CATCHWORDS

TRADE PRACTICES - claim for damages under s82 - purchase of property comprising shops - representations by purchaser about access by vendor after settlement to satisfy condition of development consent - whether refusal of access caused loss to vendor

Trade Practices Act 1974, ss 52 and 82

Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR

594

Barto v GPR Management Services Pty Ltd (1991) 105 ALR 389

Sellars v Adelaide Petroleum NL (1994) 120 ALR 16

Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514

No. NG 882 of 1993

HOSMER HOLDINGS PTY LIMITED and others v C.A.J. INVESTMENTS PTY LIMITED

MOORE J

SYDNEY

30 MARCH 1995

IN THE FEDERAL COURT OF AUSTRALIA)

                                  )

NEW SOUTH WALES DISTRICT REGISTRY)        No. NG 882 of 1993

                                  )

GENERAL DIVISION                  )

 

 

 

                   BETWEEN:      HOSMER HOLDINGS PTY LIMITED

 

                                             First Applicant

 

 

                        JAMES LOURANDOS, STEPHANIA LOURANDOS,

                         STAVROULA LOURANDOS, NICHOLAS JAMES

                         LOURANDOS, and AIKATERINA LOURANDOS

 

                                  Second to Sixth Applicants

 

 

                   AND:       C.A.J. INVESTMENTS PTY LIMITED

 

                                                  Respondent

 

 

 

JUDGE:    Moore J

 

PLACE:    Sydney

 

DATE:     30 March 1995

 

 

                     ORDER OF THE COURT

     THE COURT ORDERS THAT:

     1.   The application is adjourned.

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

IN THE FEDERAL COURT OF AUSTRALIA)

                                  )

NEW SOUTH WALES DISTRICT REGISTRY)        No. NG 882 of 1993

                                  )

GENERAL DIVISION                  )

 

 

 

          BETWEEN:                HOSMER HOLDINGS PTY LIMITED

 

                                             First Applicant

 

 

                        JAMES LOURANDOS, STEPHANIA LOURANDOS,

                         STAVROULA LOURANDOS, NICHOLAS JAMES

                         LOURANDOS, and AIKATERINA LOURANDOS

 

                                  Second to Sixth Applicants

 

 

          AND:                 C.A.J. INVESTMENTS PTY LIMITED

 

                                                  Respondent

 

 

 

JUDGE:    Moore J

 

PLACE:    Sydney

 

DATE:     30 March 1995

 

 

                    REASONS FOR JUDGMENT

     This is an application under the Trade Practices Act 1974 ("TPA") brought by Hosmer Holdings Pty Ltd and James, Stephania, Stavroula, Nicholas and Aikaterina Lourandos ("the applicants") against CAJ Investments Pty Ltd ("the respondent").  Associated common law claims founded on alleged deceit and negligent misrepresentation and a claim based on an estoppel are also made in the application.

     The applicants seek damages and/or a mandatory injunction.  At an early stage in the hearing objection was taken by the respondent to evidence in an affidavit of Nicholas Lourandos, which concerned the quantum of damages.  That evidence was in a plainly inadmissible form which invited the objection taken.  The evidence appeared to be the principal, if not only, evidence of the applicants which would have permitted the assessment of damages if liability was established.  It was not admitted.  A question then arose as to whether the applicants should be given an opportunity to put on further evidence on this issue.  I determined that the appropriate course was to continue the hearing and deal only with the question of liability and whether an injunction should issue and, if necessary, there could be a further hearing dealing with the assessment of damages.  Accordingly this judgment is confined as to the issues with which it deals.

The facts

     The facts are generally uncontentious and emerge from affidavits of Mr Reid, the applicants' solicitor, and Mr Nicholas Lourandos filed on behalf of the applicants and an affidavit of Mr Lyons, solicitor, filed on behalf of the respondent as well as documents which were tendered.  Mr Lyons' affidavit is a vehicle for proving certain documents and he had no involvement in the events to which this litigation relates.  No evidence was led by the respondent from anyone who did.  To the extent that I reserved on the admissibility, on the grounds of relevance, of any document I now refer to, I view it as relevant.  Only Mr Reid was cross-examined.

     Much of the evidence was in a documentary form and much of that was correspondence.  Generally it was admitted without objection.

     The proceedings concern the sale of land.  The applicants owned land at Swansea in New South Wales which they wished to develop by constructing a building incorporating six shops.  In March 1988 the City of Lake Macquarie ("the Council") notified them of its consent to a development application though the consent was subject to a number of conditions.  One condition concerned car parking and it provided:

      "4.   Car parking being provided on site in accordance with the following:-

 

      (i)   Fourteen (14) spaces in accordance with Council's car parking code.

 

      (ii)  Each space individually marked on the pavement.

 

      (iii)Separate off-street loading/unloading facility clear of the car parking area and driveways.

 

      (iv)  Use of the fourteen (14) car parking spaces being ensured by way of subdivision and acquisition of the land and access ways or some alternative arrangement which will ensure legal occupancy of the car parking spaces and access ways.

 

      (v)   A stop sign being provided at the exit of the site to Lake Road."

That condition was the second condition listed in the notice though it was incorrectly numbered "4" and not "2".

     The land was on the corner of Lake Road and the Pacific
Highway.  The condition concerning car parking was to be satisfied by the construction of a car park on land which was behind several existing buildings with frontages on the Pacific Highway.  To obtain access to that land it was necessary to use part of the land on which the six shops were to be built to construct a short access road.  Without an access road the land to be used for car parking would be inaccessible.  It was, in effect, a block surrounded by other parcels of land with no frontage to a street.  I have no clear understanding of the basis on which the land was to be available to construct the car park but that matter is not raised as relevant to the proceedings.  It appeared to be common ground that the land was available and a car park could be built if the access road was constructed.

     On 6 September 1989, the applicants entered into a contract with the respondent, then called Boomtaf Pty Ltd, to sell the land on which the six shops were in the process of being constructed and on part of which the access road would be built.  It is apparent from the way the First Schedule to the contract was framed, that the applicants and the respondent proposed settlement within 40 days of exchange: viz, 15 October 1989.  At this stage the applicants had not taken any legal steps that would have ensured the ongoing use of that portion of the land as an access road.  The contract for the sale of the land was drawn by Mr Reid.  He was a partner in a firm then known as Vandenberg Reid Pappas & MacDonald which I will generally refer to as VRPM though where necessary I will refer to the individual solicitor concerned.  For simplicity I will use the acronym VRPM notwithstanding that the firm's name changed during the relevant period.  The contract contained no special conditions concerning the access road or otherwise provided for its coming into existence.  The land was not then the subject of any easement.  The contract described the improvements on the parcel of land the subject of the sale as a "Shopping Centre Comprising 6 Shops".  The sale price was slightly in excess of a million dollars.

     Mr Reid gave evidence of a conversation he had on 30 August 1989 with a member of the firm of solicitors acting for the respondent, Mr Burkitt, though he was not the solicitor who was generally acting for the respondent on the sale.  That firm was Thomas Mitchell Partners which I will refer to as TMP though where necessary I will refer to the individual solicitor concerned.  No evidence was led denying the conversation and I accept Mr Reid's account of it.  It was:

      "He asked me inter alia words to the effect 'In relation to the development conditions on this site, have your clients decided whether they are going to construct the right of carriageway and carpark or pay the bond to Council and let the money go?'  I replied with words to the effect 'My clients will create the right of carriageway and build the carpark because it can be done a lot more cheaply than for $80,000.00."

     Mr Reid's evidence does not explain the basis upon which he and Mr Burkitt were then discussing a sum of $80,000 or forfeiture of that sum in the event the car park was not built.  The terms of the development consent neither permitted nor required the payment of $80,000 in satisfaction of the condition.  However, in evidence is a letter dated 4 July 1989 from the Town Clerk of the Council to VRPM which indicates that the payment of such a sum had been raised by the Council.  It said:

      "Reference is made to previous correspondence and contact with this Council relating to a proposal for a community car park at the rear of premises fronting Pacific Highway, Swansea.

