New South Wales Court of Appeal CITATION: Orix Australia Corporation Limited v Moody Kiddell & Partners Pty Limited & Anor [2006] NSWCA 257 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S): 13/09/06 JUDGMENT DATE: 26 September 2006 JUDGMENT OF: Spigelman CJ at 1; Ipp JA at 2; Basten JA at 81 DECISION: Appeal dismissed with costs. CATCHWORDS: TRADE PRACTICES - misleading or deceptive conduct under s 52 of the Trade Practices Act 1974 (Cth) - whether finance broker who passed on information liable - discussion of principles applicable when an agent passes on information obtained from others - significance of the nature of the parties and the character of the transaction - approach to be adopted when information passed on to a single individual who receives it on behalf of a single identifiable entity - effect of a disclaimer - Yorke v Lucas (1985) 158 CLR 661 and Butcher v Lachlan Elder Realty Pty Limited (2004) 218 CLR 592 applied. D LEGISLATION CITED: Trade Practices Act 1974 (Cth), s 52 Butcher v Lachlan Elder Realty Pty Limited (2004) 218 CLR 592 CASES CITED: Campomar Sociedad Limitada v Nike International Limited (2000) 202 CLR 45 Goldsbro v Walker [1993] 1 NZLR 394 Yorke v Lucas (1985) 158 CLR 661 Orix Australia Corporation Limited (Appellant) PARTIES: Moody Kiddell & Partners Pty Limited (First Respondent) Christine Mathers (Second Respondent) FILE NUMBER(S): CA 41003/05 COUNSEL: T Hale SC/A Mitchelmore (Appellant) M McCulloch SC/J White (First and Second Respondents) SOLICITORS: M D Nikolaidis & Co (Appellant) Ebsworth & Ebsworth (First and Second Respondents) LOWER COURT JURISDICTION: Supreme Court - Equity Division LOWER COURT FILE NUMBER(S): ED 6113/04 LOWER COURT JUDICIAL OFFICER: White J LOWER COURT DATE OF DECISION: 30/11/05 LOWER COURT MEDIUM NEUTRAL CITATION: [2005] NSWSC 1209 IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 41003/05 ED 6113/04 SPIGELMAN CJ IPP JA BASTEN JA Tuesday 26 September 2006 ORIX AUSTRALIA CORPORATION LIMITED v MOODY KIDDELL & PARTNERS PTY LIMITED & ANOR Judgment 1 SPIGELMAN CJ: I agree with Ipp JA. 2 IPP JA: The issue on appeal 3 This appeal concerns a claim for damages under s 52 of the Trade Practices Act 1974 (Cth) by Orix Australia Corporation Limited ("Orix"). Orix contends that Moody Kiddell & Partners Pty Limited ("Moody Kiddell") and Mrs Christine Mathers, an employee of Moody Kiddell, were guilty of misleading or deceptive conduct and that conduct caused it to suffer loss. 4 Orix's written and oral submissions were directed only to the liability of Moody Kiddell. Nevertheless, the notice of appeal seeks judgment against both Moody Kiddell and Mrs Mathers, and Mrs Mathers was represented by senior and junior counsel. She has at least an interest in any costs order made in the appeal. The case against Mrs Mathers does not depend on any circumstance that does not apply in the case against Moody Kiddell. As the result of the appeal in regard to Mrs Mathers must follow the result of the appeal in regard to Moody Kiddell, I shall, in these reasons, deal only with the argument against Moody Kiddell. 5 The trial judge, White J, found that Orix had been the victim of misleading conduct, and had suffered a substantial loss in consequence: Orix Australia Corporation Ltd v Moody Kiddell & Partners Pty Ltd [2005] NSWSC 1209. The misleading conduct in question, as pleaded and found, concerned certain information that Moody Kiddell (and Mrs Mathers acting for Moody Kiddell) had conveyed to Orix. Moody Kiddell's defence to Orix's claim was that, in disseminating the information, it was acting merely as the agent of Queensland Construction Equipment Pty Limited ("QCE"), a company controlled by Mr Raymond McCormick. Moody Kiddell argued that it had simply passed on the information to Orix as a conduit and its conduct had not misled Orix. 6 White J held that Moody Kiddell was not merely a conduit. He held that Moody Kiddell's conduct impliedly conveyed that it believed the information it supplied to be correct, and that it did not know of facts that gave reason to doubt the correctness of the information. Nevertheless, it was not liable for these implied representations, as both were true. 7 His Honour held that Moody Kiddell did not adopt or endorse the misleading information, and that Orix did not understand Moody Kiddell to have done so. He found that Moody Kiddell, to the knowledge of Orix, did no more than communicate to Orix what QCE was representing. For these reasons, Moody Kiddell was not liable as Orix claimed. 8 Orix appeals against his Honour's findings. The appeal falls to be determined by the proper application of the well-known remarks of Mason ACJ, Wilson, Deane and Dawson JJ in Yorke v Lucas (1985) 158 CLR 661 at 666 and what was said by the majority (Gleeson CJ, Hayne and Heydon JJ) in Butcher v Lachlan Elder Realty Pty Limited (2004) 218 CLR 592 about the liability under s 52 of an agent who disseminates information on behalf of another or others. The transactions giving rise to the misleading conduct 9 Orix is a large international finance house. Its business includes financing the acquisition of heavy industrial machinery and equipment. Moody Kiddell is a large finance broker, specialising in obtaining finance for customers interested in acquiring heavy machinery, particularly earth-moving, mining, construction and transportation equipment. Moody Kiddell had a long-standing relationship with Orix. 10 QCE had carried on an equipment hire business for many years. It was an old customer of Moody Kiddell and had an established business relationship with Nelson Equipment Pty Limited, a company that carried on business at Penrith in New South Wales selling used cranes, earthmoving equipment, trucks, trailers, and construction equipment. Mr McCormick, the principal of QCE, had known Mr Nelson, the principal of Nelson Equipment, since Mr Nelson was a child. 