GARRY BRENT MARSHALL & ANOR v CBFC LIMITED & ANOR [2001] NSWCA 296

New South Wales Court of Appeal

CITATION : GARRY BRENT MARSHALL & ANOR v CBFC LIMITED & ANOR [2001] NSWCA 296 FILE NUMBER(S) : CA 40223/99 HEARING DATE(S) : 6 August 2001 JUDGMENT DATE : 6 August 2001

PARTIES : GARRY BRENT MARSHALL & ANOR v CBFC LIMITED & ANOR JUDGMENT OF : Mason P at 1; Meagher JA at 20; Handley JA at 21

LOWER COURT JURISDICTION : Supreme Court - Equity Division LOWER COURT ED 1269/98 FILE NUMBER(S) : LOWER COURT Bryson J JUDICIAL OFFICER :

Appellant: M B Duncan COUNSEL : 1st Resp: R G Forster SC/T M Thawley 2nd Resp: A P Coleman 3rd Cross-Def: G C Lindsay/I Jones Appellant: Burt and Allen SOLICITORS : 1st Resp: L E Taylor 2nd Resp: Commins Hendricks CATCHWORDS : Appeal - effect of hire purchase agreement allegedly misrepresented by broker to hirer and financier - issues of fact resolved at trial (ND) DECISION : See par 22.

THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40223/99 MASON P MEAGHER JA HANDLEY JA

