ller's Australian Competition and Consumer Law Annotated (41st ed, 2019)
S Gageler, "Alternative Facts in the Courts" (2019) 93 Australian Law Journal 585
S Gageler, "Evidence and truth" (2017) 13(3) Judicial Review 249
S Gageler, "Truth and justice, and sheep" (2018) 46 Australian Bar Review 205
Category: Principal judgment
Parties: Corey Dean Ireland (First Appellant)
Prudence Jane Ireland (Second Appellant)
WG Riverview Pty Ltd (Respondent)
Representation: Counsel:
D Pritchard SC / D-L Del Monte (Appellants)
M Castle / G E Babe (Respondent)
[2]
Solicitors:
Foulsham & Geddes (Appellants)
Kent McRae Lawyers (Respondent)
File Number(s): 2019/105276
Decision under appeal Court or tribunal: District Court
Jurisdiction: Civil
Citation: [2019] NSWDC 79
Date of Decision: 26 March 2019
Before: Sidis ADCJ
File Number(s): 2017/121859
[3]
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
[4]
[This headnote is not to be read as part of the judgment]
On 11 September 2015 WG Riverview Pty Ltd, the respondent, purchased an Angus bull at an auction conducted by the appellants, Mr and Mrs Ireland ("the Irelands"). The bull was known as K34. Its sire was identified in the auction catalogue as Granite Ridge Thomas ("GRT"), a stud bull. Mr William Graham, the respondent's principal and a veterinarian specialising in large animals, attended the auction on its behalf.
A disclaimer appeared near the beginning of the catalogue which explained that "[w]hilst all due care and attention has been paid to accuracy in the compilation of this catalogue and the information neither the vendors, selling agents or representatives thereof assume any responsibility what so ever [sic] for the correctness, use or interpretation of the information included herein".
Subsequent DNA testing revealed that GRT was not K34's sire. The respondent was consequently not entitled to register K34 as a stud bull on the Angus Society of Australia's registers. K34's value was therefore considerably less than the auction purchase price of $28,000.
In District Court proceedings the respondent claimed inter alia (i) that the Irelands had misrepresented the identity of K34's sire, (ii) that the misrepresentation constituted misleading and deceptive conduct upon which the respondent relied in purchasing K34, and (iii) that the Irelands were liable to pay damages to the respondent to compensate it for its loss in purchasing K34.
Sidis ADCJ upheld the respondent's claim. Her Honour first awarded damages of $13,154 representing the difference between the sum that the respondent paid to purchase K34 and what the evidence established was its value as a commercial bull. Her Honour then awarded damages of $206,264 representing the difference between the stud and commercial cattle value of certain of K34's progeny. Her Honour then deducted $19,266.12 reflecting the marginal costs attendant upon the breeding and sales of stud cattle that did not apply to commercial cattle. The final award of damages was therefore $200,191.88.
The principal issues on appeal were whether:
1. the primary judge failed to consider the character of the Irelands' conduct as a whole, with particular regard to the impact of the disclaimer in the auction catalogue, when considering whether their conduct had been misleading or deceptive; and
2. whether the primary judge erroneously assessed damages by awarding the respondent its expectation loss.
The Court (Bell ACJ, Macfarlan JA and Barrett AJA) allowed the appeal:
In relation to Question 1:
(Per Macfarlan JA, Bell ACJ and Barrett AJA agreeing):
Consideration of the whole of the circumstances, including the nature of the parties, the character of the transaction and the contents of the auction catalogue, led inevitably to the conclusion that the Irelands did not represent that, as a matter of certain fact, K34's sire was GRT. Whilst the Irelands may have represented that they had taken all reasonable care to confirm that that was so and that they believed it to be the case, neither of those representations were relied upon or, if they had been, would have been held to be untrue on the basis of the evidence before the primary judge: [1], [40], [91].
Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60; Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25, considered.
In relation to Question 2:
(Per Macfarlan JA, Bell ACJ and Barrett AJA agreeing):
Damages for expectation loss are not usually awarded for contravention of the statutory misleading and deceptive conduct provisions. In any event, the evidence would not have supported an award of damages on that basis because there was no evidence of the number and quality of the progeny that an average stud bull would have produced in the relevant period: [1], [49]-[50], [91].
Marks v GIO Australia Holdings (1998) 196 CLR 494; [1998] HCA 69; Weatherill v Bartlett [2017] NSWCA 175, referred to.
Observations by Bell ACJ (Barrett AJA agreeing) as to the characterisation of misleading and deceptive conduct and the distinction between statements of fact, opinion and belief.
Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486; [2012] HCA 39, considered.
[5]
Judgment
BELL ACJ: I have had the benefit of reading the judgment of Macfarlan JA. I agree with his Honour's reasons and orders.
What follows is by way of supplementary observations in relation to disclaimers and misleading or deceptive conduct, as well as the point, perhaps sometimes not fully appreciated, that some representations which present on one level as representations of fact may, properly characterised, be no more than representations of honestly held belief. This was such a case.
A full statement of the relevant facts is set out in Macfarlan JA's decision. The facts highlighted below suffice for the purposes of my supplementary observations.
[6]
The Brochure
The brochure in which the key representation said to amount to misleading or deceptive conduct was found (the Brochure) contained detailed information as to the parentage (i.e. the sire and dam) of each of the 50 bulls put up for auction/sale by Mr and Mrs Ireland (the Appellants) on their property at Kyeamba near Wagga Wagga in the south west of New South Wales. Information relating to the bull the subject of these proceedings ("the Bull") and which was purchased by W G Riverview Pty Limited (the Respondent) was contained on page 9 of the Brochure and included the following statement regarding its sire:
"Sire: SJKF223 GRANITE RIDGE THOMAS F223"
Other information supplied the Brochure in relation to the Bull included its markings, date of calving, genetic status, birth weight and weight at subsequent points of the Bull's life. Under a subheading "Notes", which followed the provision of this information and which was also contained on page 9 of the Brochure, the following statement appeared:
"Thick, soft easy doing young sire. This fellow just oozes quality. He is clean fronted with plenty of length and thickness. His sire is just breeding the house down for us with daughters now in production you will hear alot more of him. This fellow[']s dam is a cow who has bred so consistently including a son who sold into a fantastic herd of the Battersby Family at 'Leighwood Grange' in Gippsland, Victoria. This cow has joined our donor program this Spring and we are excited to see what she will do going forward." (emphasis added).
