Trevor Butt v Allen Tingey [1993] FCA 369 (5 August 1993)

FEDERAL COURT OF AUSTRALIA

TREVOR BUTT v. ALLEN TINGEY
No. NG166 of 1993
FED No. 530
Number of pages - 16
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Davies(1), Neaves(2) and Beazley(2) JJ

CATCHWORDS

Trade Practices - appeal on liability and damages under s.82 of the Trade Practices Act 1974 - loss resulting from misleading and deceptive conduct in breach of s.52 of the Act - whether solicitor was knowingly involved in contravention.

Trade Practices Act 1974 (Cth) - ss.52, 75B, 82

Judiciary Act 1901 (Cth) - s.39B

Hornsby Building Information Centre Pty. Ltd. v. Sydney Building

Information Centre Pty. Ltd. [1978] HCA 11; (1978) 140 CLR 216

Parkdale Custom Built Furniture Pty. Ltd. v. Puxu Pty. Ltd. [1982] HCA 44; (1982) 149 CLR 191

Yorke v. Lucas [1985] HCA 65; (1985) 158 CLR 661

Giorgianni v. The Queen [1985] HCA 29; (1984) 156 CLR 473

HEARING

SYDNEY, 28 May 1993
5:8:1993

Counsel for the appellant: P.L.G. Brereton

R. Weinstein

Solicitors for the appellant: Blake Dawson Waldron

Counsel for the respondent: P. White

Solicitors for the respondent: Lane and Lane

ORDER

The Court orders that:

1. The appeal be allowed.
2. The judgment given on 4 March 1993 be varied by deleting
from Orders 1 and 2 the words "The second and fourth
respondents" and substituting therefor the words "The second
respondent" and by further ordering that the applicant pay
the fourth respondent's costs of the application.
3. The respondent pay the appellant's costs of the appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

DAVIES J This is an appeal on liability and damages and a cross-appeal as to damages brought from a judgment of a judge of the Court, Beaumont J.

2. It was claimed before the learned trial Judge that a company, Blu-Binda Marina Pty Ltd ("Blu-Binda"), had engaged in conduct which was misleading or deceptive or likely to mislead or deceive in breach of s.52 of the Trade Practices Act 1974 (Cth) ("the Act") and that the individual respondents to the proceedings had been involved in that contravention. One of those respondents was Mr Trevor Butt, a solicitor, who had acted for Blu-Binda. His Honour found that there had been conduct on the part of Blu-Binda which had breached s.52, that Mr Butt had been involved in that contravention, and that the applicant before his Honour, Mr Allen Tingey, had suffered loss resulting from the contravention. His Honour quantified the loss including interest at $7,500 and ordered that two respondents, including Mr Butt, pay that sum to Mr Tingey.

3. In June 1989, Mr Tingey had ordered from Blu-Binda a factory new Leeder 28 Deluxe Motor Vessel for the price of $112,000. Mr Tingey paid a deposit of $5,000 and subsequently, on 11 July 1989 and 17 August 1989, further sums of $17,000 and $9,000 for the purchase of certain items for the vessel. Mr Tingey also transferred to Blu-Binda his own Mariner Pacer motor boat which he traded in for $37,000. The result was that Blu-Binda received $68,000 towards the purchase price of the boat. However, Blu-Binda was experiencing financial difficulties during this time and the Leeder boat was not delivered by the end of October 1989 as expected, or indeed at all.

4. On 13 December 1989, the solicitors for Mr Tingey, Messrs Lane and Lane, wrote to Blu-Binda as follows:-

"You represented to our clients that the vessel would be
completed and delivered by October 1989.
Not only was the vessel not delivered as promised, but it
now appears that it cannot be delivered.
The sum of $68,000 was paid to you to be held in trust
pending the completion of the purchase of the vessel.
In the circumstances our clients require a refund in full of
all monies paid by them to you by bank cheque on or before
2.00 pm, Thursday 14th December, 1989, failing which
proceedings will be commenced without further notice.
We also require your undertaking in writing by return
facsimile that you will not disburse any funds held by you
on behalf of our clients to any person. In the absence of
receipt of such an undertaking our clients will without
further notice move for an injunction restraining you from
disbursing any further monies together with an order for
costs." (my emphasis)

On 14 December 1989, Mr Butt, in his capacity as solicitor for Blu-Binda, responded by facsimile as follows:-

