Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Midcoast County Council trading as Midcoast Water v Reed Constructions Australia Pty Ltd [2011] NSWCA 268
• Hearing dates: 11 August 2011
• Decision date: 09 September 2011
• Before: Beazley JA at [1]; Basten JA at [2]; Meagher JA at [3]

Decision

(1)Appeal dismissed.

(2)Appellant to pay the Respondent's costs.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: TRADE PRACTICES - misleading or deceptive conduct - proceedings for payment of progress claim pursuant to s 13 of the Building and Construction Industry Security of Payments Act 1999 - whether appellant was misled in failing to serve in time a payment schedule under s 14 of the Act - whether findings of the primary judge supported by the weight of the evidence - whether primary judge considered irrelevant matters.
• Legislation Cited: Building and Construction Industry Security of Payment Act 1999; Trade Practices Act 1974 (Cth)
• Cases Cited: Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112; Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238; (2006) 67 NSWLR 9; Butcher v Lachlan Elder Realty Pty Ltd; [2004] HCA 60; (2004) 218 CLR 592; Devries v Australian National Railways Commission [1993] HCA 78; (1993) 177 CLR 472; Fox v Percy [2003] HCA 22; (2003) 214 CLR 118; Jones v Hyde [1989] HCA 20; (1989) 63 ALJR 349; Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd; [2010] HCA 31; (2010) 241 CLR 357
• Category: Principal judgment
• Parties: Midcoast County Council trading as Midcoast Water (Appellant); Reed Constructions Australia Pty Limited (Respondent)
• Representation: F Corsaro SC; M Galvin (Appellant); B DeBuse (Respondent); Stacks/Forster (Appellant); HWL Ebsworth Lawyers (Respondent)
• File Number(s): CA 2010/155800

Decision under appeal

• Citation: Reed Constructions Australia Limited v Mid Coast County Council trading as Midcoast Water [2010] NSWSC 1250
• Date of Decision: 2010-10-29 00:00:00
• Before: Einstein J
• File Number(s): SC 2010/155800

Judgment

1 BEAZLEY JA : I agree with Meagher JA.

2 BASTEN JA : This appeal should be dismissed with costs, for the reasons given by Meagher JA.

3 MEAGHER JA : This is an appeal from a decision of Einstein J given in a proceeding in the Technology and Construction List.

4 The Appellant ( Reed ) and the Respondent ( Midcoast Water ) were parties to a contract for the construction of civil and associated works at the Bootawa Water Treatment Plant near Taree. That contract was made on 23 March 2007 and it was common ground that the Building and Construction Industry Security of Payment Act 1999 (the Act ) applied to it. Part 2 of that Act creates an entitlement to progress payments for work carried out under a construction contract to which the Act applies. The date upon which claims for those progress payments may be made is called the "reference date". Part 3 sets out the procedure for recovering progress payments. Section 14 states that if a person on whom a "payment claim" has been served does not reply to that claim by providing a "payment schedule" within the time required, that person (called the "respondent" to the claim) becomes liable to pay the claimed amount.

5 The contract entitled Reed to submit monthly progress claims on the last day of each month. On 30 April 2010, Reed served a "payment claim" on Midcoast Water. The parties agree that the claim complied with the requirements of s 13(2) of the Act. The claim was for a total amount of $11,033,756.59. That amount included $9,695,558.50 for items which had already been the subject of an earlier adjudication under the provisions of Division 2 in Part 3 of the Act. Therefore Midcoast Water was not entitled to re-agitate those items: s 23(2) of the Act. The balance, namely $1,338,198.00, related to items that Reed had not previously claimed.

6 The time for Midcoast Water to respond to that claim by providing a payment schedule expired on 14 May 2010. Midcoast Water failed to serve a payment schedule by that date and did not serve its payment schedule in response until 20 May 2010. The payment schedule indicated that it did not intend to make any payment to Reed and that Midcoast Water considered that an amount of $3,074,831.35 was owing by Reed to Midcoast Water.

7 Reed sought to recover $1,338,198.00 on the basis that Midcoast Water had failed to pay that amount on or before 28 May 2010 and was liable to do so under s 14(4) as a consequence of its having failed to provide a payment schedule within the time allowed.

