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SUPREME COURT OF QUEENSLAND
Hobson & Anor v Taylor & Anor  QCA 265
RODERICK GEORGE HOBSON
HOBSON INVESTMENTS (NQ) PTY LTD
ACN 102 617 050
WANDANI PTY LTD
ACN 001 698 684
Appeal No 1411 of 2019
SC No 15 of 2014
Court of Appeal
General Civil Appeal
Supreme Court at Mackay –  QSC 4 (Crow J)
22 November 2019
6 June 2019
Sofronoff P and Gotterson and McMurdo JJA
TRADE AND COMMERCE – COMPETITION, FAIR TRADING AND CONSUMER PROTECTION LEGISLATION – CONSUMER PROTECTION – MISLEADING OR DECEPTIVE CONDUCT OR FALSE REPRESENTATIONS – FALSE REPRESENTATIONS GENERALLY – where the second appellant as seller and the second respondent as purchaser entered into a share sale agreement for a half – share in an aquaculture business for $2,500,000 – where the second respondent after paying to the second appellant most of the purchase price purported to terminate the agreement upon grounds that included that it was induced to enter into the agreement by conduct which was misleading and deceptive – where the trial judge found that three representations, concerning the business’s ownership of land, interest in equipment and outstanding debts, were misleading and deceptive and induced the second respondent to enter into the agreement – whether those findings of fact were made without any evidence or upon evidence which was glaringly improbable – whether the trial judge adopted an objective, rather than subjective, test for causation as to whether the representations induced the second respondent to enter into the agreement
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – SEPARATE DECISION OR DETERMINATION OF QUESTIONS AND CONSOLIDATION OF PROCEEDINGS – SEPARATE DECISION OR DETERMINATION – APPEAL FROM DECISION OR DETERMINATION ON SEPARATE QUESTION – where the trial judge ordered that certain questions in a civil trial be decided separately pursuant to r483 of the UCPR – where those questions posed whether certain representations were misleading and deceptive pursuant to s 52 of the Trade Practices Act 1974 (Cth) and induced the second respondent to enter into an agreement with the second appellant – where the trial judge answered those questions in the affirmative and also ordered that both respondents have judgment against both appellants for damages to be assessed – where the second respondent had causes of action other than contraventions of s 52 of the Act which were not the subject of the separate questions and also claimed relief for the contraventions of s 52 other than damages – where no finding was made that the first appellant was knowingly concerned in or party to a contravention of the Act – where no finding was made that the first respondent had suffered a loss by the misleading and deceptive conduct – whether, absent any specific consideration of, and finding about, those issues, the present order for damages should stand – whether the trial judge was obliged to make any order in consequence of the determinations of those questions posed pursuant to r 483 of the UCPR
Trade Practices Act 1974 (Cth), s 52
Uniform Civil Procedure Rules 1999 (Qld), r 483
Duff v Blinco (No 1)  2 Qd R 528;  QCA 259, cited
D A Savage QC, with A E Raeburn, for the appellants
G D Beacham QC, with F Chen, for the respondents
Connolly Suthers for the appellants
Bartley Cohen for the respondents
- SOFRONOFF P: I agree with Mc Murdo JA.
- GOTTERSON JA: I agree with the orders proposed by Mc Murdo JA and with the reasons given by his Honour.
- McMURDO JA: The first respondent, MrTaylor, met the first appellant, MrHobson, in 2007 when they were participating in a “helicopter safari” in North Queensland. In that trip, they stopped at a property known at “Saltwater”, at Rollingstone between Townsville and Ingham. Saltwater was a property held under a Crown lease, in which a company controlled by Mr Hobson had an interest. It had been used as a prawn and barramundi aquaculture farm, under the name “Prawns North”, which Mr Hobson, through one of his companies, had operated. The property had been extensively developed for the conduct of the business, with numerous ponds and substantial buildings. There was also plant and equipment on the property which had been used in the business. This was the beginning of Mr Taylor’s interest in investing in such abusiness and he came to have many discussions with Mr Hobson on the subject.
- Mr Taylor had been a grazier on his family’s farm in the central west of New South Wales, until May 2009, when he sold the farm and received $4.5million of the proceeds of sale. Mr Taylor then moved to Airlie Beach, where he spent most of that money on his new home.
- Over time, the discussions between the two men, about Mr Taylor’s becoming involved in an aquaculture business, turned to a proposal that Mr Taylor acquire ashare in the venture at Saltwater as well as in another property at Cardwell, which Mr Hobson was looking to purchase and develop for the same business. Ultimately, in February 2010, a contract was made between the second respondent, which is acompany wholly owned and controlled by Mr Taylor (“Wandani”), and the second appellant, which is a company wholly owned and controlled by Mr Hobson (“Hobson Investments”). The agreement was in writing and it provided for the sale by Hobson Investments to Wandani of one of the two issued shares in another company, Prawns North Pty Ltd (“Prawns North”). The agreed price for the share was $2.5million. On 8 February 2010, which was the day on which the agreement was signed (although it is dated 11 February 2010), Wandani paid $300,000 of the price. Subsequently, in aperiod from 9 March to 25 July 2010, it paid to Hobson Investments amounts totalling $1,355,699.97. The balance of the price ($844,300.03) has not been paid, and nor has the share in Prawns North been transferred to Wandani.
- On 24 February 2012, Wandani purported to terminate the share sale agreement upon various grounds, which included a claim that Wandani was induced to enter into the agreement by conduct which was misleading and deceptive, in contravention of s 52 of the Trade Practices Act 1974 (Cth) and which also contravened s 53A of that Act.
- In 2014, Mr Taylor and Wandani commenced this proceeding against Mr Hobson and Hobson Investments. They also joined, as the third and fourth defendants, the firm of solicitors and a member of that firm who had acted for Mr Hobson and his company in the transaction. The claims against the solicitors were subsequently settled.
