Jacara Pty Ltd v Auto‑Bake Pty Ltd

Federal Court of Australia|1996-08-01|Before: Sundberg J

BACKGROUND 1 The applicant has sued the second respondent ("Perpetual") for relief under Part VI of the Trade Practices Act 1974 arising out of representations alleged to have been made to its director, Ashley Williams, by Perpetual's agent, Philippa Robertson , which it claims were misleading and deceptive and upon which it relied in entering into a lease of a shop in the Parkmore Shopping Centre from which to carry on business as a biscuit maker. 2 The representations alleged are these: · On the completion of the extensions and renovations then being carried out at the Centre ("the redevelopment") there would be a substantial increase in the number of customers attending the Centre · Prior to the commencement of the redevelopment there had been approximately 125,000 customers who attended the Centre each week, but this number would rise by at least 50 to 60 per cent following the redevelopment · The Food Hall would have only food shops in it · Stage 1 of the redevelopment, which included the Food Hall, would open in late 1994 and would be part of a two stage redevelopment · The redeveloped Food Hall would be attractive, relaxing, inviting and well lit, thereby attracting customers · The applicant's turnover would increase with the completion of each of the two stages of the redevelopment · All the other kiosks in the Food Hall had been let to well known food brand name tenants · Each of the kiosks would be fully operational by Christmas 1994 · The applicant could easily take $3,000 per week · With takings of $3,000 per week the business would clear $1,350 net per week · The applicant's business would be highly profitable · The applicant's rent was tied to its turnover, and rent payments would be easily met on weekly takings of $3,000. 3 The statement of claim also alleges warranties to the same effect as the representations, and breach of Perpetual's duty of care to ensure that information supplied to the applicant by Perpetual's agents was accurate. The applicant seeks an order that the lease be set aside, and also damages and other relief. By its defence Perpetual admits that Ms Robertson had told Mr Williams that there were approximately 125,000 customers who attended the Centre each week prior to the redevelopment, and that stage 1 of the redevelopment included the Food Hall that would open in late 1994. Otherwise it denies having made the representations and given the warranties alleged. An affidavit sworn by Mr Williams verifies the representations and warranties pleaded.

THE SIMILAR FACT MOTION 4 The applicant has applied on motion for an order admitting into evidence at the hearing of the application the "similar fact" evidence contained in five affidavits. The first is that of Gary Lee, who had been a tenant of shop Z3 in the Centre. He says that prior to entering into his lease Ms Robertson said to him: · On completion of the redevelopment there would be a substantial increase in the number of customers attending the Centre · Prior to the redevelopment 125,000 customers per week attended the Centre · His rent of $80,000 per annum would be "easily payable" as there would be a substantial increase in customers with the opening of the Big W store and the completion of the redevelopment · His business would be highly profitable. 5 In her affidavit Eva Pavlidis, who had been a tenant of Shop E2, states that Robertson told her: · When the redevelopment was completed there would be a substantial increase in the number of customers attending the Centre · Prior to the commencement of the redevelopment 148,000 customers had attended the centre each week · After the redevelopment customer traffic would increase to between 175,000 and 180,000 per week · The Centre would use high quality fittings to make it attractive for customers, and there was a big housing estate being built in the neighbourhood, and as a result traffic would increase to at least 148,000 customers per week and would continue to increase after the redevelopment was complete · Turnover at the shop would be so good that takings would easily exceed $7,000 per week initially, and much more on completion of the redevelopment · The lease of the shop would provide her with a wonderful opportunity. 6 In his affidavit Godwin Fava, who had been a tenant of shop Z5, says that Ms Robertson told him: · At the present time about 125,000 people a week were attending the Centre · She expected traffic flow to increase by about 40 per cent once the redevelopment was complete; the numbers would rise to 150,000 and eventually to 170,000 · There was to be a $2 million advertising campaign, and this and pamphlet drops would result in a substantial increase in numbers attending the Centre - "there will be people everywhere" · She agreed with Mr Fava's prediction of takings of $8,000 and $10,000 per week, which she said were achievable · On takings of $8,500 per week the rent would be easily achieved · The people who worked out the Centre rentals knew what gross profits would be achieved by each outlet. Mr Fava also says that Ms Robertson opened a black book at a page which disclosed a predicted increase in customer numbers to 150,000, and said that she should not be showing him the black book. 7 In her affidavit Sang Kyu Lee, who with her husband had been a tenant of shop E2, says that Robertson told her: · Currently about 125,000 customers per week attend the Centre · There would be a substantial increase in customer numbers on completion of the redevelopment, and the number would increase thereafter. Ms Lee's husband confirms the contents of his wife's affidavit.

