CATCHWORDS

PRACTICE AND PROCEDURE  -  amendment to statement of claim  -  misleading or deceptive conduct  -  appropriate measure of loss or damage.

Fair Trading Act 1987 (W.A.)

Trade Practices Act 1974 (Cth) s.82

David C. Price, "Opening Gates:  The Measure of Damages under the Trade Practices Act", C.C.L.J. Vol. 1 (1994)

Accounting Systems 2000 (Developments) Pty. Ltd. v. C.C.H. Australia Ltd. (1993) 42 F.C.R. 470

Elna Australia Pty. Ltd. v. International Computers (Australia) Pty. Ltd. (1987) 16 F.C.R. 410

Wardley Australia Ltd. v. Western Australia (1992) 175 C.L.R. 514

TANTO ADI PRAMOKO V. SALIM SIOE LIM LEE AND KOMEMO PTY. LTD.

WAG98 OF 1991

LEE J.

PERTH

9 FEBRUARY 1995

IN THE FEDERAL COURT)

OF AUSTRALIA         )

WESTERN AUSTRALIA    )

DISTRICT REGISTRY    )

GENERAL DIVISION     )    NO. WAG 98 OF 1991

B E T W E E N:            TANTO ADI PRAMOKO

                               Applicant

                          and

                          SALIM SIOE LIM LEE

                               First Respondent

                          and

                          KOMEMO PTY. LTD.

                               Second Respondent

                       MINUTE OF ORDER

JUDGE MAKING ORDER:    LEE J.

DATE OF ORDER:         9 FEBRUARY 1995

WHERE MADE:            PERTH

THE COURT ORDERS THAT:

1.     The applicant have leave to amend the statement of claim in the terms of the minute of proposed sixth amended statement of claim filed 11 August 1994.

2.     Costs of the motion be costs in the respondents' cause.

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

IN THE FEDERAL COURT)   

OF AUSTRALIA         )

WESTERN AUSTRALIA    )

DISTRICT REGISTRY    )

GENERAL DIVISION     )    NO. WAG 98 OF 1991

B E T W E E N:            TANTO ADI PRAMOKO

                               Applicant

                          and

                          SALIM SIOE LIM LEE

                               First Respondent

                          and

                          KOMEMO PTY. LTD.

                               Second Respondent

CORAM:    LEE J.

DATE :    9 FEBRUARY 1995

PLACE:    PERTH

                    REASONS FOR JUDGMENT

          The applicant ("Pramoko") seeks leave to further amend its statement of claim, a pleading that has been amended on five occasions.  The respondents ("Lee", and "Komemo Pty. Ltd.") object to the grant of leave in one respect.  The respondents contend that the proposed amendment contained in para.40 of the minute of the proposed amended statement of claim seeks to rely upon an impermissible measure of the loss or damage able to be recovered in the proceeding.

          Pursuant to the statement of claim as it now stands, Pramoko has pleaded that in about October 1987 he and Kokemo Pty. Ltd., as sole shareholders of Nalladeen Pty. Ltd. ("Nalladeen"), caused Nalladeen to enter contracts to purchase parcels of lands in Queensland for an aggregate price of $2.8m.  The Directors of Nalladeen were Pramoko and Lee.

          The land was purchased for the purpose of sub-division, development and resale.

          Shortly thereafter further shares in Nalladeen were issued to Pramoko, Komemo Pty. Ltd. and to a third party and the company borrowed approximately $3m "to facilitate the development".  The statement of claim does not state when or how the contracts to purchase the Queensland land were settled.

          Pramoko claims that on several separate occasions

in 1988 Lee, on his own behalf, or alternatively, on behalf of Komemo Pty. Ltd., made representations to Pramoko with the intention of inducing Pramoko to agree to transfer his shareholding in Nalladeen to the third party.  The essence of the representations alleged to have been made was that the Queensland project would not be profitable, represented a substantial risk for Pramoko and would require Pramoko to provide a further $1m by way of capital investment.  It is also claimed that Lee stated that Komemo Pty. Ltd. was anxious to "quit the project" and would be able to do so if Pramoko gave control of Nalladeen to the third party by transferring his shareholding in Nalladeen to that party.

          It is then pleaded that in September 1988 Pramoko agreed with Lee and/or Komemo Pty. Ltd. to transfer his shareholding to the third party in return for Komemo Pty. Ltd. arranging for that party to pay to Pramoko the sum of $560,000 and to transfer to Pramoko a shareholding that party held in another company in which Pramoko also held an interest.  It was further agreed that Komemo Pty. Ltd. would pay to Pramoko the sum of $800,000 after completion of the "second stage" of the Queensland project.