- On 1 June 2018, CrowJ ordered, pursuant to r483 of the Uniform Civil Procedure Rules 1999, that certain questions be decided separately. His Honour ordered that “the issues of liability”, which were defined by reference to certain paragraphs in the pleadings, be tried separately and prior to the determination of any other question in the proceeding. Those paragraphs did not include every claim which was made by Mr Taylor and his company, such as a claim for the return of the payments which Wandani had made, upon a restitutionary basis. But they did include each of the allegations of misleading and deceptive conduct (or misrepresentations) contrary to the Trade Practices Act, and allegations that Wandani was induced by that conduct to enter into the share sale agreement and make the payments which were made.
- After a two day hearing, in which the only oral evidence came from Mr Taylor and Mr Hobson, CrowJ delivered the judgment which is the subject of this appeal. His Honour found that some, although not all, of the alleged representations were made, and that they constituted misleading and deceptive conduct, contrary to s 52, by which Wandani was induced to enter into the agreement and make the payments. Indeed his Honour found that both of the plaintiffs were induced to do so, contrary to the fact that it was only Wandani, and not Mr Taylor personally, who was a party to the agreement. Further, his Honour found that Mr Hobson, as well as Hobson Investments, had engaged in the conduct in contravention of s 52 and that each of them was liable to the plaintiffs. His Honour ordered that there be judgment for both plaintiffs against both defendants for damages to be assessed.
- That order, and his Honour’s determination of the defined issues, are challenged by the appellants, upon the basis that the critical findings of fact were made either without any evidence, or upon evidence which was “glaringly improbable” in the language of Brunskill & Anor v Sovereign Marine & General Insurance Co Ltd & Ors. Further, it is argued that his Honour wrongly decided that the agreement had been induced by any such conduct.
- For the reasons that follow, the findings that there was misleading and deceptive conduct, in certain respects, by Hobson Investments, which induced Wandani to enter into the sale agreement and make the payments, should not be disturbed. But the order, that there be judgment for both respondents against both appellants, should be set aside.
The respondents’ pleaded case and the judge’s findings
- In essence, CrowJ found that there had been misleading and deceptive conduct by the misrepresentation of three things. The first was a misrepresentation that Prawns North was the “owner” of the land at the Saltwater property, when, in truth, the land was owned (in that the relevant Crown lease was held) by Hobson Investments. The second was that Prawns North did not have any outstanding debts, when, in truth, it had substantial debts. There was a debt of $810,000 which was secured over Saltwater, which was owed to a previous owner of the property, Rupert Clarke&CoPty Ltd. There was also a debt of approximately $2million, owed by Prawns North to another of Mr Hobson’s companies, Hobson ConstructionsPtyLtd. Thirdly, it was represented that, by entering into the share sale agreement, Wandani would acquire a one half interest in some earthmoving equipment, which was worth $1million, when, in truth, Prawns North owned no such equipment.
- Those three representations were amongst an extensive series of alleged misrepresentations, said to have been made at various times both before and after the share sale agreement was made. It is necessary to discuss all of that pleaded case, because it is submitted for the appellants that his Honour could not have accepted some of that case, whilst rejecting what is said to have been most of it, when the only evidence for any of the representations came from Mr Taylor.
- By paragraph 9 of the statement of claim, it was alleged that on or about 12December 2009, Mr Hobson made four representations to the respondents. One of them was that Prawns North was the owner of the Saltwater land. The others were that Mr Hobson was the owner of Prawns North, that the company owned and operated an aquaculture business on the land at Saltwater, and that the value of Prawns North’s interest in the business and land at Saltwater was not less than $4million.
- The appellants denied that there was a representation that Prawns North was the owner of the land at Saltwater, but his Honour found that the representation was made, and that it was of “primary importance and in fact relied upon by Mr Taylor in signing the share sale agreement”, in consequence of which Mr Hobson “or his entities” was paid more than $1.6million. His Honour found that the representation was made in trade or commerce and was misleading, noting that it was common ground that Prawns North did not own the land at Saltwater.
- Unsurprisingly, the appellants admitted that it represented that Hobson Investments was the owner of the shares in Prawns North. The appellants agreed that Mr Hobson had represented that Prawns North owned, and in the past had operated, an aquaculture business on the Saltwater land. His Honour accepted Mr Hobson’s evidence, which was not disputed in this respect, that it was “quite plain to Mr Taylor upon his inspection [of the Saltwater land] in November2009 that the aquaculture business was not then in operation.”
- The appellants disputed the making of the fourth representation, namely that the value of the interest of Prawns North in the aquaculture business and land at Saltwater was not less than $4million. CrowJ said that it was difficult to resolve the dispute in this respect, because the alleged conversation had occurred more than eight years earlier and there were “only slight differences in the testimonies of Mr Taylor and Mr Hobson as to what was said [on this point]”. His Honour noted that the effect of Mr Taylor’s evidence was that Mr Hobson had expressed an opinion as to the value of the business and land, whereas Mr Hobson’s evidence was that he had simply said that he wanted $2million for a 50 per cent interest in the Prawns North business. His Honour accepted that Mr Hobson did say that “he placed a value upon the Saltwater property at $4M”. However, in his Honour’s view, that was not arepresentation as to the “true valuation of the Saltwater property”. Consequently, his Honour did not find that the alleged representation was made. But he added that this did not detract from the plaintiffs’ case more generally. His Honour explained this as follows:
“[I]t is objectively more reasonable to accept MrHobson’s version of the conversation concerning the value of Saltwater at $4M, namely, he did not purport to value Saltwater at a specific figure in the sense of providing an independent valuation, but rather, simply said, in the course of negotiation with MrTaylor, that he placed his own value of Saltwater at $4M and would accept $2M for a half interest in the Prawns North business, which included the land at Saltwater. It is anecessary part of every negotiation for a property, that the vendor at some point, discloses the price at which they seek for the property. That cannot, in the absence of much more, be a suggestion of an independent or accurate valuation by the vendor of the property.”
