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[1996] FCA 88
Federal Court of Australia
1994-07-04
Finn JJ, Moore J
Original judgment source is linked above.
THE COURT: Introduction This litigation, in which only a relatively small sum of money is at stake, arises out of the sale of land at Swansea in New South Wales. The respondents, to whom we shall refer as "the vendors", brought proceedings against the appellant ("the purchaser") claiming relief both under the Trade Practices Act 1974 (Cth) ("TP Act") and under the general law. The action was based primarily on what was said to be the purchaser's misleading and deceptive conduct during the period leading up to completion of the sale on 8 December 1989.
The vendors alleged that the purchaser had falsely represented, prior to completion, that it would co-operate with the vendors, to enable them to comply with a condition of development approval imposed by the City of Lake Macquarie ("the Council"). Development approval had been granted in 1988 for the erection of a shopping centre including six shops on the site, subject (inter alia) to a condition related to the provision of parking ("Condition 2"). The vendors alleged that, had the representations not been made, they would have delayed completion of the sale, in order to undertake the work and create the easements necessary to comply with Condition 2 while they remained the proprietors of the land. Instead, they completed the sale and lost the opportunity of complying with Condition 2. They claimed that they lost the value of a bank guarantee for $80,000, which they had provided in favour of the Council in lieu of compliance with Condition 2. The vendors succeeded before Moore J. His Honour determined that the purchaser had engaged in misleading and deceptive conduct and that the purchasers had suffered loss or damage by reason of that conduct. The loss or damage comprised the lost opportunity to perform the acts necessary to comply with Condition 2 before completion of the sale. Subject to contingencies, the value of that opportunity was the difference between the value of the guarantee of $80,000 and the cost that would have been incurred, had the work been undertaken and the easements created prior to completion. After taking account of contingencies, His Honour awarded the vendors damages under s.82 of the TP Act of $55,000, plus interest calculated from 16 February 1993. The purchaser appeals from the judgment below, raising five issues: l Whether there was evidence to support his Honour's finding that the purchaser represented to the vendors that it would be willing to co-operate after completion of the sale, in order to allow the vendors to undertake the work and create the easements necessary to comply with Condition 2. l Whether there was evidence to support his Honour's finding that the representations were false on the ground that the purchaser never intended to co-operate with the vendors once the sale was completed. l Whether it was open to his Honour to find that the vendors had suffered loss or damage by reason of the purchaser's misleading or deceptive conduct, in the form of the lost opportunity to comply with Condition 2 prior to completion. l Whether, in assessing damages, his Honour had sufficiently taken into account the difficulties facing the vendors in complying with Condition 2, had completion not taken place in December 1989. l Whether the vendors' claim was barred by reason of s.82(2) of the TP Act, in that proceedings were not instituted until November 1993 which (so the purchaser maintained) was more than three years from the date of any loss sustained by the vendors. The Course of the Proceedings Before proceeding to the facts, we should note the course that the proceedings took before his Honour. The matter was listed for hearing on 25 October 1994, for determination of all issues. However, it became clear at an early stage of the hearing that the evidence upon which the vendors relied to establish the quantum of damages was largely inadmissible. His Honour decided that the appropriate course was to deal first with the question of liability and address the assessment of damages separately. His Honour gave judgment on the liability issues on 30 March 1995. This judgment included a finding that the vendors had suffered some loss or damage by reason of the purchaser's misleading and deceptive conduct. Further evidence was filed in relation to the assessment of damages and written submissions filed by both parties. On the basis of this material, his Honour delivered judgment assessing damages on 18 September 1995. Final orders were made at that time. The appeal is brought from those orders. Background Facts The land of which the vendors were registered as proprietors was a corner lot, fronting onto both the Pacific Highway and Lake Road. We shall refer to this land as "the corner lot". Early in 1988, the vendors applied to the Council, seeking development approval under the Environmental Planning and Assessment Act 1979 (NSW) to develop the corner lot for use as a shopping centre including six retail shops. On 30 March 1988, the Council advised the vendors that development consent had been granted, subject to certain conditions. One condition related to parking and was as follows: "2. Car parking being provided on site in accordance with the following: (i) Fourteen (14) spaces in accordance with Council's adopted 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."