Monday 6 August 2001 Garry Brent MARSHALL v CBFC LIMITED

JUDGMENT 1 MASON P: This appeal and cross-appeal challenge orders made by Bryson J pursuant to his judgment in Marshall & Anor v CBFC Limited & Anor [1999] NSWSC 188. That judgment sets out the relevant facts and because I am in agreement with it I do not propose to recount those facts in any detail. 2 This morning the Court gave judgment refusing to allow the appellants to enlarge the issues in the appeal. As indicated in that judgment, the appellants had also made it plain that several of the grounds of appeal contained in the amended notice of appeal were abandoned. I should add that that concession was, in my view, entirely proper. 3 The remaining issue in the appeal involves a challenge to the trial judge's dismissal of claims formulated in pars 44 to 51 of the statement of claim. In essence it is submitted that His Honour erred in rejecting the plaintiff's claim against the second defendant, Mr Ireland, that he had deceived them when he represented to them the terms of the contractual arrangements that had been negotiated on their behalf with CMV Truck and Bus Pty Limited and CBFC Limited. 4 The plaintiff's allegation was and is a serious one, whether it is cast in terms of common law fraud or misleading and deceptive conduct, because in the circumstances of the case it must necessarily have involved a finding of dishonesty on Mr Ireland's part, directed at the persons for whom he was then primarily acting, namely the plaintiffs. 5 Bryson J saw the witnesses and, in pars 20 and 21 of his judgment, set out his reasons why he was not satisfied on the balance of probabilities that the plaintiffs had made the arrangement with Mr Ireland that they contended for. Nor was he satisfied that Mr Ireland had in any way misrepresented to them the deal that he was endeavouring to put together with the financier and the original owner of the truck. 6 The principles are well known, but for the benefit of the appellants I would indicate that it is very well established that not to have seen witnesses puts appellate judges in a permanent position of disadvantage as against the trial judge. Unless it can be shown that the trial judge has failed to use or has palpably misused his or her advantage the higher court ought not take the responsibility of reversing conclusions so arrived at merely on the result of their own comparisons and criticisms of the witnesses and of their own view of the probabilities of the case (see Abalos v Australian Postal Commission (1990) 171 CLR 167 at 178). 7 Nothing that has been advanced on behalf of the appellants suggests any basis for concluding that the trial judge erred in his approach to the issue or in his conclusions. His Honour was perfectly alive to the fact that he was dealing with an issue that involved the credibility of the plaintiffs and that of Mr Ireland, in circumstances where findings of dishonesty had been made against Mr Ireland elsewhere in the judgment. However it is certainly not the law that because a person tells a lie on one occasion then he or she must inevitably be disbelieved on another, and His Honour was, in my view, entitled to conclude, in light of his assessment of the witnesses whom he saw and the probabilities of the case to which he had regard, that he was not satisfied that the claim of dishonest or misleading conduct made by the plaintiffs against Mr Ireland was made good. 8 I should add that I have very real doubts as to whether the appeal was competent, at least after the notice of appeal was shorn of the clearly untenable claim for rectification. When it is recognised that the appellants' remaining claim against Mr Ireland is based on fraud or misleading and deceptive conduct then the matters referred to in the Rule 8 affidavit filed on their behalf do not establish to my satisfaction facts showing that the amount potentially at issue in the appeal is over $100,000. 9 I would therefore dismiss the appeal with costs. 10 The cross-appeal is brought by CBFC Limited against Mr Ireland and his company on the one hand, and CMV Truck and Bus Pty Limited on the other. The cross-appellant challenges the orders of Bryson J dismissing the claim for damages based on misleading and deceptive conduct found in CBFC's favour against CMV and Mr Ireland. His Honour's reasons for rejecting the claim for damages are set out at pars 23 to 25 of the judgment. 11 It is important to recognise that His Honour accepted that there had been misleading and deceptive conduct practised by those parties upon the finance company. That conduct occurred in February 1997 when a transaction bearing the form of a sale and a high purchase agreement, as presented to CBFC, was in fact not entirely as it was represented in the documents presented to the finance company. We have been taken to the materials showing the true and complete nature of the agreement. They consist of the invoice presented by CMV Truck and Bus Pty Limited to CBFC Limited, accompanied by the hire purchase agreement. The transaction was misrepresented to the financier, in that the true purchase price was inflated and that the round-robin of cheques or payments that occurred apparently on Mr Ireland's initiative on 26 February 1997, were suppressed from the financier. As I have said, the trial judge found that there was misleading and deceptive conduct. Nevertheless the claims for compensation were dismissed because of causation findings set out in pars 23 to 25. 