EVIDENCE ACT 8 Section 56 of the Evidence Act 1995 provides: "(1) Except as otherwise provided by this Act, evidence that is relevant in a proceeding is admissible in the proceeding. (2) Evidence that is not relevant in the proceeding is not admissible." Section 55(1) provides: "The evidence that is relevant in a proceeding is evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding." Section 97(1) provides: "Evidence of the character, reputation or conduct of a person, or a tendency that a person has or had, is not admissible to prove that a person has or had a tendency (whether because of the person's character or otherwise) to act in a particular way, or to have a particular state of mind, if: (a) the party adducing the evidence has not given reasonable notice in writing to each other party of the party's intention to adduce the evidence; or (b) the court thinks that the evidence would not, either by itself or having regard to other evidence adduced or to be adduced by the party seeking to adduce the evidence, have significant probative value." Section 135 provides: "The Court may refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might: (a) be unfairly prejudicial to a party; or (b) be misleading or confusing; or (c) cause or result in undue waste of time."

SIMILAR FACT EVIDENCE 9 Section 97 assumes that the evidence of character, reputation, conduct or tendency to which it refers is relevant to the case in question. Before the questions posed by pars (a) and (b) of s 97 arise, the evidence of a person's character, reputation, conduct or tendency must be relevant in the sense described in ss 55 and 56. If the evidence does not pass the relevance test, it is not admissible: s 56(2), and there will be no occasion to inquire whether it has significant probative value. The test of relevance is whether the evidence could rationally affect the assessment of the probability of the existence of a fact in issue in the case. That effect may be direct or indirect. Once evidence of a person's character, reputation, conduct or tendency is accepted as relevant, it is nevertheless inadmissible if it would not have significant probative value. In Mood Music Publishing Co Ltd v De Wolfe Ltd [1976] Ch 119 at 127 Lord Denning MR, with whom the other members of the Court of Appeal agreed, said that while in criminal cases evidence of similar facts is not admitted unless its probative value is so strong that it should be admitted in the interests of justice, in civil cases evidence of similar facts is admitted if it is logically probative; that is, if it is logically relevant in determining the matter in issue. That distinction has been adopted in this Court: Jaldiver Pty Ltd v Nelumbo Pty Ltd (1993) ATPR 46‑097. See also Sheldon v Sun Alliance Ltd (1989) 53 SASR 97 at 145. Section 97 applies to civil and criminal cases, and accordingly has displaced the distinction. 10 Similar fact cases decided under common law regimes are useful as illustrations of "relevance" in a similar fact context under the Evidence Act. Generally speaking, proof that a person has on other occasions engaged in conduct similar to that alleged against him in the litigation does not tend to prove that he engaged in the conduct alleged. Thus in Turner v Jenolan Investments Pty Ltd (1985) ATPR 40,571, a s 52 case about representations in connection with the purchase of home units, Beaumont J refused to admit the evidence of a number of other purchasers to the effect that the respondent's agent had made representations to them similar to those alleged by the applicant. His Honour said that the evidence "cannot be probative of the facts in issue in respect of which it was tendered, ie, the terms of the conversation between Mr Londy and Messrs Turner". Similarly in Aroutsidis v Illawarra Nominees Pty Ltd (1990) 21 FCR 500, a shopping centre case, Hill J refused to admit evidence that the respondent had made representations to other lessees to a similar effect to those alleged to have been made to the applicant. His Honour said that the evidence was not logically probative of the terms of the conversation between the applicant and the respondent. Both Beaumont J and Hill J observed that the evidence sought to be introduced did not establish a system or pattern of conduct or a business practice. 11 Common law decisions are also useful as illustrations of what might constitute "significant probative value" for the purposes of s 97. Cf Zaknic Pty Ltd v Svelte Corporation Pty Ltd (1995) 140 ALR 701 at 705. In Perry v The Queen (1984) 150 CLR 580 at 586 Gibbs CJ said that to be admissible similar fact evidence must have a "strong degree of probative force". The fact that it has some probative value is not enough. In Hoch v The Queen (1988) 165 CLR 292 at 294‑295 Mason CJ, Wilson and Gaudron JJ said that "assuming similar fact evidence is to be relevant to some issue in the trial, the criterion of its admissibility is the strength of its probative force". They went on to say that this "strength" lies in the fact that the evidence reveals striking similarities, unusual features, underlying unity, system or pattern such that it raises, as a matter of common sense and experience, the objective improbability of some event having occurred other than as alleged. See also Boyce v Cafred Pty Ltd (1984) 4 FCR 367 at 370‑371. As Lehane J said in Zaknic at 705, "where in reported cases evidence of this kind has been admitted, it has been, as a matter of common sense, clearly and strongly probative of the relevant fact in issue". 12 In deciding whether to admit evidence of similar facts, each case must be considered with close regard to its particular circumstances: D F Lyons Pty Ltd v Commonwealth Bank of Australia (1991) 100 ALR 468 at 478 and Drambo Pty Ltd v Westpac Banking Corporation (unreported, Federal Court, 1 August 1996). Section 135 confers a discretion to refuse to admit evidence if its probative value is substantially outweighed by the dangers referred to in that section.