The Bull had also featured pictorially on page 2 of the Brochure. Its photograph was accompanied by the following description:
"LOT 3
IRELANDS
KELLEHER K34
GRANITE RIDGE THOMAS F223
X LOWAN B107"
The reference to Granite Ridge Thomas and X Lowan was to the Bull's sire and dam.
Paragraph 3 of the Amended Statement of Claim was in the following terms:
"Prior to the Plaintiff purchasing K34 [the Bull] from the Defendants it was represented by the Defendants that Granite Ridge Thomas 223 ("GRT 223") was the sire of K34 ("the Representation")."
It was undoubtedly the case that the parentage of a stud bull was highly material in the context of the breeding business in which both the Appellants and the Respondent were engaged.
The key issue in this case was whether the representation sued upon was as stark and unqualified as was pleaded to be the case, or whether it was qualified by any other statement or statements in the Brochure or indeed by the context in which it was made.
The Brochure contained, on page 5, under the emboldened and capitalised heading "DISCLAIMER", the following statement (the Disclaimer):
"Whilst all due care and attention has been paid to accuracy in the compilation of this catalogue and the information neither the vendors, selling agents or representatives thereof assume any responsibility what so ever for the correctness, use or interpretation of the information of animals included herein". (emphasis added).
The font size of the Disclaimer was the same as the other text on that page of the Brochure. The other text on that particular page related to the following topics:
catering (at the sale);
accommodation (for the sale);
nutrition (of the bulls);
after sales service; and
a guarantee (the terms of which have been set out at [13 *] of Macfarlan JA's judgment).
[7]
Characterisation of misleading or deceptive conduct
This case raised a number of important legal points in relation to disclaimers and the characterisation of misleading or deceptive conduct.
First, Mr Pritchard SC, who appeared for the Appellants, was critical of the way that the primary judge had approached the question of whether there had been misleading or deceptive conduct. By reference to the structure of the judgment, Mr Pritchard's point was that the primary judge's approach was, first, to find that the representation relied upon was misleading or deceptive and then to consider the effect of the Disclaimer reproduced at [10] above. He submitted that this approach was wrong, and that the Disclaimer should have been considered during the first stage of the analysis, namely, when characterising the conduct or representation in question.
That submission, which I accept, was consistent with the authorities referred to in [66] of Macfarlan JA's judgment and, in particular, the observation in Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 at [39] (Butcher) that "[i]t is not right to characterise the problem as one of analysing the effect of its 'conduct' divorced from 'disclaimers' about that 'conduct' and divorced from other circumstances which might qualify its character" and that of French CJ in Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 at [29] (Backoffice) who observed that "[t]he contemporaneous disclaimer by the person engaging in the impugned conduct is likely to go to the characterisation of the conduct" (emphasis added).
Approaching the matter in this way as it should have been, namely by examining "the relevant course of conduct as a whole" (see Backoffice at [102], citing McHugh J in Butcher at [109]), Mr Pritchard submitted that the representation made in the Brochure was not in fact as bald as that which was pleaded (see [7] above).
It was put that the Disclaimer, in conjunction with the Respondent's knowledge that a DNA test had not been conducted on the Bull to verify its sire and that genuine mistakes as to a bull's sire are made from time to time in the industry where there has been no DNA testing, had the effect of qualifying the otherwise unqualified statements in the Brochure as to the Bull's sire. Moreover, it was submitted that the information contained in the Brochure on this topic was not information in respect of which, unlike other matters, the Appellants had been prepared to give a guarantee. As a consequence, it was contended, the Disclaimer bore upon the character of the representations otherwise made in the Brochure and, in conjunction with the other contextual matters to which I have referred, turned what were bald statements of fact as to the Bull's sire into statements of the Appellants' belief as to the identity of its sire.
This was a critical distinction in the present case because, whilst it was objectively true that the Bull was not sired by Granite Ridge Thomas, it was equally true, on the primary judge's findings, that the Appellants honestly and in good faith believed that it was. Thus, if the representation were characterised as simply one of objective fact as to the Bull's sire, it would have been, as the primary judge held, misleading or deceptive, whereas if it had been characterised as one as to belief, the existence of such belief and, in light of the terms of the Disclaimer, due diligence as to the formation of the belief not having been shown to be lacking, it would not, on the facts, have been misleading or deceptive.
What is objectively true, and what a person believes or reasonably believes to be true, will not always coincide, a point recently made by the New South Wales Court of Criminal Appeal in Vasilevski v R [2019] NSWCCA 277 at [101]−[106] (Vasilevski) in the context of a consideration of s 323(a) of the Crimes Act 1900 (NSW) and the offence of procuring a person to withhold "true evidence". At [101]−[103] of that decision, the Court said:
"The foregoing analysis has proceeded on the footing that 'true evidence' when used in s 323 of the Crimes Act means 'objectively true evidence', the applicant's argument being, as has been seen, that the evidence could not have been objectively true evidence if it had been rejected by the jury. But there is a nice question of construction that was not explored in argument, namely whether 'true evidence' when used in s 323 (as well as ss 321 and 322) means 'objectively true evidence' or 'the evidence that a witness truly believes and would give under oath', whether or not that evidence is objectively true or not.
The difference may be illustrated by way of example. A person to be called as a witness may be persuaded not to give evidence that he or she saw a person at a particular place on a particular day, notwithstanding that such evidence represents the person's true belief as to what he or she saw and was what the witness would say on oath in the witness box in a hearing. That person's evidence may be objectively wrong and 'untrue', for example if it were a case of mistaken identity, but nonetheless is evidence which the person believes to be true.
Someone who persuaded that person not to give his or her honest but mistaken evidence would not commit the offence if 'true evidence' bears the first of the two meanings identified […] above but this construction might not be thought to further the purpose of s 323 of the Crimes Act, which is to prevent interference with witnesses by persuading them to give either false evidence or to withhold true evidence."
It was not necessary to resolve this question of construction in Vasilevski, but it serves as a useful illustration of the point raised in and by the present case.