"I refer to your letter of yesterday and our recent
telephone discussion. I confirm that no injunction will be
necessary as my client has indicated that the deposit (of
$68,000) will not be disbursed pending resolution of the
dispute. I confirm further that an identical (not 2nd hand)
boat is available; shall fax full details tomorrow morning."
(my emphasis)

On the following day, 15 December 1989, Mr Butt wrote to Messrs Lane and Lane:-

"I wish to advise that I have had the opportunity to take
full instructions from my client and am advised to the
effect that a contractual relationship would appear to exist
between my client and your client based on the supply of a
boat by my client to your client.
I am instructed that the transaction was as follows:-
My client was to supply a new Leeder 28 Deluxe motor vessel
for a purchase price of $112,000.00.
Your client paid a total of $31,000.00 in cash being an
initial deposit of $5,000.00 and two subsequent payments of
$9,000.00 and $17,000.00.
In addition your client traded in for an agreed value of
$37,000.00 a Marina Pacer Vessel.
The total agreed value of $68,000.00 deposit is held be
(sic) my client pending finalisation of the transaction
which will occur upon the provision of the vessel to your
client on payment of the final outstanding balance of
$44,000.00.
The contract was never intended to be in relation to any
particular vessel but only in relation to a vessel of the
correct specifications.
Originally it was hoped that a vessel currently under
construction in Perth would be ready in time for your
client, however, it now appears through no fault of my
client that such vessel would not be ready and my client is
now in a position therefore to provide an identical new
vessel from stock in accordance with the contract between
the parties." (my emphasis)

5. Mr Butt's fax and letter constitute the conduct on the part of Blu-Binda which was alleged to be in breach of s.52 of the Act. That there was a breach committed by Blu-Binda is not in doubt. During the period with which we are concerned, Blu-Binda was in financial difficulties and its bank account was substantially in overdraft. In December 1989, Blu-Binda did not hold any credit balance in a bank or any assets which represented the $68,000 which Blu-Binda had received from Mr Tingey. Of course, intent to mislead or deceive is not required by s.52. See Hornsby Building Information Centre Pty Ltd v. Sydney Building Information Centre Pty Ltd [1978] HCA 11; (1978) 140 CLR 216 at 228; Parkdale Custom Built Furniture Pty Ltd v. Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191 at 197. Nevertheless, had intent been required, intention on the part of Blu-Binda was established.

6. This present appeal relates only to Mr Butt's personal position. His conduct as an individual did not breach s.52 of the Act, which applies only to a corporation. However, s.82 of the Act grants relief not only against persons who contravene s.52 but also against persons involved in that contravention. Section 75B provides, inter alia:-

"75B. (1) A reference in this Part to a person involved in
a contravention of a provision of Part IV, IVA or V shall be
read as a reference to a person who:
...
(c) has been in any way, directly or indirectly, knowingly
concerned in, or party to, the contravention;
..."

7. In Yorke v. Lucas [1985] HCA 65; (1985) 158 CLR 661, it was established that a person is not involved in a contravention for the purposes of s.75B and s.82 of the Act unless that person is knowingly concerned in or a party to the contravention. As Mason A.CJ, Wilson, Deane and Dawson JJ said at 670:-

"In our view, the true construction of par.(c) requires a
party to a contravention to be an intentional participant,
the necessary intent being based upon knowledge of the
essential elements of the contravention."

Wilful blindness may be treated as the equivalent of knowledge, but neither negligence nor recklessness is sufficient; see R. v. Crabbe [1985] HCA 22; (1985) 156 CLR 464 at 470-1 and Giorgianni v. The Queen [1985] HCA 29; (1985) 156 CLR 473 at 482-8, 495, 504-5.

8. In this appeal, counsel for Mr Butt submitted that Mr Butt had not been knowingly involved in the contravention. He challenged the finding by the trial Judge that Mr Butt must have known that the moneys had been paid into an overdraft account and were no longer held. Counsel relied upon Mr Butt's evidence, of which his affidavit said inter alia:-

