Lee v Evans

[16]

The question remains as to whether there was an invitation to the public in connexion with which the appellant on 12th August 1963 made use of or reference to the business name Chowilla Timber Supply Co. It is plain from the particulars of the charge that the case against the appellant was that the invitation to the public was oral and that it was to be found in his conversation with the Broadbents on 12th August 1963. It may be conceded that it may be possible to establish an invitation to the public by proving a series of particular invitations to individuals over so wide a field and in such circumstances or terms as to lead to the inference that an invitation to the public is being made. But apart from the precise form and limiting effect of the charge and of its particulars, such a case could not have been made on the facts of the present case. There was evidence that the appellant invited the Tuckwells to invest in the company but there was no material such as might have justified the magistrate in the case of the Broadbents in inferring, that an invitation to lend money to or to deposit it with the firm or the appellant was involved in his conversation with the Tuckwells. There was, in addition, the admission of the appellant to the police officer that spread over some period of twelve months, a period of which the terminal points were not specified, a number of families upon his solicitation had invested a large sum of money in the Chowilla Timber Supply Co. But there was no material to warrant the conclusion that any or all of this money was obtained in circumstances in which an invitation to lend money or to deposit money had been given. The case therefore stands on the evidence, as it did on the particulars, solely on the oral invitation to the Broadbents given on 12th August 1963. In this connexion, there was some evidence that the Broadbents had been chosen for approach by the appellant because they were shareholders of South Australian Perpetual Forests and, therefore, persons likely to be interested in a timber milling or timber supplying company.

[22]

It seems to me that the judgment of Scrutton L.J., in that case [5] does not clearly distinguish between two radically different situations, namely that which arises where an invitation, not in its terms or nature an invitation to the public, becomes such by reason of the circumstances of its issue, (or perhaps here one might properly say publication) and that which arises where an invitation which is in terms or of its nature an invitation to the public is issued, and the circumstances of that issue are examined to determine whether it constitutes an issue in the relevant sense. I find nothing in the judgments of the House of Lords in that case to lead me to think that any of their Lordships endorsed the passage of the judgment of Scrutton L.J. which the Full Court cites from the report in the King's Bench [5] in the sense in which it is read by the Full Court. The contrasting positions are summarily put by Lord Buckmaster where he says: "A document is not a prospectus unless it is an invitation to the public, but if it satisfied this condition it is not the less a prospectus because it is issued to a defined class of the public" [1] . Viscount Sumner said of the prospectus that whilst "No particular numbers are prescribed" i.e. in the definition of the public in the English Companies (Consolidation) Act, 1908, "Anything from two to infinity may serve: perhaps even one, if he is intended to be the first of a series of subscribers, but makes further proceedings needless by himself subscribing the whole. The point is that the offer is such as to be open to any one who brings his money and applies in due form, whether the prospectus was addressed to him on behalf of the company or not" [2] . It is true that Viscount Sumner was of the view that the "issue" within the meaning of s. 81, even of a prospectus which, was itself an invitation to the public, must be an issue to the public and in the passage quoted he may have been treating the case as one in which the nature as an invitation to the public was to be derived from the circumstances of its issue. But, in my opinion, this does not detract from his view as to what was necessary to make the offer an invitation to the public. In this respect what he says is not, in my opinion, inconsistent with the judgment of Swinfen Eady J. in In re South of England Natural Gas and Petroleum Co. Ltd. [3] . That was a case in which his Lordship concluded that there was an invitation to the public, although the issue of the prospectus was not indiscriminate. I do not regard this case as an instance of an invitation which is shown to be an invitation to the public by the circumstances of its issue but rather as a case where an invitation to the public does not cease to be such because it is given a restricted or selective issue. As I have already indicated an invitation which is not ex facie an invitation to the public can be found to be such an invitation because of the nature of the authorized distribution it was given. In such a case the party accountable for its issue would be liable to have the extent of the circulation he had authorized taken into account. See in this connexion Sherwell v. Combined Incandescent Mantles Syndicate (Ltd.) [4] . But whether the question is whether the invitation is ex facie an invitation to the public or whether an invitation has become an invitation to the public by reason of the nature or extent of its issue, the basic concept is that the invitation, though maybe not universal, is general; that it is an invitation to all and sundry of some segment of the community at large. This does not mean that it must be an invitation to all the public either everywhere, or in any particular community. How large a section of the public must be addressed in a general invitation for it to be an invitation to the public in the relevant connexion must depend on the context of each particular enactment and the circumstances of each case. But within that sufficient area of the community the invitation must be general in the sense spoken of by Viscount Sumner in Nash v. Lynde [1] , by Warrington J. in Sherwell's Case [2] , "An offer of shares to anyone who should choose to come in", and by Jordan C.J. in Ex parte Lovell; Re Buckley [3] , "made to the public generally and capable therefore of being acted upon by any member of the public". That those to whose hands such an invitation is intended to come, also stand in some special relationship to the invitor, will not prevent the invitation being an invitation to the public. See In re South of England Natural Gas and Petroleum Company, Ltd. [4] . In my opinion Nash v. Lynde [5] lends no support to the proposition that an invitation to a single individual as a member of the public in the sense that he stands in no special relationship to the invitor is an invitation to the public within the meaning of the amending section.