In a series of recently published and illuminating articles, Gageler J has explored the dichotomy between "objective truth" and what a court is engaged in during the fact finding process, an important philosophical issue that had earlier been considered by Spigelman CJ in his Sir Maurice Byers lecture: S Gageler, "Evidence and truth" (2017) 13(3) Judicial Review 249; S Gageler, "Truth and justice, and sheep" (2018) 46 Australian Bar Review 205; S Gageler, "Alternative Facts in the Courts" (2019) 93 Australian Law Journal 585; see also JJ Spigelman, "Truth and the Law" in N Perram and R Pepper (eds) The Byers Lectures 2000-2012 (Federation Press, 2012) 232.
In those articles, Gageler J made the following points (amongst others):
within an adversarial system of justice, the tribunal of fact is not tasked with the independent pursuit of truth or an abstract question of whether or not a fact exists;
in the common law system, what passes for truth will invariably be what the tribunal of fact is satisfied to the requisite standard is the case or occurred - "actual persuasion" to use the language of Dixon J in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361; [1938] HCA 34;
this is necessarily affected both by the operation of rules of procedure and evidence governing admissibility and exclusion, and by reference to burdens of proof, neither of which requires absolute satisfaction or certainty;
ascertainment of "true facts" is also compromised by frailties of human memory and tricks of recollection;
proof of a fact within our legal system is proof of a fact to the subjective satisfaction of the tribunal of fact;
a tribunal of fact is not asked to decide between the existence of a fact and the non-existence of the fact but, rather, whether the evidence presented at trial causes the tribunal of fact to believe an assertion of fact with the requisite degree of intensity, with the consequence that our concept of truth is not absolute, but a matter of degree.
See also the discussion of the distinction between reasonable doubt and any doubt in R v Dookheea (2017) 262 CLR 402 at [29]-[37]; [2017] HCA 36 and note that "legal certainty" is necessarily or at least invariably a construct, providing answers to "questions in respect of which no other conclusive answer can be given": Bank of New South Wales v The Commonwealth (1948) 76 CLR 1 at 340 per Dixon J; see also Amaca Pty Ltd v Ellis (2010) 240 CLR 111; [2010] HCA 5 at [6] and [70].
These points highlight the epistemological truth that many statements expressed as fact or truth by the courts simply represent judgments or considered beliefs as to what was the fact or what were the facts and thus the "true" position in circumstances where the fact finder was not an eyewitness and/or the "facts" are not capable of scientifically irrefutable proof or verification and/or the information before the tribunal of fact is incomplete.
So it is with many statements made in everyday life and commerce, that is to say, matters will often be expressed as objectively the case whereas, in reality, they will (and can only) be statements as to a belief or a judgment. In the context of the jurisprudence relating to the statutory prohibition on misleading or deceptive conduct, the distinction drawn between objective truth and a person's reasonable belief in or judgment as to the truth of a particular matter or state of affairs has always assumed importance, although the distinction has traditionally been drawn between an expression of opinion, on the one hand, and a statement of fact, on the other hand: see, for example, the cases referred to and the discussion in JD Heydon, Competition and Consumer Law (Thomson Reuters Looseleaf at Service 216, October 2019) at [160.330] (Heydon); C Lockhart, The Law of Misleading or Deceptive Conduct (5th ed, 2019) at [4.39] ff (Lockhart); R Miller, Miller's Australian Competition and Consumer Law Annotated (41st ed, 2019) at [ACL 18.400]; cf. Forrest v Australian Securities and Investments Commission (Forrest) (2012) 247 CLR 486; [2012] HCA 39 at [33] and [38].
In Bateman v Slatyer (1987) 71 ALR 553 at 559, Burchett J said:
"It is of course clear law that a statement of opinion cannot be regarded as false or misleading, or as misleading or deceptive, simply because it turns out to be incorrect: Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 88; 55 ALR 25. But such an opinion may convey that there is a basis for it, that it is honestly held upon rational grounds involving an application of the relevant expertise: see James v Australia and New Zealand Banking Group Ltd (1986) 64 ALR 347 at 372; Geale v Glenhoun Holdings Pty Ltd (1985) 7 ATPR 46,970 at 46,978-9."
In Global Sportsman Pty Ltd v Mirror Newspapers Ltd (1984) 2 FCR 82 at 88; [1984] FCA 167 (Global Sportsman), the Full Court of the Federal Court had said that:
"The applicants argued that, nevertheless, the statement of an incorrect opinion is misleading or deceptive or likely to mislead or deceive merely because it misinforms or is likely to misinform. An expression of opinion which is identifiable as such conveys no more than that the opinion expressed is held and perhaps that there is basis for the opinion. At least if those conditions are met, an expression of opinion, however erroneous, misrepresents nothing."
As to the significance of the word "perhaps" in this passage, see Forrest at [102]−[104] per Heydon J.
There are, of course, many cases which have applied the distinction between a statement of fact and an expression of opinion in the context of claims of misleading or deceptive conduct.
[8]
The parties
Mr and Mrs Ireland breed Angus cattle for stud purposes and for sale in the meat market on a number of properties in south-western New South Wales. From time to time, they conduct livestock auctions on their properties, issuing catalogues for the sales in advance of the auctions. In autumn 2013 they joined a stud bull, GRT, with a number of their dams. They understood that the bull K34 born on 19 May 2014 was sired by GRT.
The respondent also conducts a livestock breeding operation on a number of properties in south-western New South Wales. It also breeds Angus cattle for stud purposes and for sale in the meat market. Its principal, Mr Graham, who attended the subject auction on the respondent's behalf, is a veterinarian specialising in large animals. He has substantial experience as a stud breeder. Mr Graham received and considered the subject auction catalogue 10 days to two weeks before the auction.
[9]
The auction catalogue
The auction catalogue was 48 pages in length, containing photographs of some of the 50 bulls that were for sale and giving detailed information in relation to each of them. The information included details of measurements and of pedigree. K34's sire was identified as GRT and in the notes to K34's entry it was stated that "[h]is sire is just breeding the house down for us with daughters now in production you will hear a lot more of him".
Near the beginning of the catalogue, there were two pages of "Sale Information" in which the following appeared in a normal sized type face, with prominent headings as shown below:
"GUARANTEE
Ireland's Angus Guarantee All bulls have been put through our in-house evaluation process and have been vet checked and fertility tested.
To the best of our knowledge all of the cattle are all in sound working order at the time of the sale. If during the next 18 months, an animal becomes infertile or breaks down due to reasons other than illness, injury or disease contracted after leaving Ireland's, we will:
1. Provide you with a satisfactory replacement as quickly as is practical so as to minimise the disruption to your program or
2. If a replacement is not available, issue you with full credit (minus salvage value) for the purchase of any one animal at the next Ireland's sale. In some cases buyers maybe requested to supply a veterinary report.