This is the Condition 2 to which we have already referred. It seems to have been accepted by all parties that a condition of development approval is capable of running with the land, in the sense that, in the event of non-compliance, the consent authority may be able to take enforcement action against the proprietor of the land for the time being: compare Proprietors of Strata Plan 20754 v Hawkesbury City Council (1991) 73 LGRA 199 (NSW CA), at 205, per Kirby P. Condition 2 is not notable for its clarity. It was common ground between the parties that the vendors understood and accepted that the 14 car parking spaces were not to be provided on the corner lot, but at the rear of a nearby lot owned by a building society. The building society's lot was located to the north of the corner lot and was separated from it by two other lots. To gain access to the building society's lot from the corner lot, it was necessary for an access way to be constructed traversing the rear of the corner lot and of the two lots located between the corner lot and the building society's lot. The following plan, taken from an exhibit, shows the layout of the lots: We were informed that the building society's lot was designated as Lot 22 on this plan. The building society's lot included the area to the east, designated as "EXISTING BUILDING" on the plan. Lot B on the plan was owned by a Mr Sawtell, while Lot A was owned by a Mr Tang. Despite its restrictive terms, Condition 2(iv) was understood by the vendors as requiring them to obtain easements over Lots A and B, as well as the right to use the building society's lot for car parking purposes. Furthermore, the vendors understood that they would be required to grant easements over the corner lot in favour of the other three lots, in order to allow vehicles to gain access to Lake Road from the parking area and vice versa. In substance, therefore, Condition 2 was understood as requiring the vendors to secure rights of way over neighbouring properties, and to obtain the right to use one of those properties as a car park. A condition of this kind might be thought to raise issues of validity under ss.90 and 91 of the Environmental Planning and Assessment Act 1979 (NSW). However, this question was not raised before his Honour and was not pursued before us. By July 1989, the construction of the six shops on the corner site was well under way, if not complete. On 4 July 1989, the Council wrote to the vendors' solicitors, advising that, because no response had been received from the building society, it was highly unlikely that the proposal for a "community carpark", at the rear of the building society's lot, could proceed. It was necessary, so the Council said, for the vendors to consider alternatives. The letter specifically mentioned that one alternative was for the vendors to make a contribution to the Council, equivalent to the value of supplying the required car parking spaces. Council estimated the figure to be $79,520, based upon a combination of land value and construction costs. In August 1989, negotiations took place between the vendors and the purchaser for the sale of the corner lot. On 30 August 1989, the vendors' solicitor, Mr Reid, had a conversation with a member of the firm of solicitors acting for the purchaser. In this conversation, the purchaser's solicitor asked the following question: "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?" Mr Reid replied: "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." On 1 September 1989, the purchaser's solicitor wrote to the vendors' solicitors concerning the proposed agreement for sale. Under the heading "Re Access Way" the letter included the following: "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." It was common ground that the reference to Mr Arkell was to another member of the firm of solicitors acting for the purchaser, who was Mr Sawtell's solicitor. At the time this letter was written, the Council had not amended its development approval to require payment of money as an alternative to Condition 2. However, it is clear that the purchaser's solicitor was aware that Condition 2 might be amended. Once again, this letter was not a model of precision. It did not, for example, address the terms upon which the "access way" was to be created. Furthermore, despite the reference to an access way "over the subject property", counsel for the appellant, Mr Motbey, accepted that the reference was not intended to be limited to the creation of easements over the corner lot, but included the creation of easements over Lots A and B and rights over the building society's lot. At the trial the purchaser conceded that, in view of this letter, it would have been unconscionable for the purchaser to have attempted to require the vendors to provide an unencumbered title on settlement, free from any easement in favour of the neighbouring or nearby lots. On 6 September 1989, the vendors and the purchaser exchanged contracts in respect of the corner lot. The agreement for sale provided for a purchase price of $1,090,000. Unusually, the deposit required was only 5% of the purchase price, namely, $54,500. Settlement was to take place within forty days of the date of the agreement - that is, on or before 16 October 1989. Time was not of the essence of the contract. The agreement contained no provisions relating to Condition 2, nor did it refer to the access way required by the condition. On 26 September 