FEDERAL COURT OF AUSTRALIA

Taylor v Crossman (No 2) [2012] FCAFC 11

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellant pay the costs of the respondent.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

LANDER J:

1    I have had the advantage of reading a draft of the judgment of Cowdroy and Flick JJ.

2    I agree with their Honours’ conclusions and largely agree with their Honours’ reasons, but I have decided to add a few words of my own.

3    As their Honours have noted, the notice of appeal raised numerous grounds of appeal. In particular, the appellant complained of the learned trial judge’s finding that the representations were made, claiming that the findings were ‘glaringly improbable in light of [the] incontrovertibly established evidence’. The notice of appeal identified each and every representation and argued that the representations should not have been found to have been made. The notice of appeal also raised the grounds addressed by Cowdroy and Flick JJ, namely that any representations made were not made in ‘trade or commerce’, and that the respondent did not suffer any compensable loss.

4    At the hearing counsel for the appellant abandoned all of the grounds of appeal asserting that the primary judge was wrong to have found that the representations were made. Counsel argued only two grounds: first, that the representations which were found to have been made were not made in ‘trade or commerce’; and secondly, if the representations were made in ‘trade or commerce’, the representations did not induce the respondent to contribute to White Marina Pty Ltd, and that even if they did the representations were not the cause of the respondent’s loss.

5    The first argument has to be considered in light of the primary judge’s findings as to the conduct of the appellant. The primary judge made the findings identified by Cowdroy and Flick JJ at [25] of their reasons. The findings of the primary judge as to the representations made support in my respectful opinion the primary judge’s finding that those representations were made in trade and commerce.

6    The appellant represented to the respondent that if the respondent made a significant financial contribution to the joint venture matching his own, the joint venture would acquire a substantial business which was likely to operate at a substantial profit.

7    For the reasons given by the primary judge, and also Cowdroy and Flick JJ, in my opinion the conduct complained of was in ‘trade or commerce’.

8    The representations were no different from those made by any commercial person seeking equity investment in an undertaking to be acquired. The fact that there was a relationship between the appellant and the respondent was, in the circumstances, not of sufficient importance or relevance to make the conduct other than in ‘trade or commerce’.

9    The primary judge was also right, in my opinion, to conclude that the respondent’s loss was caused by the conduct of which complaint is made. The respondent’s investment was made as a direct result of the representations. It is not to the point that at the time the representations were made the corporate vehicle which was used to acquire the business in respect of which the representations were made had not been incorporated. The incorporation of White Marina Pty Ltd was a consequence of the appellant’s representations and the respondent acting on the strength of those representations. The ultimate failure of that company was a cause of the respondent’s loss.

10     In my opinion, for the reasons given by the primary judge and by Cowdroy and Flick JJ, the appeal should be dismissed.

Associate:

Dated:    24 February 2012

REASONS FOR JUDGMENT

COWDROY AND FLICK JJ:

11    The appellant appeals from the decision of the primary judge delivered on 29 June 2011 which held that the appellant had engaged in misleading and deceptive conduct in contravention of s 56 of the Fair Trading Act 1987 (SA) (‘the Fair Trading Act’) and that in consequence of such conduct the respondent had incurred damages in the amount of $955,305.76: see Crossman v Taylor (No 3) [2011] FCA 734. The primary judge found it unnecessary to resolve claims made pursuant to the Corporations Act 2001 (Cth).

12    The notice of appeal filed on 14 July 2011 raised numerous grounds of appeal. Shortly prior to the hearing, however, many of the grounds were abandoned and during the hearing of the appeal only two grounds were relied upon, namely whether the representations as found by the trial judge constituted conduct in ‘trade or commerce’ within the Fair Trading Act and secondly whether the respondent’s damage resulted from the claimed breach of s 56. Section 56 of the Fair Trading Act provided at the relevant time:

56--Misleading or deceptive conduct

(1)    A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

(2)    Nothing in the succeeding provisions of this Division limits by implication the generality of subsection (1).

FACTS

13    The respondent resided in Adelaide and carried on the business of a naturopath. The evidence before the primary judge established that she was contemplating retirement from her business when she met the appellant in July 2005.

14    At the time of their first meeting the appellant was residing in Sydney but by December 2005 the parties commenced a personal relationship and the appellant moved into the respondent’s leased house at Hyde Park, Adelaide. They resided there until March or April 2007.