 

      Council's Solicitor has advised that despite a number of efforts to continue negotiations with the owner of lot 22, 158 Pacific Highway, Swansea, no response has been received in respect to participation of the owner in the car parking proposal.  Council's Solicitor believes it highly unlikely the proposal as envisaged by the City Planning Department can now proceed.

 

      In view of the above it will be necessary for your client to consider alternatives in respect to car parking required in respect of the development situated on the corner of Lake Street and Pacific Highway, Swansea.  Alternatives previously suggested is acquisition and construction of an area of land in the near vicinity of the development suitable to Council which would supply car parking in the area to the extent to that attracted to your development.  A second alternative involves a contribution to Council to the value of supply of the car parking required.  This value would be based on current valuation of premises within the business centre of Swansea together with the construction costs involved.  This figure will amount to $79,520.00 for the fourteen spaces ($160.00 per square metre plus $1,200.00 construction costs).

 

      It would be appreciated if you would advise Council of your client's decision in respect to the supply of car parking as a matter of priority."

     Two days after the conversation between Messrs Reid and  Burkitt, on 1 September 1989, Mr Reid received a fax from TMP concerning the form of the contract.  The following appears in the letter:

      "Re Access Way:   In this regard we note you are awaiting further advice from our Mr Arkell.  The purchaser requires that either an access Way will have to be registered over the subject property or the required amount of money will have to be paid to the Council before settlement in lieu of the Access Way."

Mr Arkell was a solicitor from TMP, but Mr Arkell was acting for an adjacent property owner, Mr Sawtell, whose consent was being sought to the creation of the access road and car park though other members of the firm, and in particular Mr Mitchell, acted on Mr Sawtell's behalf at least in sending correspondence.  Mr Sawtell was the owner of lot 22 referred to in the letter of 4 July 1989 from the Town Clerk to VRPM.

     Contracts were exchanged on 6 September 1989 and on 18 September 1989, TMP wrote to VRPM making requisitions on title in a standard form.  The sixth requisition concerned, inter alia, the requirements of any Local Government Authority which would involve the performance of work in connection with the land sold or any easement affecting the subject land.  VRPM answered this requisition on 6 October 1989 in the following way:

      "6(a-o)     No but the Buyer is aware of Council's intention to create a right of carriageway across the back of the block from Lake Road."

TMP responded to this letter by a letter dated 16 October 1989 to VRPM which contained the following:

      "We refer to your replies to requisitions dated 6th instant and particularly your reply to requisitions 6(a-o).  The intention to create a right of carriageway is known to our client but the precise terms of the right of carriageway are not known to us nor the precise terms of the Development Approval of which such carriageway is one option.  We should be pleased to receive these details as urgently as possbile (sic) however, at this stage we advise that our client would not agree to a carriageway that embodies any ongoing liability to the owners for the time being of the land now being purchased in relation to such carriageway.  In particular we refer to the sewer and manhole on other properties interested in the carriageway and
referred to in part in Clause (c) of our letter of the 26th ultimo."

The reference to the letter of 26 September was a letter from TMP to VRPM.  TMP was writing as the solicitors for both the respondent and Mr Sawtell and, in that latter capacity, wrote:

      "Our instructions from Mr Sawtell are that on payment of $514.64 compensation for damage to his roof and for use of electricity and water during the building of your client's premises he will consent to the granting of the easement, subject to either:

 

      (a)   reservation for the use of himself and his employees or customers of the four (4) car park spaces adjacent to his premises, or

 

      (b)   limitation of the easement to exclude those car spaces and permit only a passing over of part of the rear of is (sic) land, and

 

      (c)   subject to satisfactory arrangement to protect the manhole to the sewer main which appears to be on his property."

     The letter of 6 October 1989 from VRPM to TMP answering the requisitions contained the following which concerned the position of Mr Sawtell:

      "We also enclose our client's cheque made payable to your trust account in the sum of $514.64.  This sum was claimed by your client against ours and appears to be the consideration requested by your client for consenting to and executing when tendered, the documents necessary to create a right of carriageway across the back of Mr Sawtell's block which right of carriageway is currently being prepared by Peter Rees, Solicitor for the Council.

 

      Could you please note the funds are to be released to your client upon him unconditionally undertaking in writing to execute those documents when tendered.  In the meantime, we understand you are consulting with Mr Rees as to the terms of the easement and we ask you to advise us as soon as all arrangements have been agreed to.  We confirm that the other adjoining owners have agreed to the right of carriageway and it is expected to have the documents completed and signed (although not registered) before completion of the subject Agreement for Sale."

     It is not entirely clear what steps were taken between then and the time of settlement in early December 1989 to enable the access road to be built though it appears from later events that in that period Mr Sawtell did not give his consent notwithstanding the expectation evident in the letter of 6 October 1989 that he would do so shortly after that date.  However it had not been built by the time of settlement.  Mr Reid gave oral evidence, which I accept, that the respondent wanted a speedy settlement though so too did the applicants.  Mr Nicholas Lourandos indicated in his affidavit that he instructed Mr Reid, it appears some time in November 1989, to try and negotiate an arrangement to satisfy the conditions of the development consent so that completion of the contract could be effected sooner rather than later.  As the access road had not been built and the condition imposed by the Council thus not satisfied, steps were taken by Mr Reid to enable settlement.  At about this time TMP still had an imperfect understanding of the terms of the development consent.  This is apparent from a letter dated 23 November 1989 from TMP to the solicitors for the respondent's banker which was to finance the purchase.  It said:

      "We enclose herewith copies of the following in relation to the Pacific Highway, Swansea property:

 

      1.    317AE Certificate (copy of survey attached).

 

      2.    Copy of letter (Form 7) from the Council of the City of Lake Macquarie to the Vendor dated 30th March 1988 advising conditions of the development consent.

 

      3.    Copy of letter from the Council of the City of Lake Macquarie to the Vendor's solicitors dated 4th July 1989.

 

      4.    Copy of 149 Certificate attached to the Contract.

 

      We are also informed by the Vendor's solicitors that the Vendor holds a Strata Plan in relation to the subject property endorsed with Council's consent.  It is a fact that the carparking condition of the original development consent has not been satisfied nor has the apparent subsequent variation (i.e. payment of the $79,520 referred to in Council's letter to the Vendor's solicitor).

 

      We invite your comments."

The suggestion that the condition had at that time been varied was wrong.  The position was clarified in a letter to TMP dated 27 November 1989 from the Council's solicitor, Mr Rees, which made clear that the original condition had, at that time, not been altered.  That letter said:

      "Further to your letter of 16 October and your subsequent telephone conversations with the writer I wish to advise my instructions in relation to the development consent are as follows:

 

      1.    You would appear to be referring to Lot C DP 390381.

 

      2.    Development consent issued on 30 March, 1988 and was modified on 4 October 1988.  Copies of those documents are enclosed.

 

      3.    Condition 2 (in the consent nominated as 4) has not been complied with and negotiations are in train for the provision of an alternative.  In this respect, I should point out that the consent has not been modified for the purpose of an alternative and Council can give no assurance that the negotiations that are occurring will result in acceptance of the alternative or a modification of the consent.

 

      4.    Condition 9 therefore has not been complied with.

 

 

 

      5.    Condition 11's compliance appears to have been hampered by Council's approval of a strata subdivision of the commercial floor space, and will be further explored by the Council.

 

      I trust this answers your enquiry."

     In late November 1989 discussions occurred between VRPM, TMP and solicitors acting for the Bank of Melbourne which was to provide, by way of mortgage, the respondent with funds to purchase the property.  It was proposed that a sum of $80,000 would be retained by the Bank at settlement which would be paid to the applicants when the unsatisfied condition was met by the building of the car park or, if it was not, would be paid to the Council if demanded.  On 29 November 1989 TMP sent VRPM a facsimile enclosing a letter from the Bank's solicitors, Westgarth Middletons.  The facsimile said:

      "We transmit herewith copy letter today received from the solicitors acting for the Mortgagee.  We advise that our client would agree to this proposal and we therefore await your comments."

