Camden & Anor v McKenzie & Ors

SUPREME COURT OF QUEENSLAND

CITATION: Camden & Anor v McKenzie & Ors [2007] QCA 136

PARTIES: PETER JOHN CAMDEN and MAREE ANGELA CAMDEN (plaintiffs/appellants) v MALCOLM B McKENZIE (first defendant/first respondent) RICHARD ELLIS RETAIL MANAGEMENT PTY LTD ACN 052 372 460 (second defendant/second respondent) PERMANENT TRUSTEE AUSTRALIA LIMITED ACN 008 412 913 (third defendant/third respondent)

FILE NO/S: Appeal No 6683 of 2006 / DC No 4749 of 2004

DIVISION: Court of Appeal

PROCEEDING: General Civil Appeal

ORIGINATING COURT: District Court at Brisbane

DELIVERED ON: 20 April 2007

DELIVERED AT: Brisbane

HEARING DATE: 20 March 2007

JUDGES: Keane JA, Philip McMurdo and Douglas JJ / Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDER: 1. Appeal dismissed 2. Appellants to pay respondents' costs of appeal

CATCHWORDS: APPEAL AND NEW TRIAL – APPEAL - GENERAL PRINCIPLES – RIGHT OF APPEAL – WHEN APPEAL LIES – ERROR OF LAW – PARTICULAR CASES INVOLVING ERROR OF LAW – FAILURE TO GIVE REASONS FOR DECISION – ADEQUACY OF REASONS – where decision depended on favourable finding as to credibility of first respondent – where reasons given did not advert to conflict of evidence between first respondent and another witness or to related documentary evidence – whether reasons were adequate – whether retrial should be ordered / TRADE AND COMMERCE – TRADE PRACTICES ACT 1974 (CTH) AND RELATED LEGISLATION – CONSUMER PROTECTION – MISLEADING OR DECEPTIVE CONDUCT OR FALSE REPRESENTATIONS – MISLEADING OR DECEPTIVE CONDUCT GENERALLY – GENERALLY – where appellants entered lease with third respondent – where first respondent allegedly made representations as to refurbishment of premises – whether representations made in terms alleged – whether representations were misleading – whether representations were material to appellants' decision to enter lease / Trade Practices Act 1974 (Cth), s 51A, s 52 / Bawden v ACI Operations P/L [2003] QCA 293; Appeal No 3970 of 2002, 18 July 2003, applied / Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430, considered / Crystal Dawn P/L & Anor v Redruth P/L [1998] QCA 373; Appeal No 9868 of 1998, 17 November 1998, applied / Cypressvale P/L & Anor v Retail Shop Leases Tribunal [1995] QCA 187; [1996] 2 Qd R 462, applied / DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW) (1982) 149 CLR 431, distinguished / Fletcher Construction Australia Ltd v Lines MacFarlane & Marshall Pty Ltd (No 2) [2002] 6 VR 1, applied / Goodrich Aerospace Pty Ltd v Arsic [2006] NSWCA 187, applied / Mifsud v Campbell (1991) 21 NSWLR 725, considered / Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247, distinguished

COUNSEL: J C Bell QC, with M A Hoch, for the appellants / R S Ashton for the first and second respondents / R Perry SC for the third respondent

SOLICITORS: A.J. Torbey & Associates for the appellants / Thynne & Macartney for the first and second respondents / Clayton Utz for the third respondent

KEANE JA: On 15 December 1994, the appellants signed a lease with the third respondent in respect of a music store in shop 54 within Sunnybank Hills Shoppingtown. The appellants had actually commenced trading from the store on 21 November 1994.

On 20 May 1997, the appellants commenced proceedings against the respondents for damages for, inter alia, misleading and deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth). The appellants claimed that they had been induced to commence business at, and to take the lease of, the music store by misleading representations made orally to them by the first respondent, who was employed by the second respondent as the centre manager. The second respondent managed the shopping centre on behalf of the third respondent.

Many years later, the matter finally came on for trial in the District Court on 6 February 2006. The appellants gave evidence in support of their claim. Surprisingly, the first respondent was called as a witness in the case for the appellants.

On 18 July 2006, the learned trial judge dismissed the appellants' claim, resolving the conflict of evidence between the appellants and the first respondent on the footing that he found the first respondent to be a truthful witness and was not disposed to act upon the evidence of the appellants where it was not supported by other evidence: his Honour could find none. The appellants' action was dismissed.

The appellants contend that the reasons given by the learned trial judge were inadequate. They also contend that the circumstances in which the first respondent gave evidence were so unsatisfactory that the learned trial judge's favourable view of the first respondent's credibility should be set aside. The appellants seek an order for a new trial.

The respondents submit that the reasons of the learned trial judge afford an adequate explanation of a sufficient basis for his Honour's rejection of the appellants' case. Further, the respondents contend that the appellants' case was so lacking in substance and so riven by inconsistency that it was, and remains, doomed to fail. On this view, an order for a new trial would be pointless.

Some further reference to the case at trial and the reasons of the learned trial judge is required before I turn to discuss the competing arguments of the parties.