This guarantee is in addition to normal terms and conditions governing auction sales and as such the vendor's decision will be final.
It is important to understand that normal care must be taken and good husbandry practices observed, as we cannot replace an animal that is injured or dies for any reason. As such, we recommend you insure animals against injury.
DISCLAIMER
Whilst all due care and attention has been paid to accuracy in the compilation of this catalogue and the information neither the vendors, selling agents or representatives thereof assume any responsibility what so ever for the correctness, use or interpretation of the information included herein."
[10]
Mr Graham's evidence
Mr Graham gave evidence that the respondent owned about 700 Angus stud breeders and 500 commercial breeding cows. He said that, due to his veterinary background, the respondent frequently used artificial insemination ("AI") in its stud herd.
Mr Graham said that he considered the terms of the subject auction catalogue before the auction and was attracted by the pedigree of K34, he being familiar with GRT and GRT's sire. He considered that K34's purchase by the respondent would assist him in improving the herd's genetic diversity. He considered this to be an important objective.
He said that if K34's sire had been identified in the catalogue as an animal whose registration number he did not recognise:
"I probably would've just kept turning the pages and gone to the next few bulls and kept scanning to see something that I thought fitted our requirements and our profile".
Mr Graham accepted in cross-examination that it was "common practice" for livestock auction catalogues to contain a disclaimer and he was aware that the subject catalogue contained one. He also said that the catalogues for livestock auctions that the respondent conducted included similar disclaimers to that in the Irelands' catalogue.
A catalogue in evidence that related to an auction sale by the respondent on 30 September 2015 included the following disclaimer and DNA paternity verification clauses:
"-SALE CATALOGUE DISCLAIMER-
All reasonable care has been taken by the vendor to ensure that the information provided in this catalogue is correct at the time of publication. However, neither the vendor nor the selling agents make any other representations about the accuracy, reliability or completeness of any information provided in this catalogue and do not assume any responsibility for the use or interpretation of the information included in this catalogue. You are encouraged to seek independent verification of any information contained in this catalogue before relying on such information.
-DNA PATERNITY VERIFICATION-
It is a requirement of Angus Australia that all bulls used to sire calves for registration in the Angus Australia Herd Book Register, Red Angus Register or Angus Performance Register must have been DNA paternity verified if they are born in or after the 'Y' year (2003). Buyers intending to use bulls listed in this catalogue to produce calves to be registered in these registers should obtain DNA paternity verification on those bulls before they are used for breeding."
Mr Graham's evidence in cross-examination concerning this disclaimer included the following:
"Q. You accept that the purpose of that disclaimer was to warn prospective purchasers of the need to undertake their own independent verification because things in your catalogue could be incorrect?
A. The simple answer is, yes.
Q. We spoke of the uncertainty in this natural joining process yesterday, when things could go wrong?
A. We did.
Q. This is just an amplification of that, namely forecasting that although you've done the best that you could to be accurate in your catalogue, there are things that could go wrong which are beyond your knowledge at the time that you prepared the catalogue?
A. Yes, there could be.
…
Q. You were indicating that whilst you had been as careful as … you could be in terms of determining the genetic make-up of the stock and describing it, there were things that could be inaccurate and you're encouraging people to take their own steps to verify what information you would provide it?
A. That is possible."
In relation to the "uncertainty in [the] natural joining process" to which the cross-examination referred, Mr Graham had earlier accepted in cross-examination that "things … can go wrong that people don't always anticipate" in relation to the joining of a bull "with a mob of cows". He said that DNA testing is the way to be sure "these days" about the pedigree of a calf and that gene (or genomics) testing and DNA testing is "becoming more and more commonplace in our livestock industries".
Mr Graham also said that when he bought K34 for the respondent he presumed that it would not have been DNA tested and he accepted that he did not request a certificate of DNA verification in relation to K34's sire before the purchase. Instead, he said that he "trusted the information in the catalogue". Mr Graham also accepted that the bulls that the respondent offered for sale on 30 September 2015 had not been "genetically tested or verified" and added:
"Post that sale we have genetically verified every bull, but up until that stage it was just becoming a new system to use and a process of using genomics testing."
[11]
Mr Peter Parnell's evidence
Mr Parnell is the Chief Executive Officer of the Angus Society of Australia which maintains registers of Angus cattle, including the Herd Book and Angus Performance Registers relating to stud cattle and the Angus Commercial Register relating to steers and heifers to be sold for the meat market. As noted earlier, as a result of the testing of K34's DNA some months after the 11 September 2015 auction, K34 was not eligible for inclusion on the Society's stud registers.
In cross-examination, Mr Parnell gave the following evidence concerning an entry in the Society's stud registers relating to a bull different to K34:
"Q. It's clear from what we know of what you have just said and the contents of the document before you that the breeder has made a mistake in terms of the identity of the sire, is that correct?
A. Yeah, a mistake has - yeah, it's corrected as it is a mistake. It is quite a common thing for a breeder to register an animal by AI. It is, well, reasonably common that in fact rather than being sired by the AI sire that it was actually sired by a natural service backup [bull]. So it's reasonably common amongst our members to record an animal, but then do a parent verification to double check to make sure that sire identification is correct and in fact, that's what this breeder has done.
Q. No doubt, the breeders that are a regular presence with your society know the risks that attach to this program of mixing up sires, so to speak?
A. Yes. Generally speaking they do and that is why we do have the parent verification service facility available to members to help them establish correctly the parentage of animals."
[12]
Misleading and deceptive conduct
The primary judge found that the subject auction catalogue contained a representation that K34 had been sired by GRT, that that representation was incorrect and that the respondent, through Mr Graham, relied on it (at [16] to [17]). Her Honour found that the Irelands had not been dishonest in making this untrue representation and that both the Irelands and the respondent had acted in good faith and on the understanding that K34 had in fact been sired by GRT (at [34]).
Her Honour's findings concerning the respondent's reliance included the following:
"51 Mr Graham freely acknowledged the risks inherent in the purchase of stud cattle. The risks addressed in the course of the hearing were: low fertility, genetic mutation and parentage. His reliance upon the representation that Granite Ridge Thomas was the sire was clearly established by his evidence of the manner in which he addressed the risks of fertility and mutation by reference to past experience of breeding with Granite Ridge Thomas and Thomas Grand Up. He undertook physical inspections of K34 and Granite Ridge Thomas prior to purchase.