8 By way of defence, Midcoast Water alleged that its failure to provide a payment schedule within the required period was due to misleading or deceptive conduct of Reed in contravention of s 52 of the Trade Practices Act 1974 (Cth) because it had been misled into believing or continuing to believe that no payment claim had been served: as to the availability of this defence, see Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238; (2006) 67 NSWLR 9, esp. at [12], [17], [96].

9 The primary judge held that Reed's conduct was not misleading or deceptive. That conclusion depended on findings as to what was said at a site meeting between representatives of the parties which was held on 4 May 2010.

10 I have concluded that the primary judge did not err in holding that Reed's conduct was not misleading or deceptive. Specifically, I am not satisfied that his findings as to what was said by the relevant employee of Reed (Mr Buchanan) at the meeting on 4 May were wrong or involved appealable error.

The relevant sequence of events

11 It is convenient at this stage to identify the employees of the parties who participated in the relevant conduct. For Reed those persons and the descriptions of the positions which they held were Mr Chad Wilkinson - Project Manager, Mr John Buchanan - On-site Project Manager and Mr Jeremy Turnbull - Group Engineering Services Manager. For Midcoast Water those persons and their positions were Mr Malcolm Flew - Manager of Major Projects, Mr Daniel Brauer - Project Manager, Mr Matthew Koller - Project Engineer, Mr David Morse - Project and Contract Administrator and Mr Christopher Gilbert - Integration Co-Ordinator.

12 Within Reed, Mr Wilkinson was responsible for preparing and serving monthly payment claims. In Midcoast Water, Mr Flew was responsible for the administration of those claims. However, he was away on leave between 1 April 2010 and 3 May 2010. In his absence, Mr Brauer was responsible for administering those claims. Mr Brauer in turn was absent on leave from the afternoon of 30 April 2010. In his absence, his position as Project Manager was filled from 3 May 2010 by Mr Koller.

13 Mr Wilkinson prepared payment claim 35 for the month of April 2010 and sent it to Midcoast Water by fax addressed to "Dan Brauer" at about 5.22pm on Friday, 30 April 2010. The payment claim was sent at that time because the Justice of the Peace to witness his signature on the statutory declaration annexed to it only became available after 5.00pm. Mr Wilkinson understood at that time that Mr Brauer would be on leave from 3 May 2010 and that Mr Flew would return to work on that day. He assumed either that Mr Brauer would be in the office at the time the facsimile was sent or that a staff member would notify Mr Brauer or Mr Flew of the fact of receipt of the claim.

14 Midcoast Water had an electronic document management system which provided for the electronic capture and storage of documents, including facsimile messages. All facsimiles forwarded to it were diverted to an electronic number. Facsimiles received outside business hours were not reviewed until the next business day. Payment claim 35 was reviewed on the morning of Monday, 3 May 2010 by an office assistant at the Forster office of Midcoast Water. She checked the electronic folder holding the unopened facsimile from Reed. She opened it, noted it was addressed to Mr Brauer and forwarded the document to him by email at about 8.03am. Mr Brauer, whilst at home and on leave, accessed his emails between 9.00am and 11.00am on that day. He saw the email but did not open it. Instead, he transferred it with other emails into a folder created for the Bootawa Project. At the same time, Mr Brauer arranged for emails sent to him after that time to be redirected to Mr Koller.

15 The result of all of this was that none of the persons within Midcoast Water responsible for dealing with or actioning the payment claim was aware as at 3 May 2010 that the claim had been received. That remained the position until 19 May 2010 when Mr Wilkinson sent a further copy of the progress claim to Mr Flew following a site meeting on 18 May 2010. Midcoast Water's claim was that but for misleading or deceptive conduct on the part of Reed, it would have become aware of the existence of the claim before 14 May 2010 when the time for serving a payment schedule expired.

16 On 3 May 2010 Mr Flew returned to work. In a discussion with Mr Koller concerning the site meeting which was to be held on 4 May 2010, it was noted that Reed had not yet submitted a progress claim for April and agreed that this should be raised at the site meeting. It was not Midcoast Water's case that the fact that it was mistaken at this point in time was due to any misleading or deceptive conduct of Reed.