The case at trial

The pleaded case on which the appellants went to trial depended upon the following allegations:

between 25 September 1994 and 7 October 2004, the first respondent represented:

"that the third [respondent] had done substantial planning on further refurbishment to be carried out (hereinafter called stage 2) as follows:

the establishment of a number of new specialty shops and extension of the Mall on level 2 on the area of then vacant space (being an area to the western end of level 2 comprising approximately one third of the total floor area of level 2 part of which being the area formerly occupied by Brash's);

that one of the new specialty shops was to be a Muffin Break retail kiosk to be established in the new mall area on level 2" (the refurbishment representations).

between 25 September 1994 and 7 October 1994, the first respondent represented "that prior to the establishment of Franklins Big Fresh Supermarket, the walk-through traffic was 60,000 persons per week and it was now 95,000 persons per week" (the door count representation);

between 25 September 1994 and 7 October 1994, the first respondent represented "that the butcher shop then occupying Shop 53 was 'happening' and was a major draw card and that the entry near to Shop 53 was the second most busy in the Centre, after the Post Office entry" (the butcher shop representation);

on 21 November 1994, the first respondent represented: "Don't worry, Suncorp is 'all but signed up' and had expressed its intention to lease Shop 53" (the Suncorp representation); and

on 5 December 1994, the first respondent represented "that the Food Court refurbishment comprising the upgrading of the Food Court on Level 4 and the relocation of some of their tenants in the Food Court to Level 2 was all to occur prior to 30 March 1995" (the Christmas party representations).

It was also alleged that the first respondent showed the appellants a document comprising floor plans of the shopping centre which depicted proposed areas of expansion consistent with the refurbishment representations.

The appellants alleged that, in reliance on the first respondent's representations, they invested in the fit-out of the premises and the purchase of stock and executed a lease of the shop.

The appellants claimed that the representations were misleading and deceptive, and that the first and second respondents "breached s 52 and/or 51A of the Trade Practices Act 1974 (Cth)". It may be noted here that the allegation of a "breach" of s 51A was inappropriate, in that s 51A facilitates proof of a breach of s 52 of the Trade Practices Act. Section 51A(1) of the Trade Practices Act deems to be misleading a representation by a corporation as to "any future matter (including the doing of, or refusing to do, any act)" if the corporation "does not have reasonable grounds for making the representation". By virtue of s 51A(2), a corporation which makes a representation "with respect to any future matter" is deemed not to have had reasonable grounds for making the representation unless it adduces evidence to show that it had reasonable grounds. As Hill J said in Ting v Blanche,¹ s 51A is:

"but an interpretation section; it does not of itself create a cause of action, nor [does it] define a norm of conduct … What s 51A does, in a practical sense, in a case where it applies, is to cast the burden of proof upon the respondent corporation who has made a representation about a future matter to show that in making the representation it had reasonable grounds for so doing ".

In this case, the appellants did not expressly assert in their pleading that the respondents had made a representation as to a "future matter", and they positively asserted the bases on which it was alleged that there were not reasonable grounds for making the representations alleged.

It was the appellants' pleaded case that the first respondent made the representations alleged without reasonable grounds in that:

"(a)no major refurbishment as represented by the first defendant to the plaintiff occurred during the period of the plaintiffs' occupancy;

no re-development of level 2 took place during the period of the plaintiffs' occupancy.

Suncorp did not take up occupancy as tenant for Shop 53, upon the closure of the butcher shop at Shop 53 on 26 November 1994, and except for three short term temporary arrangements, Shop 53 remained vacant, undeveloped and in a run-down state;

the door count referred to in paragraph 6(iii) hereof was not maintained, but rather, was significantly reduced by September 1996 from 95,000 persons per week to 68,000 persons per week;

there was no upgrading of the Food Court on level 4 during the period of the plaintiffs' occupancy;

there was no relocation of some of the tenants in the Food Court to Level 2 during the period of the plaintiffs' occupancy;

there was no establishment of new specialty shops nor extension of the Mall on Level 2 as set forth in paragraph 6(ii)(a) hereof during the period of the plaintiffs' occupancy;

there was no establishment of the Muffin Bread [sic] retail kiosk in a new mall on level 2 during the period the plaintiffs' occupancy."

It may be noted that it was no part of the appellants' pleaded case that the refurbishment representations were made without reasonable grounds because the third respondent had not, in fact, engaged in the planning of the refurbishment and extension of the vacant area on level 2. Rather, the appellants' case was that there was no reasonable basis for representing that the third respondent had done substantial planning for work "to be carried out" merely because the work was not carried out. It is, therefore, not surprising that the appellants at trial made no attempt to prove with precision, or indeed at all, the nature and extent of the third respondent's planning for the refurbishment and extension of level 2 of the shopping centre at the time of the making of the refurbishment representations.