The enclosed letter from Westgarth Middletons said:

      "We refer to our several recent telephone conversations and advise that we have now been instructed by the Bank that provided $80,000.00 is held from settlement proceeds and lodged through this firm on Interest Bearing Deposit with the Bank, it will agree to allow the matter to proceed notwithstanding that the outstanding requirement of the Development Approval, that is the provision of car parking on the subject property or contribution to the Council's car parking fund, has not been resolved.

 

      Would you please ascertain from the Vendor's Solicitors whether the Vendor and your client will agree to an arrangement whereby such a deposit is made on the basis that it would be charged in favour of the Bank as collateral security and the Bank would be authorised in the event of a demand by the Council or default under the Mortgage to pay the same to the Council without any further authority either from C.A.J. Investments Pty Limited or the Vendor.  If in fact the current negotiations with adjoining owners can be satisfactorily resolved and C.A.J. Investments Pty Limited can provide evidence that the Council requirements concerning car parking have been fully complied with without the necessity of the payment of any part of the retention, then subject to the authority from C.A.J. Investments Pty Limited we propose that the Bank would refund to the Vendor the deposit together with accrued interest.

 

      Please ascertain as a matter of urgency whether this arrangement is acceptable, in which case we will attend to the preparation of appropriate documentation for the Charge over the Deposit and make arrangements to settle the matter through our Canberra Agents, Messrs Sneddon Hall & Gallop."

A draft Deed was prepared by Westgarth Middletons to give effect to this arrangement and was forwarded to VRPM.  A deed in those terms was executed by the respondent but when and in what circumstances is not clear from the evidence.  In the course of the correspondence between the solicitors acting for the Bank, the applicants and the respondent concerning the terms of the Deed, a letter dated 30 November 1989 was sent by TMP to VRPM.  It said:

      "Re: CAJ Investments Pty Ltd purchase from Hosmer Holdings Pty Ltd

 

      We refer to Westgarth Middleton's fax sent to you and to our telephone conversation today.

 

      Our client wishes to be satisfied that all of Council's requirements regarding the car park have been complied with before the $80,000.00 referred to is released to your client.  It accordingly requests that its authority be obtained before such event, but agrees that it will give that authority upon receipt by it of satisfactory evidence that all of the conditions of Council's Development Approval have been met."

Notwithstanding these discussions based on the Bank retaining funds, VRPM proposed as an alternative to the Bank retaining a portion of the purchase price, the Council giving a completion certificate on the basis that it held a bank guarantee for $80,000 and that the condition in the development consent be amended to reflect this arrangement.

     It was and its terms were recorded in a letter from the Council of 8 December 1989 to VRPM.  The earlier condition remained but an alternative condition was imposed.  It read:

      "As an alternative to the provision of the above prior to occupation, Council will accept a bank guarantee to the value of $79,520 which would cover a contribution for the provision of fourteen (14) carparking spaces in Swansea.  This bank guarantee would be held for a period of six (6) months to permit the establishment of the carparking as proposed in the application after which time Council will take steps to expend the funds upon the provision of carparking in the near vicinity."

Mr Reid gave oral evidence from which I infer that the period of six months was proposed by him on the basis that it would be sufficient time for the applicants to construct the access road and car park which was the course they then intended to pursue.

     Settlement took place on 8 December 1989 on the basis of the latter arrangement.  A bank guarantee for $80,000 had been executed on 4 December 1989 by the Westpac Banking Corporation in favour of the Council at the request of the applicants.

     In a number of places in this judgment I speak of satisfying the condition of the development consent after settlement by the construction of the access road and car park.  Strictly, this is not correct.  Having regard to the terms of the variation made to the condition on or about 8 December 1989, the condition was satisfied, as I construe it, by the provision of the guarantee.  The varied condition was simply intended to enable the applicants to avoid the guarantee being called on by doing what the condition in its original form contemplated.  However for reasons of simplicity I have referred to satisfying the condition after settlement.

     On 8 December 1989 a letter from TMP bearing that date was sent to VRPM.  Mr Reid was on leave on that day.  There was no direct evidence whether it was sent or was received before or after settlement took place.  It said:

      "We refer to Council's letter to you dated 8th December 1989 advising the amendment to Condition number 2 of the Development Consent dated 30th March, 1988.

 

      We confirm our clients are prepared to settle on the basis of that amendment, and provided however, that it be clearly understood that our client is not prepared to provide any spaces for car parking nor is it prepared to do anything in relation to the condition which will involve it in expenditure of funds.  In these circumstances as far as our clients are concerned there appears to be no alternative to the Council calling up the Guarantee at the expiration of the six month period.  We note your client is agreeable toi (sic) settle on this basis."

     On 6 March 1990 TMP wrote, on behalf of Mr Sawtell, to Mr Rees indicating that Mr Sawtell was prepared to "grant the Right of Way requested" provided that he did not have to contribute to the cost of construction or ongoing maintenance.  The letter records that a copy was to be sent to VRPM.  Notwithstanding that intimation, an internal Council memorandum of 31 May 1990 to Mr Rees from the Deputy City Planner, Mr Marr, spoke of "Sawtell's unwillingness is unreasonable" though it notes that Mr Reid had recently said to Mr Marr that Mr Sawtell was in agreement.  Mr Marr also notes that an extension of time for the creation of the car parking was not objected to.  Mr Rees responded by internal memorandum to Mr Marr on 8 June 1990 by saying that Mr Sawtell was not in agreement and noted that his position remained as set out in the letter of 6 March 1990 from TMP to the Council.  Mr Rees concludes the memorandum by saying "As presently instructed the matter is a corpse unable to be resuscitated".  From a further internal Council memorandum dated 11 September 1990 from Mr Rees to Mr Marr, it appears Mr Reid was actively pursuing the matter on behalf of the applicants and offering to make the access road and car park out of concrete and maintain it.  There appears then to have been an issue as to whether or not Council was requiring the adjoining property owners to maintain the access road and car park which was a matter Mr Sawtell and another property owner did not agree to.

     In June 1990, TMP wrote to Council on behalf of the respondent noting that the six months had elapsed and inquiring whether the guarantee had been called upon.  It received no reply and wrote two further letters requesting a reply in July and August 1990.

     Mr Reid wrote to Mr Rees on 12 September 1990 indicating that the applicants had elected to complete the construction of the car park and requested until 31 January 1991 to do so.  The letter expressed the view that the adjoining owners would be prepared to sign documents creating the necessary easements and "right of carriageway".  Mr Reid invited Mr Rees to prepare the documents on the basis that the applicants would bear the construction and maintenance costs though the letter noted that ongoing liability would be for line marking.  Mr Reid sent a copy of that letter to adjoining building owners including Mr Sawtell.  Mr Reid wrote to Mr Rees again on 1 November 1990 in the following terms:

      "We copied the solicitors for Mrs (sic) Sawtell, Tang and the Building Society with our letter to you of 12 September.

 

      The matter still appears to be going around in circles.  Could we respectfully suggest that you prepare the documents as you see fit, submit them to the solicitors for Tang and Sawtell and thereafter crystallise the terms of the right of carriageway.

 

      Our client who is no longer an owner has said it will do the work, but the terms of the right of carriageway are a matter of semantics between the adjoining owners and Council, and it appears a complete waste of time to involve our clients and/or this office as a conduit for the parties respective communications.

 

      Please keep us advised as to the document preparation and execution."

     On 5 November 1990 Mr Rees wrote to VRPM saying he was waiting for particulars of title from TMP, then acting for Mr Sawtell and the respondent, and indicating that he had been seeking them since at least 23 October 1990.  A handwritten note on the copy of that letter in evidence suggests someone, probably Mr Reid, spoke to Mr Rees in late November 1990 to ascertain what progress had been made.  VRPM wrote to Mr Rees in late January 1991 asking about the execution of the documentation.  What happened during most of the remainder of 1991 does not emerge from the evidence.  However on 25 October 1991, VRPM wrote to TMP in the following terms:

      "You will recall that we act for the original developers of the corner block now owned by CAJ Investments.