- Paragraph 10 of the statement of claim alleged that, on or about 14 January2010, Mr Hobson made two further representations. The first of them was that Prawns North was the owner of the equipment and improvements on the land at Saltwater. The appellants admitted that there was a representation that Prawns North owned some equipment on the Saltwater land, but they denied that anything was said about the ownership of the improvements on the land, and his Honour accepted MrHobson’s evidence in that respect. His Honour said that “the evidence in the plaintiffs’ case rises no higher than the evidence of Mr Taylor which I accept, namely that Mr Hobson said that Prawns North owned both the land and the equipment on the property”, without any “specific discussion at all about improvements on the land”. His Honour accepted that there was nothing said specifically about improvements on the land, but that it would follow from the represented fact that Prawns North owned the land that it owned the improvements, because it was “patently clear” that they were fixtures. Consequently, this reasoning did not disclose any doubt about Mr Taylor’s overall credibility or reliability.
- The other representation which was alleged in paragraph10, as having been made on or about 14January 2010, was that “Prawns North was the owner of earthmoving equipment valued at $1M.” His Honour observed that this allegation was “the subject of a fierce dispute”, in which the appellants pleaded, and Mr Hobson testified, that Prawns North did not own any earthmoving equipment, valued at $1million or otherwise, and that no representation to that effect was made.
- The judge noted that Mr Taylor testified that he had been told at one stage that the earthmoving equipment was owned by “Hobson Constructions”, when the two men were discussing the earthworks which would be required to develop the Cardwell property. However, Mr Taylor said that subsequently, which was “in late January, possibly early February”, Mr Hobson suggested to him that he should purchase “ahalf share of the earthmoving equipment”, which he said was “worth $1 million”.
- As already noted, his Honour was persuaded that there was a representation to this effect which was made at some stage. But apparently because Mr Taylor said that it was made in “late January, possibly early February”, his Honour rejected the case pleaded in paragraph10, which was that the representation was made “on or about 14January 2010.” The rejection of the pleaded case in this way was not significant in his Honour’s assessment of the credibility and reliability of Mr Taylor overall.
- Paragraph 11 of the pleading alleged that Mr Hobson made many representations on or about 11February2010. As I have said, although the share sale agreement was dated 11February, it was signed by both sides on 8February 2010, and the respondents’ case was that these representations were made before that occurred.
- CrowJ said that it was difficult, so many years later, “to reach a positive conclusion as to when or whether the representations the subject of Paragraph11 were made.” He further observed that some of these representations were in precisely the same terms as those which were alleged to have been made on or about 12December 2009. So the first four allegations within paragraph11 were in identical terms to those which were pleaded in paragraph 9, as having been made in December2009. His Honour said that there was no evidence that these representations were repeated on the occasion when the agreement was signed. Two of the other representations which were alleged in paragraph 11 replicated the representations alleged in paragraph10. Again, as his Honour observed, there was no evidence from Mr Taylor that the same things were said again when he was in the solicitor’s office, signing the share sale agreement.
- Paragraph 11(g) alleged that on this occasion (the signing of the share sale agreement), Mr Hobson represented that “Prawns North did not have any outstanding debts”. This allegation was supported by evidence from Mr Taylor, which was disputed by Mr Hobson’s evidence. Mr Taylor said that on this occasion, he asked Mr Hobson “whether there was any mortgages – outstanding mortgages, taxes, fines, fees, anything outstanding on the properties of Saltwater Creek”, to which Mr Hobson replied “there was nothing”. He was asked whether that representation had “any significance to your decision to sign the agreement”, to which he answered “very much so. I didn’t want to be buying debt.” His Honour said that, in Mr Hobson’s evidence, he contradicted himself on this subject. At one point he said that he and Mr Taylor did not discuss anything about the debts that Prawns North might have, after which he said: “well as I explained to [Mr Taylor], it would be debt free when he took the farm on. When he took that share over, it would be debt free.” Mr Hobson said that these were intercompany loans which he would simply write off. His Honour said that Mr Hobson’s evidence in this respect “was provided in a most unconvincing fashion” and that it would be “objectively unreasonable” to accept Mr Hobson’s evidence that matters of debt were not discussed, and then that Mr Hobson told Mr Taylor that there were debts, but the property would be debt free when he took on his interest in Saltwater. His Honour accepted Mr Taylor’s evidence as to this representation, and found that the representation was misleading.
- In paragraph 11(h), (i) and (j), it was alleged that Mr Hobson then represented that Prawns North had entered into an agreement to purchase the Cardwell property for $800,000, paid a deposit for that purchase and that the company intended to proceed with it and develop an aquaculture facility on that land. The appellants admitted that such representations were made. His Honour found that they were made, and that they were true. Similar findings were made about representations which were alleged in paragraph11(k) and (l), namely that Mr Hobson wanted to go into partnership with Mr Taylor and that the appellants proposed that Wandani would acquire a 50percent shareholding in Prawns North.
- By paragraph 11(m), it was alleged that Mr Hobson then represented that, by entering into the agreement, Wandani would acquire an interest in assets of Prawns North constituted by earthmoving equipment valued at $1million, the land and improvements at Saltwater, the aquaculture business at Saltwater and the equipment used on that business, and the business intended to be operated at Cardwell. His Honour said that there was no evidence that such an express representation (or representations) were made on 8or11 February 2010; instead, Mr Taylor’s evidence was that it was at earlier times that Mr Hobson had made the representations about the land at Saltwater and the earthmoving equipment.