17 Mr Wilkinson did not attend the site meeting on 4 May 2010 and it was not his practice to attend every site meeting because Mr Buchanan, who was on site, would attend. However, he spoke by telephone with Mr Buchanan before and after the meeting. On the morning of the meeting, Mr Wilkinson and Mr Buchanan went through the minutes of the previous meeting and Mr Wilkinson informed Mr Buchanan that he had lodged payment claim 35 on Friday, 30 April 2010. The primary judge accepted the evidence of Mr Wilkinson and Mr Buchanan to this effect and that finding is not challenged on appeal. Indeed, it was Midcoast Water's case that by the time of the meeting, Mr Buchanan was aware that the payment claim had been made.

18 At the site meeting, Mr Buchanan and Mr Turnbull represented Reed and Mr Flew, Mr Koller and Mr Morse represented Midcoast Water. The meeting went for over two hours. The question of the receipt of a progress claim for the month of April was raised. Each person present recalled words being said to the effect that Midcoast Water had not received "the April claim" or "latest payment claim". There was an issue as to what was said by Mr Buchanan in response.

19 Mr Buchanan's evidence, which was accepted by the primary judge, was that he said he understood that the payment claim had been lodged, having been told that by Mr Wilkinson, but that he would check with Mr Wilkinson. The evidence of Mr Koller, Mr Flew and Mr Morse was that nothing was said about the serving or lodging of the progress claim. Mr Koller's evidence was that Mr Buchanan said "That's Chad's department. I'll need to check on that". Mr Flew's evidence was that he said words to the effect "I will follow that up with Chad". Mr Morse's evidence was that he said words to the effect "I will follow that up with Chad and let you know". Mr Turnbull's recollection was, as the primary judge observed, "significantly different" from the other witnesses. He recalled Mr Buchanan saying words to the effect "I find that surprising as Chad is always on time with the issuing of progress claims. You should go back and double check that you don't have the claim".

20 In the telephone discussion between Mr Wilkinson and Mr Buchanan after the meeting, Mr Buchanan reported that Mr Koller had told him that the April claim had not been received and that in response he (Mr Buchanan) had said that he had been told that it had been submitted and that he would check again. That evidence of Mr Buchanan and Mr Wilkinson was accepted by the primary judge and that finding is not challenged on appeal.

21 Mr Morse prepared minutes of the site meeting and distributed those minutes by email on 7 May 2010, including to Mr Wilkinson. The minutes recorded under the heading " I . Claims":

Item	Discussion	Due date	Action
1	Update 21/4/10: Claim 34 responded to by MCW Update 4/5/10: April claim not yet received.		Noted

22 Mr Wilkinson read the minute as indicating that at the meeting on 4 May 2010, Mr Buchanan had been told Midcoast Water had not received payment claim 35. He did not understand the minute as saying that as at 7 May 2010 that was still the position. He thought that as Mr Buchanan had informed Midcoast Water that the claim had been served, it was only a matter of time before it checked its correspondence and found the payment claim. If, for some reason, that did not occur, he thought that Midcoast Water would direct an inquiry to him.

23 On 18 May 2010 and before the site meeting Mr Wilkinson had a telephone discussion with Mr Buchanan in relation to those minutes. Mr Wilkinson said that no payment schedule in response to payment claim 35 had been received. Mr Buchanan referred to what had been said at the meeting on 4 May 2010 about the April claim not being received. He recalled Mr Wilkinson saying that the payment claim had definitely been lodged. The primary judge accepted this evidence.

24 The meeting of 18 May 2010 was attended by Mr Koller, Mr Morse, Mr Gilbert, Mr Buchanan and Mr Turnbull. Each gave evidence that Mr Koller said that the payment claim still had not been received. Again there was a dispute as to Mr Buchanan's response. Mr Koller, Mr Morse and Mr Gilbert gave evidence that he said he would "find out what's happening" or "pursue it", whereas Mr Buchanan gave evidence that he said he had spoken to Mr Wilkinson who had told him that the claim had definitely been lodged but that he would check with him again. Mr Turnbull gave no evidence of any response of Mr Buchanan. Again, the primary judge preferred the evidence of Mr Buchanan and found that he had said that the relevant payment claim had been served but that he would check again with Mr Wilkinson. The minutes of this meeting as subsequently issued recorded: "Minutes of the last meeting held 4 May 2010 issued as Meeting 72 were read and agreed as correct minutes of the meeting".