"Annexed hereto and marked 'B' is a copy of the facsimile
which I sent to Lane and Lane dated 14 December, 1989. Before
I sent that fax I had a conversation with Arthur Cook. I
cannot now recall in any detail the conversation that I had
with Mr Cook but I recall that he said to me the following
words or words to the following effect:
Arthur Cook: "The deposit will not be disbursed until
this dispute is resolved."
...
After sending the fax which is Annexure 'B' hereto, I
drafted the letter which was subsequently dated 15 December
1989. While I do not now specifically recall, I would not
have drafted that letter without obtaining detailed
instructions from Mr Cook. I had no other knowledge of the
transaction. I either showed the draft letter to Mr Cook in
my office or sent it to him by fax. It is not possible that
any of the matters contained in my letter of 15 December
1989 were written by me other than upon specific
instructions from Mr Cook. His instructions seemed to me to
be straightforward and nothing he told me suggested that he
wanted to practice any deception on the applicant. I
believed what he told me. If I had any suggestion that this
was not the case I would not have written such a letter. I
have no doubt that I received specific instructions that
Blu-Binda held the money deposited by Mr Tingey. I had no
reason, on the basis of my dealings with Arthur Cook, Brian
Millard and Blu-Binda to doubt the accuracy of any
instructions which they gave me."

Mr Butt's oral evidence did not add a great deal to this matter, for Mr Butt did not actually recall the conversation that he had had with Mr Cook, who had given him instructions on behalf of Blu-Binda.

9. The trial Judge did not accept Mr Butt's evidence. His Honour said:-

"There is no doubt that the fourth respondent (Mr Butt) was
at all material times aware of the first respondent's
overdraft account.
...
I am satisfied that the fourth respondent must have known
that the funds provided by the applicant, on account of the
purchase of the subject vessel, had been banked into the
ordinary bank account of the first respondent. Indeed, it
is not, and never has been suggested on behalf of the fourth
respondent, that he believed that these amounts had been
paid into any special account whether strictly a trust
account or designated in some similar fashion. Not only is
that suggestion not made, it of course, does not accord with
the facts as we now know them.
...
I am satisfied that when the fourth respondent wrote the
facsimile dated 14 December 1989 and the letter dated 15
December 1989 he must have known that the funds provided to
the first respondent by the applicant over the previous five
months had been banked to the ordinary account of the first
respondent and not to any special account earmarked for the
purposes of the applicant's purchase."

10. I accept the finding of the trial Judge. Indeed, my own impression from the correspondence is that Mr Butt took an active part in misleading Mr Tingey and Messrs Lane and Lane. For example, in early January 1990, Mr Butt was involved in the drawing up and execution of an agreement which was signed by a number of persons who were or had been closely connected with Blu-Binda, and which imposed conditional obligations on them to pay moneys totalling $520,000 off the debt due to Blu-Binda's bank. Yet, Mr Butt failed to correct the errors contained in his facsimile and letter of December 1989 and his letters continued to be evasive. In his letter of 15 December 1989, Mr Butt had referred to another vessel and, on 18 January, Messrs Lane and Lane requested proof of ownership and proof that the title was unencumbered. On 22 January 1990, Mr Butt merely responded:-

"2. If required a letter from the manufacturers can be
obtained indicating full payment for the vessel by my
client company and also indicating date of
manufacture. My client is a Marina and Boat Broker by
trade. What proof is required of its capacity to sell
the vessel? The title is unencumbered. What proof is
required as to this?"

On 23 February 1990, after the new boat had been inspected and rejected by Mr Tingey, Messrs Lane and Lane wrote:-

"STATEMENT OF CASH POSITION
$68,000 acknowledged deposit
$ 4,500 withheld cash credit from sale of Pacer
$ 2,500 interest credit on funds held by Blu-Binda which was
agreed to be shared.
_______
$75,000
Full purchase price of vessel to specification.
$112,000
less $ 75,000 Credit
________
$ 37,000 Balance payable on delivery to AWT
iv) The $75,000 should be immediately transferred to an account
in the joint name of the Solicitors."

In a letter of 8 March 1990, Mr Butt failed to refer to this point. On 12 March 1990, Messrs Lane and Lane wrote:-

"Notwithstanding this our client is desirous of obtaining
his vessel and is prepared to settle any claims he may have
against your client on the following conditions:-
...
(iii) It is acknowledged by your client that it is
holding on trust $75,000 for our client being
$31,000.00 deposited by our client, $41,500.00
proceeds from the sale of the mariner pacer and
$2,500.00 being half of the interest.."

Again, Mr Butt did not disclose that the moneys were not held. On 30 March 1990, Messrs Lane and Lane wrote:-

"On our instructions, contrary to the claim in your letter
of 21st March, 1990, your client was not in Perth at the
time you wrote that letter. Therefore, we can only assume
that your client is attempting to delay any proceedings that
may be commenced by our client. On that basis, we require
your client to -
(i) acknowledge that it is holding on trust $75,000.00 for our
client, as itemised in our letter of 12th March, 1990; and
(ii) pay $75,000.00 into a joint account in the name of the
respective Solicitors, to be held on trust for our client."