12 I am prepared to accept that the cross-appellant has raised an arguable case in relation to par 23, where His Honour gave as one ground of dismissing the claim made by CBFC that CBFC had not satisfied him that it was probable that it would have turned away good business on a truck with plenty of value in it after giving studied consideration to the proposal. His Honour thought that the probabilities were that CBFC would have insisted on its conditions being met and that they would have been met. However, the judgment in CMV's favour also proceeded on the basis of the findings in par 24 and senior counsel for CBFC has, I think correctly, accepted that he has to overcome both sets of findings to make good the appeal against CMV. For convenience I will set out par 24: An endeavour to trace the effect in terms of loss to CBFC caused by CMV's misleading and deceptive conduct meets a very distinct turning point on 10 July 1997. On that day CBFC withdrew its prohibition against CMV giving the truck to the Marshalls, and required that the truck be delivered to the Marshalls. CBFC then acted inconsistently with the right, conferred on it by the general law and also by express terms of the High Purchase Agreement, to rescind or terminate the Hire Purchase Agreement on the basis of the deception which had been practiced on it. Its readiness to do this is part of the reasons for which I have referred to the unfastidious nature of their line of business. CBFC also acted inconsistently with reliance on the plaintiffs' failure to pay the instalment which had fallen due on 26 May 1997. CBFC made an arrangement with Mr Marshall, established clearly by the evidence of Mr Weston (and denied by Mr Marshall, whose evidence on this subject I reject) under which the plaintiffs were to make up the default by an increased scale of payments over the future and the plaintiffs were to have possession of the truck. Thereafter the contractual relationship between the plaintiffs and CBFC continued subject to those modifications, and encountered a continuing series of disasters, as the plaintiffs did not pay the modified scale of instalments, denied the modification, did not pay other instalments, withheld re-delivery of the truck and embarked on this litigation. As I discern them, the causative effects of CMV's breaches on these events were exhausted by 10 July 1997, and the later contractual difficulties, loss trouble inconvenience and legal costs which CBFC have incurred have been caused by the behaviour of the plaintiffs. Endeavouring to appraise the causation of the later events by a commonsense test I see the effect of CMV's conduct as exhausted on 10 July 1997. In these circumstances I am not prepared to direct an inquiry to ascertain the amount of damages which CBFC may recover from CMV on its Cross-Claim. 13 The nub of the argument advanced on behalf of CBFC in challenging this portion of the judgment was to contend that His Honour focussed too closely upon the question whether CBFC was entitled to rescind or terminate, and whether it lost that right by reason of the dealings that culminated on 10 July 1997. It is submitted, rather, that the issue should have been addressed by inquiring whether CBFC had acted reasonably in response to the agony of the moment in which it was placed by reason of the transaction that had been entered into in February 1997. 14 What is clear is that by 10 July 1997 CBFC was aware of the essential situation in which it had been misled back in February, was on notice that the negotiated price of the vehicle was $105,000 and not $115,000, and it knew about the side arrangement between the Marshalls, Mr Ireland, and CMV, for the $23,000 so-called deposit in effect being kicked-back, at least in part and for a time, by CMV to the Marshalls. 15 As I say, CBFC knew this by 10 July. Up until that time it had (upon discovering what had happened in February) in effect put a hold on matters. But by 10 July 1997 it agreed to go ahead with an arrangement whereby the truck was released, the Marshalls paid the money then being claimed by CMV, and in effect the hire purchase arrangement was ratified and allowed to proceed according to its terms. What happened thereafter was that there were breaches of that hire purchase agreement and Mr and Mrs Marshall, either defensively or offensively, launched the proceedings against CBFC and others that were heard by Bryson J. 16 In my view, a fair reading of par 24 of his Honour's judgment is that Bryson J looked at the actual claims that were being pressed in the damages component of the CBFC cross-claim. There is a convenient summary of those in the Rule 8 affidavit filed on behalf of CBFC at Red 127. 17 Part of the claim was that the financier had in some way lost the amount that it had paid out for the truck, less of course the deposit of $23,000 that it had received. But really that was quite an untenable claim, and it ignored the fact that by the time the matter went to trial CBFC had well and truly affirmed the transaction and were relying upon its title to the truck. That title was in turn affirmed by the judgment of his Honour. 18 The second part of the damages claimed were in effect the costs associated with the protracted enforcement action embarked upon by CBFC against the defaulting hirers after the arrangements entered into on about 10 July 1997, culminating in the release of the truck to the hirers, came to be breached in many respects by the hirers. In my view, a fair reading of par 24 of the judgment is that His Honour was simply not satisfied, as a matter of commonsense causation, that the losses claimed (being losses incurred after 10 July 1997) could be causally laid at the door of CMV. Par 25 indicates that His Honour applied similar reasoning in favour of Mr Ireland, when he concluded that the causative effects of Mr Ireland's misleading and deceptive conduct were also exhausted on 10 July, before CBFC had incurred any significant loss. 19 I agree with His Honour's conclusions and I am not persuaded that anything that has been put on behalf of CBFC suggests any error in his determination. I would dismiss the cross-appeal with costs. 20 MEAGHER JA: I agree. 21 HANDLEY JA: I agree. 22 MASON P: The formal orders of the Court are therefore as follows: 1. Appeal dismissed; 2. Appellants to pay the costs of the first and second respondents, CBFC Limited and Hayden Noel Ireland, of the appeal; 3. Cross-appeal dismissed; 4. Cross-appellant, CBFC Limited, to pay the costs of the first and second cross-respondents, Hayden Noel Ireland and CMV Truck and Bus Pty Limited, of the cross-appeal. ****************