THE PRESENT CASE 13 All deponents gave evidence about representations said to have been made by Ms Robertson about pre‑development foot traffic. Perpetual has admitted that she made these representations, and accordingly evidence about that topic is irrelevant. In relation to the post‑redevelopment foot traffic, the evidence given by Mr Williams is that Ms Robertson said there would be a substantial increase of between 50 and 60 per cent in the number of customers after the redevelopment. Mr Lee says that Ms Robertson spoke of a substantial increase. No percentage or numbers were mentioned. No other deponent mentions the Big W store. Ms Pavlidis said that Ms Robertson spoke of an increase to between 175,000 and 180,000 per week, and on another occasion of an increase to at least 148,000 per week, with a continuing increase after the redevelopment. No percentage was mentioned. No other deponent mentions the figure of 148,000, nor that any increase in customer numbers would result from the high quality of the Centre's fittings and the completion of the new housing estate. Mr Fava says Ms Robertson mentioned a 40 per cent increase on current figures. He is the only similar fact deponent to mention a percentage, but his percentage differs from that asserted by Mr Williams. Mr Fava's recollection that Ms Robertson said that numbers would rise to 150,000 and eventually to 170,000 is not mentioned by any other deponent. Nor does any other deponent refer to Ms Robertson's black book containing the reference to 150,000 persons. Mr Fava also mentioned other things said by Ms Robertson that are not mentioned by anyone else: the $2 million advertising campaign and the pamphlet drop that would help increase the number of customers. Ms Lee said that Ms Robertson spoke of an substantial increase in numbers. She does not mention percentages or numbers. 14 The question posed by ss 55 and 56 of the Act is whether the evidence of the five deponents could rationally affect the assessment of the probability that Ms Robertson told Mr Williams that there would be a substantial increase of between 50 and 60 per cent in the number of customers at the Centre after completion of the redevelopment. In view of the differences between the accounts given by Mr Williams and each of the five deponents, I doubt that it could. However I am quite clear that, whether taken alone or in conjunction with Mr Williams' evidence, the evidence sought to be admitted does not have significant probative value. The differences to which I have referred make it impossible to say that the evidence reveals striking similarities, unusual features, underlying unity, a system or pattern of behaviour, or a business practice, so as to endow what was said with the "strength" required for evidence to have significant probative value. 15 As to profitability, Mr Williams' account is that Ms Robertson said he could expect that at least 1 per cent of customers would purchase from his store, that on this basis he would easily take $3,000 per week, that on these takings the business could expect a profit of 45 per cent (namely $1,350 per week), and that he would have no problem meeting the rent. According to Ms Pavlidis, Ms Robertson said that her shop would easily take $7,000 per week initially, and more on completion of the redevelopment. The fact that Ms Robertson told Ms Pavlidis that her carvery products, sandwiches and drinks business would easily take at least $7,000 per week and more when the redevelopment was complete, could not, in my view, rationally affect the assessment of the probability that Ms Robertson told Mr Williams he would easily take $1,350 per week from his biscuit‑making business. Even if Ms Pavlidis' evidence were probative in that sense, it clearly does not have significant probative value. 16 The fact that Ms Robertson agreed with Mr Fava that his forecast of takings of $8,000 to $10,000 per week were achievable, and that he would thereby be able to pay his rent, could not, in my view, rationally affect the assessment of the probability that she told Mr Williams that based on 1 per cent of traffic flow purchasing from his shop, he would easily take $3,000 per week, and could expect a profit of 45 per cent, namely $1,350 per week. Even if it could, the evidence would not have significant probative value. 17 The fact that Ms Robertson told Mr Fava that the $80,000 rent for his Asian food shop would be "easily payable" with a substantial increase in customers that were expected to result from the opening of the Big W store and the completion of the renovations, could not, in my view, rationally affect the assessment of the probability that she told Mr Williams that he would easily take $1,350 per week from his biscuit‑making business, and so would have no problem paying his rent. The exchange between Mr Lee and Ms Robertson did not mention turnover or profit figures. Mr Lee also said that Ms Robertson told him that his Asian food business would be "highly profitable". That is what Mr Williams says that she told him about his business. No other deponent asserts that Ms Robertson said this. It may be that Mr Lee's evidence on this point could rationally affect the assessment of the probability that Ms Robertson said the same thing to Mr Williams. But Mr Lee's evidence could not have significant probative force. Taken together with Mr Williams' evidence, it establishes no system or pattern or business practice on Ms Robertson's part. Nor could two bland statements about a business being "highly profitable" be said to be strikingly similar or to possess unusual features or an underlying unity. 18 I have dealt with the evidence of the similar fact deponents individually. If their evidence is taken together, it does not establish a system or pattern or business practice, or throw up strikingly similar representations. Their accounts of the relevant conversations are simply too dissimilar. Ms Robertson mentioned no turnover or profit figures to Mr Lee. He was the only one whose business she said would be highly profitable, and to whom she mentioned the Big W store. Ms Pavlidis was the only one who was told of the wonderful opportunity her lease would provide. She was the only one to whom Ms Robertson volunteered a turnover estimate. Mr Fava volunteered his own estimate, and Ms Robertson agreed with it. Mr Fava was the only one to whom Ms Robertson said that the people who worked out the Centre rentals knew what gross profits would be achieved by each individual outlet, and that she should not be showing him the black book containing the 150,000 customer estimate. The common feature of Mr Lee's and Mr Fava's statements is that Ms Robertson told both that their rent would be easily payable. The difference between the two in this respect is that no turnover figure was given for Mr Lee whereas Ms Robertson agreed with Mr Fava's own estimate.