Finally, on 20 April 1990, Mr Butt wrote, in a letter which he described as "Without Prejudice":-

"Of course, your requirement that funds be held in trust is
impossible to meet as all funds have gone into the
construction of the vessel to its present stage and your
clients equity rests in that." (my emphasis)

11. The complete absence of any apology from Mr Butt suggests that Mr Butt had never held the view that any sum was separately set aside for or held by Blu-Binda for Mr Tingey. I need hardly add that no vessel in construction represented an equity into which Mr Tingey's funds had been paid. The matter concluded when, after months of inconclusive correspondence, Mr Butt wrote to Lane and Lane on 3 August 1990:-

"I regret to advise that due to a dispute between the
directors of my client company, the proposed settlement
cannot be proceeded with.
There is no way in which effective title in the vessel can
be given to your client.
I expect to be back in my office on Monday."

12. Moreover, despite the fact that his affidavit was sworn only 3 years after the subject events, Mr Butt did not depose that he remembered believing that the sum of $68,000 had been held by Blu-Binda in a credit account. I have set out above the crux of his affidavit on this point. Mr Butt did, however, swear to aspects of his belief in 1989. Mr Butt deposed that:-

"there was nothing that I saw in the matters where I was
acting for Blu-Binda to suggest that the financial position
of Blu-Binda was in jeopardy.
...
As at 14 December 1989 and until 26 July 1990, I did not
know that Blu-Binda was in serious financial difficulty.
...
As at 14 December 1989 and until 26 July 1990, I did not
think that Blu-Binda could not pay its debts as and when
they fell due .."

The impression that I gain from Mr Butt's affidavit as a whole is that, in December 1989 and early 1990, he did not believe that Blu-Binda was insolvent or would be unable to pay and to meet any obligation due to Mr Tingey. Nevertheless, Mr Butt did not positively have it in mind that Mr Tingey's funds were actually held in a credit account. That conclusion follows from Mr Butt's failure to depose explicitly to holding such a belief and from the three paragraphs wherein he deposed to a belief as to solvency which, while relevant, was not central to the issue in the case.

13. Thus, I accept his Honour's findings of fact, the crux of which I have set out above.

14. There is, moreover, a further basis for supporting the judgment against Mr Butt. It was Mr Butt's conduct, his facsimile of 14 December 1989 and his letter of 15 December 1989, which were in breach of s.52 of the Act. Section 84(2) was relied upon, which states, inter alia:-

"(2) Any conduct engaged in on behalf of a body corporate:
(a) by a director, servant or agent of the body corporate
within the scope of the person's actual or apparent
authority; ..
shall be declared, for the purposes of this Act, to have
been engaged in also by the body corporate."

15. Mr Butt's letters, written within the scope of his authority, did not merely convey that moneys representing Mr Tingey's contributions to the boat were actually held. They represented that Mr Butt had taken full instructions and that there was no need to institute proceedings. The fax and the letter carried additional force because they emanated from a solicitor who was acting in that capacity. Moreover, they were written in the context that legal proceedings were threatened. In this context, the fax and letter conveyed the implication that he, Mr Butt, had made sufficient inquiries to justify his writing, as a solicitor, to the effect that his client held moneys on Mr Tingey's behalf.

16. Even on Mr Butt's evidence, he had made no such inquiries. The making of a direct inquiry as to how the moneys were held was essential, given Mr Butt's knowledge that Blu-Binda operated an overdraft account and his expectation that Blu-Binda would not have maintained anything in the nature of a trust account. But even absent these special circumstances, it was, in my opinion, incumbent upon Mr Butt to clarify his instructions by inquiring of Mr Cook, the director of Blu-Binda who instructed him, as to the nature of the account in which the funds were held.

17. It would have been misleading for Mr Butt, as a solicitor, to have informed a court that the moneys were held by Blu-Binda, if he had not specifically inquired of his client and obtained instructions that the moneys were held in a credit account. Similarly, it would have been a breach of Mr Butt's duty as a solicitor to have allowed a director of Blu-Binda to have sworn an affidavit that the moneys were held by Blu-Binda, absent Mr Butt's inquiring of the director that the moneys were in a credit account operated by Blu-Binda. Finally, it would also have been misleading and a breach of Mr Butt's duty as a solicitor to have himself sworn an affidavit that his client's instructions were that the moneys were held by Blu-Binda, without inquiring as to the nature and ownership of the account in which they were situate.