On the hearing of the appeal, the appellants were represented by Mr Bell QC and Ms Hoch of Counsel. The argument on behalf of the appellants was presented with conspicuous care and clarity. The oral argument in this Court focussed entirely upon the refurbishment representations. This was an astute course for the appellants to adopt. For reasons which I will explain in due course, reference to the balance of the appellants' allegations of misrepresentation serves only to cast grave doubt on whether the appellants had a reasonably arguable case for damages. For the purposes of the appellants' argument, however, it is appropriate to concentrate upon the refurbishment representations.

In this regard, the first and second respondents, by their pleading, admitted that:

"the first [respondent] represented to the plaintiffs that the third [respondent] intended to undertake certain refurbishment to the western end of level 2 of the shopping centre, namely that that section of the shopping centre would be gutted and the vacant shops thereby created would be refurbished as 'big box user' shops."

On the appeal, the appellants' counsel emphasised, as crucial to the appellants' case, the difference between "specialty shops" and "big box user" shops. The appellants' evidence did not explain the materiality of this distinction for their decision to take a lease of the music store except to suggest that specialty shops "would maintain walk through traffic" and were "more in keeping with what would support a music shop". It seems to have been common ground at the trial that some refurbishment did occur, but that it was not of an extent, and did not involve tenants of a kind, satisfactory to the appellants.

The evidence as to the making of the refurbishment representations

The female appellant's evidence might be regarded as sufficient to prove the making of the refurbishment representations, but only barely so. She gave evidence that the first respondent told her that the vacant area of the second level of the shopping centre was:

"going to be redeveloped and refurbished … There was no doubt about them occurring … He then produced plans which he laid out on his desk and they were large architectural type plans and he indicated to us the extent and the area … I believe he used words to the effect of 'I think we're up to plan number 7 with the refurbishments now, but we really want to get this right … We're negotiating with other stores, other shops, to increase the flow of traffic on level 2' and he named Muffin Break and McDonalds … What was represented was that there would be a refurbishment and a number of new specialty stores put in."

The female appellant said she understood the refurbishment was to include "a combination of specialty shops and mini major". She accepted that the phrase "mini major" referred to large tenants.

The male appellant's evidence did not actually establish a representation by the first respondent about "specialty shops". He said that the first respondent produced:

"architectural type drawings and he pointed to an area that I recognised as being level 2. Depicted the development of Big Fresh and the development of the western end of level 2. It depicted an expansion of the mall area and the establishment of a range of retail outlets. [The first respondent] said, 'The new owner wants to get this right. I think this is version 7. It is intended to redevelop the western end of level 2 with the establishment of these retail outlets …'"

As I have said, the first respondent was called as a witness by the appellants. This Court was informed that the appellants took this course at trial in order to prove documents to which reference will be made shortly. There were other forensic avenues available to the appellants to prove the documents, as Mr Bell QC acknowledged in the course of argument; and the circumstance that the appellants took the remarkable course of calling the first respondent as a witness in their own case was not said to be due to any error on the part of the learned trial judge. It may also be noted that the appellants sought to have the first respondent declared a hostile witness, but this application was refused. No complaint of error on the part of the judge was made in this regard either.

The first respondent's evidence in relation to the refurbishment representations was that the only plan he showed the appellants:

"prior to signing the lease was a schematic drawing I had when I was leasing them the shop which was a schematic drawing of level 2 and a leasing brochure … I explained to [the appellants] that their initial inquiry was on shop 68 which is the ex-Brashes store [sic] … I explained to them that store wasn't available because we had to get access to the back area – as you can see on the document there's a large area – and we were going to make – we were putting big box users into those spaces."

The "document" to which the first respondent referred in this passage was a schematic drawing on a leasing brochure for the shopping centre: it showed no shop fronts and was, on no view, an "architectural drawing".

The appellants also called Mr Tilby from the firm Rider Hunt who gave evidence that, at the beginning of October 1994, he met with the first respondent who provided him with a document which was a sketch plan nominating 2,611 square metres of net rental area. This sketch plan showed individual shops totalling that area. Mr Tilby was not able to identify any document shown to him as the sketch plan that he referred to in his evidence.

The first respondent denied that he had provided Mr Tilby with a sketch plan showing areas for individual shops.

The appellants were not able to put into evidence the "architectural plans" which they allege they were shown; and Mr Tilby was not able to identify the sketch plan which he said he was given by the first respondent at their meeting in early October 1994. It is important to note here that there was no suggestion that the respondents had in any way failed to observe their obligations in relation to the disclosure of documents in their possession or power relating to the action.

The appellants relied upon a number of documents to support Mr Tilby's recollection against that of the first respondent. In this regard, counsel for the appellants referred to:

a letter from the first respondent to Bankers Trust Australia Ltd ("BT") dated 14 October 1994 which contained the following:

"(4)Proposed Extension – Level 2

Plans have been submitted to Rider Hunt for indicative costing for this proposed extension. These plans were presented at the previous management meeting."

a letter from Mr Tilby to the first respondent dated 14 October 1994, which contained the following:

"CONVERSION OF VACANT SPACE TO SPECIALTY SHOPS – LEVEL 2

We have prepared indicative estimates for an extent of work described below based on a sketch of the proposed layout provided by yourself.

