Brudenell v Gaygen Fern Pty Ltd [2002] VSCA 71

7. The Court has before it two appeals from judgments given in the County Court at Melbourne on 28 June 2000 against the appellant, John Brudenell, who was the second-named defendant in two actions commenced as complaints in the Magistrates' Court of Victoria at Melbourne and transferred from that court. In County Court proceeding No. 5190 of 1998 judgment was given in favour of the plaintiff Gaygen Fern Pty Ltd for $25,193.83 and in County Court proceeding No. 5194 of 1998 judgment was given in favour of the plaintiffs Gaygen Fern Pty Ltd and Christine Soo Lin Gan for $20,965.31. Those amounts included interest to the date of judgment.

10. Each complaint, of which is in the form required by the Magistrates' Court Civil Proceedings Rules 1989, as then in force, states as the nature of the claim "breach of contract/misrepresentation". In each case by the particulars of claim, the plaintiff, or one or other of the plaintiffs, claimed against the first defendant, a company, as a debt moneys due, but unpaid, for computer software consulting services performed by one or other of two individuals, respectively, on behalf of the plaintiff company or one or other of the plaintiffs, together with interest, pursuant to a series of contracts. In each case the particulars of claim alleged further or alternatively the making by the first defendant by its servants and agents the second and third defendants of misrepresentations, induced by which and in reliance on which the plaintiff or one of the plaintiffs entered into and performed or continued to perform the contracts. That part of the particulars concluded in each case that the first defendant had engaged in misleading or deceptive conduct or conduct likely to mislead or deceive contrary to the provisions of s.52 of the Trade Practices Act 1974 (Cth) ("TPA") and s.11 of the Fair Trading Act 1985 ("FTA"), which was in force at the

time. The particulars then turn to the second and third defendants. In proceeding No. 5190 of 1998 they read:

"24. Further or alternatively, the Second and Third Defendants:

24.1 have aided and abetted, counselled or procured the First Defendant in its wrongful conduct and are liable as principals pursuant to the provisions of section 75B of the TPA and section 31 of the FTA.

24.2 have engaged in misleading or deceptive conduct or conduct likely to mislead or deceive contrary to the provisions of section 11 of the FTA.

25. As a result of the breaches and wrongful conduct, the Plaintiff has suffered loss and damage.

Loss of income for the period 5 August 1997 to 12 January 1998, the day on which Haines commenced alternative employment."

WHAT OTHER RELIEF OR REMEDY (IF ANY) ARE YOU CLAIMING?

A. Interest pursuant to the Supreme Court Act

27. Save for paragraph numbers, dates and amounts and save that there are two plaintiffs, the particulars of claim in proceeding No. 5194 of 1998 are exactly the same except that the words "pursuant to the Supreme Court Act" do not appear.

30. Judgment in default of defence was, on 26 August 1999, entered in each proceeding against the first-named defendant, the company, for the amount claimed and interest to that date. It is clear from the heading to and terms of the default judgments that they were for debt as opposed to damages.

33. The plaintiffs did not proceed against the third defendant as he had been declared bankrupt in 1998.

36. The two proceedings were heard together by the County Court judge. Her Honour found that the appellant had made the representations alleged against him; that they were false and misleading; that, so far as they related to the future, there was no reasonable basis for them; and that the plaintiffs suffered loss and damage as a result of the representations. Those findings are not challenged before us, though the quantification of the judgment sums is attacked.

39. This morning the Court gave the appellant leave to amend the grounds of appeal in each appeal. There are now four grounds of appeal and the appellant's outline of argument contains a number of submissions. This morning, however, Mr Nash for the appellant advanced, as I understood him, only three or, according to how one divides them, four arguments. I therefore deal only with them.

42. After explaining the amendments to the grounds, Mr Nash said that the essential problem with her Honour's decision was to be found in the opening remarks in her reasons, whereby, so he submitted, her Honour had equated contravention of the Trade Practices Act with breach of contract, an error which, he said, permeated the relevant parts of the judgment. That equation was, he continued, contrary to the exposition by the High Court of the measure of damages for loss "by" misleading conduct (or, from another viewpoint, the exposition of causation under the Act) in Gates v. City Mutual Life Assurance Society Ltd[1]; and Marks v. GIO Australia Holdings Ltd[2], to which may be added Henville v. Walker[3]. The damages awarded under the Trade Practices Act must be damages caused by the misrepresentations, not compensation for loss (or disappointment) of expectations. There was here no evidence of any damage arising from the misrepresentations, he submitted. There should have been evidence of what would have happened if the plaintiff or plaintiffs had not entered into the contracts. That, he said, was the nub of the issues. The difficulty for the appellant is that, as Mr Nash acknowledged, this argument was not advanced below. Mr Nash accepted that the only reference to causation in the appellant's sets of written submissions below did not go to the point now raised. Had the point been raised below, evidence to answer it would have been admissible. Mr Nash accepted that the plaintiffs could have applied for leave to re-open their cases if the point had not been taken until the close of evidence and, as I understood his concession, and, in any event, as I think, that leave would probably have been granted. But, he said, the judgments were for amounts which had no connection with the misrepresentations. The answer to that last point and to the submission generally is, as was stated by the presiding judge during argument, that, having regard to the way the proceeding was conducted below, her Honour could fairly assume that there was no dispute but that the amount of damages recoverable under the Act and the amount of the debt (or damages for breach of contract) coincided, as can occur. No argument was advanced before us why the sums awarded were not in fact correct in amount save, of course, for the argument that there was no evidence at all, an argument which I acknowledge clearly embraces the point.