18. In the context that Mr Tingey's solicitors had indicated that urgent proceedings for an injunction would be instituted unless a favourable response was forthcoming, it was, in my opinion, a breach of Mr Butt's duty as a solicitor to have advised Lane and Lane that "no injunction will be necessary" and that "The total agreed value of $68,000 deposit is held by my client", without making any inquiry of his client as to the nature of the account in which Mr Tingey's moneys were said to be held. This is particularly so as Mr Butt's letter offered the information that "I have had the opportunity to take full instructions from my client".

19. Therefore, the fax and the letter of 14 and 15 December 1989, were conduct which was misleading and deceptive in breach of s.52 of the Act, not merely because the $68,000 was not actually held, but also because Mr Butt had made no inquiry sufficient to justify his writing that correspondence in his capacity as a solicitor.

20. Mr Butt's conduct was seriously misleading. The correspondence had commenced with the letter from Lane and Lane of 13 December which alleged that the sum of $68,000 "was paid to you to be held in trust." In his response of 15 December 1989, Mr Butt did not refute that allegation, but replied that the $68,000 deposit was held by his client. This response implied that the sum was held in trust. Yet, Mr Butt conceded in cross-examination that he had not had it in mind that Blu-Binda had any account in the nature of a trust account, nor had he been so instructed.

21. In my opinion, by giving his authority as a solicitor to the fax and the letter, Mr Butt knowingly assisted Blu-Binda to mislead and deceive Mr Tingey and his solicitors. Mr Butt had knowledge of sufficient essential facts, namely that his instructions were inadequate to justify his facsimile and his letter in the terms in which he wrote them.

22. The circumstances of this case are well removed from those considered in Yorke v. Lucas, in which the trial Judge held that Mr Lucas had acted in exact accordance with the instructions and information given to him, had been careful to obtain written confirmation thereof and had conscientiously and carefully passed on the instructions and information he had received.

23. In my opinion, the appeal on liability should be dismissed.

Damages
24. The trial Judge assessed damages at the low figure of $7,500 including interest, taking the view that, by December 1989, Mr Tingey's moneys had already been lost and that the amount that Mr Tingey would have been able to recover, had he been aware that his moneys had been spent, would have been small.

25. Counsel for Mr Tingey relied upon the fact that Mr Butt's letter of 15 December 1989 had offered Mr Tingey another vessel, which Mr Tingey inspected in January or early February 1990. It was proposed that Mr Tingey could accept that vessel if he paid the $44,000 balance of the purchase price. Mr Tingey did not accept the offer, however, for there were features of the vessel which he thought were unsatisfactory and he believed his $68,000 to be safe.

26. Had there been proof on the balance of probabilities that, if Mr Tingey had known the true facts, he would have purchased that other vessel for the price at which it was offered or would have negotiated a reduced price and proof that Blu-Binda was then in the position to transfer the vessel to Mr Tingey on receiving his further cheque for $44,000 or any agreed price, and had the value of the vessel been proved, damages could have been assessed accordingly, thus giving Mr Tingey substantial relief.

27. The trial Judge did not discuss the assessment of damages on this basis, but it is clear that his Honour did not accept that the various steps necessary for the claim had been established on the balance of probabilities.

28. The evidence was, indeed, insubstantial. Counsel for Mr Tingey submitted, on the basis of one answer given by Mr Butt in his evidence, that the vessel inspected in January or February 1990 was worth only $4,000 less than the price sought of $112,000. As to title, counsel relied upon Mr Butt's letter of 22 January which stated:-

"My client is a Marina and Boat Broker by trade. What proof
is required of its capacity to sell the vessel? The title
is unencumbered. What proof is required as to this?"

However, his Honour was of the view that, by December 1989, the affairs of Blu-Binda were in a parlous state. His Honour did not accept as reliable any statement made by Mr Butt in his letters. Therefore, although a vessel was shown to Mr Tingey, it was not established by the evidence that it was owned by Blu-Binda. On 23 February 1990, Mr Butt wrote that:- "... the replacement boat which was suggested has been sold to another purchaser." But there was no confirmatory evidence of the sale or of the price for which the vessel was sold or as to how Blu-Binda had acquired title. The bank statements of Blu-Binda are in evidence and counsel has pointed to two credits which may represent sums paid by the purchaser. But those sums were not identified to his Honour as evidence of the sale of the vessel. And there is likewise no clear evidence as to how Blu-Binda obtained the vessel, when it did so, or as to how much was owing on it. Finally, there was no direct evidence as to the value of the vessel and no expert was called to value the vessel in the light of the defects identified by Mr Tingey. The question of value was not put to Mr Butt in direct terms and, of course, it was a matter outside his expertise.