…

Rentable area

This indicative estimate is based on the net rentable area nominated on the sketches of 2,611 m2."

a letter from the first respondent to BT dated 31 October 1994, which contained the following:

"(7)Vacancies – Level 2

There has been an interest [sic] from potential tenants for the vacant areas on Level 2. Once the building works have been agreed, offers will be sent to these prospective tenants.

(8)Draughtsperson

Plans by Draughtsperson (Level 2) are to be costed and a tenant mix and anticipated rental levels are to be presented to Bankers Trust at the Management Meeting on the 9th November, 1994.

…"

a letter from the first respondent to BT dated 28 November 1994, which contained the following:

"(5)Vacancies

Due to the Draughtsperson going on holiday, the drawing presented and discussed at the previous Management Meeting has not been re-drawn. We have had interest by people we have shown the proposed extensions to. However it is very difficult to get any real commitments during the Christmas period.

Food Court

It is now proposed to do the Food Court Refurbishment at the same time as the Level 2 Development and the cosmetic upgrade of the Centre…"

a memorandum by the first respondent dated 7 December 1994 contained the following:

"Please find attached a drawing of the proposed extension at Sunnybank Hills Shoppingtown.

Whilst there has [sic] been several tenants contacted for this area, I would appreciate your thoughts on any 'new tenants' that may be interested in the Centre."

a document prepared by the first respondent in July 1995 described as "A Note From the Manager" which contained the following:

"I know everyone is anxious about the future extensions of the centre. Let me say things are moving, although they are slow. I believe they are positive and hopefully an announcement will be made in the near future. (I think we are up to plan eight now)."

The refurbishment representations were said to have been made on 26 September 1994. The appellants argued, both at trial and on appeal, that Mr Tilby's evidence, supported as it was by the items of correspondence dated 14 October 1994, warranted the inference that it was more probable than not that the first respondent discussed an extension and refurbishment of the vacant area of level 2 of the shopping centre involving specialty shops on 26 September 1994. The appellants' contention was that this inference should be drawn notwithstanding the first respondent's evidence to the contrary.

The reasons of the trial judge

The learned trial judge formulated the issues for determination in the following terms:

"The central issues which arose for decision are (i) what representations were made; (ii) did those or any representations induce the plaintiff to lease Shop 54 and operate a retail music store therein; and (iii) if so, what damages, if any, flow therefrom. Essentially the answers to those questions depend upon my assessment of the credibility of three persons – Mrs Camden, Mr Camden and [the first respondent] – all of whom gave evidence on the hearing and on the usefulness of the various documentary exhibits put into evidence on the hearing."²

His Honour approached the determination of the case on the basis that the issue as to what representations were actually made depended on his assessment of the credibility of the appellants and the first respondent.³ In this regard, his Honour said:⁴

"I formed views on the credibility of each of those three persons as each gave his or her evidence. I was provided with extensive written submissions by each of Mr Somers for the [appellants], Mr Ashton for the first and second [respondents] and Mr Perry SC for the third [respondent], and each counsel addressed me in support of his written submissions. Before and during the preparation of these reasons I read and reread both the evidence and those submissions and examined the documentary exhibits. [The appellants] were present throughout the addresses and, I believe, are familiar with their content.

I am now firmly of the view that, so far as credibility be concerned – and therefore the acceptability of the evidence of those three persons be concerned – the evidence of [the first respondent] was the more credible and therefore I accept his evidence in preference to that of [the appellants]. As between the [appellants], I was never convinced that I could act on it alone to find the facts which necessarily had to be found before this claim could succeed. The submissions of the [respondents] capture my own views. Mrs Camden's evidence was imprecise, and even vague, although I am convinced that she did all in her power to make a success of the business, while Mr Camden's evidence reminded me of a person who had memorised a prepared script but then could not withstand the examination represented by his cross-examination. The analyses of this evidence contained in the submissions by both Mr Ashton and Mr Perry support the conclusions I reached as to the extent to which I could rely on the evidence of [the appellants]. [The first respondent], on the other hand, was impressive and believable. He was called to give evidence in the [appellants'] case and gave his evidence in a manner which would not have met the requirements for a declaration that he was a hostile witness. His evidence did not support that given by the [appellants] on the crucial issues. He had left the second [respondent's] employ in 1997, some time after the shopping centre had been sold by the third [respondent]. I have been conscious of Mr Somers' strictures as to his inability to cross-examine [the first respondent] but that was a consequence of a decision made by him or his instructing solicitor and there is no way I can mitigate the effect of the evidence given by [the first respondent]. Neither am I convinced that his evidence, both in chief and in cross-examination, was other than truthful and honest.

The [appellants] bore the onus of proving their claim. Their evidence did not convince me to the point that I am prepared to accept it. Neither did the submissions made on their behalf."

The appellants submit that these reasons were inadequate. It is well-established that a "failure to give reasons which ought to be given amounts to appealable error".⁵ It can be seen immediately that the learned trial judge has not adverted to the conflict between the evidence of Mr Tilby and that of the first respondent or to the documentary evidence upon which the appellants relied. Before discussing this submission further, I should make some reference to the argument of the parties in relation to the applicable legal principles.