- Paragraphs 11A to 11C of the statement of claim alleged that there were representations made in “late January or early February 2010” by the provision by Mr Hobson to Mr Taylor of a copy of a valuation report of the Saltwater property, which had been made by Herron Todd White. There was such a report and it was admitted into evidence as a part of a trial bundle prepared by the plaintiffs. It valued the property as at a date in 2003. The appellants did not deny the report had been provided to Mr Taylor, but pleaded that this had occurred in April or May 2010, in order to assist Mr Taylor to obtain finance to pay the balance of the price under the share sale agreement. His Honour observed that the valuation report was not the subject of any evidence, either from Mr Taylor or Mr Hobson, so that no finding could be made about it.
- In paragraph 11E of the statement of claim, certain implied representations were alleged, in the alternative to allegations of express representations. One of them was an allegation that, by implication, it was represented that Prawns North was the owner of the Saltwater land. His Honour said that, as he had accepted that there was an express representation to that effect, the alternative allegation need not be considered. Otherwise, where an express representation was not accepted, his Honour declined to find an implied representation had been made. To the extent then that these alternative allegations were not accepted, the outcome did not reflect upon Mr Taylor’s credibility or reliability.
- Paragraph 12 of the pleading alleged that there was a further implied representation, namely that the appellants and/or Prawns North had the “necessary financial capacity and other resources to complete the purchase of the Cardwell property.” His Honour noted that there was no evidence to support that allegation, which was therefore rejected.
- Paragraph 13 of the pleading alleged that, on or about 11 February 2010, Mr Hobson represented that “he was in a serious situation by reason of a Family Law dispute and because of his position needed the plaintiffs to enter into the Share Sale Agreement as a matter of urgency”, as a result of which “the plaintiffs were encouraged to make their decision to enter into the Share Sale Agreement swiftly and without investigation of the representations made by Mr Hobson.” Mr Taylor’s evidence went no further than that Mr Hobson made a statement that “we need to move things along very quickly”, and that Mr Hobson was then “under financial hardship”. His Honour was not satisfied that this evidence proved the representation which was pleaded.
- Paragraph 22A pleaded, in the alternative, that there was misleading or deceptive conduct by an omission by the appellants to disclose that Prawns North was not the owner of the land at Saltwater. His Honour found it unnecessary to consider that allegation, in the light of his finding that there was an express representation which was made to that effect.
- The statement of claim also alleged that there were “post-agreement representations”, made later in February and in March 2010. His Honour said that these representations “were, rightfully, not the subject of any evidence” and were “accordingly dismissed”. However these allegations, whilst ultimately not essential to the respondents’ case, were relevant in explaining why the respondents continued to make, or cause to be made, payments under the agreement after becoming aware that Prawns North did not own the land at Saltwater, and there was evidence from Mr Taylor about them.
- It was alleged that on or about 18 /span>February 2010, MrFisher, the appellants’ solicitor (and previously the fourth defendant in this proceeding) contacted Mr Taylor, informing him that Prawns North did not own the Saltwater land and said the position about the ownership of the land could and would be rectified. Mr Taylor’s evidence was that, in late February 2010, he rang MrFisher’s office and asked Mr Fisher’s secretary to send to him a copy of the title for the Saltwater property, together with alist of the earthmoving equipment, as well as some information on the Cardwell property. That evidence was supported by an email within MrFisher’s office, recording such a call from Mr Taylor. Mr Taylor testified that he then had aconversation with MrFisher, in early March2010, in which MrFisher was alarmed that Prawns North was not the owner of the land. Mr Taylor asked MrFisher if this could be rectified, and MrFisher said that it was “quite a simple matter”, and that he had been in contact with Mr Hobson “to have this situation rectified”. Included in the trial bundle, which was tendered by the respondents, was an email from MrFisher to Mr Taylor, dated 1March 2010, which attached title searches for the Cardwell property and pages from a valuation of the plant and equipment at Saltwater Creek, and in which MrFisher said:
“We are also investigating the title for the Saltwater Creek property. There may need to be some change to the current title so that the 50percent ownership between your entity and [MrHobson’s] entity can be finalised. We are taking instructions about that and will get back to you as soon as possible.”
- Mr Taylor’s evidence was that he then spoke to Mr Hobson about the issue of the ownership of the Saltwater land, who assured him that there was nothing to worry about and that it was “an honest mistake” which was “not going to be a problem”. Mr Taylor said that he caused a payment to be made on 9 March 2010, in the sum of $100,000, under the agreement because Mr Hobson was desperate for money and Mr Taylor believed that Mr Hobson was in the process of rectifying the problem. He said that he made a further payment of $36,000 on 10 April 2010, in the same belief, and that this remained his belief when he made a further payment, in an amount of $500,000, on 9 May 2010.
- By this evidence, the so-called post-agreement representations were apparently substantiated. In my respectful opinion, his Honour appears to have overlooked that evidence when saying that those representations were not the subject of any evidence. However, there is no argument for the respondents that his Honour should have accepted that part of their case, pleaded in paragraphs 15 through 21 of the statement of claim.
- For the appellants, it is submitted that the weakness of his Honour’s reasoning is demonstrated by the fact that his Honour found that, of about 20 alleged representations, only three were made, and it is suggested that Mr Taylor was “disbelieved” about the other 17 of them.
- As should appear from the above, the appellants are wrong to suggest that Mr Taylor was disbelieved as to most of the alleged representations. Several of them were admitted to have been made, although they were found by the judge to be true. Anumber of them were not the subject of any evidence. And others were representations alleged to have been made by implication. There were some instances where Mr Hobson’s version was preferred by his Honour, but this did not detract from his Honour’s acceptance of Mr Taylor, in general, as an honest and reliable witness.