11 Orix had a formalised, internal system of dealing with suppliers of equipment that it financed. As part of this system it divided suppliers into two categories, namely, "licensed or recognised dealers" (on the one hand) and other suppliers (on the other). The category "licensed or recognised dealers" had no significance other than that attributed to it by Orix. Orix's verification procedures relating to the equipment to be financed, depended on the category in which the suppliers fell. Nelson Equipment was a licensed or recognised dealer. 12 White J described as follows Orix's standard procedure for financing transactions with its licensed or recognised dealers at [23]: "The standard procedure was that the application for finance was prepared by Moody Kiddell from information supplied by Mr McCormick. The finance application identified the equipment, its location, the applicant for finance, (i.e. QCE), the supplier, the price at which the goods were to be acquired from the supplier, the interest rate, the term of the finance, the amount of the balloon payment to be made at the end of the term, and the brokerage. Moody Kiddell obtained the details of the equipment from Mr McCormick. It received information on a daily basis from Orix as to the rates on which Orix provided finance if the transactions were approved. The finance companies provided Moody Kiddell with their criteria which were required to be met for the finance to be approved. As part of the standard procedure, Moody Kiddell requested the supplier to prepare an invoice to be addressed to Orix. Moody Kiddell generated the documentation from a template used in relation to all finance companies, altered to take account of the particular circumstances of each application. 13 Between June 2001 and September 2003, Orix, QCE, Nelson Equipment and Moody Kiddell participated in six financing transactions. By each such transaction QCE acquired an interest in a crane supplied by Nelson Equipment. Orix was the purported purchaser of each crane and entered into a commercial hire purchase agreement (called an "asset purchase agreement") in respect of each, with QCE as hirer. Moody Kiddell acted as broker in each transaction. 14 The six transactions were as follows: DATE DESCRIPTION OF GOODS FINANCE AMOUNT 26.06.2001 1 Franna 18 tonne crane $192,500 10.09.2001 1 Franna 18 tonne crane $187,000 08.03.2002 1 used Franna 18 tonne crane $198,000 15.10.2002 1 used Tadano 50 tonne truck crane $324,500 21.07.2003 1 used Franna 20 tonne mobile crane $297,000 11.09.2003 1 used Franna 20 tonne mobile crane $236,500 15 In providing the finance, which totalled $1,435,500, Orix acted on the strength of information provided in certain documents supplied to it by Moody Kiddell. The information amounted to descriptions of the cranes to be purchased, their location and the price at which Nelson Equipment was proposing to sell each crane to QCE. 16 In fact, the cranes did not exist and the information was false and misleading. QCE and Nelson Equipment had perpetrated a fraud on Orix. Moody Kiddell was innocent of the fraud and did not know that the information was false. In fact, it believed the information to be true. 17 Nelson Equipment is in liquidation. Mr McCormick is bankrupt; he was joined as a party at the trial but did not appear. A holistic approach 18 In Butcher, the majority said at 605, [39] that in applying the "principles" set out in Yorke v Lucas at 666, "it is important that the agent's conduct be viewed as a whole". McHugh J expressed similar views at 625, [109]. 19 In discussing the significant circumstances of the six transactions, I shall focus on the first transaction. It was common ground that all six were in substance the same and the first transaction was typical. What follows is derived principally from the judgment of White J who set out the relevant material in meticulous detail. His Honour's findings of primary fact as to the relevant circumstances are not challenged. 20 Moody Kiddell marketed itself as being pre-eminent in equipment broking and as the biggest and best broker in this particular area of the market. Its particular professional expertise involved its knowledge of and ability to provide information as to the finance facilities available, the most suitable financier for a particular transaction, interest rates that could be obtained on the market, and the lending terms and conditions that financiers would be likely to impose. It was accredited with a large number of banks and other financiers, including Orix. 21 Moody Kiddell also marketed itself as being able to process applications for finance speedily. In fact, all six transactions were processed quickly. This was characteristic of the finance business that Moody Kiddell conducted. 