The appellants contend, with the support of the decisions of the Court of Appeal of New South Wales in Beale v Government Insurance Office of New South Wales⁶ and Fletcher Construction Australia Ltd v Lines MacFarlane & Marshall Pty Ltd (No 2),⁷ that adequate reasons for judgment will refer to the evidence which was important to the determination of the matter, and will set out material findings of fact, giving the judge's reasons for his or her findings of fact, and stating the basis on which the judge has come to prefer one body of evidence over a competing body of evidence.

As a general rule, observance of these requirements is necessary to demonstrate that litigation has been determined fairly and rationally. Adherence to these requirements ensures that rights of appeal are not rendered meaningless, and that a party affected by a decision adverse to his or her interests is not left with a justified sense of grievance that the case has not been properly considered. In short, these standards promote the conscientious public discharge of the responsibilities of a judge to litigants, as well as to the community, which has a vital interest in the integrity of the judicial process.⁸

The respondents argue, however, that the only irreducible requirement of reasons for judgment is that they should provide an intelligible explanation of the basis on which the case was decided. What is required in order to meet this irreducible minimum may vary widely from case to case: as was said in the New South Wales Court of Appeal in Mifsud v Campbell:⁹ "The extent of the duty to record the evidence given and the findings made depend, as the duty to give reasons does, upon the circumstances of the individual case." The respondents contend that, in the present case, the issue on which the appellants' case depended was whether the oral representations in question had been made. Unless that issue was resolved in favour of the appellants, their case necessarily failed. That issue, so it is said, turned on the contest of versions between the appellants and the first respondent. It was, therefore, inevitable that this crucial contest fell to be determined on the basis of the trial judge's resolution of the issue of credibility. Where the issue is whether one version of a conversation should be preferred over another, the choice between conflicting witnesses in a contest of "word against word" will inevitably be, as was said in this Court in Cypressvale P/L & Anor v Retail Shop Leases Tribunal,¹⁰ "a matter not of reasoning but of judgment". The respondents argue that, as was said in Soulemezis v Dudley (Holdings) Pty Ltd,¹¹ "where the resolution of the case depends entirely on credibility, it is probably enough that the judge has said that he believed one witness in preference to another".

The difficulty with the respondents' argument is that the case in relation to the refurbishment representations was not simply one of "word against word" as between the appellants and the first respondent. There was an evident conflict between the evidence of Mr Tilby and that of the first respondent, and the documents were significant pieces of contemporaneous evidence which bore upon the rational resolution of that conflict as well as upon the conflict between the appellants and the first respondent.

Usually, the rational resolution of an issue involving the credibility of witnesses will require reference to, and analysis of, any evidence independent of the parties which is apt to cast light on the probabilities of the situation.¹² In Goodrich Aerospace Pty Ltd v Arsic,¹³ Ipp JA, with whom Mason P and Tobias JA agreed, explained:¹⁴

"It is not appropriate for a trial judge merely to set out the evidence adduced by one side, then the evidence adduced by another, and then assert that having seen and heard the witnesses he or she prefers or believes the evidence of the one and not the other. If that were to be the law, many cases could be resolved at the end of the evidence simply by the judge saying: 'I believe Mr X but not Mr Y and judgment follows accordingly'. That is not the way in which our legal system operates …

Often important issues of credibility involve sub-issues. Often, objective facts, or facts that are probable, are capable of having significant bearing on the sub-issues. In cases of this kind, it is incumbent upon trial judges to resolve the sub-issues and to explain, by reference to the relevant facts, the conclusions to which they have come. This having been done, they should then turn to the ultimate facts in issue and explain how their decisions on the sub-issues have assisted them in forming a conclusion on the ultimate issue. It is only when adequate reasons of this kind are given that an unsuccessful party will be able to understand why the judge has believed his or her successful opponent."

Similarly, in Fletcher Construction Australia Ltd v Lines Macfarlane & Marshall Pty Ltd (No 2),¹⁵ the Victorian Court of Appeal said:

"The duty to deal with facts or evidence is not absolute. The evidence must be significant in the sense that, unless disposed of, it stands in the way of the court's conclusions. The court need not deal in terms with evidence when its importance falls away because of the manner in which the court disposes of the case. Nevertheless, if evidence is significant, it is not to be peremptorily shunted aside or ignored."¹⁶

The course taken by the learned trial judge of explaining his reservations as to the credibility of the appellants by adopting submissions made by the respondents is to be deprecated. It is a course distinctly apt to give an impression to the losing party that the case has been decided without proper consideration. That impression will not be allayed by an assurance from the judge that the submissions of the parties have been read, even several times.