29. The trial Judge made his award of damages on the footing that, by December 1989, Blu-Binda had no substantial assets, notwithstanding that it continued to carry on business for some months. In my opinion, the evidence concerning the alternative vessel was not sufficiently clear to establish the contrary. It was incumbent upon counsel for Mr Tingey to prove, on the balance of probabilities, that Blu-Binda would have been able to transfer the vessel with good title, what its value was and that, if Mr Tingey had not been misled, he would have acquired that vessel with a further payment. The trial Judge did not accept those facts.

30. Counsel for Mr Tingey submitted that the sum awarded by his Honour was unduly low. Counsel referred to the fact that, during 1990, Blu-Binda continued to trade for some months and that there were moneys, greater than the sum of damages assessed by his Honour, which came into and went out of Blu-Binda's account.

31. Counsel for Mr Butt submitted that the moneys had been lost by December 1989 and that no loss at all resulted from the breach of s.52.

32. The facts may be debatable but, absent error as to principle or the establishment of facts which lead clearly to a contrary conclusion, so that the Court can perceive that the trial Judge erred in the manner in which he exercised his discretion, it is not for an appellate court to substitute its own discretionary judgment for that of the trial Judge.

33. In my opinion, no error on his Honour's part has been established. I would dismiss both the appeal and the cross-appeal.

34. I would order that Mr Butt pay to Mr Tingey 50% of the costs of the appeal and the cross-appeal.

NEAVES and BEAZLEY JJ Trevor Butt ("the appellant") has appealed from the judgment of a judge of this Court (Beaumont J.) given on 4 March 1993 whereby the appellant was ordered to pay the sum of $7,500 to Allen Tingey ("the respondent"). The liability of the appellant arose from findings by the trial judge that a company known as Blu-Binda Marina Pty Ltd ("Blu-Binda") had, in trade or commerce, engaged in conduct that was misleading or deceptive and thus in contravention of s.52 of the Trade Practices Act 1974 (Cth) and that the appellant was, within the meaning of s.75B of the Act, a person who was knowingly concerned in, or party to, the contravention by Blu-Binda.

2. The events which gave rise to the proceeding had their origin in an agreement entered into in June 1989 between the respondent and Blu-Binda whereby the respondent agreed to purchase a "Leeder 28" motor vessel for $112,000. The respondent paid a deposit of $5,000 and authorised Blu-Binda to sell the vessel which the respondent then owned at a minimum price of $37,000, the proceeds to be used in part payment for the vessel being purchased. Because the respondent required that Volvo motors be fitted to the new vessel instead of the standard Mercruiser motors, the respondent was required to make a further payment against the purchase price of $112,000. In addition to the deposit of $5,000, the respondent paid to Blu-Binda further sums totalling $26,000. In August 1989, Blu-Binda sold the vessel then owned by the respondent for a total figure of $41,500. However, Blu-Binda informed the respondent that the proceeds amounted only to $37,000.

3. Lane and Lane, Solicitors for the respondent, wrote a letter dated 13 December 1989 to Blu-Binda containing the following paragraphs:

"You represented to our clients that the vessel would be completed
and delivered by October 1989.
Not only was the vessel not delivered as promised, but it now
appears that it cannot be delivered.
The sum of $68,000 was paid to you to be held in trust pending the
completion of the purchase of the vessel.
In the circumstances our clients require a refund in full of all
monies paid by them to you by bank cheque on or before 2.00pm,
Thursday 14th December, 1989, failing which proceedings will be
commenced without further notice.
We also require your undertaking in writing by return facsimile
that you will not disburse any funds held by you on behalf of our
clients to any person. In the absence of receipt of such an
undertaking our clients will without further notice move for an
injunction restraining you from disbursing any further monies
together with an order for costs."

The amount of $68,000 referred to in the letter comprised the sums of $5,000, $26,000 and $37,000 to which reference has been made.