22 The close relationship between Moody Kiddell and Orix is manifest from the following observations of White J at [10] and [11]: "[Moody Kiddell] has brokered equipment and property finance transactions in which Orix has been the financier since 1986. In the financial year ended 30 June 2000, the value of all of the transactions in which Orix was the financier and Moody Kiddell was the broker exceeded $26,000,000. In the following financial year, the value of transactions in which Orix was the financier, and Moody Kiddell the broker, exceeded $20,000,000. In the following three financial years, the value of such transactions exceeded $30,000,000. In the financial year ended 30 June 2003, it acted as broker on 388 transactions funded by Orix. It earned brokerage of $873,422 and trailer commission of $94,117 in respect of these transactions." 23 There was an existing business relationship between Orix and Nelson Equipment. Nelson Equipment was an approved supplier from whom Orix purchased equipment for the purpose of providing lease finance. Nelson Equipment also provided valuations to Orix and sold, on its behalf, goods that had been repossessed. 24 White J said, in connection with QCE at [15]: "For more than twenty years, Mr McCormick had dealings with Mr Nelson's father, and after his death, with Mr Nelson. A credit schedule attached to the finance application for the first of the transactions with which these proceedings are concerned showed that as at June 2001, QCE was a party to seventeen current credit contracts with six finance companies, including three with Orix. The three current credit contracts with Orix as at June 2001 were taken out in March 1999, June 1999 and June 2000. It had previously entered into five credit contracts with Orix which had been finalised or re-financed The earliest of these was taken out in July 1995. Typically the term of the contracts was for two, three or four years. The contracts involved the payment of monthly rental and a residual payment, sometimes called a balloon, at the end of the contract." 25 White J concluded that, at the time of the six transactions, QCE and Nelson Equipment conducted established and apparently reputable businesses. Each had a history of dealing with both Moody Kiddell and Orix. Neither Moody Kiddell nor Orix had any suspicions about their reliability and probity. 26 I turn now to the details of the first transaction. 27 On 20 June 2001 Mr McCormick telephoned Mrs Mathers and told her that Nelson Equipment had a crane that QCE wanted to buy. Mr McCormick told Mrs Mathers the year and type of crane and its price. He told her that QCE wanted to finance the purchase over a 48-month term. He also told her that the crane would be hired for four years to a company known as Allied Shipping Service Co Pty Limited ("ASSCO") for use by BHP Steel at Port Kembla for $8,000 per month and that he would provide her with a copy of the order. 28 Mrs Mathers' personal assistant then prepared an application form addressed to Orix. The information that was chosen was intended to maximise the prospects of the application being approved. The form named QCE as the applicant. It was in the following terms: "MOODY KIDDELL & PARTNERS PTY LIMITED A.C.N.003 168 394 DATE: 20TH June, 2001 APPLICATION NO: 038.ORIX ATTENTION: RICHARD OLENCEWICZ CONSULTANT: CHRISTINE MATHERS … _____________________________________________________ APPLICANT'S NAME: QUEENSLAND CONSTRUCTION EQUIPMENT PTY LIMITED ABN 14 010 834 750 ADDRESS: Unit 79, "Oceana", 100 Old Burleigh Road, BROADBEACH. QLD. 4218 Reception: 0755 385 886 EQUIPMENT ADDRESS: BHP Steel, Port Kembla … CONTACT: Raymond McCormick DIRECTORS/ Raymond Alexander McCORMICK of Unit 79, 100 Old Burleigh Road, BROADBEACH. QLD 4218 (D.O.B. 18.9.45) Home phone: (0755)385886 PARTNERS: Gweneth Aileen McCORMICK of Unit 79, 100 Old Burleigh Road, BROADBEACH. QLD. 4218 (D.O.BO. 13.8.44) NATURE OF BUSINESS: Crane Hire. ESTABLISHED: July, 1988. EQUIPMENT: One (1) only used (1999) Franna 18 tonne crane. NEW OR USED: Used. SUPPLIER: Nelson Equipment, phone 4721 3333, contact Greg Nelson. TYPE OF TRANSACTION: CHP COST PRICE: $192,500.00 BALLOON: 30% RATE: 7.75% BROKERAGE: 4% TERM: 48 months. MONTHLY RENTAL: $3,809.30 MTHLY STAMP DUTY: $ 28.57 TOTAL MTHLY RENTAL: $3,837.87 BANK AND BRANCH: CBA, Broadbeach. ACCOUNTANT: J. S. Bryant & Co., phone 073 229 7499, fax 073 229 3609, contact Debbie. INSURANCE: Holdfast Insurance, phone (08) 8296 2963, fax (08) 8296 5019, contact Peter Paterson See Schedule attached. CREDIT COMMITMENTS: In name of Raymond McCormick: Mercedes Finance, taken out March, 2001, Opening Balance $120,000, Rentals 60 x $1,460, Balloon $60,000, Mercedes 320 CLK. ADDITIONAL INFORMATION: The applicant is known to Orix via current credit. As with all previously financed cranes, the above machine will be hired to Assco Shipping for use by BHP at Port Kembla. Copy of order to be provided (approximately $8,000 per month for 4 years). We confirm applicants have been informed that certain credit checks could be carried out and items of personal information could be disclosed to a credit reporting agency. The attached information has been provided to Moody Kiddell & Partners Pty Limited by or on behalf of the proposed borrower/lessee; Moody Kiddell & Partners Pty Limited or its licensees cannot and do not accept any responsibility for the accuracy of that information which is provided to you in good faith." 