 

      It was a term of the sale of that contract and with the consent of Council that our clients paid a bond to complete the carpark at the rear of each of the premises between the corner block and the Building Society's premises.

 

      Our clients are and have been since settlement ready to complete that work subject only to execution by each of the owners of the 4 blocks to the easement/right of carriageway documentation which is being prepared by Peter Rees, solicitor for the Council.

 

      Mr and Mrs Tang have apparently signed that documentation, the Building Society have indicated that they will sign it after the other owners have and it is essential now that the current
owners of the Sawtell block execute it.

 

      Mr Rees has indicated to the writer that he is unaware of who the solicitors for Mr and Mrs Evans, the new buyers of the Sawtell property are.  Could you please give this matter your urgent attention and have the solicitors for Mr and Mrs Evans contact either Peter Rees or the writer so that the matter can be completed.

 

      The importance to each of the owners of the blocks is that not only will they obtain a fully sealed carpark to the rear of their premises, but access via the right of carriageway along the back of their block will be guaranteed ad infinitum.

 

      Your assistance in this matter would be appreciated."

     In at least early 1992 TMP was acting for another of the adjoining property owners, the Newcastle Permanent Building Society Ltd, and Mr McMillan from TMP reported to the Society in a letter dated 14 January 1992 as follows:

      "We have ascertained that Mr Arkell, at our Swansea office, acts for CAJ Investments, the proprietor of the property at the north western corner of the intersection of Pacific Highway and Lake Road Swansea.

 

      That company is in the process of executing the documents, whereupon the documents will be returned to Mr Rees, solicitor for the Council."

     The evidence does not reveal the details of what occurred after that during 1992 though a letter was written from VRPM to TMP on 20 October 1992, in the following terms:

      "It is now a year since our last substantive communication with you on 25 October 1991.

 

      Despite repeated discussions with Peter Rees, solicitor for the Council, we are now advised that CAJ Investments Pty Ltd refuses to sign the easement documentation.

 

      Please confirm whether or not this is the fact and if not, why not?

 

      As you can well imagine, our clients are particularly frustrated that the guarantees of access could have been effected sometime ago with hard standing carparking at no cost to the owners.  To date the bond in the sum of $80,000.00 placed with the Council is still adversely affecting our clients financial arrangements with their Bankers.

 

      There is clearly sufficient evidence on our file to indicate that CAJ intended at the time of contract to execute the easement documents and unless we receive confirmation immediately that this will be attended to, our clients have instructed us to take whatever action we feel will be successful in order to require CAJ to comply with their obligations.

 

      This matter was settled in a spirit of goodwill and understanding but unfortunately for reasons totally beyond our clients control, that working relationship has not continued.

 

      We look forward to receiving your written advice that the matter as a whole can be resolved to everyone's benefit forthwith."

     In a letter dated 30 October 1992, Mr Rees informed VRPM that the Newcastle Permanent Building Society had "flatly refused to execute the document until all other parties had".  At about this time the respondent's position was made known unambiguously.  It is recorded in a letter of 13 November 1992 from TMP to VRPM.  The letter reads:

      "We refer to your letter of 20 October and ours of 29 October 1992.

 

      This matter was settled on the basis of your client satisfying Council's car parking requirement.  To satisfy that requirement, and thereby to enable settlement to be effected, the bank guarantee was furnished by your client to Council.  We enclose copy of our letter to you dated 8th December 1989 which clearly confirms that position.

 

      Our client did not at the time of signing the contract intend to execute any easement documents and that they are not prepared to do so now and indeed our client does not have any obligation to execute same."

     On 24 November 1992 Mr Rees wrote to VRPM saying that he had again contacted the respondent's solicitors and had been informed that the respondent would not agree to the right of way.  Mr Rees said the banker's guarantee would be called upon on or after 30 November 1992.

     The statement of claim pleaded as a material fact that the amount secured by the guarantee was paid to the Council at its request on 10 December 1992.  This was not put in issue by the respondent though no amended defence was filed in response to the amended statement of claim.  However some of the documentary evidence indicated that this was wrong.  As it was a matter that might be material to my conclusion I invited written submissions from the parties after the hearing concluded.  Both parties accepted that the payment of the guarantee sum was not made until late January or early to mid February 1993 and I so find.

     The question that then arises is what stage the negotiations had reached with the affected parties when the guarantee was called upon.  In a letter of 5 January 1993 from VRPM to TMP it is stated that "each of the other owners except your client has agreed to execute the documentation as and when presented to them."  This assertion was not denied in a letter of 2 February 1993 from TMP to VRPM in which the respondent again made clear that it would not consent.  The letter reads, in part:

      "We refer to your letter of 5th January 1993 and our subsequent telephone conversations with Mr Reid.

 

      We confirm that our client's instructions are that it purchased the subject property from your clients strictly on the basis that the satisfaction of Council's car parking condition was a matter for your client to attend to prior to completion of the contract.  In the event, the contract was completed by our client because the car parking condition was satisfied by the provision by your client of a bank guarantee of $79,250.00 to cover a contribution by your client for the provision of 14 car parking spaces in Swansea.  As advised in our letter to you of 8 December 1989 completion of the contract for sale was effected on the basis that so far as our client was concerned
there appeared no alternative to Council calling up your client's guarantee.

 

      We do not, with respect, agree that the implication you seek to read into our correspondence as detailed in your letter under reply can be made.  At no stage has our client agreed to provide an easement over the subject property nor indeed was it a condition of the contract for sale.

 

      It is also clear that, in any event, as there is no obligation on the Council or any other party to maintain and repair the Right of Way over our client's property it would fall back upon our client to effect, at its expense, any maintenance or repairs as may be necessary to protect the value of its property.  The provision of a right of way over our client's land would also prevent any future development and thereby deleteriously affect the value of our client's land."

     While this letter sets out the position of the respondent, the position of the other property owners at this time is less clear.  In his affidavit Mr Reid says that "I have confirmed that (sic) the date hereof the other 3 adjoining owners, whose land is subject to the proposed right of carriageway, consent to its creation and the construction of the carpark by the applicants".  The "hereof" I take to be a reference to the date the affidavit was sworn which was 22 February 1994.  Mr Reid then annexes letters from solicitors acting for the other adjourning land owners.  They were not objected to.  One is from the solicitors acting for the Newcastle Permanent Building Society dated 27 May 1993, who indicate that the Society was prepared to execute the relevant documents on the conditions appearing in a letter of 12 September 1990 from VRPM to Mr Rees.  Copies of that 1990 letter had been sent in September 1990 to the adjoining owners which included an offer by the applicants to bear the construction and maintenance costs of the access road.  While the Society had earlier indicated it would not sign the documentation until other adjoining owners had done so, it had not pressed that requirement in its solicitor's letter of 27 May 1993.  A facsimile letter of 27 May 1993 from the solicitors acting for a client name Tang, said "our clients have  no objection to the right of (carriage) way".  A letter date 22 July 1993 from solicitors acting for D and J Evans, who had bought the Sawtell property, said "my clients have always been prepared to proceed with the right of carriage way but upon the conditions set out in the enclosed copy letter".  The enclosed letter was dated 12 February 1992 and indicated the Evans would consent to the proposal for the right of carriageway as long as they did not bear any part of the costs including the costs of the roadwork or legal costs.

     The respondent put in issue whether there is sufficient evidence to indicate that even if the respondent had executed relevant documents and indicated it would provide access, the car park would have materialised.  This submission was said to be supported by various documents produced in 1990 concerning the position of Mr Sawtell.  However it appears from a letter if 25 October 1991 from VRPM to TMP, part of which I have already set out, that by then Mr Sawtell had sold the property and that it had been bought by the Evans.