- The appellants assert that the respondents did not plead any of the three representations, which were found in their favour, in their first statement of claim. Again, that is incorrect. In the first statement of claim, the respondents did plead that Mr Taylor asked Mr Hobson whether there were “any outstanding debts, mortgages, taxes or outstanding fees to pay” and was told that there were not. They also did plead that Mr Taylor believed that Wandani was purchasing a one half share of earthmoving equipment valued at $1million as well as a one half share of the prawn farm located at Saltwater. They pleaded that this belief came from representations to Mr Taylor that, if he purchased the share in Prawns North, he would be purchasing a half share in all of those assets as well as a half share in the Cardwell property. It appears that the respondents’ first statement of claim was struck out. The reasons for that order were not provided to this Court but are not presently relevant. Undoubtedly, the pleading of the respondents’ case was improved by subsequent versions. But it cannot be accepted that the respondents succeeded on a case which was conceived only after their first pleading.
The appellants’ arguments
- This is an appeal from the determination of certain issues or questions. Having determined those issues as he did, the primary judge then made an order in the form of a judgment in favour of the respondents. But absent that order, his Honour’s determination of issues, adversely to the appellants, was able to be challenged by them in an appeal. The function which is performed by a primary judge under r483 is to make a “decision” on each question identified for separate consideration. The appellants challenge the decisions by the judge, in which he held that there was misleading and deceptive conduct by these three representations and that, as a result of this conduct, the share sale agreement was entered into and the payments were made.
- Each of the three representations was supported by evidence given by Mr Taylor. In assessing that evidence, and any conflicting evidence from Mr Hobson, his Honour must be considered as having had the benefit of hearing and seeing the witnesses give their evidence. The appellants’ argument concedes that, as a result, this Court should not interfere with his Honour’s findings unless they are demonstrated to be wrong by “incontrovertible facts or uncontested testimony”, or they are “glaringly improbable” or “contrary to compelling inferences”.
- The appellants argue that each of his Honour’s findings was of one or more of those kinds.
- The finding that it was represented that Prawns North was the owner of the Saltwater land is said to have been directly contradicted by a number of facts. The first of those facts, it is said, is that Mr Taylor conceded that the Herron Todd White report “made no reference to Prawns North owning any real property, and in particular identified the Saltwater land as being Crown land leased to Hobson Investments”.
- It is wrong to say that Mr Taylor conceded that he had received and relied upon this valuation report before he signed the share sale agreement. As I have discussed, that fact was alleged in his pleading, but it was not the subject of any evidence. Further, the allegation was denied in the appellants’ pleading, so that it could not be said that the trial proceeded upon an agreed factual premise in that respect. The present submission is remarkable for the fact that, not only did Mr Taylor give no evidence about the report in his evidence-in-chief, he was not cross-examined about it, or about his pleaded allegation in this respect. Further, the report was many years old by the time of this transaction, and it could not have been considered by Mr Taylor, had he received and read it prior to signing the share sale agreement, as a reliable statement of the ownership of the Saltwater land in 2010. Further, on page 11 of the report, the valuers recorded that the Crown lease was then to be “transferred to the instructing party”, identified earlier in the report as “Mr Rick Hobson, Operator of the Prawns North Aquaculture Farm”.
- Next it is said that the finding was contrary to the fact that the share sale agreement made no reference to any real property. But that is not to say that the terms of the agreement were inconsistent with Prawns North being the owner of the land. Indeed the share sale agreement made no reference to any asset of Prawns North, or to the business which had been conducted at Saltwater.
- It is said that the finding was inconsistent with the history of complaints, or the absence of complaints, by the respondents about the ownership of the property. It is said that in the first complaint to Mr Hobson about the transaction in any respect, in Mr Taylor’s email to Mr Hobson dated 21 February 2012, there was no reference to the ownership of the Saltwater property. In fact, in that email there was no suggestion of any misrepresentation by Mr Hobson. When this was put to Mr Taylor in cross-examination, he agreed but explained his purpose was to not antagonise Mr Hobson, but to appeal to his good nature, because Mr Taylor was then anxious to receive some refund, in order to prevent his house at Airlie Beach from being sold by a mortgagee. His Honour accepted that explanation, which was not an improbable one.
- On 4 October 2013, for the first time, solicitors wrote on behalf of the respondents to Mr Hobson. On any reasonable view of that letter, each of the representations, as found by his Honour, was alleged by it. His Honour said, correctly, that any differences between what was set out in the letter and what was ultimately advanced in the hearing were of no significance.
- A further fact against the respondents’ case is said to have been the absence of an allegation in the first statement of claim to a representation about the ownership of the Saltwater land. As I have said already, this was a case which can be identified in the pleading. And as I have just discussed, it had been clearly alleged in the solicitors’ letter of October 2013, which was prior to the commencement of this proceeding.
- It is submitted that his Honour’s finding, as to this representation, was inconsistent with the fact that none of Mr Taylor’s applications for assistance from third party financiers, from about June 2010, in order to fund the payment of the balance price under the share sale agreement, made any reference to Prawns North owning any real property. But as to that submission, Mr Taylor could hardly have claimed honestly that Prawns North did own the Saltwater property, having discovered the truth.
- As to the “no debt representation”, it is submitted that his Honour failed to explain why, having found so many matters against the respondents, he felt able to accept that the representation was made. The argument seems to be based upon the contention, which I have rejected, that Mr Taylor was “disbelieved” on most of his pleaded case.
- As to his Honour’s finding about the earthmoving equipment, it is submitted that the finding was directly contradicted mostly by the evidence which is relied upon to impugn the first finding. Again, the argument refers to the suggested concession by Mr Taylor that he had received and relied upon the Herron Todd White report, prior to signing the agreement, and it is said that the report made no reference to Prawns North owning any earthmoving equipment. As I have discussed, there was no evidence from Mr Taylor on the subject, nor was it common ground on the pleadings that Mr Taylor received and relied upon the report as alleged. In any case, the fact that this report, for a valuation date in 2003, made no reference to earthmoving equipment would have been inconsequential, because it was Mr Taylor’s evidence that, in effect, Prawns North would acquire the earthmoving equipment which, he had been told originally, was owned by another of Mr Hobson’s companies.