1989, a letter from the purchaser's solicitors advised that the firm had received instruction from Mr Sawtell, that on payment of $514.64, as compensation for certain damage to his premises, he would consent to the granting of an easement over his lot subject to certain specified conditions. It is somewhat curious that this letter should be written by the purchaser's solicitor, yet also record instructions from Mr Sawtell, who was represented by another member of the firm. However, nothing turns on this. On 6 October 1989, the vendors' solicitors provided answers to requisitions on title. In response to a requisition concerning the requirements of any local government authority, the vendors' solicitors stated as follows: "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." In the same letter answering requisitions, the vendors' solicitors enclosed a cheque for $514.64 as the consideration requested by Mr Sawtell for consenting to the right of carriageway along the back of his lot. The vendors' solicitors noted that the purchaser's solicitors were consulting with the Council as to the terms of the easement and requested advice as soon as all arrangements had been agreed to. The letter confirmed that other adjoining owners had agreed to the right of carriageway and expressed the vendors' expectations that the documents would be completed, although not registered, before settlement of the sale. The purchaser's solicitor responded to this answer in a letter of 16 October 1989: "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 details as urgently as possible, 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...". Despite the vendors' expectation that the documents creating the easements would be executed prior to completion, it appears that Mr Sawtell did not give his consent to the proposed arrangements, and the documents were not executed. On 27 November 1989, in response to an inquiry to the purchaser's solicitor, the council advised that Condition 2 had not been completed, but that negotiations were in train for the provision of an alternative. In late November 1989, the solicitors for the Bank of Melbourne, which was to finance the purchaser's acquisition of the corner lot, proposed that it should retain $80,000 on settlement. This sum would be paid to the vendors if the unsatisfied conditions were met by the construction of the access way and the creation of the easements. If Condition 2 were not complied with, the sum of $80,000 would be paid to the Council on demand. The purchaser expressed its agreement to the proposal in a letter of 29 November 1989 from its solicitors to the vendors' solicitors. Subsequently, a draft deed was prepared by the Bank's solicitors to give effect to the arrangements and at some stage, not disclosed precisely in the evidence, the purchaser executed a counterpart of the deed. On 30 November 1989, the purchaser's solicitors wrote to the vendors' solicitors in the following terms: "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." His Honour construed this and other communications relating to the Bank's proposal as indicating to the vendors that the purchaser would co-operate with them after completion in order to enable them to comply with Condition 2. In the event, the Bank of Melbourne's proposal did not proceed. In response to requests from the vendors, the Council varied the condition of development consent on 8 December 1989. Condition 2 remained, but an alternative was added: "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." The vendors' solicitor gave evidence, accepted by his Honour, that he had proposed a period of six months because the vendors thought this would be sufficient time to enable them to comply with Condition 2. On the same day, 8 December 1989, the purchaser's solicitors sent a fax to the vendors' solicitors, as follows: "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 to settle on this basis." (Emphasis added.) There was no direct evidence that this fax was received by the vendors' solicitors before settlement. However, his Honour thought it was more probable than not that this was the case and there has been no challenge to that finding. Settlement also took place on 8 December 1989. The vendors provided a bank guarantee to the Council, as contemplated by the amended Condition. As his Honour pointed out, the provision of the bank guarantee meant that the vendors had complied with Condition 2. However, it was plainly their intention to undertake the work and create the easements required by Condition 2, in its original form, in order to avoid the Council calling upon the bank guarantee. Despite intimations from Mr Sawtell's solicitor that he was prepared to consent to the easement over his lot, his agreement to the easement was not forthcoming. Other difficulties presented themselves and were the subject of correspondence. In November 1992 the Council wrote to the vendors' solicitors stating that the purchaser had refused to agree to an access way over the corner lot. The Council informed the vendors that the bank's guarantee would be called upon on or after 30 November 1992. In the event, the guarantee was called upon in about late January 1993. His Honour found that at the time the bank guarantee was called upon, all of the relevant lot owners, except the purchaser, were prepared to agree to the construction of the car park and the creation of the easements, as proposed by the vendors.