     The evidence of the applicant on the attitude of the other adjoining property owners is not in an entirely satisfactory form.  Nonetheless there is correspondence from solicitors acting for each of them, admitted without objection, from which I can infer that at the time the bank guarantee was called upon in January or February 1993 each of the adjoining owners other than the respondent, were prepared to agree to the construction of the car park and access road on the terms being proposed by the applicants.  I draw that inference and find that each of the adjoining owners, other than the respondent, were prepared to agree to the construction of the access road and car park in the way I have just discussed at the time the guarantee was called on.

The representations for the purposes of s52

     The amended statement of claim identifies the relevant representations in the following way:

      "6.   In order to induce the Applicants to complete the Agreement (on such terms as set out in paragraph 5 above), the Respondent, expressly and/or impliedly and/or by its conduct, represented to the Applicants that it would (the "representations");

 

            (a)   allow to the Applicants such reasonable access to the subject property so as to allow the Applicants the opportunity of completing their outstanding obligations to the Council in respect of Condition No. 2;

 

            (b)   execute such documentation as it (sic) necessary to create a right of carriageway (in accordance with the plans annexed to the Applicant's Development Application, then submitted to the Council) across the subject property.

 

                                Particulars

 

                  (i)         Telephone conversation between Mr Reid of the Applicants' solicitors and Mr Burkitt of the Respondent's solicitors of 30 August 1993, whereupon Mr Reid informed Mr Burkitt that "the Vendors were going to complete the right of carriageway as it would cost significantly less then the $80,000 required by the Council in lieu thereof."

 

                  (ii)        Letter dated 1 September 1989 from the Respondent's solicitors to the Applicants' solicitors

 

                  (iii)       Letter dated 16 October 1989 from the Respondent's solicitors to the Applicant's solicitors.

 

                  (iv)        Letter dated 30 November 1989 from the Respondent's solicitors to the Applicants' solicitors.

 

                  (v)         Undertaking and Authority dated on or about 8 December 1989 executed by both the Applicants and the Respondent.

 

                  (vi)        Letter dated 8 December 1989 from the Respondent's solicitors to the Applicants' solicitors.

 

                  (vii)       The Respondent completed the Agreement with the Applicants on those terms referred to in paragraph 5 above.

 

                  (viii)      The Respondent never at any time prior to completion of the Agreement, stated, indicated or in any way made known to the Applicants that they would at any time following completion of the Agreement:

 

                              -     refuse access to the Applicants to the subject property, thereby denying the Applicants the opportunity of satisfying Condition No. 2.

 

                              -     refuse to sign the necessary "right of access" documentation."

     The applicants' case concerns representations made on or before the date of settlement, namely 8 December 1989.  It is thus necessary to consider what representations, if any, were made by or on behalf of the respondent in the dialogue, which was principally between the solicitors involved, concerning the preparation and exchange of the contract for sale and, in due course, settlement.

     It is clear that immediately prior to exchange, TMP were aware that the applicants intended to build the car park and provide access to it by means of an access road across the land the subject of sale.  The terms of the facsimile of 1 September 1989 from TMP to VRPM do not make entirely clear what the respondent's attitude then was.  The letter indicates that the respondent required that one of two things would have to happen.  The first requirement was that "an access way will have to be registered over the subject property".  What precisely was meant by this is not clear.  I will return to this matter shortly.  The second requirement advanced as an alternative was payment to the Council before settlement of a contribution in lieu of providing the car parking.  It is likely that at this stage, the solicitor handling the purchase for the respondent, Mr Mitchell, believed that arrangements were then in place and agreed to by Council that would permit this to occur.  So much is apparent from the last paragraph of the later letter of 23 November 1989 from TMP to Westgarth Middletons.

     The facsimile of 1 September 1989 makes clear that this second requirement, put as an alternative, would have to be satisfied before settlement.  This indicates two things about what the respondent was then contemplating in relation to the first requirement.  One concerned when it had to be satisfied, the other what it entailed.  The second requirement called for payment before settlement.  That would occur if the first requirement had not been satisfied and it follows that it was contemplated that the first requirement had to be satisfied before settlement.  The second requirement was intended to satisfy the condition of the development consent in a way that Mr Mitchell of TMP then believed was possible.  It would otherwise be satisfied by creating, both in a physical and legal sense, the access road and car park.  If the respondent's objective was to ensure satisfaction of the condition in the development consent before settlement, then in so far as it was then speaking of a requirement that "an access way (be) registered", it was contemplating the creation of the access road and car park in a physical as well as legal sense before settlement.  This is consistent with the remarks of Mr Burkitt of TMP two days earlier when he spoke of whether the applicants "were going to construct the right of carriageway and car park or pay the bond..." (emphasis added).  The reference to "construct" was, in context, a reference to physically building the access road and car park.

     I am not satisfied that at this stage, the respondent was representing to the applicants that upon settlement they would have a continuing right or opportunity to construct the access road and to have the applicant, then as the registered proprietor, execute whatever documents were necessary to give legal recognition to it.

     Thereafter there was some uncertainty if not confusion about what each party was proposing to the other through their solicitors.  It is clear from the letter of 16 October 1989 from TMP to VRPM that their understanding of what was being proposed was incomplete.  The earlier letter of 6 October 1989 from VRPM to TMP answering the requisitions, but in the section concerning Mr Sawtell, was couched in terms that may have been viewed as implying that what the applicants had in mind before settlement was the finalisation of the documentation to create "the right of carriageway".  It made no reference to whether it was intended that the construction of the access road was to occur before settlement or not.

     However by late November 1989 the sale was proceeding to settlement and both the applicants and the respondent were aware that the condition requiring the creation of car parking would not be satisfied by the time settlement occurred.  The arrangements that were being discussed between TMP and VRPM concerning the retention of part of the purchase price by the Bank of Melbourne were, in my opinion, based on an understanding between the applicants and the respondent, arising from the discussions between their solicitors, that the applicants would endeavour to construct the access road and car park after settlement and the steps necessary to give legal recognition to its creation would also be undertaken after settlement.

     In the facsimile of 29 November 1989 from TMP to VRPM, the applicant indicated agreement to the proposal reflected in the letter of 29 November 1989 from Westgarth Middletons to TMP a copy of which formed part of the facsimile transmission.

     The proposal in that letter from Westgarth Middletons contemplated that the funds to be retained by the Bank would be released if the agreement of adjoining owners was secured and the condition imposed by Council satisfied by the construction of the car park.  No time was stipulated during which this would have to occur.  This proposal, viewed objectively, would have involved the respondent, upon settlement, permitting access to the property so the access road and car park could be created physically and taking whatever steps within its power that were necessary to give legal recognition to it.  It may well be that the respondent would have been obliged to do this as the better view is that a development consent runs with the land: see Proprietors of Strata Plan 20754 v Hawkesbury City Council (1991) 73 LGRA 199 at 205 and 212.  The statement in the facsimile of 29 November 1989 from TMP to VRPM that "our client would agree to this proposal" constituted a representation that the respondent would later do what was required to effectuate the proposal if the consent of adjoining owners was obtained.

     The letter of 30 November 1989 from TMP to VRPM proposing that the authority of the respondent be obtained before the money was released was consistent with the respondent accepting the proposal.  The statement in the letter that it would give its authority "upon receipt by it of satisfactory evidence that all of the conditions of Council's Development Approval have been met" was a further representation that it would do what was necessary to permit the applicants to meet that condition.

     This leads to a consideration of the events in early December 1989.  TMP was aware at least by 7 December 1989 of the specific proposal being put to Council by VRPM to vary the condition so that it would be satisfied by the provision of a bank guarantee to the Council which could be called on by the Council if the access road and car park was not created.  They had been made aware of the discussions about the variation by, at the latest, the time they received the letter of 27 November 1989 from Mr Rees.  A letter dated 7 December 1989 was sent by TMP to VRPM concerning the details of settlement which said:

      "We would be grateful if you could advise us as soon as possible when you receive the letter from the Council.  We note settlement will not take places until this is received."