15    Prior to 2005 the appellant had been engaged in real estate sales and had managed a marina for houseboats near Mannum in South Australia known as ‘Kia Marina Houseboat Hire’. In 1987 the appellant first bought a houseboat and in 2001 he also owned a houseboat known as ‘Flat White’. The cost of that houseboat was $560,000 which the evidence shows was provided by a finance company. In 2005 Flat White was moored at another marina near Mannum.

16    Sometime well before February 2006 the appellant became interested in purchasing the marina at which Flat White was moored. The marina business was conducted under the business name ‘Temptation Houseboat Holidays’ which the proprietors, in approximately May 2005, were proposing to sell to the appellant (‘the marina business’).

17    The primary judge found that between July 2005 and early April 2006 several conversations took place between the appellant and the respondent regarding the possible purchase of the marina business, the critical conversations being in approximately February and March 2006.

18    Early in their relationship the appellant had informed the respondent that he owned substantial assets including Flat White, an apartment in King Street, Sydney (‘the King Street apartment’), a residential property in Lane Cove, a townhouse at Moana, South Australia, a shack on the River Murray, two jeeps, a Porsche motor vehicle, jet skis, a speed boat and a motor cruiser moored on Sydney Harbour.

19    The appellant also represented to the respondent that he had been a real estate agent for over 30 years and had been very successful; that he had previously managed Kia Marina on the River Murray near Mannum which had been a very successful business; that he wished to return to live in Adelaide and there was a marina which he would like to purchase which was identified by him as a marina at which Flat White was moored and that the business was run down. Although the appellant provided limited evidence to the contrary, each of the above statements were found by the primary judge to have been made by the appellant. His Honour further found that the appellant took the respondent to see the state of the marina business that he proposed to purchase.

ISSUE 1: THE REPRESENTATIONS

20    The critical statements giving rise to the first ground of appeal were made in connection with the proposed purchase of the marina business. His Honour found that the appellant told the respondent that the asking price for the business, including one or two houseboats, was $1.2 million; that he might be able to acquire such business and assets for about $650,000; that he was planning to fund the purchase with a bank loan; that the appellant showed the respondent a sheet showing his assets and liabilities recording an excess of assets over liabilities. The assets included the King Street apartment estimated at $1.2 million with a liability of $823,000 on that apartment and $60,000 owed to the appellant by way of commissions.

21    The primary judge found that the appellant told the respondent that he was having difficulties in raising the finance for the purchase of the marina business and asked the respondent to lend approximately $350,000. The respondent informed the appellant that she had no ready funds available and would need to borrow on a credit facility held with the Bank of South Australia; and that she would have no security if funds were simply lent to the appellant.

22    Significantly, his Honour found at [36] as follows:

The conversations were taking place in a context where the first defendant’s [the appellant’s] primary purpose in acquiring the marina business was to provide him with a facility where he could operate his own houseboats under his control.

23    The primary judge found that the respondent would not agree to making a loan as requested; that upon her refusal the appellant then suggested that they purchase the marina business together and that thereafter the appellant continued to raise the subject with her; discussing his plans for the marina and his experience in operating marinas. His Honour rejected the appellant’s claim that he wished to purchase the marina alone and that it was the respondent who was anxious to have an interest in the marina business. His Honour also found that when the accounting figures for the conduct of the marina business were produced by its existing owners, it showed a small profit; that the respondent told the appellant that it was not a viable business, whereupon the appellant again referred to his business experience.

24    Significantly, the primary judge found that the appellant’s proposal to purchase the marina business was dependent upon the involvement of the respondent.

25    The appellant was found by his Honour to have made seven statements to the respondent which induced her to enter into an arrangement resulting in her contributing substantial sums of money for the acquisition of the marina business. The statements made by the appellant were found to be as follows:

1.    that the appellant would only go into a venture for the acquisition of the marina if the respondent promised to meet the initial funding that he provided and if each of the appellant and the respondent then continued to contribute 50/50 to the funding of the business at all times;

2.    that his previous marina had 47 berths and that the marina business which he proposed they purchase had only 10 berths and therefore should be a ‘piece of cake’ to operate;

3.    that the appellant would purchase speedboats and hire them out at $500 per day and would develop cabins on the marina which would be used for rental accommodation;

4.    that once the marina business was established it would be largely operated by staff without the need for either the appellant or the respondent to be involved;

5.    that upon the purchase of the marina business they could refurbish and improve the facilities and generate an income and make a capital gain in the longer term;

6.    that all major decisions affecting the conduct of the marina business would be discussed between them and decisions would be made jointly;

7.    that in addition to his initial contribution of about $250,000 the appellant would be able to raise his share of funds by selling the King Street apartment and collecting the commissions of $60,000 owed to him.