29 On 20 June 2001 Moody Kiddell faxed the finance application to Orix, together with a statement of assets and liabilities of Mr and Mrs McCormick, schedules showing QCE's current and finalised credit contracts with Orix and other financiers, and a profit and loss account and balance sheet for QCE. This information had been given to Moody Kiddell by QCE in the past and Moody Kiddell had kept it in its files. 30 On 21 June 2001 Moody Kiddell requested Nelson Equipment to "prepare a payout/invoice along the following lines". The request set out the format for an invoice from a supplier to be addressed to Orix. The format included a description of the goods to be supplied, and required the supplier to state whether the goods were new or used, the year, model, and all relevant identifying features, the cost price, GST and the total price. The invoice was required to provide for delivery to QCE, at BHP Steel Port Kembla. 31 On the same day Nelson Equipment faxed back the invoice to Moody Kiddell. The form had been completed as requested. It was addressed to Orix and described the crane, its serial number, engine number and year, set out the price of $175,000 plus GST, and provided for delivery to QCE, BHP Steel, Port Kembla. The invoice stated that the crane was sold in an "as is where is" condition. 32 On 21 June 2001, Moody Kiddell received by facsimile what was or purported to be purchase order number JL31005 dated June 2001 from ASSCO. The purchase order was addressed to QCE and stated "Rental of Franna Approx: 48 months at $8,000/month". It bore a signature and had been stamped "confirmation". 33 Also on 21 June 2001, Orix sent a facsimile to Mrs Mathers, stating: "On the basis of the information you supplied in the application for finance dated 20/6/01, Orix Australia Corporation Ltd ("Orix") will consider entering into a finance agreement with the abovenamed applicant subject to Orix's standard conditions for the type of finance and the specific terms and conditions that are briefly set out below." The facsimile was said not to be an offer of finance capable of acceptance, but a summary of the basis upon which Orix would be prepared to provide finance if the applicants and any guarantors met its conditions. Orix reserved the right to withdraw its approval before the finance agreement was implemented if, inter alia, any representation provided by or on behalf of the applicants was found to be false or untrue in any material respect. The form set out the term, the interest rate, the balloon payment and the brokerage fee. It also calculated the stamp duty and the monthly rental of $3,837.87 per month. One of the conditions was confirmation that the crane would be used predominantly in New South Wales. 34 On 22 June 2001, Moody Kiddell prepared an invoice for the first month's rental and addressed it to QCE. It requested that the cheque be made payable to Orix. 35 On 25 June 2001, Mr McCormick signed the statement of assets and liabilities relating to his wife and himself that had accompanied the application for finance. On the same date, he drew a cheque in favour of Orix for the first month's rent. He signed a customer acknowledgment and declaration form addressed to Orix. He declared that the crane had been inspected, that it was as ordered, and that it was in a good and substantial repair, working order and condition. He acknowledged on behalf of QCE that Orix relied upon the declarations in entering into the asset purchase agreement and in settling with the supplier of the crane. He also acknowledged that Orix had appointed QCE as its agent to take delivery of the crane. The acknowledgment stated that the crane was located at Port Kembla and contained a description of it, including an engine number and serial number. 36 On 26 June 2001, Moody Kiddell received a facsimile that appeared to emanate from ASSCO confirming that the crane for rental under purchase order JL31005 would be on hire in New South Wales only. Moody Kiddell faxed the document to Orix. On the same date, Moody Kiddell also sent Orix, by facsimile, a copy of an insurance certificate for the crane. 37 Mr and Mrs McCormick signed an asset purchase agreement as guarantors of the obligations of QCE. The asset purchase agreement described QCE as the hirer of the crane. It included a description of the crane and the hiring instalments. 38 Moody Kiddell sent Orix invoices for the monies it was required to pay under the finance arrangement it had entered into. On 26 June 2001 Orix paid the amounts reflected in the invoices. It also paid Moody Kiddell the commission it had earned in respect of the transaction. 