     I take this to be a reference to the response that VRPM had sought from Council in a letter of 7 December 1989 in which VRPM had requested Council to vary the condition concerning the car parking and had sought an immediate response.  The respondent thus knew of the changes that were being proposed to the condition Council had originally imposed.  In this period it said nothing to suggest it would not co-operate after settlement to enable the condition to be satisfied save for a comment made in its letter of 8 December 1989.  The applicants were proceeding to settlement on the assumption the respondent would co-operate.

     I find the letter of 8 December 1989 from TMP difficult to follow.  It indicates that the respondent is prepared to settle on the basis of the varied condition.  By itself, I would have taken this to be an affirmation of the attitude the respondent had earlier adopted in relation to the proposal involving retention of a portion of the purchase price by the Bank, namely it would do whatever was necessary to enable the applicants to create, both physically and legally, the access road and car park.  The letter goes on to indicate that the respondent is not prepared to provide spaces for car parking itself or expend funds.  Again this is consistent with the attitude it had adopted earlier.  However the comment that "in these circumstances as far as our clients are concerned there appears to be no alternative to the Council calling up the Guarantee at the expiration of the six month period" is less easy to understand.  Taken literally, it is expressing the view with some certainty that the guarantee would be called upon because the car park and access road would not be created.  This may have been because the respondent then intended not to grant access to the property to permit the applicants to build the access and/or then intended not to co‑operate in executing whatever documents were necessary to give legal effect to its creation.  Alternatively, it may have been because the respondent had reason to believe that other parties whose consent was required would not co-operate or it believed it could not be done at no cost to it.  It emerges from subsequent correspondence that this somewhat cryptic passage hints at what was the real position of the respondent at the time.

     The terms of the letter written on 13 November 1992 from TMP to VRPM suggest that the respondent may have never intended to co-operate at least by executing any easement documents.  That letter is expressed in terms of the respondent not intending to do so "at the time of signing the contract".  Counsel for the respondent submitted that this is a reference to the attitude of the respondent only at the time of execution of the contracts and exchange.  This construction of the letter is consistent with what I have already said appeared to be the position of the respondent evident from the facsimile of TMP of 1 September 1989.  The respondent then believed the car park and access road would be built before settlement if it was to be built.  It would appear to follow that any easement that needed to be created would have been created by the applicants before settlement, and would be created notwithstanding the terms of the contract for sale. 

     While the letter of 13 November 1992 is susceptible of the construction that it related to what the intention of the respondent was at the time of exchange, it may also have been referring to an attitude that existed for the entire period between exchange and the time the letter was written.  The fact that neither the solicitor acting for the respondent nor anyone in a senior position in the respondent gave evidence and explained what the position of the respondent was at various times permits the inference to be more readily drawn that the letter refers to an attitude existing during the whole period: see Jones v Dunkel (1959) 101 CLR 298.

     In my opinion the second construction of the letter of 13 November 1992 is to be preferred and reflects the position of the respondent immediately prior to settlement.  It did not intend to co-operate with the applicants and was content for the arrangement to be made between the applicants and the Council for the provision of the bank guarantee knowing that it would be called on in due course.  This is consistent with what is said in the penultimate paragraph of the letter of TMP of 2 February 1993.

     I find that the letters of 7 and 8 December 1989 were written by TMP on behalf of the respondent at a time when the respondent did not intend to co-operate with the applicants to enable them to obtain access to the property to construct the access road and did not intend to execute whatever documents were necessary to give legal recognition to it.  While there is no direct evidence of when the letter of 8 December 1989 was sent and received, its terms clearly suggest that it was written in anticipation of settlement.  It is more probable than not that it was sent with a view to reaching VRPM before settlement occurred.

     While I have expressed the finding by reference to the intention of the respondent, the expression by a corporation of what its future conduct will be can constitute a contravention of s52 if, at the time of the representation, it did not intend to conduct itself that way: see James v ANZ Banking Group Ltd (1986) 64 ALR 347, see also s51A.

     It is now necessary to consider further the letter of 8 December 1989.  The applicants submitted representations were made by the respondent that access would be granted and documents executed without any limit as to time.  The respondent submitted that if any representation was made, it was only that access would be granted and documents executed during the period of six months provided for in the varied condition.  This, it submitted, is apparent from the letter of 8 December 1989.

     The letter of 8 December 1989 from TMP to VRPM must be considered in association with the letter of 8 December 1989 from the Council containing the amended condition.  That condition is that the guarantee would be held for a period of six months "to permit the establishment of the carpark".  After that time the Council would be free to call on the guarantee and expend the funds on the provision of car parking in the near vicinity.  The letter from TMP of 8 December 1989 repeats the reference to six months.  The letter from TMP might reasonably have been understood to be a representation by the respondent that it would grant access and execute documents during that period only and that it would not do so for any greater period or indefinitely.  However the letter of 8 December 1989 was received in the context of the respondent having earlier indicated to the applicants its willingness to co-operate to give effect to the proposal involving the Bank of Melbourne. The letter, in adopting the six months time limit, gives the appearance of simply adopting the time limit the applicants had set for themselves, when securing the variation of the condition, during which the car park and access road would be built and negotiations finalised to permit this to happen.  The reference in the letter of 8 December 1989 to six months does not have the appearance of being a qualification being imposed by the respondent on the period in which it would co‑operate and thus limiting the unqualified representation arising from the correspondence concerning the proposal involving the Bank.  It is clear that the applicants did not understand the offer to co-operate as qualified in this way and, in my opinion, they were entitled to so act.

     I find that the respondent represented immediately before settlement that it then intended to co-operate after settlement with the applicants by granting them access to the property to construct the access road and would execute whatever documents were necessary to give legal recognition to it.  When those representations were made it did not intend to co-operate and the representations were false.  Not only did it, by its statements, positively represent that to be its intention at that stage, it failed to state what its true attitude was other than what might possibly have been inferred from the statement in the letter of 8 December 1989 that "there appears to be no alternative to the Council calling up the Guarantee at the end of the six month period".  Its failure to make clear its position provides another basis for concluding that its conduct was misleading or deceptive: see Demagogue Pty Ltd v Ramenski (1992) 110 ALR 608.  The respondent engaged in conduct that was misleading and deceptive within the meaning of s52 of the TPA.

Trade or commerce

     Section 52 is enlivened when the corporation engages in the relevant conduct "in trade or commerce".  That is not an expression of unlimited application: see Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594.  The respondent submitted that any misleading or deceptive conduct that might have been engaged in was not in trade or commerce.  The conduct complained of was of the respondent as purchaser of property.

     The subject matter of the sale was a property on which six shops had been erected by the applicants which were let.  The property was not being sold with vacant possession but subject to tenancies.  The letter of 1 September 1989 from TMP to VRPM concerning the form of the contract said:

      "Re Leases:We note these are now all signed by all parties and will be handed over on settlement with the appropriate allowance."

and a letter from TMP to VRPM of 7 December 1989 immediately prior to settlement again refers to the property in the context of it being tenanted and managed by a managing agent.  So much is also apparent from the contract for sale which, in the third schedule, refers to leases for "shops 1 to 6 inclusive".

     It has been held that s52 had no application to a sale of a vacant parcel of land where the vendor, whose conduct was said to be contrary to s52, was not in the business of buying or selling land: see O'Brien v Smolonogov (1983) 53 ALR 107 and that it had no application to the sale of a property which was a dwelling house purchased at auction: see Argy v Blunts & Lane Cove Real Estate Ltd (1990) 26 FCR 112 at 127-131.  In Bevanere Ltd v Lubidineuse (1985) 7 FCR 325 a Full Court of the Federal Court determined that the sale of a business of a cosmetic clinic was in trade or commerce and the Full Court distinguished O'Brien, supra on the basis that the land was not used for any business activity, a factor that they pointed out had been relied upon by the earlier Full Court.  In Benavere, supra, the Full Court rejected the suggestion that a corporation must be engaged in multiple transactions of a similar kind for it to be engaged in trade or commerce.  It concluded that an arrangement to dispose of a business is part and parcel of the totality of the vendor corporation's activities in trade and commerce.