26    In consequence of such representations his Honour found that the respondent agreed to enter into an arrangement with the appellant in the nature of a joint venture to purchase the marina business. Such venture required the creation of a trust and the incorporation of a company in which the appellant and the respondent would hold equal shares.

27    In or about April 2006 a company known as White Marina Pty Limited (‘the company’) was incorporated for the purpose of acquiring the marina business. The appellant and the respondent became directors and shareholders, each holding a $1 share. The White Marina Trust was established by trust deed executed on 5 April 2006 and White Marina Pty Limited became the trustee of that trust. The White Marina Trust was a discretionary trust, the beneficiaries being nominated as the respondent and her children and the appellant and his children (although the appellant had no children).

28    In April 2006 the appellant entered into a contract for the construction of a second houseboat named ‘White Water’. It was owned by Maritime Ten Pty Ltd, a company controlled by the appellant.

29    The company purchased the marina business and commenced to operate it in August 2006. It ceased trading in February 2010. At the date of the trial the respondent’s contributions (before interest) totalled $661,444.23 whereas the appellant’s contributions totalled $195,018.15. By 30 June 2009 the respondent’s financial contribution to the business including interest totalled $826,773.80 which was financed by her borrowing and selling her own assets. At that time the appellant’s net financial contribution was reduced to $180,272.67.

30    His Honour found that the representations referred to in [15] above were designed to encourage the respondent to make investments or contributions to a proposed business; that such representations were made in trade or commerce within the meaning of s 56(1) of the Fair Trading Act; and were relied upon by the respondent to invest money in the joint venture.

31    The appellant acknowledged that he misled the respondent concerning the sale of the King Street apartment; that during the conduct of the business he preferred to arrange bookings for his own houseboats at the marina rather than those owned by the partnership; that he diverted potential bookings for the houseboats to his own name rather than those of the business; that he had no intention of making contributions beyond his contribution of $250,000 and that his representation in this respect was misleading and deceptive.

Were the statements made in trade or commerce as defined in the Fair Trading Act?

32    First, the appellant submitted that there is a clear distinction between representations which are private compared to those which are made in ‘trade or commerce’ and that the representations could not have been made in trade or commerce because the company had not been incorporated at the time that the representations were made. The representations were made in preparation for a proposed commercial venture and therefore were not representations which could properly be said to have been made in the course of trade or commerce. The appellant relies upon decisions relating to the interpretation of analogous provisions in the Trade Practices Act 1974 (Cth) (‘the TPA’), such as the decision of O’Brien v Smolomogov (1983) 53 ALR 107.

33    In O’Brien the Full Court found that representations concerning a sale of land lacked a trading or commercial character resulting in no contravention of s 53A(1)(b) of the TPA. In allowing the appeal, the Full Court found that the transaction lacked the requisite character for the purposes of s 53A of the TPA.

34    Secondly the appellant submits that any representations were not made in ‘trade or commerce’ because they were of a private nature. The appellant relies upon Kowalczuk v Accom Finance (2008) 77 NSWLR 205 in which Campbell JA at 247 found that an investment, by a private individual or a private individual’s company, did not comprise a transaction ‘for the purpose of trade or commerce’ when it is not itself a part of a business of investing. The appellant submits that the same considerations apply to any representations made by the appellant to the respondent since the representations were made in a mere private context.

35    For the same reasons, the appellant relies upon the observations of the Full Court in Hearn v O’Rourke (2003) 129 FCR 64 in which the Full Court, on a strike out motion, referred at [4] to the distinction between conduct which was ‘in’ trade or commerce and conduct which was merely ‘in connection with’ trade or commerce.

36    The appellant submits that in the present circumstances the appellant was not ‘in’ the businesses of investing in marinas but rather any statements made by him were merely ‘in connection’ with trade or commerce as considered in Dataflow Computer Services Pty Ltd v Goodman (1999) 168 ALR 169 at 173.