39 Nelson Equipment prepared what it called a "recipient created tax invoice" for the crane. This was addressed to QCE and was in respect of the purchase by Nelson Equipment of the crane from QCE. The invoice provided for payment of $175,000 by Nelson Equipment to QCE. This was the same amount as the amount for which Nelson Equipment had earlier invoiced Orix, less GST. On 2 July 2001, Nelson Equipment deposited $175,000 to the bank account of QCE. The principles applicable when an agent passes on information obtained from others 40 In Yorke v Lucas Mason ACJ and Wilson, Deane and Dawson JJ said at 666: "It is, of course, established that contravention of [s 52] does not require an intent to mislead or deceive and even though a corporation acts honestly and reasonably, it may nonetheless engage in conduct that is misleading or deceptive or is likely to mislead or deceive … . That does not, however, mean that a corporation which purports to do no more than pass on information supplied by another must nevertheless be engaging in misleading or deceptive conduct if the information turns out to be false. If the circumstances are such as to make it apparent that the corporation is not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is worth, we very much doubt that the corporation can properly be said to be itself engaging in conduct that is misleading or deceptive." 41 Butcher concerned what the majority of the High Court referred (at 604) to as a "representation" in a suburban real estate agent's brochure relating to a Sydney waterfront residential property. The representation was to the effect that a fence ran along the line of the mean high water mark that appeared in a survey diagram included in the brochure. In fact the mean high water mark was not located where it was shown on the diagram. 42 When discussing Yorke v Lucas, the majority said at 605: "[39] In applying [the principles set out in Yorke v Lucas at 666], it is important that the agent's conduct be viewed as a whole. It 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. Everything relevant the agent did up to the time when the purchasers contracted to buy the Rednal land must be taken into account. It is also important to remember that the relevant question must not be reduced to a crude inquiry: 'did the agent realise the purchasers were relying on the diagram?' To do that would be impermissibly to dilute the strict liability which s 52 imposes. [40] For the following reasons, the agent did not engage in conduct towards the purchasers which was misleading. Whatever representation the vendor made to the purchasers by authorising the agent to issue the brochure, it was not made by the agent to the purchasers. The agent did no more than communicate what the vendor was representing, without adopting it or endorsing it. That conclusion flows from the nature of the parties, the character of the transaction contemplated, and the contents of the brochure itself." 43 In a footnote (footnote (38) to the reference in [39] to Yorke v Lucas), the majority referred with apparent approval to Goldsbro v Walker [1993] 1 NZLR 394, a decision of the New Zealand Court of Appeal on comparable legislation, saying: "Cooke P [at 398] described Yorke v Lucas as supporting the 'fairly obvious proposition' that 'an innocent agent who acts merely as a conduit and purports to do no more than pass on instructions from his principal does not thereby become responsible for anything misleading in the information so passed on' (emphasis in original); Richardson J approved Yorke v Lucas (at 402), and Hardie Boys J said (at 405) that it 'may be that' Yorke v Lucas 'puts it somewhat too narrowly'". 44 After discussing the nature of the parties, the character of the transaction, and the contents of the brochure the agent issued (including two disclaimers), their Honours concluded (at 609, [51]: "Hence it would have been plain to a reasonable purchaser that the agent was not the source of the information which was said to be misleading. The agent did not purport to do anything more than pass on information supplied by another or others. It both expressly and implicitly disclaimed any belief in the truth or falsity of that information. It did no more than state a belief in the reliability of the sources." 45 From the passages that I have quoted it appears that the ratio of the majority's decision that the agent had not engaged in misleading conduct was that the agent did no more than communicate what the vendor was representing. Their Honours held that an innocent agent, who acts merely as a conduit and makes it clear, expressly or impliedly, that he or she is doing no more than passing on information obtained from others, does not attract liability under s 52. 46 In Butcher, the fact that the agent did not adopt or endorse the communication, was a factor that supported the finding that the agent had done no more than pass on information from the vendor. Likewise, the disclaimers in the brochure were merely part of the circumstances relevant to the inquiry whether it would have been plain to a reasonable purchaser that the agent was not the source of the misleading information. Orix's arguments 47 Orix contended that the effect of Yorke v Lucas was that, without an express or implied disclaimer on the part of the agent, the agent – in passing on information supplied to it by a principal – will be held to have engaged in conduct that is misleading or deceptive. It submitted that, although each finance application submitted by Moody Kiddell on behalf of QCE contained a disclaimer, that disclaimer did not apply to the information that was misleading (namely, that relating to the existence, location and title of the cranes). 48 In addition, Orix relied on the nature of the parties and the character of the transactions in submitting that Moody Kiddell had adopted and endorsed the information. 