     In each of these cases the corporation whose conduct was said to have contravened s52 was the vendor or was acting in the vendor's interests.  In Barto v GPR Management Services Pty Ltd (1991) 105 ALR 339 Wilcox J considered the application of s52 to a corporation making representations to an employee when employing him.  While those circumstances are far removed from those of this case, his Honour made some observations of more general application at 344:

      "It has long been recognised that s52 conduct is not confined to conduct by which a corporation earns its recurring revenue.  The section has frequently been applied to capital transactions such as the sale of a business.  Bevanere Pty Ltd v Lubidineuse (1985) 7 FCR 325; 59 ALR 334 was such a case, the major issue before the Full Court being whether s52 applied to the sale by the company of its sole business activity.  The Full Court held that it did, because the sale was "part and parcel of the totality of the appellant's activities in trade or commerce".  Bevanere was cited to the High Court in Concrete Constructions but that citation provoked no mention of the case in the majority's reasons.  Neither directly or indirectly did their Honours suggest that it was wrongly decided.  Moreover, the majority did expressly envisage the use of s52 in relation to a transaction in which the corporation was a "consumer": see at CLR 602.  Having regard to the nature of a corporation, they must have had in mind a case where a corporation acquired goods or services in order to use them in its business or in some processing activity or to resell them.  In any such case, the relevant transaction would not itself be a source of income but only a means whereby income could be earned in other transactions.

 

      Under these circumstances, it seems appropriate to start with the proposition that, notwithstanding Concrete Constructions, it is still good law that the range of conduct to which s52 has potential application is not limited to the activities by virtue of which the corporation directly earns its income.  Subject to one qualification, the only question is whether the conduct is part of the corporation's total activities in trade or commerce.  The range of relevant activities is a broad one and it includes activities by virtue of which the corporation equips itself to earn income.

 

      The one qualification to which I refer is that imposed by the decision in Concrete Constructions: the relevant particular conduct must be conduct which itself has "a trading or commercial character".  Even conduct directly related to the earning of revenue may fall outside s52 if it lacks a trading or commercial character; for example the manner of driving a truck delivering goods to a customer.  Conversely, conduct which is trading or commercial in character will fall within s52 if it is encompassed within the corporation's total activities; even though that particular conduct does not directly yield income."

     The limits of the reach of s52 remain unclear.  In this matter the relevant corporation, the respondent, engaged in the misleading and deceptive conduct in the course of acquiring property and not selling it.  The view of the
minority of the High Court in Concrete Constructions, supra, was that s52 should not be treated as extending to the conduct of a corporation as a consumer: see Brennan J at 606 and McHugh J at 619.  However the majority did not view the section as limited in this way and said:

      "In these circumstances, it is not permissible to give to the heading of Pt V the effect of confining the general words of s52 to cases involving the protection of consumers alone.  So to constrict the provisions of s52 would be to convert a general prohibition of misleading or deceptive conduct by a corporation, be it consumer or supplier, in trade or commerce, into a discriminatory requirement that a corporate supplier of goods or services should observe standards in its dealings with a corporate consumer which the consumer itself was left free to disregard.  That being so, the general words of s52 must be construed as applying even-handedly to corporations involved in a transaction or dealing with one another "in trade or commerce"."

SSee also Tobacco Institute of Australia Limited v Australian Federation of Consumer Organisations Inc. (1992) 38 FCR 1.   The majority saw the scope of s52 being limited by the requirement that the conduct be "in trade or commerce".  In the present case the respondent acquired a property comprising six shops that were let.  From that I infer that it did so to acquire an income producing asset that it would retain or might sell.  In fact it has retained it.  The purchase was one in which the corporation has equipped itself to earn income: see Banks, supra at 344.8.  It was a purchase from the applicants who had developed the property by constructing the shops and tenanting them.  The transaction itself was plainly, in all respects, a commercial one.  In my opinion, the conduct of the respondent, when making the representations, was in trade and commerce.

     It follows from my reasons to this point that the applicants have made out a case that the respondent acted in a way proscribed by s52, that is, the respondent did, in trade or commerce, engaged in conduct that was misleading or deceptive.

The effect of the false representations

     Notwithstanding that conclusion, the applicants' claim for damages under s82 of the TPA will succeed only if the applicants have suffered loss or damage by that conduct.  A difficulty immediately arises in considering this issue given the course the proceedings took.  The evidence that would enable the assessment of damages was objected to and disallowed.  There is no evidence presently before the Court that would sensibly permit an assessment to be made of what the damages were if indeed any quantifiable damage was suffered.  As the majority of the High Court said in Sellars v Adelaide Petroleum NL (1994) 120 ALR 16 at 18 when considering the expression "loss or damage" in s82(1):

      "The question whether the applicants have sustained loss or damage is necessarily related to the ascertainment or measurement of that loss or damage."

     In considering whether the applicants suffered loss or damage by the conduct of the respondent I will proceed on the following basis.  The loss the applicants suffered was the loss of the opportunity to retain the funds that were secured by the bank guarantee which was ultimately called on by the Council, by satisfying the condition of the development consent by building the access road and car park.  I will assume that this loss is of value and if quantified, it would be the difference, if any, between the sum of $80,000 and the cost of constructing the access road and car park and maintaining it.

     The loss or damage compensable in proceedings under s82 is loss "by" conduct contravening s52.  The case of the respondent, in resisting the argument that it had engaged in conduct that founded a claim under s82, was based, in large part, on the terms of the contract for sale and the nature of a development approval.  The point was made that the contract for sale did not seek to impose on the respondent as purchaser any contractual obligation to create an easement or give access to construct the access road nor is the property that was to be sold the subject of any existing easement.  The sale took place on those terms.  Further, the respondent referred to the likely nature of a development consent as running with the land: see Proprietors of Strata Plan 20754, supra, though if it was satisfied by the provision of the guarantee in the present case, that feature of a development consent is ultimately irrelevant.  However ss52 and 82 can operate independently of the contractual arrangements between the parties.

     In Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514, the majority comprising Mason CJ and Dawson, Gaudron and McHugh JJ, made clear at 525 that the word "by" expresses the notion of causation and s82(1) "should be understood as taking up the common law practical or common-sense concept of causation recently discussed by this Court in March v Shamare (E & M.H.) Pty Ltd (1991) 171 CLR 506, except in so far as that concept is modified or supplemented expressly or impliedly by the provisions of the Act": see also Janssen-Cilag Pty Ltd v Pfizer (1992) 109 ALR 638 in which Lockhart J said:

      "The use of the preposition "by" in s82(1) is important; it indicates the requirement that there be a sufficient cause or link between the respondent's conduct and the recoverable loss or damage: Brown v Jam Factory Pty Ltd (1981) 35 ALR 79 at 88; Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (No 2) (1987) 16 FCR 410 at 418; 75 ALR 271.  "By" is used in s52(1) in the sense of "by reason of" or "as a result of": Munchies Management Pty Ltd v Belperio (1989) 84 ALR 700; (1989) ATPR 40-926 at 50,037.  Loss or damage must directly result from or be caused by the respondent's conduct.  The respondent's conduct must be the real or direct or effective cause of the applicant's loss; it must have been "brought about by virtue of" the conduct which is in contravention of s52: Elders Trustee & Executor Co Ltd v EG Reeves Pty Ltd (1988) 20 FCR 164; 84 ALR 734;"

     Further, as Deane J said in March, supra at 524:

      "None the less, the question of whether conduct is a 'cause' of injury remains to be determined by a value judgment involving ordinary notions of language and common sense."

     In the present case, the applicants have established that conduct of the respondent induced them to settle when they did with the arrangement in place entailing the provision of a bank guarantee and a varied condition of the development consent that would entitle the Council to call on the
guarantee.  The question that then arises is whether the loss of the opportunity to satisfy the condition by constructing the access road and car park and thus avoiding the payment of the guaranteed sum to the Council was caused by that conduct of the respondent.