[39]

The substantial question on which this appeal turns is whether what the appellant did amounted to an "invitation to the public" to deposit money with or lend money to Chowilla Timber Supply Co. "Chowilla Timber Supply Co." was merely the registered business name of the appellant. That the appellant had approached a large number of people and collected a considerable sum of money from them is beyond doubt. But at his trial attention became very largely concentrated on his transactions with the two Broadbents. The magistrate, in a careful survey of the evidence as a whole, said of the testimony of the Broadbents that "there is a certain amount of confusion evident as to just what was said. I can well understand this as it seems that Chowilla Sawmills was also brought into the conversation". Cross-examination of these witnesses had been largely directed to establishing that the invitation to them was not to invest in Chowilla Timber Supply Co. but in Chowilla Sawmills: that was the name in which one Galpin carried on a sawmilling business until July 1963 when the appellant became registered in place of Galpin as carrying on that business also. As I read the magistrate's findings, he thought that the mention of both names had caused some confusion. But his conclusion was quite definite. He said: "I think that the defendant's statements to Constable Thompson show conclusively that, although the witnesses mentioned the references which were made by him to Chowilla Sawmills as well as Chowilla Timber Supply Company, the defendant's real purpose was to get them to invest in Chowilla Timber Supply Company and that he invited both of the Broadbents and Mr. and Mrs. Tuckwell to invest in the Chowilla Timber Supply Company of which he was in fact the sole proprietor". This finding was in my opinion justified by the evidence. Neither in the Supreme Court nor in the notice of appeal to this Court was any point taken that the invitation to invest was not an invitation to deposit money. What is said is that there was no invitation to the public to do so. The magistrate found that the invitations the appellant issued to the Broadbents and the Tuckwells were invitations to deposit money with his "company". If the evidence showed that the invitations to those persons occurred in the course of and as incidents in the appellant's canvassing members of the public generally with similar invitations then in my opinion it would support the charge. However the magistrate, I think, was led into a mistake as to the issue he had to decide. The prosecution gave, and then amended, particulars of the charge, with the result that it was alleged that the invitation to the public was "oral and made to Oliver Claud Broadbent and John Noel Broadbent on 12th August 1963". With the particulars in that form - and it was the form the prosecution chose - the magistrate was not unnaturally led to the view that, as he put it: "The question is whether the oral invitation to Oliver Claud Broadbent and John Noel Broadbent at Whyalla on 12th August 1963 was an invitation to the public, which it must have been before there can be a conviction". It was, however, misleading to formulate the question in that way. An invitation to a particular individual cannot, it seems to me, ever be of itself and without more an invitation to the public; but an approach to an individual may occur in the course of an invitation general in character.

[41]

That there was an invitation to the public may be proved by proving an invitation to one person, selected to receive it simply because it was thought he might respond to it, and that substantially similar invitations had been made or were to be made to sundry other persons, members in the same sense of the general public. In my opinion there was evidence of that in this case. The appellant admitted that he had been canvassing people to raise money for his "company". The Broadbents gave evidence that he said that he was approaching other people and that if enough people responded by putting in money the company would seek registration on the stock exchange. The magistrate did not convict the appellant because, having formulated the question for himself in the way he did, he was persuaded that certain dicta of Jordan C.J. in Ex parte Lovell; Re Buckley [1] were in point. In that case the learned Chief Justice of New South Wales was considering a prohibition of share-hawking, that is to say of going "from house to house or from place to place offering shares for subscription to the public or any member of the public". In the course of his judgment he referred to the meaning that in the prospectus cases had been put on the phrase "offer to the public". And he went on to point out that in the prohibition of share-hawking the words were "the public or any member of the public", wider words than "the public", which was the phrase in the prospectus cases. He said: "It is to be noted that the section is not restricted to offers to the public. In the case of provisions which are so restricted, an offer to the public prima facie connotes an offer of the Carlill v. Carbolic Smoke Ball Co. [2] type, namely one made to the public generally and capable therefore of being acted upon by any member of the public" [3] . But to apply that remark in the way counsel sought to do here is, I consider, a mistake. The denotation of the phrase "any member of the public" was, it had been argued, restricted by its association with the phrase "the public". It was in the course of dispelling that proposition that Jordan C.J. spoke of the prima facie meaning of the words "an offer to the public". His reference to the Smoke Ball Case [2] was by way of illustration only. That case was in a somewhat different field from the present because it concerned an offer acceptance of which by any member of the public would create a binding contract. Such an offer must necessarily be uniform and explicit. But an invitation to the public to deposit money may amount to no more than the soliciting in general terms of offers which may or may not be accepted. It is enough if there be an offer to do business, as distinct from an offer to make a contract. However, the distinction does not make the illustration of a public offer that Jordan C.J. gave inapt here. Whether or not the proposal be an offer or an invitation, it cannot be an offer or an invitation to the public if it be addressed only to a particular person. All that Lovell's Case [1] decided is that an offer to "a member of the public" does not cease to be so because it is not made to the public at large. That has no direct bearing on the facts of this case.

Lee v Evans - [1964] HCA 65 - HCA 1964 case summary — Zoe

At a glance

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Decision date

Before

Source

Judgment (45 paragraphs)

Parties