

DAWSON J

GUMMOW J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO CANBERRA

ON FRIDAY, 4 APRIL 1997, AT 11.36 AM

Copyright in the High Court of Australia

______________________________

MR N. SAMIOS: May it please the Court, I appear with my learned friend, MR G.J. CROSS, for the applicants. (instructed by Hoolihans)

MR P.R. DUTNEY, QC: I appear with my learned friend, MR N.E. ULRICK, for the second respondent. (instructed by Steindls)

MR P.H. MORRISON, QC: If the Court pleases, I appear with my learned friend, MS E.M. O'REILLY, for the fifth (fourth) respondent. (instructed by Allen Allen & Hemsley)

MR SAMIOS: Your Honours, the applicants paid $4 million for a 50 per cent shareholding in a company - - -

BRENNAN CJ: Just before you commence, Mr Samios, I have a certificate from the Deputy Registrar who has been informed that Coastmine Pty Ltd, the first respondent, was deregistered on 26 April 1994. He has been informed by the Insolvency and Trustee Service Australia, Trustee in the bankruptcy for the third respondent in this matter, that the Trustee in Bankruptcy does not wish to be represented at the hearing of the special leave application and will submit to any order of the Court save as to costs.

Yes, Mr Samios.

MR SAMIOS: Thank you, your Honour. As I said, the applicants paid a substantial sum of money for an interest in restaurants on the Gold Coast in Queensland. At the trial before the Federal Court judge in which they brought proceedings against the respondents for damages, they claimed that they had been defrauded and that the respondents were guilty of misleading and deceptive conduct, infringing section 52 of the Trade Practices Act. Although the applicants relied upon a number of misrepresentations which they claimed induced them to enter into the transaction, the learned trial judge in his judgment was not prepared to accept that these misrepresentations induced the applicants to enter into the transaction and pay the money. Those misrepresentations, your Honours, are set out at pages 52, 59, 61, 64, 67 and 68 of the application book.

Your Honours, the conclusion the learned trial judge reached - - -

GUMMOW J: That appears at page 71, does it not?

MR SAMIOS: Yes, your Honours.

BRENNAN CJ: What is the special leave point, Mr Samios?

MR SAMIOS: The special leave point in the first instance, with respect to the learned trial judge's finding that the critical and only factor was the repeated promise of "black money", is that in this instance the general principle ought to be - and which was not applied by the learned trial judge - that a preceding misrepresentation ought to be found to have induced the applicant to enter into the transaction when there is no direct evidence that that was not relied upon. Your Honours, we say that because what his Honour appears to have done is to have approached the matter on the basis of a choice of inducements.

Your Honours, in Gould v Vaggelas and in Ricochet, which we have mentioned in our summaries of argument, and even in Wardley, the representations that were made were made in block, in terms of what the - either the business, what its attributes were or what the solvency was of a particular party. Here - - -

GUMMOW J: What is the special leave point, Mr Samios?

MR SAMIOS: The special leave point is that this Court, your Court, ought to determine that it is a principle that where there has been an earlier misrepresentation which has led a purchaser to rely on a later misrepresentation, then unless there is direct evidence that the earlier representation was not relied upon, then the Court should find that caused the applicants to enter into the transaction and caused the loss. The learned trial judge, as I have said - - -

BRENNAN CJ: Mr Samios, there is no principle of law as to what facts have to be found.

MR SAMIOS: No, your Honour, but here the judge found that the applicant repeatedly asked for previous trading history and information regarding the restaurants and, in a word, your Honour, he was given the swerve by the second respondent and by the fifth respondent that no such information existed.

BRENNAN CJ: This might be a good argument before the trial judge, but there is no special leave point in it, Mr Samios. You are wanting us to say that the trial judge should have found that the contract was induced by the making of some earlier representations, is that right?

MR SAMIOS: Yes, your Honour, but for the reason that - - -

BRENNAN CJ: What principle is there which can justify the grant of special leave to lead this Court to say that?

MR SAMIOS: Your Honour, the principle that where that is, in our submission, an independent representation leading to a further representation, then it should be inferred that that has induced the later representation.

BRENNAN CJ: When you say "inferred", you are speaking about questions of fact which depend upon ordinary experience and the circumstances of each case. There is no question of law involved in it.