49 Orix stressed the size of Moody Kiddell, the fact that it specialised in the finance of heavy equipment such as cranes, that it marketed itself as the "biggest and best" broker in the leasing finance industry, that it claimed, on its website, to "offer you a depth of knowledge other financiers can't hope to match" and that, generally, Moody Kiddell encouraged a reputation for its expertise in the eyes of financial institutions. Orix submitted that Moody Kiddell's experience and the nature of the relationship between Orix and Moody Kiddell added credibility to the information Moody Kiddell provided about the cranes. Orix submitted: "The transactions and the information about the cranes were clothed with the expertise, experience and professionalism of [Moody Kiddell]." 50 Orix pointed out that Moody Kiddell had knowledge of how financiers, including Orix, operated. Moody Kiddell had access to and could generate Orix's loan documents and had access to Orix's finance rates. It prepared the finance applications and knew what information was most likely to achieve an approval of a finance application. Orix stressed that Moody Kiddell was able to process finance applications quickly and did so in regard to the six transactions. Orix submitted that it was relevant that Moody Kiddell had earned very substantial amounts in commissions from transactions brokered with Orix, and it stood to earn trailing commissions from the six transactions, the subject of its claim. All these matters, it argued, added verisimilitude to the finance application. 51 Orix pointed out that it never had any contact with Mr McCormick or anyone else from QCE and it did not have any contact with Mr Nelson in regard to any of the six transactions. The inference being that Orix, to Moody Kiddell's knowledge, depended on the information provided by Moody Kiddell. 52 Orix drew attention to the information contained in the finance applications, particularly the details of the non-existent cranes. It relied on the fact that Mrs Mathers, on Moody Kiddell's behalf, inserted the reference to the cranes being hired to ASSCO for use by BHP at Port Kembla because she thought that that information might assist in the processing of the application. She knew that the reference to BHP would add quality to the application. 53 Undoubtedly, as Orix pointed out, the information communicated to it by Moody Kiddell was misleading. Orix acted on this information and, in consequence, suffered substantial loss and damage. Orix contended that, when regard is had to all the matters on which it relied, and to Moody Kiddell's conduct in collating the information, assembling it in an appropriate format, setting it out under its own letterhead, White J should have held that Moody Kiddell had adopted or endorsed the information. The significance of Orix being the only recipient of the information 54 In Butcher the majority at 604, [36] pointed out that questions of allegedly misleading conduct, including questions as to what the conduct was, can be analysed from two points of view. One is employed in relation to "members of a class to which the conduct in question [is] directed in a general sense" (Campomar Sociedad Limitada v Nike International Limited (2000) 202 CLR 45 at 85, [103]). The other is employed where the objects of the conduct are "identified individuals to whom a particular misrepresentation has been made or from whom a relevant fact, circumstance or proposal was withheld". Such individuals, their Honours noted, are considered quite apart from any class into which they fall (see Campomar at 85, [102] to [103]). 55 The majority proceeded at 604, [37] to say: "But the former approach is inappropriate, and the latter is inevitable, in cases like the present, where monetary relief is sought by a plaintiff who alleges that a particular misrepresentation was made to identified persons, of whom the plaintiff was one. The plaintiff must establish a causal link between the impugned conduct and the loss that is claimed. That depends on analysing the conduct of the defendant in relation to that plaintiff alone. So here, it is necessary to consider the character of the particular conduct of the particular agent 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 each may be taken to have known. Indeed, counsel for the purchasers conceded that the mere fact that a person had engaged in the conduct of supplying a document containing misleading information did not mean that that person had engaged in misleading conduct: it was crucial to examine the role of the person in question." 56 The majority (in the course of considering the significance of the disclaimers in the brochure) discussed various tests for determining the "conduct" of an agent. One was "what a reasonable person in the position of the purchasers, taking into account what they knew, would make of the agent's behaviour". In other circumstances, they said, the tests "might turn on what purchasers actually made of the agent's behaviour, whether they were acting reasonably or not". 57 In this case, the conduct said to be misleading was directed to Orix alone. In these circumstances, as Basten JA pointed out in the course of argument, the questions whether particular conduct was misleading and whether there was reliance on that conduct, tend to become elided (or merged). 