37    The appellant also relies upon the observations of the High Court of Australia in Concrete Constructions (N.S.W.) Pty Limited v Nelson (1990) 169 CLR 594 especially at 602-603, wherein the majority (Mason CJ, Deane, Dawson and Gaudron JJ) considered the possible constructions of the phrase ‘in trade or commerce’ contained in s 52 of the TPA. The majority found at 603 that such requirement was limited ‘to conduct which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character’. The appellant relies upon such interpretation and further relies upon the observations of Toohey J at 613 in which his Honour referred to the fact that s 52(1) of the TPA was directed to conduct in which a corporation engages when that conduct takes place in a situation which ‘fairly answers’ the description ‘in trade or commerce’. At 614 Toohey J observed that it is not sufficient merely to have a connection with but rather the conduct must be ‘in’ trade or commerce.

38    The appellant submits that based upon the observations in Concrete Constructions it is not sufficient merely to assert that the representations relied upon related to or were preparatory to an anticipated business transaction and that the activity must be ‘in’ trade or commerce. Similar concepts to those referred to in Concrete Constructions were discussed in Plimer v Roberts (1997) 80 FCR 303 by Lindgren J at 324-326 where his Honour considered whether s 42 of the Fair Trading Act 1987 (NSW) should have been given a different interpretation to that of s 52 of the TPA.

Consideration

39    Whether the representations were made in trade or commerce as required by s 56 of the Fair Trading Act will depend upon the context in which the representations were made and the nature of such representations. The primary judge found that the representations were made by one of the two parties proposing to enter a business venture and that such representations concerned the establishment and operation of such proposed venture. The representations related to investment in the marina business and were part of other statements and discussions of a commercial character which included the payment of interest on loans, joint management and payment of commissions in respect of hiring of the houseboats.

(a) Is it determinative that the company was not incorporated at the time of the representations?

40    The primary judge found that whilst the company had not been established when the representations were made, this fact did not detract from such statements possessing the requisite character of being ‘in trade or commerce’ for the purposes of the Fair Trading Act. His Honour referred to the decision of the High Court in Houghton v Arms (2006) 225 CLR 553 wherein the High Court considered whether employees of a corporation were personally liable for representations made by them even though those employees were not engaged in such activity themselves. Significantly, his Honour referred to the findings of the High Court at [34]:

Moreover, in his judgment in Concrete Constructions, Toohey J emphasised that, while in most cases, the focus would be on the nature of the business of the party making the representation, s 52 was not so limited; in particular, the section did not, in terms, refer to the trade or commerce of any particular corporation. Accordingly, statements made by a person not himself or herself engaged in trade or commerce may answer the statutory expression if, for example, they are designed to encourage others to invest, or to continue investments, in a particular trading entity. [Footnotes omitted]

41    The test to be applied in respect of the phrase ‘in trade or commerce’ in s 52 of the TPA was definitively stated by the High Court in Concrete Constructions. Paragraph [34] of Houghton v Arms serves to refine the observations of the High Court regarding statements that will properly answer the description of being ‘in trade or commerce’. Such decision reinforces the fact that the statement, in order to be actionable, need not be made by one who is engaged in trade or commerce. The decision serves to illuminate the very issue upon which the appellant relies upon in this appeal.

42    The appellant had owned and leased a houseboat prior to his association with the respondent. This fact was not of itself a reason why his Honour found that the statements were made in trade or commerce. However, the representations were made for the express purpose of encouraging the respondent to make investments and contributions in the marina business and the primary judge took into consideration the fact that the appellant’s business, namely the letting of a houseboat, would be operated in conjunction with the marina business. Further, the primary judge found that the raising of the finance by the company bore a direct relationship to its commercial and trading activities. Accordingly, the statements made at that preparatory stage were statements in trade or commerce, and his Honour relied upon the decision of the majority in Hearn v O’Rourke in support of this conclusion.

43    In Concrete Constructions the majority of the High Court at 604 said:

What the section [i.e. s 52 of the TPA] is concerned with is the conduct of a corporation towards persons, be they consumers or not, with whom it (or those whose interests it represents or is seeking to promote) has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character. Such conduct includes, of course, promotional activities in relation to, or for the purposes of, the supply of goods or services to actual or potential consumers, be they identified persons or merely an unidentifiable section of the public.

44    The above extract, together the observations of the High Court decision in Houghton v Arms at [34], establishes that the person who makes the representation need not be engaged in trade or commerce at the actual time when the representations are made. Rather the inquiry is whether the representations were made in such context and in such circumstances as to render them statements having a commercial character. That character will include statements directed to the undertaking of a commercial enterprise including the establishment, financing and operation of that enterprise.