The second letter was dated 2 February 1993 and was also written to the vendors' solicitors. It contained the following passage: "I 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." Mr Motbey submitted that the first letter did not show that the purchaser never intended to co-operate with the vendors. He pointed out that it was literally true that the purchaser did not intend, at the time of signing the contract, to execute any documents relating to an easement. At that stage it was contemplated by the parties that the vendors themselves would execute the documents prior to completion of the sale. Had that occurred, there would have been no need for the purchaser to execute any documents creating easements over the corner lot. The trial judge accepted that this was a possible construction of the letter. However, he thought that the letter was also open to the construction that the purchaser's attitude, throughout the period from the time of signing the contract until the writing of the letter, was that it would not co-operate with the vendors. In the absence of any explanation from an officer of the purchaser, or from the solicitor who had written the letter, his Honour thought that the inference could more readily be drawn that the letter referred to an attitude held by the purchaser throughout the period: Jones v Dunkel (1959) 101 CLR 298. We see no error in his Honour's approach in the first letter. The letter is ambiguous. It can be read as an admission that the purchaser never intended to co-operate with the vendors. It was open to the purchaser to adduce evidence to clarify its intended meaning or to shed light on the instructions that lay behind the letter. The purchaser did not do so. Mr Motbey explained the absence of any such evidence, on the ground that the case advanced by the vendors departed from the pleadings. Whether or not this was so, a reading of Mr Aldridge's opening at the trial makes it abundantly clear that the letter was to be relied upon in order to establish the falsity of the representations alleged. It cannot be said, therefore, that the purchaser did not have notice of the significance of the letter, which in any event was annexed to an affidavit filed on behalf of the purchaser. Accordingly, in the circumstances of the present case, we think it was open to his Honour to infer that the purchaser's attitude, as disclosed in the letters, had existed at all times since contracts were exchanged. If there were any doubt about the matter we think it is dispelled by the second letter. That letter stated unequivocally that the purchaser "at no stage...agreed to provide an easement over the subject property". This statement is plainly inconsistent with the purchaser's own interpretation of its solicitor's letter of 8 December 1989. It will be recalled that Mr Motbey conceded that that letter conveyed that the purchaser would co-operate with the vendors, by creating easements over the corner lot, as required by Condition 2 in its unamended form and Mr Motbey's concession was limited to accepting that the letter represented that the purchaser would co-operate for a period of six months after completion. Even so, if the purchaser's view at all times was that it had never agreed to provide easements over the corner lot, its intentions were inconsistent with the representations conveyed in the letter of 8 December 1989. Accordingly, we reject Mr Motbey's contention that his Honour was in error on this aspect of the case. 3. Was it Open to Find that the Vendors had Suffered Loss or Damage by Reason of the Misleading and Deceptive Conduct? In considering this issue, the trial judge recognised that a difficulty had been occasioned by the course of the trial. At the point when his Honour considered what he described as the "causation" issue, the vendors had not adduced admissible evidence sufficient to permit an assessment of the quantum of any loss sustained by them. However, his Honour pointed out that the issue before him at that stage was whether the vendors had established, on the balance of probabilities, that they had suffered some loss or damage by reason of the purchaser's misleading and deceptive conduct. His Honour referred to Sellars v Adelaide Petroleum NL (1994) 179 CLR 332. The judgment of the majority in that case summarised the applicable principles in this way (at 355): "On the other hand, the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities. It is no answer to that way of viewing an applicant's case to say that the commercial opportunity was valueless on the balance of probabilities because to say that is to value the commercial opportunity by reference to a standard of proof which is inapplicable." Although this passage may not be part of the ratio decedendi of the case, this statement of the law has been followed and applied by appellate courts: see Daniels v Anderson (1995) 13 ACLC 614 (NSW CA), at 683; Bailey v Namol Pty Ltd (1994) 53 FCR 102 (FC), at 109. The trial judge formulated the causation question as follows: "In my opinion the conduct of the [purchaser] can