(1) The way the First Appeal was argued
44 In oral submissions in the First Appeal, the case for Harvard was presented as raising a single issue, namely whether the state of affairs brought about by the misleading conduct as found can be characterised as loss and damage caused by that conduct. It was contended for Harvard that it was possible to have a species of loss and damage that was sufficient to activate the statutory power to set aside an agreement even though it may not be loss and damage that could be the subject of a damages award in favour of the claimant. In short, the loss that might support statutory rescission could be different to the loss that might support an award of damages in circumstances where there was no rescission.
45 It was then submitted that the misleading conduct as found by the primary judge was directed to the identity of a person who would be involved in the transaction in circumstances where Harvard would not have entered into the new arrangements if it had known of the involvement of that person, being Mr Nicoletti. In those circumstances, it was put that entry into the New Leases by Harvard where Mr Nicoletti's involvement was concealed was, in itself, relevant loss and damage for the purposes of the claim to statutory rescission.
46 In that context, the Full Court was taken to the written opening submissions before the primary judge. Reliance was placed upon a statement in paragraph 4 of those submissions to the effect that the complaint made was that control of the Farms passed from someone that Harvard was prepared to support in times of difficulty (Mr Tiller) to someone who deserved no such support (Mr Nicoletti). In effect, by the misleading conduct Mr Nicoletti secured the benefit of the favourable rent that Mr Caratti as the operative mind and will of Harvard was prepared to extend to Mr Tiller.
47 The presiding judge in the First Appeal then directed the attention of senior counsel to paragraph 7 of those submissions which stated that Harvard's case essentially rested on four propositions being:
(a) Proposition 1 - [Harvard] had an absolute right to decide who could farm its land and had intended on 8 February 2019 only to have Mr Tiller do so with his company, Dimension Agriculture Pty Ltd;
(b) Proposition 2 - from mid-January 2019, Mr Nicoletti wanted to operate the Farms in place of Mr Tiller, and set about doing so in combination with Mr Tiller and Mr Bryce in a way which concealed Mr Nicoletti's intended involvement from the Applicant on 8 February 2019;
(c) Proposition 3 - After securing his entry on the Farms, Mr Nicoletti, with the help of Messrs Tiller and Bryce, used Dimension Agriculture in March and April 2019 to pretend that Mr Tiller remained involved in the management of the Farms, withholding facts which, if disclosed, would have enabled [Harvard] to have a lawful basis for exercising its right to terminate the new leases and re-take possession of the Farms in early to mid-April 2019;
(d) Proposition 4 - the measure of loss caused by the misleading and deceptive conduct of the Respondents is the difference between the rent which [Harvard] would have enjoyed from the first Fowler Lease if vacant possession had been delivered to [Harvard] when [Harvard] sought to rescind the new leases, and rent payable purportedly under the new leases from the date which the first Fowler Lease would have commenced if vacant possession had been given, on 1 May 2019.
48 Significantly, it was not Harvard who raised those propositions in support of its argument on the First Appeal.
49 It is propositions 3 and 4 that assume significance for present purposes. As to those propositions, it was put by senior counsel then appearing for Harvard that 'proposition 3 may come into it a bit later'. However, the then presiding judge did not draw attention to proposition 3 but rather pressed counsel as to the significance of proposition 4. It was put to counsel that the way the case was put in proposition 4 was that the only loss that the primary judge was required to look at was the difference between the rent paid by Mr Tiller and the rent that would have been enjoyed by Harvard if vacant possession had been delivered under the Fowler Lease.
50 In response, it was submitted that the claim by Harvard for rescission of the New Leases depended upon a different set of propositions to those that supported the claim for loss and damage. The response led into an exposition of the relevant authorities.
51 After dealing with the authorities as to what was required by way of loss and damage to support an order for statutory rescission, senior counsel for Harvard then turned to what was described as the 'second part of the case'. The submissions began with the following introduction:
The second part of the case, in one sense, is not necessary if the first part succeeds, this is the part of the case that looks at the non-disclosure of the 15 February deeds. Now, we rely on the 15 February deeds in relation to the first part because they demonstrate … that there was a recognition of the significance of concealing the ever present intention that Mr Tiller was not going to be substantively involved in the operation of the farms under the leases.
In other words, the 15 February deeds entered into less than two weeks after the new leases were entered into clearly demonstrate that what was in substance always [sought] to be achieved was the removal of Mr Tiller from the farms and the substitution of Mr Nicoletti …
The challenge that we make to his Honour's reasoning in respect of this part of the case is really quite [confined]. There's two aspects to it, the first is that we say his Honour erred in failing to find that there was a repudiation by reason of a breach that went to the root of the contract.