…
54 The unavoidable finding therefore, was that the plaintiff relied on the representation concerning parentage both in assessing breeding risks and in accepting that the parentage described would permit K34's progeny to be registered with the Angus Society and thereby command higher sales values than those of commercial cattle.
55 In this respect I considered that Mr Graham acted reasonably."
Having referred to the separate dissenting judgments of McHugh and Kirby JJ in Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 and distinguished that case on its facts, her Honour expressed the following conclusions concerning the disclaimer in the subject catalogue:
"64 The wording used in the defendants' catalogue was somewhat ungrammatical but, in appropriate circumstances, it might provide them with some limited protection against claims. I could not accept that they should be permitted to rely upon the disclaimer in the circumstances of this matter. The misleading conduct complained of by the plaintiff went beyond aspects of misdescription that it could have checked pre-purchase. They extended to the description of a bull that was not the bull sold to the purchaser.
65 The disclaimers that were accepted [in Butcher] as providing protection against misrepresentation were:
(1) Prominent and not in small print; or
(2) Not expressed in general terms but specific as to the matters to be excluded from liability.
66 The disclaimer that appeared in the defendants' catalogue was in a satisfactorily prominent position but it did meet the second requirement. It did not expressly disclaim any assurance concerning the parentage of the bulls offered for sale.
67 I concluded that the disclaimer did not assist them in this case."
[13]
Damages
The primary judge first referred to the evidence before her that after the auction sale of 11 September 2015 and before DNA testing indicated that GRT was not K34's sire, the respondent joined K34 with various of its breeding females and that this produced 78 calves, of which 74 were delivered live. The respondent's claim was reduced to 28 bulls and 25 females after the exclusion of a number of K34's progeny which were not suitable for sale. As K34's sire could not be proved to be a stud bull, it was not possible for the respondent to register these progeny as stud cattle. Instead, they could only be treated as commercial cattle.
Her Honour awarded damages, first, of $13,154 representing the difference between the sum that the respondent paid to purchase K34 and what the evidence established was its value as a commercial bull (at [90]). Her Honour then awarded $206,264 for damages resulting from the difference between the stud and commercial cattle values of K34's claimed progeny, being 28 males and 25 females (at [90]). Her Honour then deducted $19,226.12, reflecting the marginal costs attendant upon the breeding and sales of stud cattle that did not apply to commercial cattle (at [93]). This produced the awarded amount of $200,191.88 (at [94]).
Her Honour also referred to the Irelands' contention that there was a "propensity for error" in the record keeping of the respondent, the Angus Society and the stud breeding industry generally but declined to make a requested deduction for contingencies from the damages as calculated above (at [79]). Her Honour gave the following reasons:
"84 I concluded that this was not necessary for several reasons. While there were acknowledged errors in the materials produced for the purpose of the hearing, the business documents concerning the subsequent sale of the cattle that supported the plaintiff's claim were not challenged. The four heifers, listed as M604, M878, M884 and M895, were withdrawn from the plaintiff's claim, notwithstanding the evidence that they were not registrable. It was not suggested that Mr Graham deliberately inflated or overstated his figures or his claims of loss, and the numbers involved in the apparent errors, in the context of the numbers of cattle dealt with by the plaintiff and the industry generally, were insignificant.
…
86 The defendants also pointed to the absence of evidence of what might have been the return to the plaintiff if another bull had been joined in lieu of K34. There was some merit in this argument when Mr Graham acknowledged that K34 proved to be very productive but there was evidence that, if the initial joining did not result in pregnancies, back up methods were available either through artificial insemination or the introduction of a second bull. In K34's case, neither was necessary.
…
88 K34 continued to demonstrate high productivity in servicing commercial cows for three years and in providing the plaintiff with a return, although at a lower level than anticipated. The defendants suggested that this should influence the assessment of damages but did not make clear how. The plaintiff did not claim for loss of income in any subsequent year. Its claim for the 2015/2016 season was reduced by the income it earned from the sales of K34's progeny as commercial cattle. I would only entertain any claim for discount in respect of income received in subsequent years if losses for those years were claimed."
[14]
Whether misleading and deceptive conduct
The High Court's decisions in Butcher and in Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 are authority for the following three propositions that are of particular relevance to the present appeal.
First, when determining whether conduct was misleading or deceptive, it is necessary to consider that conduct from the perspective of a reasonable person in the position of the person complaining of it. In Butcher, the purchasers of an expensive residential property complained that a sales brochure provided to them by a suburban real estate agent was misleading and deceptive because it reproduced an inaccurate survey diagram prepared by a surveyor. The majority in that case considered that the conduct of the real estate agent was to be assessed "in relation to the particular purchasers, bearing in mind what matters of fact each knew about the other as a result of the nature of their dealings and the conversations between them, or which may be taken to have known" (at [37]). The majority accordingly took into account the character and circumstances of the purchasers, including that they were "intelligent, shrewd and self-reliant" (at [41] cf Kirby J at [188]).
Secondly, the conduct of the person alleged to have engaged in misleading or deceptive conduct must be viewed as a whole. In this respect, the plurality in Campbell cited with approval the following observations of McHugh J in Butcher at [109], adding the emphasis which appears in the quotation below (at [102]):
"The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. In determining whether a contravention of s 52 has occurred, the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself. It invites error to look at isolated parts of the corporation's conduct. The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced from the whole course of conduct. Thus, where the alleged contravention of s 52 relates primarily to a document, the effect of the document must be examined in the context of the evidence as a whole. The court is not confined to examining the document in isolation. It must have regard to all the conduct of the corporation in relation to the document including the preparation and distribution of the document and any statement, action, silence or inaction in connection with the document."
Thirdly, the majority in Butcher emphasised that the provision of a disclaimer by a defendant is part of the conduct that is required to be considered. Their Honours referred to the Court of Appeal having declined in that case to accord disclaimers "decisive significance" but their Honours said that "they do have some significance" (at [50]). Their Honours continued:
"If the 'conduct' of the agent is what a reasonable person in the position of the purchasers, taking into account what they knew, would make of the agent's behaviour, reasonable purchasers would have read the whole document, given its importance, its brevity, and their use of it as the source of instructions to professional advisers."
