Disclaimers and statements of belief

Foulsham & Geddes acted for the appellant vendors in Ireland v WG Riverview Pty Ltd [2019] NSWCA 307, who have had a stunning victory.  This appeal, overturning a decision of the District Court in which we did not act, will likely be an important precedent on misleading and deceptive conduct in the future.

The case concerns an Angus bull “K34” which was sold in 2015 by the appellants, who are Angus cattle breeders, to another Angus cattle farm.  The purchaser’s director was a cattle breeder and vet specialising in large animals.

In the auction catalogue, K34 was identified as the son of a stud bull, “Granite Ridge Thomas”.  The catalogue also had a disclaimer which said: “Whilst all due care and attention has been paid to accuracy in the compilation of this catalogue and the information neither the vendors, selling agents or representatives thereof assume any responsibility what so ever for the correctness, use or interpretation of the information included herein.”

After the auction, the purchasers conducted DNA testing on K34 as it was a requirement for his use as a stud bull.  This testing revealed that Granite Ridge Thomas was not K34’s sire (father).  K34 could not be the sire of stud cattle and his progeny could only be sold as commercial cattle (for meat), diminishing his value.

The purchasers commenced proceedings in the District Court, claiming that the vendors had misrepresented the identity of K34’s sire and that this misrepresentation constituted misleading and deceptive conduct.  The District Court found in favour of the purchasers and awarded $200,191.88 in damages plus costs.

The vendors appealed to the NSW Court of Appeal and retained Foulsham & Geddes to run the appeal.

In the successful appeal, overturning the original decision, the Court ruled that the conduct was not misleading and deceptive.  Unanimously, the Court said:

Consideration of the whole of the circumstances, including the nature of the parties, the character of the transaction and the contents of the auction catalogue, led inevitably to the conclusion that the [appellants] did not represent that, as a matter of certain fact, K34’s sire was [Granite Ridge Thomas]. Whilst the appellants may have represented that they had taken all reasonable care to confirm that that was so and that they believed it to be the case, neither of those representations were relied upon… The disclaimer clause was important, not because it excluded liability which otherwise arose, but because it was an integral part of the Irelands’ conduct…

The Court of Appeal said that in many cases a disclaimer cannot be used to avoid responsibility for such statements. However, in this case, there were a number of relevant factors identified by the Court which meant that the disclaimer operated to qualify the statement that Granite Ridge Thomas was the sire of K34. Ultimately, those factors meant that there was no representation as to the sire of K34.  They included:

  • The parties to the present transaction were intelligent, experienced commercial people [70].
  • The character of the transaction was a sale by experienced commercial parties to another in which the sellers could reasonably expect that the purchaser would read the whole of the sale catalogue insofar as it was relevant to the particular sale [72].
  • The disclaimer was (i) in a prominent part of the catalogue, (ii) presented in a prominent fashion, and (iii) expressed in clear terms [73].

In this decision, the Court clarified the previous landmark decision on disclaimers, Butcher v Lachlan Elder Realty.

President Bell also found that the vendor’s catalogue, stating that Granite Ridge Thomas was the sire of K34, was merely a statement of belief rather than a statement of fact. In his examination of the authorities, he found that ‘what is objectively true, and what a person believes or reasonably believes to be true, will not always coincide’, and highlighted that there has traditionally been a divide ‘between an expression of opinion, on the one hand, and a statement of fact, on the other hand’ where ‘a statement of opinion cannot be regarded as false or misleading, or as misleading or deceptive, simply because it turns out to be incorrect’.

Whether a statement is belief or opinion ‘is to be viewed from the perspective of the person or “ordinary or reasonable” audience to whom the statement or representation is directed’;  if, ‘to the target audience, that statement has presented as one of fact, and not of opinion or belief’ then liability for misleading or deceptive conduct occurs if the statement is incorrect.  If it is one of belief, liability ‘will generally depend upon an assessment as to whether or not the belief or the opinion was honestly held and “perhaps” whether or not the maker had a reasonable basis for the belief or opinion’.

His Honour also clarified regarding disclaimers: 

The facts of this case highlight that it is not solely statements that present as ones of opinion (or prediction) … but also, in certain circumstances, statements that present as statements of objective fact but which, upon proper analysis, viewed from the perspective of their target audience, are in fact statements of nothing more than the maker’s belief. The terms of a contemporaneous disclaimer may, as in the present case, play an important role in this characterisation exercise.

Please note that the above analysis is a description of the general law and only applies to the specific disclaimers and representations in this case .  If you would like advice regarding disclaimers or misleading and deceptive conduct claims in general please contact one of our solicitors.