52 The presiding judge then posed the question 'Isn't this fundamentally inconsistent with your primary case?'. Senior counsel responded 'It's alternative'. Which led to the primary judge observing 'It's a pure alternative though'. To which senior counsel responded:
It's a pure alternative. As I say, it does not arise if the first part of the case is correct … I'm sorry if I haven't made that clear, your Honour.
53 Plainly, the challenge to the finding by the primary judge to the effect that the conduct in entering into the 15 February Deeds was not a repudiation of the New Leases was only pressed if the first part of the case was not successful. The first part of the case concerned a claim that there was loss or damage of a kind that justified statutory rescission (being a different question to whether there was loss and damage which might support an award of damages).
54 Submissions that were then advanced were to support a claim that the entry into the 15 February Deeds was a repudiation of the New Leases. Which led the presiding judge to observe:
This is why I have trouble with this part of the case … the matters you're calling in aide in order to demonstrate how fundamental this term was such as to - for it to be characterised in such a way that it amounted to a repudiation, hence allowing you to terminate, are precisely the matters you rely upon in order to say that there was a misrepresentation. But you only get to this in circumstances where there's not a misrepresentation. That's why they just - it seems to have such - I know you say it's a pure alternative. But it's a real inconsistency too…because essentially you're saying the reason why it's fundamental are the very same things as you say that gave rise to the right that you had in any event.
55 Which led, in turn, to senior counsel for Harvard indicating:
Can I be candid with your Honour. I think it is very unlikely that there will be any circumstance in which I lose on what I will call the first part of the case and I succeed on this part of the case…However, they are true alternatives. I do not submit, and I don't accept for the purposes of this submission, that there is any fatal conflict between them. If the first case fails, there is a second independent case which is premised upon a separate and discrete non-disclosure which arose in April rather than back in January.
56 Then, senior counsel went on to make clear that the second part of Harvard's case in the First Appeal was a claim that Harvard had a contractual right which 'was invoked as a step in the identification of loss which gives rise in this part of the case, only to a claim under section 236 [being the statutory provision that allows a person to recover loss and damage if the person suffers loss and damage because of the conduct of another person]'. Further, it was said that there was no claim for rescission or voiding and termination on the second part of the case. Rather, it was put that 'there was a contractual right to terminate for repudiation which was lost because we didn't know about it'.
57 For the purposes of this Second Appeal, two important matters emerge from the way the case was put for Harvard in the First Appeal, namely:
(1) no significance was given to the fact that Mr Nicoletti was only personally liable under the second part of the case; and
(2) the second part of the case was put on the basis that the loss suffered was a consequence of a failure to exercise a contractual right to terminate for repudiation.
58 With respect, it is difficult to see why, in those circumstances, it might be said (as was submitted by senior counsel for Harvard) that the second part of the case put on the First Appeal was a 'pure alternative' that did not arise if the first part of the case is correct. If the first part of the case was upheld then there remained an issue as to whether there was a contractual right to terminate which was not exercised because Harvard did not know about the 15 February Deeds. Its significance lay, at least, in the fact that it was the only pathway to liability on the part of Mr Nicoletti.
59 It appears that at the time of the First Appeal, Harvard was unconcerned about whether it succeeded on the first part or the second part of the appeal because its focus was upon securing the termination of the New Leases and a consequential award of damages (assessed on the basis that the New Leases were not binding). If Harvard succeeded on the first part of its appeal it would be entitled to that relief. It did not seek, at that time, to preserve the distinct second claim (in order to pursue that route to personal liability on the part of Mr Nicoletti). The claims were true alternatives if the only object in view was termination and damages rather than securing personal liability on the part of Mr Nicoletti. Indeed, quite properly, this explanation was exposed in the course of oral submissions for Harvard in the Second Appeal when it was said that the issue of Mr Nicoletti's personal liability came into sharp relief when issues arose as to the solvency of Dimension. The focus upon termination of the New Leases in the First Appeal is understandable because the New Leases operated for a considerable term and bound Harvard to ongoing dealings with Dimension.
60 Despite the indication in the First Appeal that proposition 3 may 'come into it a bit later', there was no further reference to proposition 3 or its significance in the course of the oral argument advanced for Harvard. Nor was there any separate reference to ground 1b.
61 The submissions advanced for the respondents in the First Appeal emphasised the significance of the way in which the case had been put to the primary judge. In that context, reference was made to the fact that the submissions for Harvard did not distinguish between Mr Tiller, Dimension and Mr Nicoletti. The point was made in the First Appeal that Mr Nicoletti was found not to be liable in respect of the Main Conduct. Reference was made to loss or damage being 'the gateway' to the statutory remedies (including rescission) but not the end of the inquiry. It was also emphasised that the claim to rescission of the New Leases was based solely upon the First Claim.