Their Honours then concluded that "the brochure", read as a whole, simply conveyed the following so far as the survey was concerned:
"The diagram records what a particular surveyor found on a survey in 1980. We are not surveyors. We did not do the survey. We did not engage any surveyor to do the survey. We believe the vendor and the surveyor are reliable, but we cannot guarantee the accuracy of the information they have provided. Whatever you rely on, you must rely on your own enquiries."
Turning to the present case, it is convenient to use the headings adopted by the majority in Butcher for the purposes of its analysis, namely, "the nature of the parties, the character of the transaction contemplated, and the contents of the brochure itself" (at [40]).
[15]
The nature of the parties
The parties to the present transaction were intelligent, experienced commercial people. Mr Graham, who represented the respondent, had extensive experience in the breeding, purchase and sale of Angus cattle. He was aware that problems could occur in identifying the sires of Angus progeny and it can be inferred that he therefore knew that the only certain (and practical) means of doing so was through DNA testing. He presumed that the Irelands had not had K34 DNA tested to determine its pedigree before the auction, no doubt because he knew both that in 2015 it was not the practice in the industry to have such testing done prior to sale, and that the sale catalogue did not suggest that it had occurred.
As Mr Graham knew, or at least presumed, that the Irelands had not DNA tested K34, it cannot be said that the Irelands held themselves out to the respondent as having any certain means of identifying K34's sire. Certainly, their knowledge of their stud operations, and the care taken in them in joining cattle, would have given them grounds for belief in the identity of K34's sire which the respondent did not have, but that is different from saying that they had certain knowledge of that identity.
[16]
The character of the transaction
The character of the transaction was a sale by experienced commercial parties to another in which the sellers could reasonably expect that the purchaser would read the whole of the sale catalogue insofar as it was relevant to the particular sale. A similar conclusion was reached in Butcher where it was held at [50] that "reasonable purchasers would have read the whole document, given its importance, its brevity, and their use of it as the source of instructions to professional advisors".
[17]
Contents of the catalogue
Importantly, the disclaimer was (i) in a prominent part of the catalogue, (ii) presented in a prominent fashion, and (iii) expressed in clear terms. In particular, it stated with clarity that it related inter alia to the "accuracy" of "the information" in the catalogue and that no "responsibility what so ever [sic]" was assumed for "the correctness" of that "information". It also stated that "all due care and attention" had been paid to the accuracy of the information. This last-mentioned statement would have supported a contention that a representation that such care and attention had been taken was conveyed by the catalogue. There was however no assertion in the proceedings that the Irelands had in any way failed to take reasonable care to ascertain the identity of K34's sire. Such a contention would not therefore have assisted the respondent. Likewise the catalogue as a whole would have supported a contention that the Irelands represented that they believed that K34's sire was GRT. The primary judge however held that the Irelands had at all times acted in good faith and the respondent did not allege otherwise. As a result, this contention would also not have assisted the respondent.
Consideration of the whole of the circumstances to which I have referred, including in particular the nature of the parties, the character of the transaction and the contents of the auction catalogue which formed the basis of the sale, leads inevitably to the conclusion that the Irelands did not represent that, as a matter of certain fact, K34's sire was GRT. They might have represented that they had taken all reasonable care to confirm that that was so and that they believed it to be the case but neither of those representations would have been untrue on the basis of the evidence before the primary judge. The disclaimer clause was important, not because it excluded liability which otherwise arose, but because it was an integral part of the Irelands' conduct, as it was in relation to the real estate agent's conduct in Butcher.
Although not essential to my reasoning, the following two circumstances support the conclusion to which I have come.
First, the guarantee provisions in the auction catalogue (see [47] above) identified matters that were the subject of statements of certain fact, leaving other statements which were not mentioned to be governed by the immediately following disclaimer clause indicating that the correctness of such statements was not guaranteed. In the former category were the statements that the bulls the subject of the catalogue had been "put through our in-house evaluation process" and had been "vet checked and fertility tested". The use of the word "guarantee" in relation to them indicated that the Irelands stated these as matters of certain fact. The absence of such a "guarantee" in relation to the identity of the bulls' sires tends to confirm the conclusion, otherwise arrived at, that the Irelands did not make a representation of certain fact on that topic.
Secondly, the respondent's cautious statements in the disclaimer in its own catalogue of 30 September 2015 (which was representative of its catalogues generally) indicated the likelihood of a reasonable person in the respondent's position being alive to the effect of the equally cautious statements in the disclaimer in the Irelands' catalogue.
On appeal, the respondent objected to the Irelands contending on appeal that they were assisted by the guarantee clause in their catalogue. They submitted in this respect that Mr Graham was not given the opportunity to deal with such an argument in his evidence at first instance. I accept that, for this reason, it would not have been appropriate to allow the Irelands to rely on appeal on the guarantee clause on an issue as to whether there was subjective reliance by the respondent (through Mr Graham) on the representation it alleged. I do not however consider that the same restriction applies to the Irelands' reliance on the guarantee clause in relation to the question of whether they engaged in misleading and deceptive conduct. This is because the issue in that regard is whether that conduct would have been misleading and deceptive to a reasonable person in Mr Graham's position. That issue is not concerned with Mr Graham's subjective belief, about which he was able to give evidence.
Before leaving the issue of misleading and deceptive conduct, I indicate that I also do not accept the respondent's argument on appeal that it was not open to the Irelands to contend on appeal that such representations as they made by means of the auction catalogue fell short of statements of certain fact that K34's sire was GRT. Although the Irelands' arguments at first instance may not have been as well refined as they became on appeal, they sufficiently raised the point in the court below. For example, their defence denied that they represented that K34's sire was GRT, referred to the disclaimer and stated that they believed that the statement in the catalogue was correct. Further, their written outline of submissions asserted that they had reasonable grounds for making such representation as was made through the catalogue. This assertion was only relevant if the representation made was one as to belief or opinion, rather than certain fact. Counsel's oral argument at first instance was to a similar effect.
In any event, the issue of misleading and deceptive conduct is to be determined on an objective basis and it does not appear that the respondent would suffer prejudice if the Irelands' argument is new and they are allowed to put it for the first time on appeal. As the point is not concerned with the respondent's subjective state of mind, additional evidence from Mr Graham could not have affected the outcome of the argument. Nor was it suggested that the respondent might otherwise suffer prejudice.