only be said to have caused the [vendors'] 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 [vendors] to prove what they would have done on the balance of probabilities." His Honour accepted that the access way would not have been completed for at least 12 months after 8 December 1989, because Mr Sawtell was not co-operating at that time. Nonetheless, he concluded that the probabilities were that the vendors would have satisfied the terms of Condition 2 by mid-1993. The Council had been co-operative during the period leading to the calling up of the guarantee, and his Honour inferred that that co-operation would have continued until mid-1993, had the vendors remained the proprietors of the corner lot. In our view, his Honour somewhat overstated the burden that the vendors had to discharge on the causation issue. Sellars v Adelaide Petroleum demonstrates that the vendors did not have to establish on the balance of probabilities that, had the representations not been made, they would have been able to satisfy the terms of Condition 2. In Sellars v Adelaide Petroleum itself, what was lost was the opportunity to conclude a particular agreement. While the probabilities were that the agreement would not have been concluded, the loss of the opportunity constituted compensable loss or damage under s.82 of the TP Act: see 179 CLR at 356. It follows that in the present case it was sufficient for the vendors to establish, on the balance of probabilities, that the purchaser's contravening conduct caused the loss of a commercial opportunity that had some value. The vendors discharged that burden if they established, on the balance of probabilities, that, had the representations not been made, they would have had a commercial opportunity to comply with the terms of Condition 2 in its unamended form and therefore to avoid the Council calling up the bank guarantee. In our view, it flows from his Honour's findings that the vendors did demonstrate, on the balance of probabilities, that they had lost such a commercial opportunity. As his Honour found, the vendors would not have completed the sale had they known that the purchasers did not intend to co-operate in relation to the access way. The vendors had successfully requested the Council to amend Condition 2, because they thought they would be able to undertake the necessary work and complete the required documentation within a period of six months (with the co-operation of the purchaser). The inference is clearly available that, had the misrepresentations not been made, the vendors would have delayed completion of the sale in order to attempt to satisfy Condition 2, thereby avoiding the need for the Council to require a bank guarantee or call up such a guarantee. Of course, as his Honour recognised, the value of the commercial opportunity depends on an assessment of the degree of probabilities and possibilities. On that question, such matters as the likelihood of the contract remaining on foot for a sufficient period to enable the vendors to comply with Condition 2, must be weighed in the balance. But the evidence clearly justified the conclusion that the vendors had lost a commercial opportunity, and that that opportunity was of more than merely negligible value to them. 4. Did His Honour Err in Assessing the Quantum of Damages? The trial judge recognised that, in assessing the value of the vendor's lost opportunity, it was necessary to do so by reference to probabilities and possibilities, as required by Sellars v Adelaide Petroleum. In assessing damages, his Honour found that, had completion not taken place on 8 December 1989, the applicants would have been likely to apply themselves more diligently than they did in fact to the task of gaining the consent of all adjoining owners. On this basis, he thought it probable that the consent of all owners could have been secured "in the early months of 1990". He therefore concluded that the vendors would probably have been able to comply with the terms of Condition 2 in its unamended form while the agreement for sale remained on foot. His Honour acknowledged that events may not have turned out this way. For example, there may have been delays in obtaining the necessary consents. Moreover, the purchaser may have sought to rescind the contract in view of the delays (although any attempt to rescind may well have raised difficult questions as between the vendors and the purchaser). His Honour considered it appropriate to make some allowance for these contingencies. The damages claimed by the vendors amounted to $63,493, being the difference between the amount of the bank guarantee, ultimately called up by the Council (which his Honour rounded off at $79,500), and the cost of constructing the access way and car park (found to be $15,757). He discounted the figure of $63,493 by $8,493, or approximately 13%, to reflect the various contingencies. Mr Motbey's major complaint on this aspect of the case was that the trial judge's finding, that the consent of all owners would have been obtained by early 1990, was inconsistent with his