62 As to the four propositions in paragraph 7 of the written opening submissions before the primary judge (to which reference has already been made), the submissions for the respondents on the First Appeal focussed upon the fourth proposition. They made only passing reference to the third proposition. There was no suggestion that the third of those propositions was uncontroversial for the purposes of the First Appeal or anything that might be said to be a concession to that effect. Rather, the focus was upon a submission to the effect that the case run before the primary judge as to rescission was that, but for the Main Conduct, the Tiller Leases would have remained in place. It was submitted that 'the proposition that loss and damage, which open the gate to the statutory remedies under the Australian Consumer Law, was Mr Nicoletti being in de facto possession of the farming properties' was a proposition that was not put to the primary judge.
63 In the course of further submissions for the respondents in the First Appeal, some matters were raised by the Full Court with senior counsel for Harvard. In the course of dealing with those questions the description of the second part of the appeal as a 'true alternative' was again adopted by senior counsel. The following submission was then put for Harvard:
… the second case proceeds on the basis that there was an ongoing contract to be terminated … We say that it was, although there was no relief specifically sought directly vindicating the common law or equitable right to rescind, we do say that the substantive existence of that right was in play on the pleadings and in the way the case was run.
64 However, the submissions advanced by senior counsel for Harvard at that point then proceeded to return to the first part of the case in order to explain the basis upon which statutory rescission was sought (being a claim that was only made in the first part of the case). The submission put was that Harvard was seeking a confirmation of its election to rescind as expressed in correspondence at the time. Therefore, although there was no declaration sought to vindicate by way of declaration the exercise of that right to rescind, what was sought was statutory relief to confirm what had been sought in correspondence at the time. Which led to an exchange about the statutory gateway to relief. The presiding judge put to senior counsel that the approach that had been adopted 'erected a gateway which was not necessary' if it had simply been claimed that there had been lawful rescission.
65 In that context, the following exchange occurred:
COUNSEL: Ultimately, his Honour found that we didn't get through the gateway of loss and damage, so all questions after that fell away. But it remains the case, we would submit, that ultimately, the critical question in relation to both section 237 and rescission was, 'Had there been misleading conduct?' The trial judge found that there had been. And then, the second question would have been in the discretionary exercise of the statutory power, 'Whether relief should have been granted, given what else had happened?'
In other words, that was the same sort of question as whether restitution was possible, in Equity. So the substantive issues, all ultimately, became subsumed under the same decision that had to be made in relation to the statutory claim.
COURT: But so you don't allege, it's certainly not within your grounds of appeal. You don't, you do not conten[d] that his Honour fell into error in failing to determine whether or not you were entitled to rescind in common law, as of 2 April 2020?
COUNSEL: No. Because, we say, that - we say that the error occurred at a prior point in the analysis.
COURT: Yes.
MR OWENS: Ie the loss and damage gateway argument. And after that, all the trial judge's findings after that lead to the conclusion that we're entitled to relief that we've sought below and claimed in the notice of appeal.
66 In submissions for Harvard in the Second Appeal it was suggested that the final sentence quoted above was a submission to the effect that if Harvard was successful in the First Appeal then it was entitled to all the relief that it had claimed before the primary judge, including an award of damages against Mr Nicoletti. There was no foundation for such a suggestion. What was being put at this point was that if Harvard could show loss and damage (that is, satisfy the gateway to an order for statutory rescission) then it was entitled to the relief it had sought on the appeal. It was not directed to the issue whether it would be entitled to relief as against Mr Nicoletti. It was a single sentence in submissions made after the case for Harvard had been fully presented and at a point when senior counsel was dealing with a question raised as to whether Harvard sought an order for rescission based upon a claim at law (rather than under statute). Harvard disavowed any claim at law as a basis for rescission and did so immediately after confirming that the second case being advanced in the First Appeal (being the only case that could found a claim against Mr Nicoletti) was proceeding on the basis that the New Leases had not been terminated and as a 'true alternative' to the first case. It reflected an overall approach to the First Appeal that if Harvard was to succeed on its first case then its second case was simply an alternative way to the same outcome. It was an approach that gave no significance to the fact that, on the findings of the primary judge, Mr Nicoletti was only personally liable if the second case was successful. If indeed Harvard wished to seek damages against Mr Nicoletti then it was a flawed basis upon which to put the appeal. In order to overturn the decision of the primary judge that Mr Nicoletti was not liable then Harvard had to succeed on ground 2. Nevertheless, Harvard advanced its appeal on the basis that ground 2 was a pure alternative to ground 1.
67 Senior counsel for the respondents then resumed making submissions in answer to Harvard's appeal insofar as it concerned the first part of the appeal. He concluded those submissions by stating 'so now I've dealt with, I think ground 1, which has various subgrounds'. Then very short submissions were made concerning 'ground 2' by adopting the written submissions and noting that ground 3 of the notice of contention 'dovetails into ground 2'. Then, senior counsel made some brief submissions about ground 1b. The fact that these submissions were made separately indicates that the earlier reference to 'subgrounds' was to the particulars to ground 1a.