[18]
The damages assessment
As the Irelands are entitled to succeed on their appeal on liability, the correctness of the primary judge's assessment of damages does not strictly arise. It is however appropriate to address it as follows.
I turn first to the larger element of her Honour's damages award, that is, the alleged revenue loss in relation to K34's progeny.
Initially it appeared to the Court that her Honour may have assessed the damages in this respect by calculating the difference between what K34's relevant progeny were worth as commercial cattle and what they would have been worth if their sire was a stud bull. That method of assessment would not have been appropriate as damages for expectation loss are not usually awarded for contravention of the statutory misleading and deceptive conduct provisions (Marks v GIO Australia Holdings (1998) 196 CLR 494; [1998] HCA 69 at [39] to [46]; Weatherill v Bartlett [2017] NSWCA 175 at [22]). Rather, damages of that type are awarded in claims for breach of contract.
In any event, the evidence would not have supported an award of damages on that basis because there was no evidence of the number and quality of the progeny that an average stud bull (whether average in terms of those for sale at the auction on 11 September 2015, or more generally) would have produced in the relevant period. On her Honour's findings, K34 was not average in this respect. Rather, it was said to be particularly "productive" (see [63] above).
The respondent's counsel submitted however that the award of damages for revenue loss was properly made by the primary judge calculating the difference between the non-stud (that is, commercial value) of the progeny that K34 produced in the relevant period and the stud value of the progeny that the female cattle with whom K34 was joined in the relevant period would have produced if they had not been joined with K34. He submitted that on this "no transaction" basis the damages sought and awarded were not for expectation losses but for losses incurred as a result of the respondent's purchase of K34 causing the respondent not to utilise the female animals in question in a more productive fashion than they were used.
The difficulty with this approach is that it was not supported by evidence of what the respondent would have been done but for the purchase of K34. In particular, there was no evidence as to the likelihood of a certain number of the identified cows being impregnated (whether by AI or natural means) or of the likely number and quality of their progeny. The primary judge's finding that K34 was a particularly productive bull, at least during the period in question, emphasises the significance of the absence of such evidence.
Such evidence as there was in fact pointed against the appropriateness of a calculation on this basis. Mr Graham's evidence was to the effect that if he had not been attracted to the purchase of K34, he would have proceeded to look through the catalogue for a stud bull to purchase (see [50] above) and, by inference, would have purchased one of the other bulls for sale at the auction.
In these circumstances, the only award of damages that the evidence warranted was one for the difference between the value of K34 as a commercial bull and the price paid for it as a stud bull. This was the amount of $13,154 that the primary judge awarded. It would not however have been appropriate to award this amount in addition to expectation losses (if, contrary to my view, an award on that basis had been open) because to earn the expected amount the stud bull price would have to have been paid at the auction.
As the evidence did not justify an award for loss of income, it is not necessary to address the Irelands' contention that the primary judge should have discounted the award for contingencies. It is sufficient to say that as a matter of principle, in calculating any award in respect of revenue loss, it is appropriate to have regard to the contingencies that might have been encountered in earning revenue if the alleged contravention had not occurred. Whether her Honour had sufficient regard to them in her assessment need not be determined.
[19]
ORDERS
For the reasons given above, the respondent failed to establish that the appellants engaged in misleading and deceptive conduct. As a result, I propose the following orders:
1. Allow the appeal.
2. Set aside the judgment entered, and the costs order made, at first instance on 26 March 2019.
3. Order that the respondent pay the appellants' costs at first instance and on appeal.
4. Direct that the respondent have a certificate under the Suitors' Fund Act 1951 (NSW), if qualified.
BARRETT AJA: I agree with Macfarlan JA. I also agree with the additional observations of Bell ACJ.
[20]
Amendments
28 January 2020 - Cover sheet: Name of Appellants' solicitors changed.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 28 January 2020
Consistent with the extra-judicial observations of Gageler J to which I have adverted above at [19]-[20], a person's expression of something as a fact will frequently be an expression of their belief as to the existence of a fact or "conclusion involving matters of judgment" (cf. Peter Anthony Thompson & Robyn Lesley Thompson v Ice Creameries of Australia Pty Ltd & David Alan Atchison [1998] FCA 54 per Lehane J) in circumstances where they are unable to verify the truth of that fact or conclusion. In the context of the matter in issue in Forrest, Heydon J observed (at [94]) that "[t]he binding quality of an alleged contract is an inherently controversial matter of professional judgment".
Whether or not an expression of belief or conclusion regarding a matter of judgment is properly described as a matter of "opinion" may be open to debate. Thus, I may say that a particular horse won the Melbourne Cup because someone I assumed was a reliable source told me that matter. My statement would not present as one of opinion, but as one of fact. It would have represented my belief that what I said was true. But what if my source had been misinformed? As an expression of my belief, my statement would not have been false or misleading or deceptive. If construed as a statement of fact, however, it would have had that character.
In The Saints Gallery Pty Ltd v Plummer (1988) 80 ALR 525 at 531, a case concerning a statement made as to the provenance of four artworks sold on consignment by a gallery, the Full Court of the Federal Court observed that:
"It is true that Mr Flannery did not disclaim belief in the truth of what the owner had told him, but that did not in itself make his statement misleading. A statement of belief may not, depending on the circumstances, be misleading if what is stated truly is believed and does not imply any misleading fact." (emphasis in original).
Thus in Forrest, for example, Heydon J at [95]−[110] analysed the case in terms of Fortescue's belief that the agreement the subject of an ASX release was a binding contract.
In the context of the case law on misleading or deceptive conduct, there is no relevant difference in principle, in my view, between the expression of an opinion and a statement of belief, although the more explicitly the opinion or statement in question is expressed to be only one of opinion or belief, the more likely it is to be held to have that character. Absent such explicit identification, the distinction between a statement as to belief and one as to fact may be subtle and masked by the language in which it is uttered (although sometimes it will be express: see, for example, Sanofi-Aventis Australia Pty Ltd v Apotex Pty Ltd (No 3) (2011) 281 ALR 705; [2011] FCA 846 at [280]) and there will frequently be debate as to the proper characterisation of the statement in question: see, for example, Council of the City of Sydney v Goldspar Pty Limited [2004] FCA 568 at [145]; (2004) 62 IPR 274. The decision of the High Court in Forrest in relation to an ASX release announcing entry into a "binding contract" is a case in point, all members of the High Court differing radically on this question of characterisation from the Full Court of the Federal Court of Australia.