In my view, however, it is not necessary to say any more about the adequacy of the general approach taken by the trial judge to the statement of his reasons for judgment. That is because it is clear that his Honour overlooked the contest of credibility between the first respondent and Mr Tilby and failed to refer to the contemporaneous documents which bore upon the resolution of that contest. The rational resolution of the issue relating to whether the refurbishment representations were made by the first respondent to the appellants required reference to these matters. The conflict between Mr Tilby and the first respondent was relevant to the issue as to whether it was more probable than not that the refurbishment representations involving specialty shops was made on 26 September 1994. It may be that resolution of this conflict in favour of Mr Tilby would not have been decisive of the refurbishment representation issue. It may well be that, for example, because Mr Tilby's evidence related to a period beginning in early October 1994, the contest between the appellants and the first respondent as to what was said on 26 September 1994 could still have been decided in the respondent's favour even if Mr Tilby was preferred as a witness to the first respondent. But that does not mean that the conflict between Mr Tilby and the first respondent could be ignored entirely. The learned trial judge failed to address this conflict at all. Similarly, the correspondence of 14 October 1994 was sufficiently relevant to require consideration in relation to the objective probabilities of the discussions between Mr Tilby and the first respondent, and between the appellants and the first respondent at about that time.

In my respectful opinion, the learned trial judge's reasons erroneously failed to deal at all with evidence which was material to his Honour's determination of the case. The oracular expression of a favourable view of the first respondent's credibility was not a satisfactory basis for the decision in favour of the respondents. It is, therefore, unnecessary to consider whether there are other reasons why the credibility finding in favour of the first respondent should be set aside.

Should the judgment be set aside?

The appellants submit that it follows that there should be a retrial of the action on the basis that a proper consideration of the issues might result in a decision in their favour. In this regard, I respectfully disagree. It does not follow that the case, or even the issue as to the refurbishment representations, should be resolved in the appellants' favour as a result of the error of the learned trial judge. Even if the finding in favour of the first respondent's credibility is set aside, there were powerful reasons, not dependent on a favourable view of the first respondent's credibility, which mean that the appellants' case should have been rejected. Accordingly, there is no occasion to order a retrial.

Even if the first respondent's evidence in relation to the refurbishment representations is ignored, it does not follow that it is open to find, as a reasonable inference from the evidence adduced by the appellants, that the refurbishment representations were a material factor in the appellants' decision to take the lease. Speaking broadly, there are three points at which the appellants' case can be seen to be less than compelling.

First, the female appellant's evidence of the refurbishment representations and, in particular, the reference to specialty shops, was not compelling. It was not supported in the most important respect by her husband's evidence of the terms of the refurbishment representations. More importantly, the appellants' case was inconsistent with the appellants' own letter of 23 May 1996 which I shall discuss presently.

Secondly, even if the versions of the refurbishment representations given in evidence by the appellants were to be accepted as accurate, it does not follow that the appellants were misled by that representation. There is no sufficient basis in the evidence on which one could conclude that the representation was misleading.

Thirdly, even if these problems were overcome, one could not conclude, on the evidence, that the refurbishment representation was a material inducement to the appellants to act to their detriment.

I will discuss these points in turn. I will then make some further observations upon aspects of the appellants' case which, viewed objectively, prevent one being satisfied that the appellants established their case on the balance of probabilities.

The making of the refurbishment representation in relation to "specialty shops"

The evidence adduced by the appellants at trial is of insufficient weight to warrant a conclusion, on the balance of probabilities, that the refurbishment representation in respect of "specialty shops" was made prior to the appellants' decision to take up the lease. The female appellant's evidence barely sufficed to "prove up" the making of the refurbishment representations. Her husband's evidence did not suffice. The great delay which occurred in bringing the action on for trial may explain the absence of greater coherence in their evidence; but this is no reason for the courts to credit the appellants with a stronger basis for their claim than they were able to swear to. If anything, the courts should be sceptical of evidence of oral discussions said to have occurred many years before.

The nearest thing to a contemporaneous account of the discussions relating to the refurbishment representations was contained in a document tendered by the appellants. This was the letter dated 23 May 1996 sent by them to the first respondent. It contained the following:

"It is with concern and disappointment that we write.

When we negotiated the lease of Shop 54, Level 2, Sunnybank Hills Shoppingtown, our entrance to Level 2 was vibrant because of the existing Butchershop, giving a positive impression to those people using that entrance. Within the first week of our business opening, that Butchershop closed. In subsequent discussions with you, it was indicated on numerous occasions that negotiations were proceeding favourably with Suncorp to occupy that position and we should be 'patient'.

It has been some eighteen months since that business closed, and except for two short term tenancies, the premises remain vacant and an eyesore. The positive impression upon entering the centre through that entrance has now been replaced with a negative, reinforced daily.

Throughout the past eighteen months we have spoken with you personally and attended centre functions, at which we have been told of impending developments within the centre; refurbished Food Court prior to March 1995**, development of additional retail area on Level 2, proposed refurbishment of the centre (Proposal 7 was the last I believe).** A group of concerned retailers within the centre wrote to the Bankers Trust, the owners of the property, through yourself seeking an answer to these outstanding issues or alternatively a definitive answer that nothing was to happen. The overview of macro and micro economic issues received in response was insulting.

