Fleetman Pty Ltd v Cairns Pty Ltd [2005] FCAFC 80 | Case summary

the court 1 This is an appeal from a judgment of a Federal Magistrate given on 24 September 2004. The learned Magistrate found that the appellant had engaged in misleading or deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) (the TP Act) by failing to tell the respondent, in the particular circumstances, that a car which it purchased was not a 2001 model Saab 9-5 Griffin motor vehicle but a 2000 model of that vehicle. 2 The appeal raises no issues of law. The parties were agreed that the observations of the Full Court in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 (Demagogue) accurately set out the correct approach to s 52 in such circumstances. Gummow J in Demagogue at 40-41 said: 'To inquire … whether an independent "duty to disclose" has arisen is to digress from the application of the terms of s 52. … The use of the term "duty" is apt to suggest a necessary connection with the general law, which does not exist and is not required by the statute/ … [The] question is whether in the light of all relevant circumstances constituted by acts, omissions, statements or silence, there has been conduct which is or is likely to be misleading or deceptive.' 3 Black CJ further explained how the failure to refer to a particular matter may in some circumstances amount to misleading and deceptive conduct. His Honour said at 32: 'Silence is to be assessed as a circumstance like any other. To say this is certainly not to impose any general duty of disclosure; the question is simply whether, having regard to all the relevant circumstances, there has been conduct that has been misleading or deceptive or that is likely to mislead or deceive. To speak of "mere silence" or of a duty of disclosure can divert attention from that primary question. Although "mere silence" is a convenient way of describing some fact situations, there is in truth no such thing as "mere silence" because the significance of silence always falls to be considered in the context in which it occurs. That context may or may not include facts giving rise to a reasonable expectation, in the circumstances of the case, that if particular matters exist they will be disclosed.'