The case law requires that the characterisation of a statement as to one of belief or opinion, on the one hand, or as to a matter of fact, on the other hand, is to be viewed from the perspective of the person or "ordinary or reasonable" audience to whom the statement or representation is directed (as opposed to from the perspective of the maker of the statement): Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 at 85; [2000] HCA 12 at [102]. This will frequently be a critical aspect of the context as the decision in Forrest also illustrates: see at [36]−[39]; [105]. Thus, in Pyrotek Pty Ltd v Ausco Industries Pty Ltd (1992) ASC 56-131; (1992) ATPR (Digest) 46-085 at [53323], French J (as he then was) observed that:
"A statement which has the character of a statement of fact when read by an ordinary person may to another, who has relevant knowledge, be seen as an opinion involving interpretation of other data. If in the circumstances in which it is communicated, including the nature or resources of the recipient, a statement presents as a statement of opinion then it is not necessarily to be characterised as anything other than a representation that the maker of the statement holds the opinion or interpretation offered."
On the other hand, in Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1; [1992] FCA 962 (Tobacco Institute), an advertisement in a widely circulated newspaper made claims about the effects of cigarette smoke, the "evidence" as to effects and the non-existence of scientific proof that smoke caused disease in non-smokers. Both at first instance and in the Full Court, a differentiation was made between, on the one hand, the lay audience to whom the statement was directed (and from whose perspective it was held to amount to misleading and deceptive conduct), and a scientific audience, on the other hand, from whose perspective the statement as to an absence of scientific proof may have been understood to be true and thus not misleading or deceptive: see, for example, Tobacco Institute at 27 and 30 per Foster J; at 47 per Hill J.
Mr Lockhart has observed that "[o]rdinarily, the more informed the target audience regarding the subject of the impugned remarks, the more willing the court will be to construe the statements as opinions" or, it might be added, as reasonably held beliefs: see Lockhart at [4.43]. As Macfarlan JA has pointed out, the Respondent in the present case was himself an experienced veterinarian cattle breeder and indeed included a similarly worded disclaimer to the Disclaimer in the Brochure in his own sales catalogues.
It follows from the above discussion of principle that there will be cases where a statement made by a person honestly believing it to be true will give rise to liability, notwithstanding that person's honest belief in its truth because, to the target audience, that statement has presented as one of fact, and not of opinion or belief: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 197; [1982] HCA 44. In this sense, liability for misleading or deceptive conduct is sometimes described as strict (in that it does not require any fault or intent on the part of the representor to be established: see, for example, Heydon at [160.250])
Where, however, it is established that a statement or representation is or must have been understood by its target audience as one of opinion or belief, even though presenting at one level as one of fact, liability will not be strict; rather, it will generally depend upon an assessment as to whether or not the belief or the opinion was honestly held and "perhaps" (see [24] above) whether or not the maker had a reasonable basis for the belief or opinion. Other than in cases of statements as to future matters (where the statutory presumption is engaged: see, for example, Competition and Consumer Act 2010 (Cth), Sch 2 - Australian Consumer Law, s 4), it will be for a plaintiff to establish the lack of reasonable basis for belief if misleading or deceptive conduct is to be established.
The facts of this case highlight that it is not solely statements that present as ones of opinion (or prediction) that attract what I might describe as the Global Sportsman analysis but also, in certain circumstances, statements that present as statements of objective fact but which, upon proper analysis, viewed from the perspective of their target audience, are in fact statements of nothing more than the maker's belief. The terms of a contemporaneous disclaimer may, as in the present case, play an important role in this characterisation exercise.
MACFARLAN JA: On 11 September 2015 the respondent, WG Riverview Pty Ltd, purchased an Angus bull at an auction conducted by the appellants, Mr and Mrs Ireland, on their property near Wagga Wagga. The bull, known as K34, was listed in the auction catalogue as Lot 3. Its sire was identified as Granite Ridge Thomas ("GRT"), a stud bull. Mr William Graham, the respondent's principal, attended the auction on its behalf.
Subsequent DNA testing revealed that GRT was not K34's sire. As a result, the respondent was not entitled to register K34 as a stud bull. Its value was consequently considerably less than the auction purchase price of $28,000.
The respondent subsequently commenced District Court proceedings against Mr and Mrs Ireland claiming, inter alia, that (i) they had misrepresented the identity of K34's sire, (ii) that misrepresentation constituted misleading and deceptive conduct upon which the respondent relied in purchasing K34, and (iii) Mr and Mrs Ireland were liable to pay damages to the respondent to compensate it for its loss in purchasing the bull. The respondent relied on s 18 of sch 2 to the Competition and Consumer Act 2010 (Cth). The respondent's Statement of Claim also contained contract and tort claims but they were not pursued.
After a three day hearing in the District Court, Sidis ADCJ upheld the respondent's claim, awarding it damages of $200,191.88. These comprised $13,154 in respect of the respondent's overpayment for K34 and $206,264 for economic loss it suffered in relation to calves sired by K34 in the months following the auction, before DNA testing revealed that GRT was not K34's sire. The assessment was arrived at after the deduction of $19,226.12 to reflect marginal costs attendant upon the breeding and sale of stud cattle that did not apply to commercial cattle.
On appeal, Mr and Mrs Ireland challenged the judgment on two bases. As explained in oral argument on the appeal, they were to the following effect.
First, the Irelands complained that, in considering whether their conduct had been misleading or deceptive, the primary judge failed to consider the character of that conduct as a whole, with particular regard to the impact of a disclaimer in the auction catalogue. They contended that her Honour should have concluded that their statement in the catalogue concerning K34's sire was at most a representation as to their beliefs, and not a representation of fact which amounted in effect to a guarantee by them of the identity of K34's sire. They contended that in these circumstances any reliance by the respondent on the statement as a representation of fact was unreasonable because no such representation was made.
Secondly, the Irelands complained that the primary judge erroneously assessed damages by awarding the respondent its expectation loss, that is, the profit that it would have made if K34 had in fact been sired by a stud bull. They also challenged the damages award by contending, first, that the primary judge erred in awarding the respondent both its capital and revenue loss and, secondly, by failing to discount the award for contingencies.
For the reasons that follow, I consider that both bases of the appeal should be upheld and that the judgment below in favour of the respondent should be set aside.