          Pramoko has pleaded that he executed a transfer of his shares as requested and received a promissory note in the sum of $560,000 endorsed by the third party and a transfer of that party's shareholding in the other company.  In due course the promissory note was honoured.

          Pramoko further pleaded that he made demand on Komemo Pty. Ltd. on several occasions for payment of the sum of $800,000 and seeks an order that Komemo Pty. Ltd. pay that sum as the amount due to Pramoko under his contract with Komemo Pty. Ltd.

          In the minute of proposed amendments to the statement of claim Pramoko seeks to abandon the contractual claim against Komemo Pty. Ltd. and to seek orders under the Trade Practices Act 1974 (Cth) ("the Act") or the Fair Trading Act 1987 (W.A.) that Lee and/or Komemo Pty. Ltd. pay the
amount of loss or damage sustained by Pramoko by reason of the misleading or deceptive conduct engaged in by Lee and/or Komemo Pty. Ltd.

          The claim for loss or damage is put as the difference between the amount paid for the shares transferred by Pramoko and the true value of that shareholding at the time of transfer, or alternatively, the worth of the opportunity forgone by Pramoko to share the profit of the Queensland project.  In support of the alternative measure of loss Pramoko pleads that but for the conduct of Lee and/or Komemo Pty. Ltd., Pramoko would not have sold his shareholding in Nalladeen and would have retained that interest until the Queensland project had been completed by Nalladeen and the profit earned from the project distributed to shareholders.

          Pramoko sought to make that amendment to the statement of claim by the previous application for leave to amend.  Leave was refused because such an amendment was inconsistent with the pleading which relied upon the contract made in September 1988 and sought an order for the payment by Komemo Pty. Ltd. of the sum assessed by the parties to the contract as an appropriate sum to be paid to Pramoko for relinquishing his right to participate in the profits of Nalladeen by agreeing to sell his shares in Nalladeen to the third party.  Pramoko now seeks to abandon that claim in contract and to claim instead as the loss he has suffered the value of the opportunity to share in the profit of the Queensland project that Pramoko would have retained but for the conduct of Lee and/or Komemo Pty. Ltd.

          Pramoko seeks relief in equity to the extent that he has pleaded that the conduct of Lee and Komemo Pty. Ltd. was fraudulent but does not allege that either of the respondents were in breach of any fiduciary duty to him pursuant to which orders may be made requiring the respondents to disgorge any profits or benefit improperly obtained by them by reason of their conduct.  (See:  Elna Australia Pty. Ltd. v. International Computers (Australia) Pty. Ltd. (1987) 16 F.C.R. 410 per Gummow J. at 420-421.)

          Although in many circumstances to which the Act applies the term "the amount of the loss or damage" (suffered by conduct of another person) referred to in s.82 of the Act may be taken to be analogous to the measure of loss applied in cases of deceit, it is not necessary that it be the measure in all cases.  (See:  Wardley Australia Ltd. v. Western Australia (1992) 175 C.L.R. 514 per Mason C.J., Dawson, Gaudron and McHugh JJ. at 526 and Toohey J. at 554; Accounting Systems 2000 (Developments) Pty. Ltd. v. C.C.H. Australia Ltd. (1993) 42 F.C.R. 470 per Lockhart and Gummow JJ. at 503.)

          As pleaded in the proposed amendment Pramoko does not seek to recover an expected, but unfulfilled, profit from a bargain entered into under the influence of deceit.  Pramoko pleads that by reason of misleading or deceitful conduct he altered his position to give up the opportunity he then held to share in any profit as Nalladeen may earn, a step he would not have taken but for that conduct.  (For a discussion of the distinction between expectation loss and direct or consequential loss see:  David C. Price, "Opening Gates: The Measure of Damages under the Trade Practices Act", C.C.L.J. Vol. 1 (1994), pp.257-277.)

          Having abandoned reliance upon a contract which had already assessed the worth of that opportunity, the proposed amendment to the pleading becomes tenable and is not bound to fail.  No objection is taken to the request for leave to amend on any other ground and, therefore, leave should be granted as sought.  The matter will be relisted for further directions that will progress the matter to an early hearing.

          I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment of his Honour Justice Lee.

               Associate:

               Date:

                         APPEARANCES

Counsel for the Applicant:   P. Mendelow

Solicitors for the Applicant:   Parker & Parker

Counsel for the First

and Second Respondents:   V.M.F. Haigh

Solicitors for the First

and Second Respondents:   Mallesons Stephen Jacques

Date of Judgment :  9 February 1995