- The fact that the share sale agreement made no reference to any earthmoving equipment did not contradict Mr Taylor’s evidence about this representation. Again, the agreement made no reference to any property or business of Prawns North.
- Yet again, it is said that this part of the respondents’ case was contradicted by the evidence as to the complaints which were made, or not made, by the respondents. What I have said already about the email from Mr Taylor in February 2012 applies equally here. And the letter from the respondents’ lawyers, dated 4 October 2013, did complain of this misrepresentation. Again, this was the first occasion in which lawyers had written for the respondents. Further, in relation to this representation, the evidence did not disclose when Mr Taylor first realised that Prawns North did not own earthmoving equipment. His evidence was that he had continued to ask for a list of the equipment, without receiving it. Some of that evidence was given in cross-examination, where it was not suggested to him that he discovered the truth years before the complaint.
- Again, it is said that the first statement of claim made no reference to this part of the respondents’ case. In fact, paragraph 30 of that pleading alleged a representation that, if Mr Hobson purchased a share in Prawns North, he would be purchasing “a one-half share of earthmoving equipment valued at $1,000,000”. And again, before the commencement of the proceeding, there had been the letter of October 2013, which had expressly asserted the representation and its falsity.
- Lastly, again it is said that none of Mr Taylor’s application for financial assistance made any reference to Prawns North owning earthmoving equipment. Mr Taylor’s evidence was that he continued to press for details of this equipment. As is submitted for the respondents, it is unremarkable that Mr Taylor would not advance the ownership of this equipment, which he could not describe in a way which would satisfy a financier. And Mr Taylor was not challenged on this subject in cross-examination.
- As should appear from this assessment of the evidence which is relied upon by the appellants, there was no “incontrovertible fact” or “uncontested testimony” by which any of his Honour’s findings was demonstrated to be wrong. Nor can it be accepted that the findings were “glaringly improbable” or contrary to a compelling inference.
- It is inherently improbable that Mr Taylor was not told by Mr Hobson that the company, for which Mr Hobson was asking a price of $2.5million for a half share, was the owner of the land on which it had conducted, and proposed to conduct, its business. Mr Hobson did not claim to have told Mr Taylor of the true position as at the beginning of 2010, which was that it was Hobson Investments which was the lessee. Against the representation according to Mr Taylor’s evidence was put the alternative possibility that Mr Taylor was not told anything to the effect that the company in which he invested was not the owner of the farm.
- It was not improbable that each of the other representations, as found by his Honour, was made. The business at Saltwater was not being conducted at the time. But it is probable that Mr Taylor would have been concerned enough about the prospect of the existing debts of Prawns North for him to have asked a question about this, as he recalled in his evidence. Relatively speaking, the case for the third representation, namely that in respect of the earthmoving equipment, had less strength. But it was not such a glaringly improbable case that his Honour should have rejected it. His Honour gave several reasons for accepting this part of the respondents’ case. One of them was that this representation explained how the price came to be $2.5million. Mr Hobson had asked for $2million as a fair price for a half share in the aquaculture farm at Saltwater. Mr Hobson’s case was that the other $500,000 was for a half share in the Cardwell property, despite the contract price for that property being $800,000. His Honour accepted that a payment of $500,000 for a half share of the equipment neatly explained the price for the share of $2.5million.
- Further, his Honour considered it relevant that, as was common ground, earthmoving equipment was required to undertake work on the Cardwell property and that earthmoving equipment had been used annually to do work on the Saltwater property. But there was further land to be developed at Saltwater, by the addition of another 50 or so ponds, for which earthmoving equipment would be required. Given Mr Hobson’s difficult financial position, his Honour said that it was plausible that Mr Hobson would offer to sell Mr Taylor a half share of this equipment, which he had held in another company. Further, his Honour said that the respondents’ case about this representation was consistent with Mr Taylor’s conduct, shortly after the agreement was signed, in asking for a list of the equipment. In my view, these matters were sound reasons for preferring Mr Taylor’s evidence on this issue.
- In the appellants’ outline of submissions, reference is made to witnesses who were available to the respondents, but whom they chose not to call to give evidence at the trial. The first of them is MrFisher, formerly the fourth defendant, who was present when the share sale agreement was signed. The respondents had caused a subpoena to issue requiring his attendance. MrFisher, of course, had not been the respondents’ solicitor, and he could not have been asked by them to disclose anything which was privileged to the appellants.
- It is argued that the decision not to call MrFisher is remarkable, because by the time of the trial of these questions, the solicitors’ insurer was conducting this proceeding on behalf of the respondents, a substantial sum in settlement of the respondents’ claim having been made to them by that insurer. From this it is suggested that MrFisher is awitness whom the respondents, rather than the appellants, would have been expected to call.
- This submission for the appellants goes further than what was said on their behalf at the trial, about the absence of oral evidence from MrFisher. At the commencement of the trial, counsel for the respondents informed his Honour that there were documents in the tender bundle which had been created by the solicitors, and said that his Honour should “work on the basis that there’s nothing really to be gained by having the solicitor here to identify his business documents and to the extent that they speak for themselves, they can be taken to do so.” Counsel for the appellants then said to the judge that they did not require the attendance of MrFisher. At the end of the trial, the written submissions for the appellants included the following:
“At some stage in the process of obtaining the order for separate determination it was suggested that the person who were present apparently on the occasion that these representations were made would be called by the plaintiff, in the end none were. The plaintiff however conceded that he had subpoenaed MrFisher, but his Counsel conceded that the evidence that MrFisher could give would only be the evidence his notes recorded – given the length of time. It must be assumed that no other of MrFisher’s evidence would have assisted the plaintiffs’ case.”