25 Mr Buchanan reported to Mr Wilkinson that Mr Koller had said he had still not received the April claim. As a result, on 19 May 2010, Mr Wilkinson sent Mr Flew a further copy of the progress claim by email.

Midcoast Water's misleading or deceptive conduct claim

26 Midcoast Water's claim that there had been misleading or deceptive conduct was formulated in its written submissions on appeal as follows -

"On [Midcoast Water's] case, because Mr Buchanan did not inform [it] that the Payment Claim had been served, [Midcoast Water] had, or continued to have, a mistaken belief that no Progress Claim had been provided by [Reed]. [Midcoast Water's] case was that by Mr Buchanan's conduct in stating that he would have to check if the payment claim had been served, and failing to tell [it] that he had been informed that the Payment Claim had been served by [Reed] on 30 April 2010, [Reed] represented that:

(a) [it] had not served the Payment Claim; or

(b) [it] was genuinely uncertain of the circumstances relating to the service of the Payment Claim; or

(c) [Midcoast Water] was correct in believing that [Reed] had not served the Payment Claim; or

(d) [it] was yet to make a Payment Claim for the period ending 30 April 2010."

This formulation of the claim was, with minor but immaterial differences, the same as the formulation in Midcoast Water's Technology and Construction List Response.

27 Conduct will be misleading or deceptive if it leads or is likely to lead into error. It is not necessary that it convey express or implied representations which themselves are misleading or wrong: Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 at [32], [179]; Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357 at [15], [16]. The formulation of Midcoast Water's claim in terms of representations was another way of alleging that the conduct in the circumstances did or was likely to lead into error, the error being that the position as represented was the true position whereas that was not the position in fact. The conduct relied upon consisted of Mr Buchanan's responses at the meeting and Reed's silence in the face of Mr Koller's comment about non-receipt of the progress claim. Whether conduct including silence should be characterised as misleading or deceptive requires attention to the persons to whom it is directed, the circumstances and the context. What is significant, as Midcoast Water's written submissions acknowledge, is that none of the pleaded representations was conveyed and the conduct was not likely to lead into error if Mr Buchanan said at the meeting on 4 May, as he asserted he had, that he understood that the claim had been lodged but would check the position with Mr Wilkinson.

28 The primary judge concluded that the pleaded representations were not made because of his acceptance of Mr Buchanan's evidence of what was said. Relevantly he said -

"[113] Ultimately, having heard the evidence, I do not accept the defendant's significant attack on Mr Buchanan. That is, I accept Mr Buchanan's recollection that he told the 4 and 18 May meetings that he understood, on Mr Wilkinson's advice, that the relevant payment claims had been served but he would check with Mr Wilkinson. It will be apparent that I reject the defendants' submission that the integrity of the plaintiff's evidence was called into question because of out of court discussions between its witnesses.

[114] I turn to consider the representations alleged by the defendant to have been made by the plaintiff, until 19 May 2010, on this basis:

i. I do not accept that the plaintiff represented that it had not made a progress or payment claim. On the contrary my view of the evidence is that Mr Buchanan disclosed to the defendant in the two meetings that it was his understanding that the payment claim had been served.

ii. I also do not accept that the plaintiff made the second alleged representation, which is pleaded as that the plaintiff genuinely believed or was genuinely uncertain of the circumstances relating to its making of a progress or payment claim [there appears to be a typographical error or omission].

iii. I do not accept that the plaintiff represented that the defendant was correct in believing that the plaintiff had not made a progress claim or payment claim. In my view the defendant was actually made aware that Mr Buchanan believed that a payment claim had been served.

iv. I do not accept that the plaintiff represented that it proposed to make a progress claim and had not done so and would inform the defendant when it had done so.

[115] It will be clear that I do not accept that the relevant silence drawn on by the defendant to support its misleading or deceptive conduct case - being the alleged failure of Mr Buchanan to disclose to the two meetings that a payment claim had been served - existed. [Rather, as explained above I accept that Mr Buchanan informed the relevant meetings that he understood a payment claim had been served]. Thus no reasonable expectation of disclosure of the alleged silence could arise: Vitek at [37].