58 The only witness who testified on behalf of Orix was Mr Olencewicz, who was employed by Orix as the senior key accounts executive. The knowledge and understanding of Mr Olencewicz were the knowledge and understanding of Orix. 59 In a case where the alleged victim of misleading conduct is a single entity, and the knowledge and understanding of the entity is that of a particular individual, the actual knowledge and understanding of the individual is of fundamental importance. If the individual recipient of information believes a disclaimer to mean that the agent is not the source of the information said to be misleading, and that the agent is merely passing on information supplied by others, that must be decisive. It is then not necessary to construe the disclaimer. 60 Further, if the individual recipient, in fact, is fully cognisant of the fact that, in disseminating the information, the agent is doing no more than acting as a conduit, then that knowledge and understanding, too, must be decisive. There could then be no basis in justice or logic for finding that the agent was liable for misleading or deceptive conduct under s 52. It is not then necessary to have regard to what others might reasonably believe in consequence of the "conduct". 61 It therefore becomes necessary to consider what Orix, and in particular Mr Olencewicz on Orix's behalf, knew or believed about Moody Kiddell's personal involvement in connection with the information it supplied concerning the six transactions. 62 Mr Olencewicz accepted that the role of Moody Kiddell was to act as an intermediary between "[Orix] and the client, the borrower, for the transporting of information between the two of you". He gave the following additional evidence: "Q. You understood in relation to these transactions that each time Moody Kiddell gave you a piece of information, that that information had come from a source other than Moody Kiddell? A. Yes, I am taking it for granted that they were given the information. Q. They were passing it on to you, a bit like a conduit pipe from [sic] which information flows? A. Yes. Q. You understood that they were not warranting the correctness of information in any way? A. Not to warranting it, but producing it. Q. Producing it in the sense of physically ensuring that it arrived at your office in an efficient way? A. Yes, that's right." 63 Mr Olencewicz's attitude is at least partly explicable by Orix's policy of differentiating between "licensed or recognised" dealers and other dealers. White J explained at [9] how this differentiation worked: "Where the supplier was not a licensed or recognised dealer in the goods, the transaction was classified by Orix as a private sale. Orix's internal settlement checklist provided that if the transaction was a private sale, the settlements officer needed to establish the supplier's credentials, unless the supplier was already known to Orix. Orix also required invoices, receipts or other documents to be produced to establish ownership and that a statutory declaration be completed by the vendor that there were no charges over the goods. If the transaction was not a private sale, that is, if the supplier was a licensed or recognised dealer, Orix's settlement checklist merely required that the supplier's invoice correctly describe the purchaser as Orix Australia Corporation Limited, contain a detailed description of the goods, including make, model and serial numbers, and omit certain notations which were unacceptable to Orix. Thus Orix did not make the same checks to verify the ownership of goods if the supplier was a licensed or recognised dealer such as Nelson Equipment." 64 In fact, until June 2004, Orix's standard procedures in regard to equipment that it purchased and hired out to licensed or recognised dealers did not include carrying out a physical inspection of the equipment, the subject of the transaction. In transactions involving licensed or recognised dealers, it was Orix's policy to rely merely on the say-so of its customers and the suppliers to verify that it would obtain title to the goods it was financing. As Nelson Equipment was a licensed or recognised dealer, this policy led, inevitably, to Orix accepting, without more, the statements it and QCE made as to the existence, location and other details concerning the six cranes. 65 In this context, the following unchallenged findings of White J are of particular relevance to the character of the conduct of Moody Kiddell and Orix's reliance on it: · Orix relied upon QCE and Nelson Equipment to ensure that it had title to the goods. · Orix did not rely upon Moody Kiddell for the correctness of the information as to the existence, location, or title to the equipment to be purchased or hired. · Orix knew that Moody Kiddell had obtained the information from another source and that it was not warranting its correctness. 66 These findings must be taken together with Mr Olencewicz's evidence that Orix always understood that Moody Kiddell had obtained the information from QCE and Nelson Equipment, and that Moody Kiddell was merely "transporting" the information "a bit like a conduit pipe". 67 In these circumstances, the following inferences are inevitable: · Moody Kiddell's conduct did not enhance the reliability of that information and did not cause any additional "quality" to be added to it. · Orix did not regard Moody Kiddell as doing more than communicating what it had been told. · Moody Kiddell did not adopt or endorse the information. 