45    As Deane J observed in Re Ku-ring-gai Co-Operative Building Society (No 12) Ltd (1978) 22 ALR 621 at 648-649 the words ‘trade’ and ‘commerce’ are ‘clearly of the widest import’. Significantly his Honour said at 649:

They are not restricted to dealings or communications which can properly be described as being at arm's length in the sense that they are within open markets or between strangers or have a dominant objective of profit-making.

46    It is also useful to observe that in Coyne v Calabro (No 5) [2010] NSWSC 694 White J in the Supreme Court of NSW found that certain statements by vendors of the property were not misleading or deceptive or were likely to mislead or deceive within the meaning of s 42 of the Fair Trading Act 1987 (NSW). However, his Honour observed at [89] that had it been necessary to determine the issue, the sale and purchase of the property was a business project which involved the purchasers using a firm associated with the vendor to undertake construction on the site. In those circumstances his Honour considered that such a venture fell within the definition of trade or commerce.

47    In the present circumstances it is apparent that the same considerations apply. It was pivotal to his Honour’s decision that the representation fell within trade or commerce, in that they related to conduct of a business, of its financing and of its operation, even though the business had not yet commenced in the name of the company.

48    The observations of White J in Coyne v Calabro (No 5) are consistent with the findings of the primary judge. The transaction proposed by the appellant to the respondent involved the respondent raising substantial finance for the proposed marina business; the representations related to financial contributions to be made by each party and directly concerned the proposed operation of the business. The representations included those relating to commissions and hiring fees earned by houseboats owned by him for bookings that were to be made through the company. They had all the character of trade and commerce necessary to satisfy the requisite definition.

49    In these circumstances it is immaterial that the company did not exist at the time that the representations were made. Rather, what must be addressed is the broader consideration of the nature of the representations being made.

(b) Were the representations of a private nature?

50    The appellant relied upon the observations of the Full Court in O’Brien as authority for the proposition that the Court must determine whether representations are made in trade or commerce or of a private nature. In Bevanere Pty Ltd v Lubidineuse (1985) 7 FCR 325 the Full Court considered the sale of a cosmetic business and statements made by the vendor during negotiations. Their Honours (Morling, Neaves and Spender JJ) had no difficulty in concluding that the negotiations fell well within the definition of ‘trade or commerce’ within s 52 of the TPA. Significantly, their Honours distinguished O’Brien and confined it to its particular facts. Their Honours observed that the subject matter of the representations was land which was not used for any business activity and said at 331:

Nothing was said in O'Brien's case that lends support to the proposition that the sale of a capital item used for business purposes will not constitute conduct in trade or commerce unless it forms part of a business of buying or selling such capital assets.

51    The appellant also relied upon the decision in Kowalczuk. This decision does not assist the appellant since the issues arising in that matter did not relate to an analogous provision to s 56 of the Fair Trading Act, but rather whether there had been a contravention of ss 51AA and 51AC of the TPA. The representations in question were made by a borrower to a finance company for the purpose of on-lending to make a profit. There is no factual similarity between that decision and the matter now before us.

52    Further, it is not determinative that the parties were engaged to be married and proposed to live together. The focus must be directed to the statements concerning the business operations which the appellant made to the respondent concerning its establishment, operation and financing. Such statements were not of a private character but related to the business venture, and therefore satisfy the definition of ‘trade or commerce’.

53    For the above reasons, the Court finds that the first ground of appeal must be dismissed.

ISSUE 2: CAUSATION

54    The appellant submits that the respondent’s financial contributions to the marina business would have been by way of loans to the company for which the appellant would receive a rate of interest. The appellant submits that the parties and the professional advisors upon whom the applicant and respondent relied considered that the value of such business would be approximately $2.5 million. The appellant submits that although the conduct of the appellant may have resulted in the respondent lending money to the company, such conduct did not lead to the inability of the company to repay the funds which she had invested. The appellant submits that the decision of the House of Lords in Banque Financière de la Cité S.A. v Westgate Insurance Co Ltd [1991] 2 AC 249 is consistent with the decision of the High Court in March v E. & M. H. Stramare Pty Limited (1991) 171 CLR 506.

55    In Banque Financière de la Cité S.A. the House of Lords found that syndicates of banks which had lent money on the faith of securities which were later found to have been overvalued were not entitled to recover their loss under a policy of insurance because such loss did not result from any breach of duty on the part of the insurers even though their employee had twice deceived the banks into believing that they had insurance cover to protect them in the event of non-repayment of their loans. Rather the loss arose because of the fraud perpetuated by the borrower.