[116] In my view there are three overarching reasons which support the above conclusions:

i. Firstly, for all the heat generated in the courtroom on behalf of each party, the simple fact is that the defendant failed to protect its own interests in circumstances where even a simple phone call to Mr Wilkinson to clarify the issue of whether a payment or progress claim had been served was never made.

ii. Secondly, the defendant failed to ensure that that the facsimile in question was considered in a timely manner, in circumstances where it conceded that it had been properly served upon it. This could be characterised as an internal document management error on the defendant's part which resulted in the facsimile not coming to its attention earlier. It was open to the defendant to enquire of Mr Brauer, who had received the facsimile and was on holidays during the relevant period. As is made clear in the above quoted decision of Justices Deane and Fitzgerald in Taco Co of Australia the court must determine for itself whether conduct was misleading or deceptive or likely to mislead or deceive. And as part of that exercise it is necessary to enquire why the proven misconception has arisen. In my view the defendant's misconception that a payment claim had not been served did not arise because of any conduct of the plaintiff.

iii. Thirdly, the defendant's submissions placed great weight on Mr Buchanan having told the relevant meetings he would check, with the defendant arguing for an inference that Mr Buchanan would report back in a timely manner. However, the defendant could have protected its interests by considering the possibility either that Mr Buchanan did not think he had to get back to them, or that he would fail to get back to them. Again, it was a straightforward matter for the defendant to make its own enquiries of Mr Wilkinson."

The issues on appeal

29 Midcoast Water argued that the primary judge's conclusion that there was no misleading or deceptive conduct was in error for three reasons. The first was that the primary judge erred in finding that at the meetings on 4 and 18 May 2010, Mr Buchanan had said that he understood the relevant payment claim had been served. The second was that the primary judge erred in rejecting the misleading or deceptive conduct claim for reason that Midcoast Water had "failed to protect its own interests" by failing to make a telephone call to Mr Wilkinson to clarify the issue or to make inquiries of Mr Brauer. The third, which was put in oral argument, was that on the facts as found, the primary judge nevertheless erred in failing to characterise Reed's conduct as misleading or deceptive.

30 The first and second of these arguments are dealt with below. The third may be disposed of shortly. As formulated, it was not predicated on the facts found by the primary judge but on facts which included that Mr Buchanan did not inform Midcoast Water on 4 May 2010 that the payment claim had been lodged. In the absence of a finding to that effect, and in circumstances where no witness for Midcoast Water gave evidence that Mr Buchanan had said he would get back to them having checked the matter with Mr Wilkinson or that they should assume it had not been served unless advised otherwise, there was no basis on which the conduct was or was likely to lead to any of the errors contended for by it. Therefore, unless the primary judge's finding is overturned, this third argument must also be rejected.

The challenge to the primary judge's findings of fact

31 Although Midcoast Water also challenged the primary judge's finding in relation to the 18 May 2010 meeting, what happened at that meeting was relevant only to the extent that it assisted in resolving what had happened at the earlier meeting by reflecting on the credit of the various witnesses or making one version more likely to have occurred than the other.

32 The relevant principles as to fact finding on appeals by way of rehearing are not in dispute. This Court must set aside challenged findings of fact which are shown to be wrong. When addressing those challenged findings, the Court must weigh conflicting evidence and draw its own inferences and conclusions from that evidence, giving due regard to the fact that it has not seen nor heard the witnesses. Specifically, if a finding might be affected by the trial judge's impression about the credibility of a witness or witnesses, this Court should respect the advantage of the trial judge in that regard. Usually such a finding should stand unless it is shown that the trial judge "has failed to use or has palpably misused his advantage" or acted on evidence which was "inconsistent with facts incontrovertibly established" or "glaringly improbable": Devries v Australian National Railways Commission [1993] HCA 78; (1993) 177 CLR 472 at 479, 480-481; Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 at [25]-[27]. Furthermore, as McHugh J observed in Jones v Hyde [1989] HCA 20; (1989) 63 ALJR 349 at 351, when a trial judge resolves a conflict of evidence between witnesses it does not follow that "because the learned judge made no express reference to demeanour and credibility", they played no part in the conclusion. Also to be kept in mind is that caution should be exercised against placing too much reliance on the appearances of witnesses rather than on "contemporary materials, objectively established facts and the apparent logic of events": Fox v Percy at [31].