7 The learned Magistrate found by reason of the transaction, and notwithstanding that the vehicle had been registered in March 2001, that it was reasonable for the respondent to infer that the vehicle was the current model, that is the 2001 model, of the vehicle and not the 2000 model. His Honour then addressed whether the appellant's silence on the topic of the particular model of the vehicle, judged objectively in the light of all the circumstances, amounted to the appellant engaging in misleading or deceptive conduct. That was the appropriate question for the learned Magistrate to address, based upon the approach of the Full Court in Demagogue. His Honour found that, in the context of the transaction as a whole, there would be a reasonable expectation in the mind of the appellant that the fact that the vehicle was a 2000 model should have been disclosed to it, as the respondent would reasonably have thought that it was purchasing the current i.e. 2001 model of the vehicle. His Honour said: 'A demonstrator model in my view by implication would be a demonstrator model of the current year.' He further found that, although there is no substantial variation in the features and characteristics between the 2000 model and a 2001 model of the vehicle, there are significant variations in the trade-in value and the depreciated value of the two models of the vehicle dependent on the year of manufacture. His Honour also accepted that the respondent would not have purchased the vehicle if Mr Robinson had been informed that it was a 2000 model and not a current 2001 model, and that Mr Robinson relied on the representation that 'he would be purchasing a new vehicle and was entitled to infer that it would be a current 2001 model'. 8 Consequently, the learned Magistrate found the appellant to have engaged in misleading or deceptive conduct in contravention of s 52 of the TP Act. The respondent did not seek recision of the contract. It is still using the vehicle. Damages were assessed at $9800, being the difference between the value of a new 2000 model at October 2001 and the value of a new 2001 model as at that date. 9 The ground of appeal is that the learned Federal Magistrate erred in finding that the appellant engaged in misleading or deceptive conduct by failing to inform the respondent that the vehicle purchased was not the current year model of the vehicle. Its submission put the question in the following way: 'Can a failure to advise of the model year of a new car constitute misleading or deceptive conduct when a purchaser does not ask about the model year?' 10 In the course of argument, counsel for the appellant accepted that the question so expressed was too general. It ought more accurately be expressed as follows: 'Did the failure to advise of the model year of the new car purchased by the respondent constitute misleading or deceptive conduct in all the relevant circumstances when the purchaser does not ask about the model year?' The Full Court in Demagogue makes it clear that each case will turn upon its own particular facts. The initial question posed by the appellant does not reflect the need to do so. 11 In oral argument, counsel for the appellant submitted the learned Magistrate had asked himself the wrong legal question by addressing whether (and finding that) it was a reasonable inference for the respondent to have drawn that it was purchasing a current 2001 model of the vehicle. However, it emerged in the discourse with counsel that the real complaint was simply that the conclusion so expressed was not available on the evidence. In essence that was said to be because Mr Robinson had not conveyed to Mr Hughes that it was important to him to buy the current 2001 model of the vehicle. 12 In our view, that question did not involve any error of law on the part of the learned Magistrate. The alleged misleading conduct arose from the fact that in the circumstances the respondent was not told that the vehicle was not the most recent i.e. 2001 model of the vehicle. Whether conduct is misleading is a question of fact. The learned Magistrate needed to address as a fact whether, on the evidence and in the circumstances, the failure to so inform the respondent was misleading. It could only be so if, in the circumstances, the conduct reasonably conveyed to the respondent that it was buying the current 2001 model of the vehicle. As a starting point, that was therefore a proper question for the Magistrate to address. It did not involve error of law on his part. 13 As noted, the learned Magistrate then proceeded to find that, in all the circumstances, the appellant would reasonably have been expected to disclose to the respondent that the vehicle was a 2000 model. His Honour did not simply find that the respondent reasonably believed it was buying the current 2001 model of the vehicle, but further that the failure of the appellant to disclose that it was the 2000 model was in all the circumstances misleading or deceptive. 14 The real issue of the appeal is whether the learned Magistrate was correct to conclude from the primary findings that, by the appellant's silence as to whether the vehicle was a 2001 model or a 2000 model, the appellant engaged in misleading or deceptive conduct. The appeal is under s 24 of the Federal Court of Australia Act 1976 (Cth), and is by way of re-hearing. The nature of the re-hearing has been discussed in a number of cases: see e.g. Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424; [2001] FCA 1833 at 434-435, [20], and in Sidhu v Holmes [2000] FCA 1653 and Zhang v Minister for Immigration & Multicultural & indigenous Affairs [2005] FCAFC 30. 15 In our judgment the inferences which his Honour drew were reasonably available and were not wrongly drawn. Indeed, in all the circumstances as found we respectfully agree with those conclusions. The transaction concerned an expensive motor vehicle. The current model of the vehicle was the 2001 model. The appellant in October 2001 said it was a new vehicle (as it was) which had been used as a demonstrator vehicle. The features of the 2001 model were not significantly different from those of the 2000 model. However, the 2001 model had a significantly greater trade-in value than the 2000 model, and its depreciated value was also significantly greater than that of a 2000 model. Although the vehicle was registered in March 2001, the transaction took place in October 2001. The Magistrate had regard to that fact. The evidence showed that the vehicle sold was actually manufactured in September 1999 although it was properly described as the 2000 model. The fact that it was registered in March 2001 would not therefore clearly point to it being a 2000 model (as the appellant suggested). Mr Robinson was believed when he said he thought it was the current 2001 model of the vehicle. The documentation relating to the sale did not itself indicate that the vehicle was a 2000 model. (The documentation 'compliance plate' information recorded the vehicle was an '01' vehicle, although, as the evidence showed, that is reference to the date an imported vehicle is ready for certification in Australia rather than its date of manufacture or its model year.) 16 Those circumstances in our judgment support the inference that the respondent reasonably understood the vehicle to be the current 2001 model and the conclusion that the conduct of the appellant in all the circumstances, including that it did not expressly indicate that the vehicle was not the current 2001 model of the vehicle, amounted to conduct which was misleading or deceptive. Mr Hughes in evidence said that he was desirous of moving current stock and considered whether he should discuss the availability of a 2001 model but did not feel obliged to do so as he had none in stock and it would take some time to procure one, and because the two models are 'virtually identical'. 17 Counsel for the appellant stressed that Mr Robinson's principal concern was to obtain a reliable vehicle, rather than a current model vehicle, and that Mr Robinson could readily have asked if the vehicle was the current model vehicle if that was important to him. However, the learned Magistrate found that the respondent would not have purchased the vehicle if it had known it was the 2000 model. That finding was not challenged on appeal, and as it turned upon acceptance of Mr Robinson's evidence it would have been very difficult to have done so. That finding means that, although Mr Robinson may have been concerned to secure a reliable vehicle, he also understood the respondent was acquiring the current 2001 model of the vehicle. That Mr Robinson might have, but did not, ask if the vehicle was the current model does not demonstrate either that the appellant did not engage in misleading or deceptive conduct or that the respondent did not rely upon that conduct. The failure to ask the question, as the learned Magistrate found, was because the conduct of the appellant was misleading and deceptive. In such circumstances, conduct is no less misleading or deceptive because the consumer might have asked more questions which might have exposed the real facts. Often the absence of probing questions will be precisely because conduct has been engaged in which as a fact is found to have been misleading or deceptive. 18 There is no challenge to the findings that the respondent relied upon the misleading and deceptive conduct to purchase the vehicle, when it would otherwise not have done so, and that it suffered loss as a result. Nor was there any challenge to the assessment of damages. 19 In our judgment, the appeal should be dismissed with costs.

Fleetman Pty Ltd v Cairns Pty Ltd

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Judgment (7 paragraphs)

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Legislation Cited (2)

Cases Cited (5)

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