4. The appellant, as solicitor for Blu-Binda, replied on 14 December 1989 by handwritten facsimile transmission in the following terms:

"I refer to your letter of yesterday and our recent telephone
discussion. I confirm that no injunction will be necessary as my
client has indicated that the deposit (of $68,000) will not be
disbursed pending resolution of the dispute. I confirm further
that an identical (not 2nd hand) boat is available; shall fax full
details tomorrow morning."

There was no evidence before the trial judge as to what was said in the telephone discussion.

5. On the following day, 15 December 1989, the appellant wrote to the respondent's solicitors in the following terms:

"Further to my telephone conversation and handwritten facsimile
transmission of yesterday I confirm that I act for Arthur Cook and
for Blu-Binda Marina Pty Limited of Newport.
I wish to advise that I have had the opportunity to take full
instructions from my client and am advised to the effect that a
contractual relationship would appear to exist between my client
and your client based on the supply of a boat by my client to your
client.
I am instructed that the transaction was as follows:-
My client was to supply a new Leeder 28
Deluxe motor vessel for a purchase price of $112,000.00.
Your client paid a total of $31,000.00 in
cash being an initial deposit of $5,000.00
and two subsequent payments of $9,000.00 and $17,000.00.
In addition your client traded in for an
agreed value of $37,000.00 a Marina Pacer Vessel.
The total agreed value of $68,000.00 deposit
is held be (sic) my client pending
finalisation of the transaction which will
occur upon the provision of the vessel to
your client on payment of the final
outstanding balance of $44,000.00.
The contract was never intended to be in
relation to any particular vessel but only
in relation to a vessel of the correct specifications.
Originally it was hoped that a vessel currently under construction
in Perth would be ready in time for your client, however, it now
appears through no fault of my client that such vessel would not
be ready and my client is now in a position therefore to provide
an identical new vessel from stock in accordance with the contract
between the parties.
All that is required now is confirmation from your client that he
is in a position to complete the transaction by payment of the
$44,000.00 and on receipt of such confirmation the trim and
upholstery shall be altered to suit your client's requirements.
I am advised further that if such confirmation is received today
then the transaction could be finalised next week with the
delivery of the boat in return for the balance of $44,000.00
referred to above.
With regard to this particular vessel it appears that your client
may have some misconception about it and it is advised that the
vessel is not second hand and is a brand new vessel whose history
is that it has been delivered from Western Australia by truck
(which is usual) and subsequently water-tested for a period of
approximately six hours and since then held in stock at my
client's marina.
Should there by any doubt as to the fact that the vessel is brand
new my client is prepared in the circumstances to provide an
appropriate marine survey at no cost to your client on settlement.
I look forward to your early reply."

6. Further correspondence ensued but it is unnecessary to refer to it for the purpose of determining the appeal. In the result, no vessel was delivered to the respondent, no refund was made to him of the moneys he had paid on account of the purchase price and Blu-Binda did not account to him for the proceeds of the sale of his vessel.

7. Before the trial judge, it was not seriously disputed by the appellant that, in instructing him to send the facsimile transmission on 14 December 1989 and the letter dated 15 December 1989, Blu-Binda engaged in misleading conduct in contravention of s.52 of the Trade Practices Act. His Honour found that, as the sum of $68,000 had already been paid to the Commonwealth Bank of Australia towards the reduction of Blu-Binda's overdraft, the statement in the facsimile transmission that the deposit of $68,000 would not be disbursed pending resolution of the dispute and the statement in the letter that "the total agreed value of $68,000.00 deposit is held be (sic) my client pending finalisation of the transaction" were false.

8. The question relevantly before his Honour was whether, in terms of s.75B(1)(c) of the Trade Practices Act, the evidence established that the appellant had been in any way, directly or indirectly, knowingly concerned in, or party to, that contravention by Blu-Binda. As the judgments of the High Court in Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661 and Giorgianni v The Queen [1985] HCA 29; (1984) 156 CLR 473 establish, it was necessary for the respondent to show that the appellant had actual knowledge of the essential facts which rendered false the relevant statements in the facsimile transmission and the letter.