68 For these reasons, alone, the appeal should be dismissed. 69 I shall, however, go on to discuss the other arguments that Orix has raised. The effect of the disclaimer 70 I do not accept Orix's submission that, in the absence of an express or implied disclaimer, an agent that disseminates information supplied to it by others will, without more, be held to have engaged in conduct that is misleading or deceptive. The majority in Butcher make it clear that, while the existence of a disclaimer is relevant to the "conduct", it is not essential to a finding that an agent did no more than communicate what others were representing. The characterisation of the agent's conduct depends on a consideration of all the relevant circumstances and the existence or otherwise of a disclaimer is not necessarily determinative. 71 For convenience, I shall repeat the disclaimer that appears at the end of the financial application. It is in these terms: "The attached information has been provided to Moody Kiddell & Partners Pty Limited by or on behalf of the proposed borrower/lessee; Moody Kiddell and Partners Pty Ltd or its licensees cannot and do not accept any responsibility for the accuracy of that information which is provided to you in good faith." 72 White J agreed with Orix's argument that, on a textual construction of the disclaimer, it did not apply to the information contained in the body of the application form (as such information was not "attached"). His Honour said, however at [92]: "On the other hand, it is not to be inferred from the express disclaimer in relation to attached information, that Moody Kiddell accepted responsibility for the information in the body of the form." 73 His Honour expanded on this observation by saying at [93]: "Mr Olencewicz said that the clause was a standard clause that Moody Kiddell put in the applications. He understood it as being a 'get out clause' which was put in by Moody Kiddell 'just to cover themselves'. Neither Orix nor Moody Kiddell expected that the clause would be construed closely so as to distinguish between information attached to the application and information contained within it. Certainly, it was not understood by Orix as impliedly warranting the correctness of the information contained within the application form in contradistinction to information attached to it in respect of which no responsibility was accepted. The clause is but part of the overall circumstances that are to be taken into account in characterising Moody Kiddell's conduct." 74 In my view, on a reading of the application as a whole, the disclaimer extends to all information supplied to Moody Kiddell by others. Were that not to be the case, serious anomalies and uncertainties would arise. Mr Olencewicz did not construe the disclaimer technically, like a lawyer. He said that it was a "get-out clause" put in by Moody Kiddell "just to cover themselves". He accepted that that is what the disclaimer "was doing". He understood the disclaimer to mean that Moody Kiddell was not warranting and was not responsible for the information that it had obtained from others. 75 Accordingly, the disclaimer supports the findings of White J; it does not detract from them. The nature of the parties, the character of the transaction and the other arguments raised by Orix 76 Both Orix and Moody Kiddell were experts in their field and vastly experienced in it. Neither was an ingénue. In determining whether Moody Kiddell's conduct misled Orix, no special allowance should be made for Orix; it was well able to look after itself. It was not a party in any unusual or particularly vulnerable position. It chose deliberately, as a matter of policy (unrelated to any conduct on the part of Moody Kiddell), not to check equipment supplied by Nelson Equipment. 77 The fact that Moody Kiddell advertised itself as a finance broker with considerable expertise does not assist Orix. Whatever expertise Moody Kiddell held itself out as having, that expertise did not include the verification of information given to it by its customers as to the existence, title and location of goods to be financed, and which it passed on to financiers. Orix understood this to be the case. 78 Similarly, the close relationship between Orix and Moody Kiddell, and Moody Kiddell's knowledge of how Orix operated, do not advance Orix's case. None of these matters gave rise to any expectation on Orix's part that Moody Kiddell would verify the existence, title and location of the goods, the subject of finance applications. 79 The information put into the finance applications by Moody Kiddell, and the way in which it furnished that information to Orix, did not suggest to Orix that Moody Kiddell was enhancing the quality of that information or adopting it or endorsing it in any way. The findings of the judge and the evidence of Mr Olencewicz are unequivocally to this effect. Thus, the fact that Moody Kiddell collated the information, assembled it, and set it out under its own letterhead, does not support a finding that Moody Kiddell disseminated the information otherwise than as the judge found. Conclusion 80 I would dismiss the appeal with costs. 81 BASTEN JA: I agree with Ipp JA. ********** 28/09/2006 - Lower Court File No (year) amended on Cover Sheet - Paragraph(s) N/A 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.