33 In preferring the evidence of Mr Buchanan, the primary judge accepted that Mr Flew did his best to recall the relevant events and that Mr Koller and Mr Morse were generally to be accepted as witnesses of truth. However, he regarded two "concessions" made by Mr Flew and Mr Morse as casting doubt on the reliability of their evidence. He also noted one respect in which Mr Morse's recollection of the events of 4 May 2010 was influenced by his subsequent reading of affidavits of other witnesses of Midcoast Water.

34 Midcoast Water contends that the primary judge's treatment of those "concessions" involved error. The matter is dealt with in the reasons as follows -

"[111] The defendant emphasised that it had put forward five witnesses who essentially concurred that Mr Buchanan had only said that he would check and that he had not said that he understood the payment claim had been served. However, this matter is not to be resolved by a mere weighing of the number of witnesses able to support a proposition. That would be a superficial way of treating with the exercise. The court has examined and accepted the evidence given by Mr Buchanan. Additionally, the defendant's witnesses were not fully accepted in this area. As explained above, Mr Flew made a significant concession, that Mr Buchanan had not said that he would get back to Midcoast after enquiring of Mr Wilkinson. A concession by Mr Morse also cast some doubt over his evidence."

35 The concessions to which the primary judge is referring are identified in the following earlier passages in his reasons -

"[64] During Mr Flew's cross-examination, the following exchange took place at T122:

Q - Your expectation was that Mr Buchanan or someone from Reed would respond to Midcoast in relation to whether or not the payment claim had been served?

A - Yes.

Q - Mr Buchanan hadn't said that?

A - Mr Buchanan said that he would look into it with Chad.

Q - But he hadn't said he would get back to you?

A - Mr Buchanan said that he would look into that with Chad and get back to us, yes.

Q - Well the words "get back to you" don't appear anywhere in your affidavit, do they?

A - Maybe not, no.

Q - In fact you just made those up in the witness box, didn't you?

A - No.

Q - If they'd said he's going to get back to you, why wouldn't you have put that in your statement?

A - I was probably incorrect. Mr Buchanan said that he would look into it with Chad, words to that effect.

Q - Well which was it, did he say "I'll look into it with Chad" or "I'll look into it with Chad and get back to you"?

A - I will follow that up with Chad, words to that effect.

Q - So he didn't say anything about getting back to you?

A - No, he didn't.

[65] The above obviously represents a significant concession by Mr Flew. His evidence that Mr Buchanan said that he would check with Mr Wilkinson and get back to Midcoast is obviously not accepted. However outside of the above glitch Mr Flew's evidence appeared to me to be his best endeavour to recall the events of the time."

"[99] Under cross-examination, Mr Morse made the following concession (T146.50) :

Q - See, you saw the responsibility of Reed as being to let you know and by letting you know it meant Midcoast?

A - Yeah.

Q - And therefore you have assumed that that's what would have been said?

A - Yes."

36 Mr Flew said he could not recall the precise words used by Mr Buchanan on 4 May 2010. In his affidavit he did not suggest that Mr Buchanan had said that he would "get back to us". However, he did give evidence to that effect in cross-examination. When pressed, he conceded that those words were not said. Midcoast Water argued that Mr Flew's concession did no more than correct a statement made to the cross-examiner which conveyed the witness' impression as to what Mr Buchanan meant as opposed to what Mr Buchanan said. That submission does not accurately reflect Mr Flew's oral evidence. As the extract above shows, Mr Flew did correct his earlier oral evidence as to what Mr Buchanan had said. Nevertheless, he maintained that nothing had been said about the payment claim having been received. I consider that, the concession, although of marginal significance to an assessment of the reliability of Mr Flew's evidence, was something which the primary judge was entitled to take into account for that purpose.

37 In his affidavit Mr Morse gave evidence that Mr Buchanan had said he would follow the payment claim up "and let you know". However, in cross-examination, Mr Morse accepted that he had assumed without necessarily recalling that Mr Buchanan had used those words. Midcoast Water submitted that this aspect of his evidence was not relevant to an assessment of the reliability of his account of the relevant discussions, or alternatively could only be of marginal relevance, especially when considered with the other evidence as to what happened at the meeting. Mr Morse also denied that Mr Buchanan had made any reference to the payment claim having been lodged. Mr Morse's concession that he did not recall Mr Buchanan using some of the words which he had attributed to him in the critical conversation was also a matter which the primary judge was entitled to take into account when assessing the reliability of his evidence.