- The submission made to his Honour appeared to agree that, given the passage of time, MrFisher could not have been expected to recall anything beyond his notes, which had been tendered by the respondents. It was not submitted that his Honour should infer that the reason why the witness was not called was because the respondents feared to do so.
- The appellants suggest that there is a Jones v Dunkel inference to be drawn in respect of MsTami Attwood, who was Mr Taylor’s partner. A summary of her evidence had been provided pursuant to pre-trial directions. Its content is unknown. It does not appear that she was present on any occasion on which a critical representation was made to Mr Taylor. And the appellants did not ask the judge for any Jones v Dunkel inference to be drawn about her evidence.
- In his summary of evidence, Mr Taylor, it is said, referred to three others as persons who had had some involvement in the matter. The subject matter of any evidence which could have been given by them is unknown to this Court, and no Jones v Dunkel inference was sought at the trial.
- For these reasons, none of the arguments which are advanced against the findings, that these three representations were made, can be accepted. There is no demonstrated error by his Honour in making those findings. And there could be no doubt that the representations constituted conduct which was in contravention of s 52.
- I come to the submissions about the effect of the representations. The appellants argue that his Honour erred in finding that any of the representations was relied upon by the respondents. His Honour found as follows:
“I further find that the plaintiffs entered into the share sale agreement of 11February 2010 acting upon and induced by those three representations, and as a result made the payments of money totalling $1,655,699.97 as set out in Paragraph 25 of the [statement of claim]”.
- The order made by his Honour for this trial identified the issues to be tried as those arising from paragraphs 1 to 24C of the statement of claim. Paragraph 24 alleged that the plaintiffs were induced by, and relied upon, the “pre-agreement” representations in entering into the share sale agreement. Paragraph 24A alleged that, in the absence of the “post agreement” representations, Wandani would have “avoided or rescinded” the agreement and would not have made the payments. Consequently, although it was paragraph 25 which pleaded the particular payments made under the share sale agreement, the issues for separate determination included the question of whether the payments were made because of certain representations.
- On a strict view of the pleading, it was the respondents’ case that those payments were made on the basis of the post-agreement representations, and his Honour’s finding, which I have just set out, could be thought to have gone beyond that case. However the finding conformed with the submission made at the end of the trial by the respondents’ counsel, and there is no argument for the appellants in this Court which challenges the finding upon the basis that it went beyond the pleaded case.
- In the Notice of Appeal, the first ground is that the judge erred in law by adopting an objective, rather than a subjective, test for causation. However, in the outline of submissions for the appellants, the argument is that his Honour approached the question by accepting “no more than the uncorroborated testimony of Mr Taylor as to his subjective state of mind (which was of no weight even if technically admissible) buttressed by what was said to be the objective considerations”. The argument appears to concede that his Honour did assess the state of mind of Mr Taylor (and therefore of Wandani). It is argued that the judge “was required as a matter of first principle to make findings about Mr Taylor’s subjective state of mind from what was actually found to have happened and what may or may not have influenced him rather than merely accept his self-serving evidence and then support such a finding by reference to objective considerations.”
- Undoubtedly, it was necessary for the respondents to prove that the making of the agreement was induced by one more of these representations. It was sufficient for them to prove that at least one of the representations was a substantial inducement. It was not the respondents’ case that it was only by a combination of each and every representation which they had pleaded that they were induced to have Wandani enter into the agreement.
- The inducement could have been proved by direct evidence, which of course could have come only from Mr Taylor, by a process of inference from other facts or by acombination of the two. In Hanave Pty Ltd v LFOT Pty Ltd, KiefelJ (with whom WilcoxJ agreed) said:
“The question of causation can sometimes be resolved not by direct evidence as to what part a misrepresentation played in the process of entry into contract, but by a court determining what effect must be taken to have resulted. Indeed this course may sometimes be preferable to one which rested solely on evidence later given on the point. InGould v Vaggelasat CLR 236, WilsonJ held that if amaterial representation is calculated (which is to say, objectively likely:Ricochet Pty Ltd v Equity Trustees Executor & Agency Co Ltd(1993) 41 FCR 229;113 ALR 30;Henderson v Amadio Pty Ltd (No1)(1995) 62 FCR 1at166;140 ALR 391) to induce the representee to enter into a contract and the person in fact enters into acontract, a fair inference arises that the representation operated as an inducement, adding that it need not be the only cause.
A conclusion of inducement may then be reached where a combination of factors, including the quality of the representation itself, goes unanswered. In relation to the representation itself it would need to be of a kind likely to provide that inducement and such that: “;… common sense would demand the conclusion that the false representations played at least some part in inducing the plaintiff to enter into the contract” (per WilsonJ at CLR 238), a statement regarded by the full court inRicochetas providing a practical guide to the drawing of inferences in such cases.”
- Mr Taylor gave evidence that he was induced by each of these three representations to have Wandani sign the agreement. He was without legal or other independent professional advice in respect of this transaction. He said that he was taken by Mr Hobson to the solicitors’ office without being told in advance that he would be asked to sign the share sale agreement. He did sign the agreement on that occasion, because he trusted Mr Hobson, who by then was a friend of some years’ standing.
- The nature of each of these representations is such that it is likely to have induced a prospective purchaser to enter into the agreement. In this sense, each representations was “objectively likely” to have had that effect. Given his Honour’s general acceptance of Mr Taylor as a witness, coupled with that objective likelihood, the case that the share sale agreement was induced by the representations, and, as a result of that agreement, the payments were made, was a compelling one. There was no error in his Honour’s findings on the question.
The order which was made
- His Honour was not obliged to make any order, in consequence of the determination of these issues. As KeaneJA said in Duff v Blinco (No 1), the function performed by a judge under r483 of the UCPR is the “decision” of the question or questions, and that whilst r484 permits “orders” to be made “if a question is decided under this part”, r485 contemplates that a decision of the question under r483 may, or may not, lead to a range of orders.