MR SAMIOS: Your Honour, as we have submitted, that approach ought to be adopted and ought to be expressed as a principle unless there is direct evidence that the applicant did not rely on that previous misrepresentation. Your Honours, it was not even an inducement in the sense that what it was was a lie about the existence of information. That then led the applicants to the further representation about the promise of "black money". It is for those reasons that we submit that it ought to be established as principles that the inference should be drawn, unless there is direct evidence that the applicants did not rely - - -

BRENNAN CJ: Mr Samios, unless you can take this case past the point of saying that an inference should have been drawn, you are not really advancing your clients' interests to any extent. Unless you can find something other than that to say.

MR SAMIOS: The matter that we have sought to raise is distinguishing -relying upon those principles established in Gould v Vaggelas, compared to determining causation of the prior misleading deceptive conduct. If your Honours are against the applicants in that respect, and I appreciate what your Honour has said, then we submit that what has occurred in this case, though, goes to the administration of justice; that is that, your Honours, there is an error in the approach that the learned trial judge made, when one weighs up the evidence that he was calling for that previous trading information and was lied to about it and then was led to the further representation. Your Honours, in our submission, it is on that basis, as a second limb, that we submit your Honours ought to interfere with the judgment, because it does go to the administration of justice.

GUMMOW J: We ought to interfere with the Full Court. You have already had one appeal.

MR SAMIOS: Yes, your Honour, and they also, your Honour, if I may submit on behalf of the applicants, made the same error in assessing this as a choice of inducements as opposed to a series of misleading deceptive conduct and did not, in our submission, see them as separate, as they ought to have in terms of the causation, leading the applicants to enter into the transaction. In our submission, the Full Court went the same road by examining Gould v Vaggelas and the principles there established, that inferences can be rebutted, rather than looking at that there was misleading deceptive conduct in its own right which caused the applicants to proceed further with the transaction.

Your Honours, the third matter that we submit raises special leave is that an amendment ought to have been made by the learned trial judge for the reasons we have set out in our summary - - -

GUMMOW J: Not being sought by either party?

MR SAMIOS: That is correct, your Honour.

GUMMOW J: That would take case management to new heights, I must say.

MR SAMIOS: Your Honour, it will, and what it will mean is, as we have submitted, that the law will come into the future and not be left in the past. We submit that the judge ought to have made that amendment. He had it in mind, that this was the gravamen of the whole case. He decided against the applicants and, in our submission, Blomley v Ryan demonstrates how appeals to this Court would be less likely to be occurring if judges, when a matter raises itself as it did in this case, made the amendment when the evidence in the form of exhibit IG6, IG9 and IG10 were already in evidence. His Honour found, and said in his reasons, as your Honours have noted, much about what was not pleaded and, in our submission, having determined the matter on that basis, ought to have made those amendments and allow the parties then to determine whether they wish to proceed further. If there was no evidence at the end of the day, in the judge's opinion, to meet the pleading, then he could give judgment.

But, in this instance, we submit that as in Blomley v Ryan, the court ought to have invited the parties to consider that. If the invitation was not taken up by the judge, then the judge ought to have made the amendments himself. If he could base his reasons on the evidence to dismiss the applicants' claim then, in our submission, the pleading ought to have been made to accord with the evidence.

In our submission, it is not a convincing result to the public, nor to the applicants, that matters that were the basis of the judgment were not pleaded and were not sought to be pleaded by the applicants. It would be different if his Honour did not decide the matter on those very issues, but the learned trial judge did, and on that basis our submission is that he ought to have made the amendments that he had reasoned had not been the case presented by the applicants, although the evidence was there to make that ultimate finding. Your Honours, those are our submissions.

BRENNAN CJ: Yes, Mr Samios. We need not trouble you, Mr Dutney, nor you, Mr Morrison.

The case does not raise any question of principle that warrants a grant of special leave to appeal. The case involves no more than findings of fact. The suggestion that the trial judge ought to have amended the pleadings, although neither the plaintiffs nor their counsel applied for any amendment, is wholly without merit. Accordingly special leave is refused.

MR DUTNEY: I ask for costs on behalf of the second respondent.

BRENNAN CJ: Yes, Mr Dutney.

MR MORRISON: May it please the Court, so do I on behalf of the fifth respondent.

BRENNAN CJ: Yes, Mr Morrison. What do you say about that, Mr Samios?

MR SAMIOS: We have nothing to say, your Honour. We cannot resist it.

BRENNAN CJ: Special leave will be refused with costs in favour of the second and the fifth respondents.

AT 11.50 AM THE MATTER WAS CONCLUDED