38 Ultimately, the primary judge had to resolve the conflict in the evidence of the various witnesses without the benefit of any non-contentious facts or documents which were more consistent with one version rather than the other.

39 Midcoast Water submitted that this Court, when weighing that conflicting evidence and drawing its own conclusions, was free to substitute its own findings unconstrained by any need to respect the advantage of the primary judge because his findings did not depend on the demeanour of the witnesses "at least not to a substantial degree". I do not accept that this submission is correct. The primary judge observed that he had "examined and accepted the evidence" given by Mr Buchanan and that "having heard the evidence" of Mr Buchanan, he did not accept the "significant attack" on him. This is not a case in which it can be concluded that the primary judge's decision was not or could not have been affected by his impression of the credibility of the witnesses: Fox v Percy at [26]. Accordingly, it remains necessary to consider whether the primary judge's conclusion was improbable or contrary to compelling inferences or to incontrovertible facts or that the primary judge otherwise misused his advantage.

40 Midcoast Water relied on four matters as providing a basis for concluding that the primary judge erred. The first was that Mr Buchanan had failed to correct what was recorded in the minutes of the meeting of 4 May 2010. It was said that his failure to correct them was consistent with them being an accurate and complete record of what was said. The second, which relates to the first, was that in cross-examination on those minutes Mr Buchanan gave evidence of a new conversation with Mr Wilkinson in order to explain away the fact that he had not made any correction. The third matter relied on was that Mr Buchanan had discussed his evidence with Mr Wilkinson in July or August 2010 and before he swore his affidavit. This, it was said, cast doubt on the veracity of his evidence. Finally, it was submitted as more likely that if Mr Buchanan had said he understood that the payment claim had been served, one of the representatives of Midcoast Water would have asked for a copy of it. That did not happen and thus it was unlikely that there had been any reference to the claim by Mr Buchanan.

41 As to the first of these matters, the final form of the minutes of the meeting of 4 May 2010 was circulated on 7 May 2010. They recorded "April claim not yet received" but did not identify that matter as one for action by either party. That statement accurately recorded what was asserted to be the position by Midcoast Water as at 4 May 2010. The entry did not purport to record the position after that date and, whilst not a complete or full record of the discussion according to the evidence of Mr Buchanan, was not inconsistent with that evidence.

42 Midcoast Water contended that Mr Buchanan's failure to correct what was recorded in the minutes was more consistent with its version of what took place at the meeting. There are a number of difficulties with this argument. First, Mr Buchanan's evidence was that he did not receive or see the minutes of the meeting of 4 May 2010 until the day of or before the meeting of 18 May 2010. At that time he raised the question with Mr Wilkinson. Secondly, the minutes were not clearly inconsistent with Mr Buchanan's version of events. Thirdly, Mr Buchanan's evidence was that he did not take the view that the minutes were wrong or incomplete and that he did not regard himself as having any "influence" over the minutes. In cross-examination it was apparent that he read the minutes as suggesting that the progress claim had still not been received. This led to his conversation with Mr Wilkinson which is the subject of the second matter raised by Midcoast Water. His evidence in these respects was plausible. None of this provides a basis for doubting Mr Buchanan's version of events.

43 As to the second matter, Midcoast Water's submission concerning a "new conversation" not referred to in Mr Buchanan's affidavit, was rejected by the primary judge. In my view this was correct. In his affidavit Mr Buchanan had said that following his discussion with Mr Wilkinson after the 4 May 2010 meeting, his next discussion with him occurred on the morning of 18 May 2010 and before the site meeting. That was consistent with his evidence in cross-examination that the discussion he had with Mr Wilkinson concerning the content of the minutes took place "prior to" the meeting on 18 May 2010.

44 As to the third matter concerning the discussion between Mr Buchanan and Mr Wilkinson in about July or August 2010, this evidence was rejected by the primary judge as calling into question the reliability and integrity of Mr Buchanan's evidence. In his answers under cross-examination, Mr Buchanan was forthright and not evasive. At the time of the conversation he was unaware of any defence raised by Midcoast Water to Reed's claim based on the non-payment of the April payment claim. His evidence was that he was asked for his recollection of what happened at the meeting and that he provided this, giving a version consistent with that found by the primary judge. It was not suggested to him that he was prompted in any way in giving that response or that Mr Wilkinson sought to obtain his agreement to a particular version of events. In these circumstances the primary judge is not shown to have erred in concluding that this discussion did not affect the reliability of Mr Buchanan's evidence.