45. Mr Nash next submitted that if the judgments were for the contract sums (by which he said he meant were on the contracts) a merger had occurred on the entry of the judgment in default against the first defendant, the company, because the plaintiffs' rights against the company and the appellant were in the alternative. That would not be so, he volunteered, so far as the liability was joint or cumulative. It is unnecessary to consider whether in the situation postulated by the submission a merger would have occurred, for, in my opinion, although each judgment sum may be equivalent in amount to the amount due under the contract or contracts plus interest, it is clear from the particulars of claim set out earlier, with their reference to loss and damage and loss of income and from references in her Honour's reasons for judgment, which I shall mention, that the judgments were for damages under the Act awarded pursuant to s.87. In the last two pages of her Honour's reasons, she stated that the plaintiffs had "suffered loss and damage as a result of those representations" and spoke of the plaintiffs' "recovering damages as a result of the misrepresentations made by Brudenell". Mr Nash volunteered that the appellant could not contend that, if the judgments given by her Honour were for sums under the Trade Practices Act, there was any merger. The "last leg" of the argument on which the first ground of the amended grounds of appeal was based, being a ground alleging an election to obtain judgment for debt against the company and to abandon alternative statutory claims, Mr Nash said, broke down and he did not put the argument for it strongly.

48. 11 There was reference in the course of discussion to an argument noted by her Honour, that the plaintiffs were not entitled to recover damages for the misrepresentations because of their failure to plead a claim under s.82 of the Act. The short answer to that argument is that her Honour made clear in her closing remarks that she was acting under s.87 and that by sub-s.(1C) of that section as then in force an application might be made under sub-s.(1A) as then in force independently of any existing proceeding under another provision of Part VI of the Act.[4] Sub-section (1A) empowered her Honour to make such order as she thought appropriate against the appellant as a person who, by virtue of s.75B(1), was a person who was involved in the contravention by the first defendant of s.52 if, as she did, she considered that the orders would compensate the plaintiffs for the loss or damage suffered by them. In my view, the respondents can support the judgments of her Honour by reference to any sub-section or sub-sections of s.87. In response to the respondents' reliance on s.87, Mr Nash submitted that the plaintiffs should have expressly pleaded a reference to s.87(1A). In my opinion, in the circumstances of this case at least, the plaintiffs were not obliged to do so. It must be remembered that the proceedings began as complaints in the Magistrates' Court and that the concluding words of the complaint which I have set out earlier in bold capital letters were prescribed by form 4a of the Magistrates' Court Civil Proceedings Rules 1989. Those concluding words do not ask for the specificity which might be found in a prayer for relief in a Supreme Court pleading.

51. 12 In his concluding submissions Mr Nash, with his usual candour, stated that, if the Court said that causation was not sufficiently raised below and that it was now too late to raise it, the appellant had significant difficulties. I agree.

54. For the reasons I have given I would dismiss these appeals.

58. I agree. I would only wish to add that the proposition which I put to counsel in the course of argument (and referred to by Batt, J.A.) was not, of course, one which purported directly to reflect the principles laid down by the High Court in Gates v. City Mutual Life Assurance Society Ltd[5] or in Marks v. GIO Australia Holdings Ltd[6], but was an attempt to put a proposition related to the manner in which the case had been fought in the County Court. It was a suggestion made in the light of the possibility that such a claim might, in certain circumstances, coincide with the loss of income. Such a view, albeit one expressed in terms which suggested that it would not be the usual but perhaps an exceptional case, was referred to by Gaudron, J. in Marks at 504, where she referred to the decision in Collings Construction Co Pty Ltd v. Australian Competition & Consumer Commission[7]. Of course, as Batt, J.A. has carefully explained, this case was fought upon an assumption arising from the absence of any real contention that the amount claimed was in dispute.

66. The order of the Court therefore will be that the appeals are dismissed.

(Discussion ensued re costs)

ORMISTON, J.A.:

75. In the circumstances we do not think it is a suitable case for awarding indemnity costs and therefore the order of the Court, so far as costs are concerned, is that the appellant pay the respondents' costs of and incidental to the appeals.

[2] [1998] HCA 69; (1998) 196 C.L.R. 494 at 504-5, 510, 512-13 and 514.

[3] [2001] HCA 52; (2001) 75 A.L.J.R. 1410.

[4] Mayne Nickless Ltd v. Multigroup Distribution (Services) Pty Ltd (No.2) (2002) ATPR para 41-850 at p.44,532.

[7] (1998) 43 N.S.W.L.R 131.