DISCRETION 19 Even if I had been of the opinion that the evidence sought to be adduced was not to be excluded as lacking significant probative value, I would have refused to admit it on the ground that its probative value was substantially outweighed by the danger that it might cause or result in undue waste of time. The case will be a long one. Counsel estimated at least ten days, even without the similar fact evidence. Because of this, the hearing date that had been fixed on the Registrar's estimate of five days has been vacated. Allowing for material answering the claims made by the similar fact deponents, and for cross‑examination of the deponents on each side of the similar fact debate, the case would last at least thirteen days. A case of that length will cost the parties more than the $200,000 in dispute. That is an argument for avoiding the "cobweb of subsidiary factual disputes" that is likely to arise out of the admission of the similar fact evidence. Cf D F Lyons at 478 and Drambo at 31. Further, because of the disparities between the accounts of the similar fact deponents, I am not satisfied that the extra length of the case incident upon the admission of their evidence would have a countervailing benefit in assisting the resolution of the primary issues. In addition I observe that counsel told me that Ms Pavlidis, Mr Gary Lee and Mr Fava have been in litigation with Perpetual in relation to representations relating to their shops. That litigation has been settled. The other two deponents are currently suing Perpetual in relation to representations made about their shop. All deponents have an axe to grind, and I would have taken this into account in the weighing exercise contemplated by s 135, that is to say, I would have regarded their partisan feelings as reducing the probative value of their evidence.

CONCLUSION 20 The motion notice of which was filed on 1 March 1999 should be dismissed with costs. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sundberg.

Solicitors for the Applicant: Taylor Splatt & Partners

Solicitors for the Respondent: Maddock Lonie & Chisholm

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