68 As to ground 1b, senior counsel noted that the position of the respondents was that the submissions did not conform to the way in which ground 1b was expressed. It was noted that the submissions advanced to support ground 1b challenged the correctness of a finding by the primary judge. It was a finding to the effect that if Harvard had sought to rely upon a right at law to terminate the New Leases then there would have been an application for relief against forfeiture and the likelihood was that such an application would have been granted. As to that challenge, senior counsel accepted that his Honour's reasoning in that regard 'was probably not correct' because any such application would 'have needed to be supported by an undertaking as to damages' and that 'my client would have been liable under that undertaking as to damages'.
69 However, none of those submissions conceded any error as to the finding by the primary judge that the entry into the 15 February Deeds was not a repudiation of the New Leases. As has been observed, that finding was the subject of ground 2 which was advanced as a true alternative. Nor did those submissions indicate any concession that there would be personal liability on the part of Mr Nicoletti if Harvard's claim about the gateway to statutory rescission was accepted.
70 After those submissions were made, the presiding judge put to senior counsel for the respondents certain propositions as to the issues for determination in the First Appeal. They were to the following effect:
(1) The first issue for determination in the appeal was a pleading issue as to whether it was now open for Harvard to run a case that the loss and damage it had suffered for the purposes of the statutory gateway to relief was, in effect, the fact that it was now in a long term contractual relationship with Mr Nicoletti when it would not have entered into the New Leases had it known of his involvement.
(2) If that case was open, then the second issue for determination was whether the loss and damage for the purposes of the gateway could be different to the loss in respect of which a compensatory award of damages might be made (being a proposition that was not challenged by the respondents).
(3) Then, if it was found that there was error by the primary judge as to whether there was loss or damage for the purposes of the gateway to statutory relief by way of rescission the appropriate order was to remit the proceedings to the primary judge limited to the question whether Harvard was entitled to any of the relief sought in the originating application.
(4) If Harvard was successful to that point then ground 2 goes away. As to that aspect, the presiding judge put the proposition that:
There will be no need to deal with Ground 2 … but then your trial wouldn't go back in respect of the alleged repudiation case arising in April.
71 Senior counsel for the respondents agreed, observing that 'from our point of view, that would seem right. Because the[n] ground 2 would be premised upon a scenario that will have been rejected … Because the loss of … the Fowler Lease is not the loss that will have been identified [for the purpose of statutory rescission]'. It was also accepted that if the matter was remitted on that basis then it would be for the primary judge to determine whether Harvard was entitled to damages to compensate for the loss of the additional rental that may have been earned from the Fowler Lease.
72 In reply, senior counsel for Harvard submitted that the Full Court could conclude that any correct exercise of discretion would involve the rescission of the New Leases. However, senior counsel did not cavil with the proposition that if Harvard was successful on ground 1 then ground 2 would go away.
73 As we have noted, that was indeed the outcome of the First Appeal, namely ground 2 was treated as a true alternative because the finding that there was a statutory entitlement to rescind the New Leases was inconsistent with ground 2.
74 What was put by Harvard in the Second Appeal was that the respondents (particularly Mr Nicoletti) somehow accepted in the course of the First Appeal that if the argument on the loss and damage gateway to statutory rescission was upheld then Harvard was entitled to relief against Mr Nicoletti. We are unable to reach such a conclusion. At no point was any attention given to the significance that success on what was described by senior counsel for Harvard as the first part of the appeal might have for the claim against Mr Nicoletti in particular. The proposition that ground 2 was a true alternative did not have its source in anything that was advanced for the respondents. It was a characterisation of the case that came from the presiding judge and was embraced wholeheartedly by counsel for Harvard. The submissions for Harvard focussed upon the gateway to statutory relief. It reflected a central concern with securing rescission of the New Leases and an award of damages in consequence rather than a desire to demonstrate a pathway to recovery from Mr Nicoletti personally.
75 It is the case that Harvard sought orders in the First Appeal against all three respondents to the appeal, namely Mr Tiller, Dimension and Mr Nicoletti. Further, as we will see, the orders made by the Full Court did not exclude Mr Nicoletti on the basis that there could be no liability on his part on the remitter. But the difficulty for Harvard is that the particular position of Mr Nicoletti was simply not addressed. In those circumstances, the way in which submissions were advanced is an insufficient foundation for a conclusion to the effect that it was accepted that if the appeal on the loss and damage gateway was successful then Mr Nicoletti would be personally liable for any damages that may be then awarded. Indeed, they demonstrate that there was no such basis for the way the case was run in the First Appeal.