Tag: Silence

Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992)

  • Winterton Constructions Pty Ltd v Hambros Australia Ltd [1992] FCA 881; (1992) 111 ALR 649
  • Full Federal Court, 30 November 1992
  • Silence – Trade practices – Misleading or deceptive conduct

The case Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) discussed the context of misleading or deceptive conduct under section 52 of the Trade Practices Act 1974.

Facts of the case

Hambros Australia Ltd (a merchant bank) entered into a facility agreement with Pan Properties Pty Ltd, a developer, to finance a project. The agreement allowed Hambros to withhold further advances if there was a material alteration in Pan Properties’ financial position.

Pan Properties faced financial difficulties and informed Hambros of its inability to refinance or pay interest. Hambros decided not to release further funds.

Winterton Constructions Pty Ltd, the builder, completed the project despite knowing there were doubts about the payment of outstanding progress claims. Winterton later sought payment from Hambros, alleging that Hambros had failed to disclose its reservation to withhold funds, constituting misleading conduct under section 52.

Court’s Findings in Winterton Constructions Pty Ltd v Hambros Australia Ltd

The court ruled in favour of Hambros, finding no breach of section 52.

Key considerations were as follows:

1. Silence and duty to speak: The court acknowledged that silence might be misleading if there is a duty to disclose. However, such a duty arises only under special circumstances.

2. Confidentiality: Hambros owed a duty of confidentiality to its borrower (Pan Properties) and was not obligated to disclose Pan Properties’ financial issues to Winterton.

3. Reasonable expectation: Winterton could not reasonably expect Hambros to disclose details of its reservation of rights under the facility agreement, as such disclosures could harm Pan Properties and impose undue burdens on the financier.

The court distinguished between duties imposed by general law (such as duties of care) and the obligations under section 52. The latter requires specific circumstances to establish a duty to disclose.

Outcome

Hambros’ silence did not constitute misleading conduct. The claim under section 52 failed because no special circumstances imposed a duty to disclose.

References:

http://classic.austlii.edu.au/au/journals/AUConstrLawNlr/1993/136.pdf

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Demagogue Pty Ltd v Ramensky (1992): Trade Practices Act Case

  • Demagogue Pty Ltd v Ramensky [1992] FCA 851; (1992) 39 FCR 31; 110 ALR 608
  • Full Court of the Federal Court, 20 November 1992
  • Silence – Trade practices – Misleading or deceptive conduct

Demagogue Pty Ltd v Ramensky (1992) concerned the issue of whether silence can constitute misleading or deceptive conduct under section 52 of the Trade Practices Act 1974.

Facts of the case

Demagogue Pty Ltd (the appellant vendors) had a written contract with the Ramenskys (the respondent purchasers) for the sale of land in Queensland.

The contract mentioned that Demagogue had applied for planning consent from the local council for the development of the land but failed to disclose key information about the land’s access.

Specifically, the access to the land would only be possible via a driveway that needed to be constructed over public land, and Demagogue had been negotiating with the Land Administration Commission for the right to build the driveway.

There was also a road licence issued in Demagogue’s name that allowed access to the land, but this licence could not be transferred to the Ramenskys without a separate agreement. No offer of transfer was made to the Ramenskys before the date for settlement of the contract.

The Ramenskys had inspected the site before entering the contract and were told by a local real estate agent that the developer would build a driveway up to the road, without mentioning the complexities surrounding the access.

After signing the contract, the Ramenskys learned about the road licence issue and rescinded the contract, claiming that Demagogue’s silence regarding the access constituted misleading or deceptive conduct under section 52 of the Trade Practices Act 1974.

Court’s Findings in Demagogue Pty Ltd v Ramensky

The Court ruled in favor of the Ramenskys, agreeing that Demagogue had engaged in misleading or deceptive conduct.

The case highlighted that whether silence amounts to misleading or deceptive conduct depends on the context in which it occurs. Silence may be misleading when, in the context of a transaction, there’s an expectation that certain material facts will be disclosed.

In this case, Demagogue’s conduct created a false impression that the access to the land was straightforward and free of complications, while in reality, access required a road licence and negotiation with the Land Administration Commission.

The Court emphasized that silence could constitute misleading conduct when the circumstances are special and there is an expectation of disclosure.

Takeaway

Silence may be deemed misleading or deceptive when the failure to disclose important information creates a false impression in the mind of the other party, especially if the circumstances imply a duty to disclose.

References:

http://classic.austlii.edu.au/au/journals/AUConstrLawNlr/1993/136.pdf

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