     The contract contemplated settlement by 15 October 1989.  Without a collateral arrangement of the type ultimately agreed to with the Council, the applicants would not have been able to settle in December 1989 on the basis that the condition of the development consent had been satisfied.  The arrangements with other adjoining owners that would have enabled the condition to be satisfied had not by then been finalised.  By settling the sale, the applicants denied themselves the opportunity of satisfying the condition as registered proprietors.  The case of the applicants is, in essence, that but for the representations, the opportunity to satisfy the original condition by building the access road and car park would not have been lost to them.

     It is clear that the respondent would not have agreed to settle without the condition in its original terms having been satisfied or an arrangement in place of the type arrived at with the Council.  The applicants led evidence through Mr Reid that the applicants would not have settled had they known that the respondent did not then intend to create an easement in relation to the access road.  Even accepting this is so it rather begs the material question of what would have happened then.  While counsel for the applicants sought to establish through Mr Reid his views as to what would have happened if settlement had not occurred, the questions directed to this issue were withdrawn following objection and the matter was not pursued.

     A consideration of what would have happened had the representations not been made and acted upon is relevant in these proceedings in two respects.  It firstly relates to causation.  In my opinion the conduct of the respondent can only be said to have caused the applicants' loss if they can demonstrate that they would have satisfied the original condition by building the access road and car park had the representations not led them to settle on 8 December 1989.  It is necessary for the applicants to prove what they would have done on the balance of probabilities: see Sellars, supra, per Mason CJ, Dawson, Toohey and Gaudron JJ at 29.

     If they succeed in showing this, the damages they are entitled to will then have to be quantified.  I earlier made certain assumptions about how those damages might be assessed.  Their assessment may involve a consideration of what would have happened if settlement had not occurred when it did and the condition had not been varied by the Council.  The access road and car park would not have been completed for at least twelve months after 8 December 1989 because Mr Sawtell was not co-operating.  It may be appropriate to determine the damages, if any, the applicants are entitled to in the context of the commercial arrangement they had entered.  Should, for example, allowance be made for any loss the respondent might have suffered because of a delay in settlement, assuming the contract remained on foot, or allowance made for the possibility that the respondent may have sought to rescind the contract and sue?

     I raise these matters at this point because a distinction is drawn by the majority in Sellars, supra, between the proof required to show that some loss or damage arose from contravening conduct and the value of the lost commercial opportunity for the purposes assessing the damages.  The value of the loss of a commercial opportunity for this latter purpose is to be determined "by reference to the degree of probabilities or possibilities": see Sellars, supra, at 30.

     Returning to the question of causation, I am satisfied on the balance of probabilities that the applicants would have satisfied the condition by building the access road and car park by mid 1993.  There is no suggestion that they were unwilling or incapable of constructing them and by then the adjoining owners had all consented.  In the period preceding the guarantee being called on in early 1993, the Council had co-operated in the applicants' attempts to build the access road and car park and from that I infer they would have been as co‑operative over the same period had the condition not been varied in December 1989.

     It would presently be in the realm of speculation to consider whether the respondent would have, over that period, treated itself as continuing to be bound by the contract.  If it had, the condition in the development consent would have been satisfied in the likely context of a subsisting contract which would be settled when it was satisfied.  If not, then a range of possibilities may have arisen including the rescission of the contract by the respondent and the satisfaction of the condition by the applicants as registered proprietors not then bound to a contract for sale.  However, the applicants, at all relevant times, viewed the cost of complying with the condition as less than the sum the Council had indicated would be required by way of cash contribution.  They would have, in my opinion, persisted in their endeavours to construct the access road and car park and would have done so.  While the possible loss of the respondent as a purchaser might have altered their attitude to the manner in which the condition should be satisfied, there is presently no evidence to suggest their attitude would have altered for this reason even assuming there was a real prospect the respondent could have and would have withdrawn from the sale.  Again this may be a matter to be considered in the assessment of damages.

     I conclude that the loss or damage the applicants suffered was caused by the conduct of the respondent in contravention of s52 though I do so on the assumption that I earlier discussed, namely that the applicants can show some loss of value arising from the settlement occurring on the terms it did.

Time limits

     The respondent submitted that the application under s82 was not brought within the three years specified in s82(2).  The respondent submitted that the case against it is that the misleading and deceptive conduct induced the applicants to settle the sale and settlement occurred on 8 December 1989.  The application was filed on 5 November 1993.  The respondent submitted "the damage was done when settlement took place".  The operation of s82(2) has recently been considered by the High Court in Wardley, supra.  The applicants statutory cause of action arose when they suffered loss or damage.  In the joint judgment of Mason CJ and Dawson, Gaudron and McHugh JJ, the following is said at 532:

      "If, contrary to the view which we have just expressed, the English decisions properly understood support the proposition that where, as a result of the defendant's negligent misrepresentation, the plaintiff enters into a contract which exposes him or her to a contingent loss or liability, the plaintiff first suffers loss or damage on entry into the contract, we do not agree with them.  In our opinion, in such a case, the plaintiff sustains no actual damage until the contingency is fulfilled and the loss becomes actual; until that happens the loss is prospective and may never be incurred.  A deferred liability may stand in a different position but there is no occasion here to discuss that matter."

See also Quanstruct Pty Ltd v Bongiorno Ltd (1993) 113 ALR 667.

     In the present case the applicants settled and, in order to do so in the circumstances, secured a bank guarantee
payable to the Council.  The loss occurred when the opportunity to satisfy the condition of the development consent by building the car park and access was lost and the guarantee was called upon in January or February 1993.  It was then that the statutory cause of action arose under s82.  Accordingly the application is brought within the three year time limit.

The injunction

     It is unnecessary to consider at length the claim made, in the alternative, for a mandatory injunction requiring the respondent to grant access to the property to permit construction of the access road and to grant an easement over the land.  By calling on the guarantee, the Council was paid an amount that had been guaranteed to satisfy the varied condition of the development consent.  The applicants sought to lead evidence from Mr Reid that the Council might refund the money if the car park was constructed.  The respondent successfully objected to that evidence being led from that witness.  There is no evidence that the Council would adopt that course and all that is apparent from the evidence is that the condition of the development consent has been satisfied by the provision of the guarantee and the guarantee has been called on.  There is no subsisting requirement that the car park and access road be built.  An injunction in the terms claimed by the applicants would serve no apparent purpose and for that reason alone should not be granted.

The various common law claims and estoppel

     In addition to the claim under the TPA, various common law claims were also made by the applicants.  They submitted that the circumstances sustain claims based on the common law torts of deceit and negligent misrepresentation though their submissions on these matters were not detailed.  In view of the conclusion I have reached about the applicants' rights under s82, it is presently unnecessary to deal with them.

     The applicants further submitted that damages could be awarded founded on an estoppel arising from the conduct of the respondent.  Reference was made to the trilogy of comparatively recent decisions of the High Court dealing with estoppel: Legione v Hateley (1983) 152 CLR 406, Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 and The Commonwealth v Verwayen (1990) 170 CLR 394.

     It is clear from those decisions that the scope of the principles of estoppel in its various guises is evolving.  However a point has not been reached where any estoppel that might arise from the conduct of the respondent, would, on that basis, constitute a cause of action sounding in damages which is the assumption on which the submission appears to have proceeded: see Verwayen supra at 445 per Deane J but compare The Place of Equity and Equitable Remedies in the Contemporary Common Law Word, The Hon Sir Anthony Mason Vol 110 (1994) LQR 238 at 255.

     I adjourn the matter.  It will be relisted upon application to deal with the residue of the application under the Trade Practices Act 1974.

     I certify that this and the preceding forty-seven (47) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Moore.

     Associate:                       

     Date:                             30 March 1995

     Counsel for the Applicants:       Mr M.R. Aldridge

                                      & Mr P.J. Hayes

     Solicitor for the Applicants:         Vandenberg Reid

     Counsel for the Respondent:       Mr S.J. Motbey

     Solicitor for the Respondent:         Lyons & Lyons

     Date of hearing:                  25 October 1994

     Date of judgment:                 30 March 1995