- His Honour’s decision of the questions is found in these paragraphs of the primary judgment:
“In conclusion, I find that Mr Taylor had proven that:
- (a)Mr Hobson did represent to the plaintiffs that the company Prawns North was the owner of the Saltwater land (Representation 9(b));
- (b)Mr Hobson did represent to the plaintiffs that Prawns North did not have any outstanding debts (Representation 11(g));
- (c)Mr Hobson did represent that by entering into the Sharesale Agreement; the second Plaintiff would acquire a 50% interest in earthmoving equipment valued at $1M (Representation 11(m)(ii)).
I further find that the plaintiffs entered into the share sale agreement of 11 February 2010 acting upon and induced by those three representations, and as a result made the payments of money totalling $1,655,699.97 as set out in Paragraph 25 of the SFASC.
I further find that the three representations were in fact false. Ifind that the first defendant, Mr Hobson, acting as the sole shareholder and director of the second defendant, Hobson Investments, did, by making the said three false representations, engage in conduct in trade or commerce which was misleading in contravention of s 52 of the Trade Practices Act 1974 (Cth).”
- In my respectful opinion, his Honour went too far in then ordering, as he did, that both respondents have judgment against both appellants for damages to be assessed.
- Mr Taylor had not entered into the agreement. Only Wandani had done so on his side of the transaction. MrTaylor may have suffered a loss by the misleading and deceptive conduct which was found by his Honour, but that was a question for another day.
- As for the liability of Mr Hobson, he had not contravened s 52 of the Trade Practices Act, on his Honour’s findings. It was the second appellant which had done so. Mr Hobson was liable for that conduct if he was knowingly concerned in, or a party to, that contravention of the Act, as was alleged in paragraph 37 of the statement of claim. But that was not one of the questions which was ordered to be tried separately in this trial. And in the absence of a specific consideration of, and finding about, that issue, the present order against him should not stand.
- Further, there are other causes of action which are claimed by Wandani, and there is other relief which is claimed for the contraventions of s 52. It is conceivable that the Court would see fit to make orders under s87 of the Act to compensate Wandani, in whole or in part for its loss or damage, or an order to prevent or reduce that loss or damage. On one view, the effect of the order made by his Honour might be to preclude the availability of that alternative relief in the ultimate disposition of this case.
Conclusion and orders
- I would order as follows:
- Allow the appeal, by setting aside the order made by CrowJ on 17 January 2019 whereby there was judgment for the first plaintiff and the second plaintiff against the first defendant and the second defendant for damages to be assessed.
- Otherwise dismiss the appeal.
- Order the appellants to pay the respondents’ costs of the appeal.
 The Trade Practices Act 1974 (Cth) (the ‘Act’) being the relevant statute as the alleged conduct occurred prior to the commencement of the substantive provisions of the Trade Practices Amendment (Australian Consumer Law) Act (No 2) 2010 (Cth) on 1 January 2011, and the retitling of the Act to the Competition and Consumer Act 2010 by way of sch 5 s 2 of the amending act.
 Taylor & Anor v Hobson & Ors  QSC 4 (“the Primary Judgment”).
  HCA 61; (1985) 62 ALR 53 at 57.
 Primary Judgment .
 Primary Judgment -.
 The second further amended statement of claim, filed 26 October 2018.
 Primary Judgment .
 Primary Judgment -.
 Primary Judgment .
 Ibid. Footnote omitted.
 Primary Judgment .
 Primary Judgment .
 Primary Judgment .
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 Primary Judgment .
 Primary Judgment .
 Namely those in paragraph 11(a), (b), (c) and (d).
 Primary Judgment .
 Primary Judgment .
 T1-17 referred to in Primary Judgment .
 T1-18 referred to in Primary Judgment .
 T1-90 referred to in Primary Judgment .
 Primary Judgment .
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 Statement of claim paragraphs 15-21.
 Primary Judgment .
 Statement of claim paragraph 15.
 Which was tendered at page 283 of the trial bundle and was dated 25 February 2010.
 Pages 296-297 of the trial bundle.
 Appellants’ amended outline of argument paragraphs 5-7.
 Statement of claim paragraph 13(d), (e).
 Statement of claim paragraph 15.
 Statement of claim paragraph 30.
 Duff v Blinco (No 1)  QCA 259;  2 Qd R 528.
 Fox v Percy  HCA 22 at ; (2013) 214 CLR 118 at 128  per GleesonCJ, Gummow and KirbyJJ.
 Fox v Percy  HCA 22 at ; (2013) 214 CLR 118 at 128 ; see also Robinson Helicopter Company Inc v McDermott & Ors  HCA 22 at ; (2016) 331 ALR 500 at 558-559  and Lee v Lee  HCA 28 at .
 Appellants’ amended outline of argument paragraph 21(a).
 Pages 7 and 11 of the report.
 Primary Judgment .
 Primary Judgment .
 T1-19–21, 29.
 Primary Judgment [100(1)], .
 See Primary Judgment -.
 Jones v Dunkel  HCA 8; (1959) 101 CLR 298.
 Primary Judgment .
 Plaintiffs’ written submissions paragraphs 73-75.
 Appellants’ outline of argument paragraph 26.
 Gould v Vaggelas  HCA 75; (1985) 157 CLR 215 at 236; Hanave Pty Ltd v LFOT Pty Ltd & Ors  FCA 357 at ; (1999) 43 IPR 545 at 555-556 .
  FCA 357 at ; (1999) 43 IPR 545 at 555-556 .
  QCA 259 at ;  2 Qd R 528 at 530 .
 s 52 applying only to the conduct of a corporation.
 ss 75B and 82 of the Trade Practices Act 1974.
- Published Case Name:
Hobson & Anor v Taylor & Anor
- Shortened Case Name:
Hobson v Taylor
 QCA 265
Sofronoff P, Gotterson JA, McMurdo JA
22 Nov 2019