45 Finally, as to the sequence of events, the absence of any request for a further copy of any payment claim following the meeting of 4 May 2010 was equally explained by a wrong assumption on the part of Midcoast Water that Mr Buchanan, having checked with Mr Wilkinson, would let them know what the position was. In some respects that position is consistent with the evidence of Mr Flew and Mr Morse although not in circumstances where they conceded that Mr Buchanan had made reference to the sending of the payment claim.

46 In my view, the primary judge's conclusion as to what Mr Buchanan said was more consistent with what was likely to have occurred in the circumstances as found and not challenged on appeal. Specifically, Midcoast Water accepted the correctness of the finding that before the meeting on 4 May 2010, Mr Wilkinson and Mr Buchanan discussed the fact that the progress claim for April had been lodged. It is most unlikely, in the absence of sharp practice or conduct verging on incompetence on the part of Mr Buchanan, that at the meeting later on that day he would not have recalled and referred to the fact that Mr Wilkinson had told him that a payment claim had been lodged. Midcoast Water did not suggest sharp practice on the part of Mr Buchanan. Furthermore, the primary judge accepted the evidence of Mr Wilkinson and Mr Buchanan that following the meeting, Mr Buchanan reported that he had told Mr Koller that the payment claim had been sent and said that he would check that again with Mr Wilkinson. The findings in relation to that conversation are not challenged on appeal. That being so, there was only one possibility in relation to that evidence consistent with MidCoast Water's case. That was that Mr Buchanan did not truthfully report to Mr Wilkinson what had occurred. Again, the probabilities are against this position as the only reason why Mr Buchanan might have falsified that part of his report to Mr Wilkinson was to hide his failure to raise it at the meeting. This was never suggested to him to have been the case.

47 In the result, the matters raised by Midcoast Water do not provide a basis for concluding that the primary judge misused his advantage or acted on evidence which was inconsistent with established facts or that he made a finding which was glaringly improbable.

48 Midcoast Water's challenge to the primary judge's finding as to what Mr Buchanan said at the meeting on 4 May 2010 should be rejected. Once that finding is upheld, the conclusions of the primary judge as to the alleged representations not having been made follow for the reasons given by him. In this respect, as to the second alleged representation, I agree with the primary judge's conclusion that the statement that Mr Buchanan understood that the payment claim had been served, did not convey that Reed was "genuinely uncertain" as to whether or not it had been served at all. Rather, it conveyed Mr Buchanan's understanding of the position in circumstances where he was not the person responsible for preparing and sending the claim and the person who was responsible had told him that it had been served.

The significance of any failure of Midcoast Water to "protect its own interests"

49 Midcoast Water submits that the three "overarching reasons" given by the primary judge as supporting his conclusions concerning the making of the representations, do not in fact do so. I am inclined to agree with this submission although it makes no difference to the outcome of the appeal. As the foregoing analysis shows, the answer to the question whether the conduct was misleading or deceptive turns on the acceptance of the evidence of Mr Buchanan.

50 The fact that in particular circumstances a person had the opportunity to but did not take steps which might or would have corrected a misapprehension or wrong assumption can be relevant to an inquiry as to whether conduct which includes silence should be characterised as misleading or deceptive: Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; (2010) 241 CLR 357 at [19], [20]. It may also be relevant to an inquiry as to whether loss or damage has been suffered by that conduct: see Argy v Blunts & Lane Cove Real Estate Pty Ltd (1990) 26 FCR 112 at 138.

51 However, the outcome of each of these inquiries is fact dependent and it certainly does not follow, if a person does not make an inquiry which he or she could or might otherwise have made, that the conduct should not be characterised as misleading or deceptive or that any damage or loss was not suffered by such conduct. It is unnecessary to consider further this argument of Midcoast Water because, even if accepted, it does not affect the outcome of the appeal.

Conclusion

52 For the above reasons, I propose that the following orders be made -

(1) Appeal dismissed.

(2) Appellant to pay the Respondent's costs.

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Decision last updated: 09 September 2011