earlier finding that the access way would not have been completed for at least 12 months after December 1989. We accept that the findings are not easy to reconcile. The difference appears to be that, in assessing damages, his Honour specifically took into account that, had completion of the sale been delayed because the purchaser's co-operation was not forthcoming, the vendors would have devoted themselves more diligently to the task of securing the necessary consents. The precise time at which Mr Sawtell's consent could have been expected is not a matter that bears materially on the causation issue. Whether his consent would have been obtained in early 1990, or only after a period of at least 12 months, cannot alter the conclusion that the vendors had lost a commercial opportunity of more than negligible value. The real question, in relation to damages, is whether it was open to his Honour to make the finding he did concerning Mr Sawtell's consent. In our view, there was sufficient evidence to support this conclusion, particularly as Mr Sawtell had indicated after completion, in March 1990, that he was prepared to grant the right of way requested, subject to certain conditions that were not particularly onerous. Mr Motbey also contended that the allowance made by his Honour for the possibility that Condition 2 could not have been complied with was insufficient. As McLelland C.J. in Eq. observed in Sussman v Symes (unreported, 4 July 1994 (NSW SCt, EQD 1780/90), at 17, the assessment of probabilities and possibilities, in relation to the happening of hypothetical events, is not generally a process that can be undertaken with anything approaching precision. While the allowance made by his Honour for what he described as "contingencies" is somewhat modest, we do not think that the overall assessment of the value of the lost chance is such as to justify the intervention of an appellate court. 5. Was the Action for Damages Barred by s.82 of the Trade Practices Act? Section 82(2) of the TP Act requires an action for damages under s.82(1) to be commenced within three years after the date on which the cause of action accrued. In this case the proceedings were commenced by the vendors on 5 November 1993. This was more than three years after the date of completion of the sale, but within three years of the date the Council called up the bank guarantee and (if it matters) within three years of the purchaser making it clear to the vendors that it would not co-operate. The purchaser submitted at the trial that the claim for damages was barred by s.82(2). His Honour rejected the submission. He did so on the ground that the vendors' cause of action did not accrue until actual loss or damage occurred. The vendors did not suffer actual loss until the bank guarantee was called upon, in about late January 1993. Mr Motbey repeated the submission before us, but did not elaborate upon it. We therefore deal with the issue briefly. In Wardley Australia Ltd v Western Australia (1992) 175 CLR 514, the majority (Mason CJ, Dawson, Gaudron and McHugh JJ.) pointed out (at 527) that detriment is not the same as the legal concept of "loss or damage". Thus, if a person is induced by a misrepresentation to enter into an agreement which ultimately proves disadvantageous, he or she does not necessarily suffer loss or damage at the point of entering the agreement. What is required is actual damage, not merely prospective loss. If the agreement exposes the person to a contingent loss or liability, he or she does not suffer an actual loss until the contingency is fulfilled. As the majority said (at 532) "until that happens the loss is prospective and may never be incurred". See also Karedis Enterprises Pty Ltd v Antoniou (1995) 31 IPR 393 (FCA/FC), at 401-405, per Burchett and Hill JJ; at 406-409, per Sackville J. In the present case, the vendors suffered no actual loss upon completion of the sale, or upon procuring the bank guarantee. Until the guarantee was called upon its loss was prospective or contingent. It had sold a property for its commercial value. It was exposed to a risk that the Council might call upon the bank guarantee. Whether that would happen depended upon a number of factors. It was not until the Council called upon the bank guarantee that the vendors suffered an actual financial loss. It follows that the proceedings were instituted by the vendors within three years of their cause of action accruing. Therefore, the proceedings claiming damages were not barred by s.82(2) of the TP Act. Conclusion The appeal should be dismissed with costs.
I certify that this and the preceding 30 pages are a true copy of the Reasons for Judgment of the Court. Associate: Dated: 23 February, 1996 Heard: 20 February, 1996 Place: Sydney Decision: 23 February, 1996 Appearances: Mr S. Motbey, instructed by Lyons and Lyons, Solicitors, appeared for the appellant. Mr M. Aldridge, instructed by Vandenberg Reid, Solicitors, appeared for the respondent.
Jones
Dunkel
(1959) 101 CLR 298
(1995) 31 IPR 393
(1994) 179 CLR 332
(1992) 175 CLR 514
(1994) 53 FCR 102