Traffic flows have been reduced through the entrance in question, due in part undoubtedly, to the appearance. Promotional activities within the centre have revolved around Level 4, again doing nothing to enhance or improve traffic flows on Level 2.

The 'Nut Shack' closed down and remained an eyesore prior to being dismantled. The 'on again, off again, on again' closure of Fabric City does nothing for the confidence of customers and retailers of this centre.

In view of these circumstances we request the following action be taken:

1. A reduction in rental by 5%, effective from 1 June 1996.

2. The window of the vacant Butchershop be used to create a positive impression of the centre by having the whole window painted, saying Welcome to Sunnybank Hills Shoppingtown and a directory of businesses on Level 2. To ensure that it isn't defaced it should be painted on the inside of the window.

Your earliest response would be appreciated." (emphasis added)

The text of this letter makes no reference to any representations about refurbishment on level 2 prior to the entry into the lease. The only reference to such representations puts them in a time frame after the appellants' entry into the lease. This account of the appellants' complaints is thus quite inconsistent with the proposition that the appellants agreed to lease the shop in consequence of the refurbishment representations.

The appellants gave no evidence which might afford a rational basis on which the terms of this letter might be reconciled with their pleaded case. There is, therefore, no reason to think that the appellants' evidence was more reliable than the recollection reflected in this letter. Indeed, this letter was, as a matter of ordinary human experience, much more likely to be reliable than a recollection of events given 12 years after those events occurred.

The substance of the complaints in this letter also suggests that, so far as the shops on level 2 are concerned, the appellants' real grievance is not with the number of "specialty" shops but with the quality and performance of tenants who have from time to time occupied retail space on level 2. At this point, one may turn to discuss the appellants' case that the refurbishment representations, if made on 26 September 1994, were misleading.

Were the refurbishment representations misleading?

As to whether the refurbishment representations were misleading, the appellants point to the 14 October 1994 documentation to prove that a refurbishment including "specialty shops" was discussed between the first respondent and the appellants. These documents (and Mr Tilby's evidence), if treated as the best evidence of the first respondent's state of mind as at 26 September 1994, prove that such a refurbishment was truly being considered by the first respondent at that time. There was not a skerrick of evidence to suggest that the owner of the shopping centre had a view to the contrary.

The representation pleaded by the appellants was to the effect that the third respondent, by which the pleading clearly meant the owner of the shopping centre, had done substantial planning on further refurbishment towards the establishment of a number of specialty shops and an extension of the mall. The fact that a particular kind of refurbishment did not happen – being the basis on which it is said that the representation was misleading – is plainly insufficient to establish that the owner had not, as a matter of historical fact, done substantial planning in that regard. It is common place human experience that plans change and intentions are not fulfilled. Ironically, to the extent that the appellants relied upon the correspondence of 14 October 1994 and thereafter to show that it was likely that representations to the effect alleged by the appellants were made by him on 26 September 1994, that correspondence could be said to reflect the planning in which the owner was involved at that time. The third respondent had apparently not completed its acquisition of the shopping centre at the time the representations were allegedly made, but the appellants did not seek to make anything of this. Nor in my view could they: the first respondent was treated by them as the agent of the owner of the shopping centre for planning purposes, and they did not seek to show a difference in planning intention between the first respondent and the owner.

This was not a case in which the nature of the representation alleged was such as to entitle the appellants to invoke s 51A of the Trade Practices Act even if it be accepted, somewhat generously in their favour, that they had by their pleading actually purported to do so. The refurbishment representation was a representation about a state of present fact, namely the state of planning by the third respondent as at 26 September 1994, not a promise of what it intended to do in the future or a prediction of what would occur. The appellants simply did not attempt to prove that the owner had not planned for a refurbishment that would have answered the very general terms of the refurbishment representation. Counsel for the appellants sought to meet this deficit in the appellants' case by emphasising that the pleaded refurbishment representation referred to "refurbishment to be carried out", and argued that the phrase "to be carried out" made the representation one as to a "future matter" within the meaning of s 51A of the Trade Practices Act. That argument cannot be accepted. In DKLR Holding Co (No 2) Pty Ltd v Commissioner of Stamp Duties (NSW),¹⁷ Gibbs CJ said:

"The words 'to be', before a past participle, and used in relation to a noun, can express obligation, intention, possibility or simple futurity; the sense must in every case depend on the context in which the words appear."

In the context of the pleaded refurbishment representations, the "refurbishment to be carried out" cannot be understood as being other than that which had, to that time, been the subject of "substantial planning". The phrase "to be carried out" must be understood as referring to refurbishment planned to be carried out. It would be quite wrong to understand the phrase as expressing obligation or fixed intention as opposed to possibility in accordance with the then plans. The context makes it clear that the allegation is of a representation about what is then planned – and may change – not what is promised will be carried out.

Materiality

It is difficult to accept that the reference, on the female appellant's evidence, in the refurbishment representations to "specialty shops" was truly material to the decision by the appellants to take up the lease.