9. The trial judge referred to the two several affidavits sworn by the appellant on 28 April 1992 and 28 May 1992 respectively and to his oral evidence. The earlier affidavit was to the effect that the appellant knew nothing of the transaction between the respondent and Blu-Binda prior to being shown a copy of the letter dated 13 December 1989 from Lane and Lane to that company; that he composed the facsimile transmission of 14 December 1989 and the letter dated 15 December 1989 upon the instructions of Arthur George Cook, a director of Blu-Binda; that those instructions included instructions that Blu-Binda held the money deposited by the respondent; and that he had no reason to doubt the accuracy of the instructions he received. In the later affidavit, the appellant stated that at the material time he was aware that Blu-Binda operated an overdraft facility and several other accounts at the Commonwealth Bank of Australia but that he knew nothing which suggested to him that Blu-Binda's affairs were otherwise than healthy or that the overdraft facility was not being operated within its limits. He again stated that he was instructed that the deposit made by the respondent had not been disbursed and would not be disbursed pending resolution of the dispute. His oral evidence was substantially to the same effect.

10. His Honour noted the absence of a file or other contemporary note of the discussion between the appellant and Mr Cook to which the appellant deposed. He formed the opinion, based on the absence of such a note and the length of time since the discussion took place, that the appellant's recollection as to the terms of the discussion was not reliable. His Honour, however, accepted that a discussion did take place between the appellant and Mr Cook prior to the facsimile transmission and the letter being sent but, in the absence of any evidence from Mr Cook, his Honour was not in a position to make, and did not make, any finding as to what the terms of that discussion were. There is no finding that the facsimile transmission or the letter was sent without instructions. His Honour made no general finding as to the appellant's credibility.

11. His Honour found that it was unrealistic to assume that the appellant could not have been aware that all funds available to Blu-Binda had been applied in the discharge of Blu-Binda's significant debt to the bank and that, therefore, the appellant was knowingly concerned in the contravention by Blu-Binda of s.52 of the Trade Practices Act. Those findings were expressed to be based on the following:

(a) The appellant knew that Blu-Binda not only
operated an overdraft facility with the bank
but that the overdraft was substantial and
that difficulties were being experienced in
making arrangements for its discharge.
(b) The appellant knew (based on a file note
prepared by him on 21 November 1989) -
(i) that special measures were called for in
order to discharge the
significant overdraft then owed to the bank; and
(ii) that Blu-Binda owed more than $500,000 to the
bank and that special measures, including the sale
of the personal assets of the then directors of the
company, were required in an effort to reduce that debt.
(c) When the appellant wrote the facsimile of 14
December 1989 and the letter dated 15 December 1989
he must have known that the funds provided by the
respondent over the previous five months had been banked
to the ordinary account of Blu-Binda with the bank
and not to any special account earmarked for
the purpose of the respondent's purchase.

12. Counsel for the appellant challenged a number of the findings made by the trial judge as being unsupported by the evidence. However, we do not find it necessary to consider that submission as we are of opinion that, accepting the findings of fact made by his Honour, those findings, taken singly or in combination, do not give rise to the inference that the appellant, at the time he sent the facsimile transmission or the letter, had actual knowledge of the essential facts constituting the contravention by Blu-Binda of s.52 of the Trade Practices Act. The findings of his Honour that are set out in pars (a) and (b) above do not, in our opinion, support the inference that the appellant had actual knowledge that the amount of $68,000 had already been disbursed by Blu-Binda (to use the language of the facsimile transmission) or that the amount of $68,000 was not held by Blu-Binda pending finalisation of the transaction (to use the language of the letter). Nor, in our opinion, is the finding set out in par.(c) above - a finding expressed in terms of constructive rather than actual knowledge - sufficient to sustain a finding of liability in the appellant.

13. In our opinion, the evidence does not establish that the appellant, in writing the facsimile transmission and the letter, was doing more than conveying to the solicitors for the respondent the essence of the instructions he had received from Mr Cook on behalf of Blu-Binda. There is nothing in the documents as we read them to warrant the conclusion that the appellant was adding his imprimatur to what was stated there as being his instructions. The only representation he himself made in what was written in the facsimile transmission was that he had been informed of certain matters by his client. The only representations he made in the letter dated 15 December 1989 were that he had taken full instructions from his client and that those instructions were to the effect set out in the letter. There is no finding that those representations were false but, even if they had been false, they would not have subjected the appellant to any liability under s.52 of the Trade Practices Act. The appellant did, of course, express the view in the facsimile transmission that no injunction would be necessary because of the statement made by his client, but there is no finding that the appellant did not hold that opinion based on what he had been told.

14. In our opinion, the appeal should be allowed and the judgment given on 4 March 1993 varied by deleting from Orders 1 and 2 the words "The second and fourth respondents" and substituting therefor the words "The second respondent" and by further ordering that the applicant pay the fourth respondent's costs of the application. The respondent should pay the appellant's costs of the appeal.