56     In March v Stramare the High Court found that the driver of a motor vehicle who was under the influence of alcohol was the cause of an accident even though the driver’s vehicle collided with a truck which had been parked in a position which straddled the centre line of a six lane road. At 515 Mason CJ referred to the need to identify what was the ‘effective cause’ of the damage and stated that the question of causation was one of fact.

57    In the present circumstances the appellant submits that the company could not repay the respondent because it realised less than $1 million rather than its anticipated worth of $2.5 million and such deficiency caused the inability of the company to repay the loans to the respondent. The appellant submits that the observations of Mason CJ in March v Stramare assist where his Honour said at 510:

However, in Chapman v. Hearse, this Court said, at p 122, “the term ‘reasonably foreseeable’ is not, in itself, a test of ‘causation’; it marks the limits beyond which a wrongdoer will not be held responsible for damage resulting from his wrongful act”. [Footnotes omitted]

58    The appellant submits that no one could foresee that the money paid by the respondent might not be repaid and accordingly no one foresaw the loss that might result. The inability of the company to repay the loan resulted from a forced sale ‘in a less than perfect market’.

Consideration

59    The primary judge dealt extensively with the question of damages as provided under s 82 of the TPA where a person suffers loss or damage because of a contravention committed by another person in breach of, inter alia, s 52. His Honour referred to the observations of the High Court in Wardley Australia Limited v The State of Western Australia (1992) 175 CLR 514 especially at 525 per Mason CJ, Dawson, Gaudron and McHugh JJ, and in Henville v Walker (2001) 206 CLR 459.

60    Significantly his Honour observed that the contravening conduct ‘need only be a cause of the loss and damage claimed’ and referred to the High Court’s decision of I & L Securities Pty Limited v HTW Valuers (Brisbane) Pty Limited (2002) 210 CLR 109.

61    His Honour thereafter observed that s 82 of the TPA (which, by analogy is applicable to the issue of damages under the Fair Trading Act) did not import common law tort or contract notions of remoteness and foreseeability although they may be of assistance: see Marks v GIO Australia Holdings Limited (1998) 196 CLR 494; Kenny & Good Pty Limited and Another v MGICA (1992) Limited (1999) 199 CLR 413. His Honour also observed that the Court should not limit the scope of s 82 by analogy with common law and equity principles as observed in Marks at [38] per McHugh, Hayne and Callinan JJ.

62    Lastly, his Honour referred to the principle in Murphy v Overton Investments Pty Limited (2004) 216 CLR 388 in which the High Court at [44]-[45] found that it is erroneous to approach interpretation of Part VI of the TPA as being analogous to a claim under the general law.

63    His Honour observed that once it was found that the respondent would not have entered into the venture or made the contributions but for the appellant’s representations concerning his ability and willingness to made contributions, those representations were a cause of the respondent’s loss or damage. His Honour also found that there was no event which broke the chain of causation and that even if the concept of reasonable foreseeability was applied, it did not assist the appellant because it was ‘reasonably foreseeable that if he did not match the plaintiff’s contributions there was a risk the plaintiff would not be able to recover her contributions’.

64    The principles relied upon by his Honour as cited above with regard to causation under the TPA are well established. Whilst it may be that a misrepresentation might ‘rarely be the sole cause of the loss’ (see Gleeson CJ in I & L Securities Pty Limited at [25]), it is sufficient if the misrepresentation is a cause of the loss. At [33] Gleeson CJ said of the TPA:

The relevant purpose of the statute was to proscribe misleading and deceptive conduct in circumstances which included those of the present case. In aid of that purpose, the statute provided for compensation, by an award of damages, to a victim of such conduct. The measure of damages stipulated was the loss or damage of which the conduct was a cause. It was not limited to loss or damage of which such conduct was the sole cause. In most business transactions resulting in financial loss there are multiple causes of the loss. The statutory purpose would be defeated if the remedy under s 82 were restricted to loss of which the contravening conduct was the sole cause.

65    We are satisfied that the primary judge was correct in his finding that, but for the representations made by the appellant concerning his future contributions the respondent would not have invested any money in the business. Having made such finding the conclusion is inevitable that the representations were a cause of the respondent’s loss. It follows that the requisite causation to entitle the respondent to damages was established.

66    For these reasons the Court dismisses the remaining ground of appeal.

67    The appellant should pay the costs of the respondent.

Associate:

Dated:    24 February 2012