Mr Ashton of Counsel, who appeared for the first and second respondents, made the point that the Offer to Lease which the appellants signed contained an acknowledgment and agreement that any representations made by the first respondent not included in the offer document was not material. The female appellant gave evidence that she had read and understood the acknowledgment and expected the owner to act upon it. A disclaimer of this kind cannot defeat a claim for relief from the consequences of a contravention of s 52 of the Trade Practices Act; and the evidentiary weight accorded to such a disclaimer may vary. It will often be explained away by other evidence. In this case, however, no explanation supporting the materiality of the refurbishment representations was forthcoming from either appellant.

Mr Perry SC, who appeared for the third respondent, emphasised that the business plan prepared by the appellants in October 1994 to support an application to their bank for financial support made no reference to the refurbishment representations. Its absence from the business plan reflected, either the fact that the representation had not been made, or the fact that it was immaterial.

If the points made by Mr Ashton and Mr Perry stood alone, they might not suffice to compel a tribunal of fact to reject the appellants' sworn testimony that the representations were made and were material to their decision to take the lease. But these points did not stand alone.

Other unsatisfactory aspects of the appellants' case

It is appropriate at this point to mention other aspects of the appellants' case which render the appellants' case distinctly improbable.

The terms in which the material misrepresentations alleged by the appellants appeared in different manifestations over time. In this regard:

in paragraph 7(iv) of the amended plaint of May 1997, it was alleged that the first respondent had represented to the appellants that "as a result of the refurbishment, the patronage of the shopping centre would increase substantially". The appellants pleaded that they relied upon this representation in entering the lease. These allegations were repeated in the further editions of the appellants' pleading dated 7 December 2000 and 25 July 2002. In the appellants' pleading of 5 August 2004, these allegations were abandoned; and

in the appellants' pleading of 5 August 2004, it was alleged in paragraph 7(viii) for the first time that the first respondent had represented to them that "the regular walk through traffic in the shopping centre was 95,000 persons per week". The appellants pleaded that they relied upon this representation in entering the lease. In the further pleading of 5 August 2004, these allegations were abandoned.

By the time the matter came on for trial, the appellants alleged that they relied upon all of the pleaded representations in coming to their decision to take the lease and set up business in the shopping centre. This case was shown to be largely without substance by the evidence of the female appellant. She said that the appellants made the decision to sign the offer of the lease of the premises on 24 October 1994 when they made the necessary arrangements for a loan and overdraft facility in respect of the business. The Suncorp and Christmas party representations of November and December 1994, if made, could have had nothing to do with the appellants' decision to commit to the lease of the shop and associated expenditure. And, yet, the appellants proceeded to trial on the basis that they seriously contended that they were induced to take up the lease by the Suncorp and Christmas party representations. The undeniable lack of substance in this case was only elicited in cross-examination of the female appellant.

The chronology of the appellants' decision-making established by this evidence is directly destructive of their case insofar as it depends on the allegation that their decision to take up the lease was induced by the Suncorp representation or the Christmas party representations. It also casts a pall of doubt on the case which is dependent on the refurbishment representations. Like the proverbial 13th chime of a clock, it is not only clearly wrong in itself, it throws into doubt all that precedes it.

Conclusion and orders

In my respectful opinion, the reasons of the learned trial judge did not afford a satisfactory basis for the determination of the case. Nevertheless, the decision of the learned trial judge to dismiss the appellants' action was correct. Even if one ignores the credibility finding in favour of the first respondent, on the evidence adduced by the appellants, a court could not be satisfied, on the balance of probabilities, that they had a sound case for damages for misleading conduct on the part of the respondents.

The appeal should be dismissed.

The appellants should pay the respondents' costs of the appeal.

PHILIP McMURDO J: I agree with Keane JA.

DOUGLAS J: I have had the advantage of reading the reasons for judgment of Keane JA and agree with him and with the orders proposed by his Honour.

Footnotes

1. (1993) 118 ALR 543 at 554. ↩

2. Camden v McKenzie & Ors, unreported, Wylie QC DCJ, DC No 4749 of 2004, 18 July 2006 at [2]. ↩

3. Camden v McKenzie & Ors, unreported, Wylie QC DCJ, DC No 4749 of 2004, 18 July 2006 at [2]. ↩

4. Camden v McKenzie & Ors, unreported, Wylie QC DCJ, DC No 4749 of 2004, 18 July 2006 at [3] – [5]. ↩

5. Bawden v ACI Operations P/L [2003] QCA 293 at [29]; Crystal Dawn Pty Ltd v Redruth Pty Ltd [1998] QCA 373. ↩

6. (1997) 48 NSWLR 430 at 431. ↩

7. [2002] 6 VR 1 at 31 – 33. ↩

8. Bawden v ACI Operations P/L [2003] QCA 293 at [29]. ↩

9. (1991) 21 NSWLR 725 at 728. ↩

10. [1996] 2 Qd R 462 at 484. ↩

11. (1987) 10 NSWLR 247 at 280. ↩

12. Cf Expectation Pty Ltd v PRD Realty Pty Ltd (2004) 209 ALR 568. ↩